Investing: The Basics

As you build your personal wealth (by increasing your personal income, automating your savings, and cutting your biggest expenses), you’ll need one more piece to make your financial plan a success and achieve your goals: to properly invest your savings.

Investing puts your money to work for you and increases your overall earnings, which drives your wealth-building engine even more…

But investing properly isn’t necessarily simple or easy. There are risks involved (which we tend to avoid), and so many options available that we often feel paralyzed by the choices and take no action, or defer to a professional (financial advisor), who often charges hefty fees for their services.

While many personal finance and investment writers will advise you to manage your own investments entirely, I would argue that in some cases it does make sense to hire a financial advisor (disclosure: I am not a financial advisor).

When to hire a financial advisor (FA) or financial planner

  • Are Very Risk Averse (especially when thinking about money)
  • Have a very limited understanding of the financial world
  • Have a very limited amount of time to dedicate to self education on investing
  • Have opportunities to earn more by working/consulting than the cost of hiring an FA

If any of those sounds like a match, then you can look into hiring an FA. But you want to choose a good one, meaning someone trustworthy and with a reasonable fee structure. Unfortunately, some financial advisors/planners just try and sell you their company’s products or push you to make trades so they earn commission. I don’t blame them, they have to make a living, but it’s not ideal from the clients point of view.

When choosing a financial advisor, you’ll want to consider their qualifications and pay structure. This article from the Wall Street Journal gives some good tips on finding and choosing a high quality financial advisor/planner:

When to manage your own investments

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