When you begin your financial journey, it is highly recommended that you get a financial advisor on board. Apart from providing direction and guidance on how to save and invest, they also help ensure that you set and achieve financial goals that are suited to your financial requirements.
There’s a basic structure when it comes to financial planning - you set a goal and then start saving and investing in financial products that make it possible to achieve it. However, it’s not always a smooth process. You may face a job loss, economic uncertainty, or market fluctuations that may cause financial anxiety. To overcome this, you can take help from a financial advisor who can help you define your goals and come up with suitable solutions to reach your targets.
Let’s discuss how a financial advisor can help you define and achieve your financial goals:
- Diversification of your portfolio
- Managing your debt
- Saving for retirement
- Implementing effective tax saving strategies
- Motivating you to remain proactive
By diversifying your investment portfolio, you are better equipped to handle market fluctuations and sail through the financially tough times. A major benefit of diversification is that you spread your risk across different sectors by not sticking to one asset class and industry. This allows you to protect yourself in the event of a particular industry experiencing a downturn since your money invested in another sector may not react to the fluctuations of the market in the same manner. A financial advisor can help you find the right mix for diversifying your portfolio and invest your funds in lucrative opportunities that can bring in significant rewards, all while keeping in mind your risk appetite. Overall, your advisor can guide you through the level of diversification needed for your profile, taking care to avoid over or under diversification.
To go without accruing any debt through life may be a challenge for the average person. Whether it is a student loan, a mortgage on a home, or taking out a loan to start your own business, chances are you may need to take up debt at some point in your life to achieve your financial goals. What you may fail to realize is that it’s not the debt itself but the management of debt that may pose a threat to your financial wellbeing. If you’re taking on debt, you need to plan carefully for the coming future years of your life to repay the loan. Therefore, you need to be confident in your ability to take on such a big responsibility. Moreover, having an excessive amount of debt can negatively affect your credit score, making it difficult for you to land future loans or sometimes even a job. A financial advisor can step into this situation and help you create a suitable strategy to tackle the implications of debt interest on your future goals. They can also help you identify alternative ways of achieving your goals such as finding opportunities to make systematic investments in short-term funds. These strategies can help bring in high rewards while keeping you away from having to take on unnecessary debt.
One of the major goals of financial planning is saving up money for your golden years so that you can live comfortably in your retirement. Your investments and savings are structured in a way that enables you to save for a comfortable retirement while also meeting your present needs. Planning for the future requires careful assessment and evaluation. One needs to assess the impact of different factors such as changing lifestyles, incomes, the standard of living, medical conditions, inflation, etc. to secure the desired corpus. To achieve this, you need to select a suitable savings instrument. A financial advisor can help you identify whether you require a 401(k) account, an Individual Retirement Account (IRA), a Roth IRA, a Roth 401(k) account, annuity plans, life insurance policies, etc. Though you can study financial journals to find out the differences between each of these instruments, you may need the help of a professional to truly understand the present and future implications of each choice that you make.
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While undertaking financial planning, you may come across taxes such as income tax, inheritance tax, estate tax, capital gains tax, etc. A financial advisor can help you identify different strategies to lessen the impact of these taxes on your savings funds. He can pick out tax-advantaged savings instruments and design efficient investment strategies to reduce your tax liability. This helps ensure that your money is secure and easily accessible to use rather than being eaten away in taxes.
One needs to be financially aware and up to date with what’s happening in the financial world to be financially secure. A political or economic event can have unforeseen repercussions on your personal financial situation. Developing situations such as a change in laws, contribution limits, tax rules, etc. can come in the way of you attaining your financial goals. However, by being proactive you can better navigate uncertain times. A financial advisor takes time and effort to study and analyze the impact of economic events and their effect on the market. They’re in a good position to steer you away from loss-making endeavors and identify potentially profitable opportunities that may crop up. They can advise you on how to prepare for financial emergencies without them affecting your present and future financial goals. They also come in handy when it comes to making a budget for yourself and sticking to it, weaning you away from credit cards or reducing your dependency on them, cultivating a habit of saving, and living within your means by practicing financial discipline.
To summarize
Every investor has their own unique strategy and goals when it comes to financial planning. A financial advisor needs to ascertain these targets and help their clients achieve these goals so that they can live fulfilling lives. Hiring a financial advisor is an important decision that has big ramifications on your financial planning journey. It is important that you hire an advisor who offers you value for your time and money, with whom you can communicate easily and build a smooth, professional association.
If you are looking for professional help in planning and achieving your financial goals, use FinancialPlanners.net’s free match service and get connected to 1-3 financial advisors that are most suited to meet your financial requirements and goals. Answer a few simple questions about yourself and get connected to the best financial advisor for your needs.