There are several DIY investing platforms being used these days. During the chaos of the coronavirus pandemic, many investors have turned to these platforms. However, professional financial advisors warn of the risks associated with these methods.
Let’s look at the differences between DIY investing and investing with the help of an experienced financial advisor in Arlington, VA.
While it may seem easy, investing is quite complicated. It’s much different than financial planning and carries a lot of risks. While investing on your own, you may sell or buy at the wrong time, or have a portfolio that isn’t suited to your financial needs. DIY investor platforms may show you the best buy list of stocks, but an advisor can look past that and understand if this is truly right for you.
Don’t Put All of Your Eggs in One Basket
It’s important to consider your risk tolerance before you begin investing. If you have a longer timeline for investing, you can afford to take more risks. Financial advisors help you asses the risks involved in investing and decide if it’s right for your portfolio.
They also help ensure that your portfolio is diverse so that you aren’t putting all your eggs in one basket. An advisor can help you decide how many different investments to make as well as the various types of investments you should choose. For example, a typical portfolio might include stocks, shares, bonds, and cash.
While some DIY platforms provide ready-made portfolios that are based on general investing goals and risk tolerance, an advisor will always be able to build a more accurate and personal portfolio for you.
Planning vs. Product Focus
Some DIY investment platforms focus on tax-free investing through push funds or an ISA product. However, advisors will also begin by focusing on your specific goals. They will then plan your investments to help you achieve these goals. A great advisor will make you question your decisions and your relationship with money and encourage you to sit down with your family and talk about what you really want your money to do for you.
An advisor has a proven track record, professional qualifications, experience, and regulatory requirements. They also have the patience and discipline to remain focused on a long-term goal even when things get shaky like they did earlier this year when the Covid-19 pandemic began. Having a long-term view also helps them predict problems, and plan for how to handle them.
[Related: Best/Worst-Case Investing During COVID]
A financial advisor starts by looking at your goal, and really getting to know you and understand your needs. Then they think carefully about each situation before deciding. For example, a person may be a higher-rate taxpayer but has a spouse in the lower-tax band, making it more beneficial to invest in the spouse’s name.
Furthermore, many investors today focus on environmental impact and sustainability as important factors. But it is difficult for a DIY investor to research and understand these types of funds.
Schedule a Consult With an Experienced Financial Advisor in Arlington, VA
It’s true that not everyone requires a financial advisor. DIY platforms are cheaper than using a professional, but many advisors would argue that they offer extra value by helping form a plan and ensuring the investor sticks to it. If you are looking for very simple investments, such as an ISA, and have no desire to engage in complex pension decisions, it could be worth it to DIY.
However, if you need more complex investing opportunities, or want to invest with larger amounts of money, it’s best to stick with a professional financial advisor in Arlington, VA. If you would like more information on the benefits of using a financial advisor, please contact Argent Bridge Advisors online or call (833) 568-4900 today!