How to Use Investment Advisors

13
May

If you are the type of person who wants to get the maximum return that is possible by intelligently investing your money, then you have probably surveyed a wide variety of investment options and opportunities. Many people with the same goal in mind when it comes to investing and building wealth have completely different approaches for achieving this goal. On one side of the spectrum, there are people who refuse to take investment advice from professionals and choose to perform all the necessary research and analysis themselves. On the other side of the spectrum, there are people who are adverse to making any decisions on their own, so they lean heavily on the advice of an investment advisor. Unless their investment advisor tells them that a certain investment is a good choice, they are unwilling to make it. Most people fall between these two extremes. They like to get input from their investment advisor, but ultimately they know that they are the one who will be responsible for their final choice. They worked hard to earn the money that they have, and they made that money largely by making their own decisions in life. It seems silly to them to simply rely on someone else’s thinking right at the time when the stakes have become even higher.

The people who refuse to use investment advisors whatsoever often have a point when they explain their aversion. There have been statistics released that show that investment advisors are only correct about 47% of the time when it comes to accurately predicting the short term movement of the stock market. Not only is this worse than flipping a coin, but these investment advisors are actually wrong more often than they are right. People have rightfully determined that that these people largely have no clue what they are doing. Simply because they earned a degree in some kind of finance program does not necessarily make them a solid bet to rely upon for investment advice. It’s entirely possible that they spent their time learning incorrect or outdated theories which are actually deeply flawed. They are also often turned off by the fact that the investment advisors tend to charge much more than their services are actually worth. If you choose to have your wealth managed by an investment advisor, then he will typically charge you a 1% fee on your account every year. 1% may not sound like a lot, but when it is assessed every year for 20 or 30 years – the impact on the total value of your wealth is dramatic. Furthermore, the interests of these investment advisors and your own are not in perfect alignment. Your main interest is to maximize the return that you can get on your investment. Although you might think that your investment advisor would be best served by accomplishing this for you, this isn’t exactly the case. Instead, his interests are best served by acquiring more and more accounts to manage. His plan is to merely match the performance of the broader market so that no one’s feathers become ruffled, and then to spend the majority of his time convincing more people to give him their money.

If you want to get out of this trap, but still utilize the services of an investment advisor – then there are certainly ways for you to accomplish this. You might be able to hire an advisor on a temporary basis to do some consulting work for you. You might want to simply subscribe to an online or print newsletter of a few investment advisors. Rather than taking their word as gospel, you can simply consider their opinions in relation to your own. Then, you can use your own mind to arrive at the conclusion that will serve you best. As you listen to the recommendations given by these investment advisors, always remember that they are looking out for their own interests.

This post was written by

jason – who has written posts on Budget Clowns.
Father of three and married to a lovely women. Always looking for ways to save money, and invest it properly for my children's future.

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