Andy Flack, MBA, CFP®
Tired of Losing Money in Robinhood?
4 Signs You Need a Financial Advisor.
We live in a DIY world where you can look up almost anything and get it done like a pro. With just a little extra time and elbow grease, you can save yourself money. More people have recently taken this approach with investing thanks to easy access to low cost trading platforms.
However, there is a big difference between investing and most other DIY projects. While a home improvement project gone awry can be remedied relatively easily, it takes just one mistake with investments to set your plans back for retirement and add years onto the time you’ll need to work.
Here are four ways to tell you need a financial advisor:
1. If you have no idea how much you will need to withdraw from your portfolio each month when you retire, you need an advisor.
How much will you need from your portfolio and when? The answer to this question should be the basis for your entire investment strategy. If this thought hasn’t occurred to you, it's time to go back to the drawing board. How you invest your savings should increase the likelihood that your portfolio will grow large enough to provide income for you through retirement. Social security should help a little, but most people need additional income — that’s where the portfolio comes in.
With a dollar specific goal for your portfolio, you’ll know how much growth you need, how much risk you can afford to take, how much you need to add to your investments every year, and for how long you might need to work before you retire.
It’s best to remain flexible and patient since the market can be unpredictable, and you may need to make adjustments along the way as your goals or situation change. Having an advisor can be invaluable in helping create a portfolio that increases the likelihood that you’ll achieve your goals. They can also advise when it makes sense to adjust the investments along the way and (perhaps even more importantly) when it doesn’t.
2. If you are trying to time the market, you need an advisor.
Trying to time the market is perhaps the most common investor mistake that can derail even the soundest of financial plans. Panic selling after a big downturn in the market, or buying into a manic bubble at inflated prices are classic examples of market timing gone wrong. Another form of market timing is the person that “waits for more certainty before they invest”. They’ll wait till the election is over, or after the market has recovered, etc. Of course, after that election is over, or after the market has recovered, something else always pops up. The certainty never comes, and neither does their retirement.
First of all, I’ve never met anybody that could successfully time the market. You have to be right twice — knowing when to sell and when to buy back in. Second, short-term market gyrations should have little impact on a decades-long financial plan. Trying to time the market is a common investor mistake that could have a major impact on one’s financial future. Having an advisor to prevent this type of mistake from occurring could very well save your retirement.
3. If you are investing in individual stocks but don’t know the difference between revenue and income, you need an advisor.
If you are investing in individual stocks, you should know a few basic concepts. Revenue is synonymous with gross sales before expenses. Income is synonymous with profit after most expenses. While many of the popular high growth companies today have impressive revenue growth figures, some have yet to make any profit!
This is perhaps the most basic of concepts when evaluating the fundamentals of a company. When you hear people talk about “earnings per share”, “earnings” refers to income after expenses. If there is no income, there are no earnings per share. If this sounds like a foreign language and you want to own individual stocks, you need an advisor.
4. If you are blindly picking stocks like one might pick Keno numbers at a bar and have no idea what investments you have in your 401(k), you need an advisor.
...No need to expand on number 4.
Need help with any of the above 4 topics? You need to find the right financial advisor.
I specialize in helping people create, implement and maintain financial plans and investment strategies based on their unique financial goals and situation.
Don't leave your financial future to pure chance. If you need help with even 1 of the topics mentioned above, it’s time to pass on this DIY project. Click here to request a call today.