So let’s say you have some money saved up and you’re thinking this investment thing looks attractive. You know, sitting on a beach sipping a Pina Colada while your money works for you, that’s pretty enticing. Although, we all know it’s not that easy, right? Here’s the real question. Do you hire an investment advisor, or just do it yourself?
Three Reasons an Investment Advisor Beats DIY
First off, good for you for having money saved up that you can invest. At best, only 1 in 3 middle-income households have enough saved up to put anything at risk in the stock market. You’re already ahead of the pack. But let’s get back to the question of who actually does the work?
OK. I’m blatantly biased here. My company, ALTUS Wealth Solutions, is a Register Investment Advisor firm and I’ve been managing other people’s money for close to two decades. Yeah, this is a conflicted opinion. But, here are three reasons why paying a professional beats the Do It Yourself approach:
Reason #1 – The Time Commitment
Investment management is work. We’re talking many hours every week for research and following market news and keeping tabs on what your account is doing. That’s work. It is definitely NOT sipping a pina colada on the beach. Hire an investment advisor to do this work for you. That’s pennies out of your pocket relative to the dollars you could earn devoting your time to other more important things.
Reason #2 – Expertise Matters
Investing concepts are simple but markets are complex. Do you really think a guy who does this a couple hours a week has an edge over hiring the investment advisor with thousands of hours of training and tens of thousands of hours of experience?
Reason #3 – Avoiding Emotional Decisions
Last but not least, a real professional who follows a written investment policy will keep you from ad-hoc decisions that are the root cause of investor underperformance. Investors trail the market by around 4% per year and have done so consistently over the past 30 years. With a professional manager pulling the strings, it isn’t their money. So they are far less likely to get emotionally invested in the process and chase bad decisions with even worse ones.
It’s Your Choice to Hire an Investment Advisor
But it’s your life savings so ultimately it is your choice. Once you’ve made the choice of WHO is going to manage your investments, the next question is how they will manage them. We’ll start to get into that one in the next video.
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