There has been a surge of do-it-yourself (DIY) investors opening discount brokerage accounts and trading stocks. The trend towards DIY tends to be a cyclical phenomenon that emerges after long bull markets. The well-known tech giants have been great performers and if you hold a few of these names your portfolio has likely done very well. While the past 10 years in the markets have been very good to us and you have accumulated a nice portfolio, do you feel as confident about your investment prowess for the next decade?
With that being said, it’s time to decide - should you be a DIY investor, or should you hire a financial professional to help manage your portfolio? If you’re still a believer in doing your own thing, you shouldn’t totally dismiss professional management. There are some habits and disciplines you can borrow from the pros that will improve your outcomes. Let’s start with a few basics.
Here are seven reasons why it may be beneficial, in the long run, to work with a financial professional.
Reason #1: They Deter Emotionally Driven Investment Decisions
Emotions come into play when it comes to making decisions about your own money - even when you don’t realize it’s happening. And when it comes to investing, making emotionally driven decisions can be detrimental to meeting your long-term financial goals.
It can be difficult to put aside feelings and make the right decision every time. A financial advisor is free of any emotional biases toward your wealth, meaning they can make objective, education-based decisions regarding your portfolio.
Reason #2: They Employ a More Disciplined Process
There are no guarantees when it comes to the stock market, even if you choose to follow stock trends closely. But choosing and sticking to a proven investment strategy may offer investors more peace of mind. Your financial advisor has years of investment experience to use as a guide, and they aren’t inclined to risk your money over a gut feeling or hot tip.
Reason #3: They Can Help Build More Balance
Would you sell a well-performing asset to buy another financial instrument that is underperforming? This is the type of question that a professional can help you answer. Most DIY investors are reluctant to make such seemingly counter-productive moves, but an advisor knows when it makes sense to take the risk or when you should wait before making a big move.
Reason #4: They Help Diversify Your Portfolio
The old adage,” Only invest in what you know," is good advice, but if you don't have experience with various types of financial assets, your portfolio may not be diverse enough to fit your needs. A good financial advisor will make sure that your investment strategy is well-diversified to help minimize the damage of a market downturn.
Reason #5: They Help You Through Market Volatility
The market is down for the second week in a row, and the value of your portfolio is dropping. Are you going to stick with your investment system? Some DIY investors may not, which could mean missing out on a lucrative rebound. Financial professionals aren’t fearful of adverse market conditions and can help their clients through times of tumultuous market volatility.
Reason #6: They Avoid Calling Tops and Bottoms
You’ve heard the phrase, "buy low, sell high” for years, but attempting to call the tops and bottoms of a volatile market could cause you to lose out - and add unnecessary stress to managing your portfolio. A professional can help keep you focused on the long-term trend of a stock, instead of its short-term highs and lows.
Reason #7: They Alleviate Financial Stress
Investing on your own is stressful. If the market is up, you are worried whether you should ride the wave as long as possible or take your profit now. But if the market is down, you’re worried about recovering from a loss. Having a trusted financial professional to guide you through the emotional roller coaster of investing is important to your peace of mind and long-term success. They can help take the guesswork out of “Am I doing the right thing?” and help develop a strategy based on your long-term goals.
You have enough on your plate already, there’s no need to make investing harder than it should be. Take your life back and build a stronger portfolio by speaking with an experienced financial professional today.