How a financial planner can help you grow your wealth
February 26, 2018
Most people find managing their finances a bit of a chore.
Disinterest leads to a lack of action and the accumulation of lazy money that isn’t earning a decent return.
It’s pretty clear that this group can benefit from using a financial planner; someone who can act as strategist, coach and adviser to help ensure the most is made of both hard-earned income and a growing investment pool.
But what if you’re someone who enjoys looking after your money?
You take an active interest in the share market, have an investment property or two, and have a good understanding of how superannuation works.
How can a financial planner help you grow your wealth? Here are three ways they can help.
What’s the best use for your savings capacity? Pay down your mortgage? Top up your super? Negatively gear a property or share portfolio portfolio?
The answer depends on several factors including individual circumstances, how much investment risk you are comfortable with and prevailing economic conditions.
A financial planner can model different options and see what their likely impact is on your future wealth.
Over the decades, the difference between a mediocre strategy and a good one can be measured not in thousands of dollars, but hundreds of thousands of dollars.
Having a strategy is one thing, implementing it is another. This can often be one of the most exciting parts of investing.
But before you rush into buying shares or taking on an investment tip you’ve received from a friend, it’s important to work with a financial planner throughout this phase, to ensure you’re making sound choices and completing all the necessary paperwork associated with buying and selling investments.
It’s also important to analyse your strategy before jumping into buying shares or other investments, to ensure you are clear on your objectives and obtain a sound understanding of the risks involved. A financial planner can give you the guidance you need to help you align your strategy with your investment purchase decisions.
Another thing a financial planner can do is assist with identifying investment opportunities that you may not look to on your own, and steer you away from risky or speculative investments.
Many financial planners will also provide you with online access to view the status and value of your entire investment portfolio at any time.
Monitoring and review
Markets move up and down, interest rates change with economic conditions, new types of investment are rolled out and other opportunities pop up.
If not watched, portfolios become unbalanced and no longer match the risk tolerance of the investor.
Reviewing and rebalancing portfolios is one area where financial planners can add real value to a client’s wealth.
It’s natural that people want to hold onto investments that have done well, but yesterday’s winner is often tomorrow’s loser.
A financial planner can take a dispassionate view of a portfolio, removing the emotional component that often clouds judgement.
Regular rebalancing – taking some of the profits on recently high-performing asset classes and investing them in lower performing asset types – may seem counterintuitive but has been shown to both increase returns and reduce risk.
Engaging a financial planner doesn’t mean giving up control of your investment decision-making. The ultimate decision always remains yours.
For the interested investor, the relationship with a financial planner is more one of partnership, of collaboration with someone who has a finger on the pulse of investment markets. And aren’t two heads better than one?
Find out more about how a financial planner can help you grow your wealth. Give us a call on (03) 9875 2900 or complete the form below to arrange a chat with one of our qualified financial planners.