If you have a difficult situation, for example, the process of inheritance, the adviser will help you deal with this and develop an action plan. If you are going to hire a financial adviser in such life situations, you need to study everything in detail.
At the same time, financial advisers are not advisers for all occasions.
In the vast majority of situations, they cannot provide anything that you could not handle on your own and with less expense.
People often turn to consultants with questions, the answers to which they can find themselves by studying various publications on this topic. They can be addressed even with trifling questions, such as how to invest extra money.
But this can be done without leaving home, having a computer with Internet access and a bit of free time.
Sometimes financial advisers help people who do not want to study the topic of money on their own.
Such people simply pass on all information about themselves to the adviser, so that he makes personal finance planning for them, and does not even have an idea what will happen next.
This is great if you have an excellent consultant, but what if he is not very competent or, worse, plans to take your money in hand?
Another problem concerns financial advisers who work for a commission.
They are interested in choosing a specific investment option, because then they will earn more money.
Even the best and most honest professionals can do wrong, seduced by the opportunity to get a high percentage of the deal.
In general, it is better to independently explore options for solving specific issues, and engage in daily organization of money yourself.
You can start planning your personal finances without any professional help. You can choose your contribution, where to put the money. This will not only save you money, but also increase the financial IQ, which is absolutely necessary for a RICH life.
Questionable Tip # 2: Invest in Things You Don't UnderstandThis phrase may seem shocking. In the end, you will never see anywhere else write about it that way.
However, if you read carefully, you will see many articles that indirectly talk about it again and again.
All that is needed is to read about new types of investments or lists of investment funds.
These articles praise these investments, almost always guarantee a high income from investments in these tools, but they never go into details and do not explain what exactly they are, what philosophy is behind this fund, and who is specifically associated with the name of this company.
But they always have one conclusion - you definitely need to invest your money here.
To do so is a gross mistake . So personal finance planning is not done. If someone talks about investments and says that you should invest there, and does not give enough information to understand where your money will go, and does not even say where you can find out for yourself, then you need to run from such an adviser.
Never invest in something you do not understand. Reading an article that briefly mentions an investment does not necessarily lead to a comprehensive understanding of this product.
If you are going to invest somewhere, do a research. Do not trust the words of any author of the article, whoever he is. Find out what this investment is and continue to search for information until you can explain its essence in one sentence and answer the questions that have arisen in connection with this.
Questionable Tip # 3: If you don’t invest in X, then make a huge mistakeThis advice can be seen not often, but enough to start worrying about people who may fall victim to such pressure, if so, personal finance planning may suffer.
Some authors like to talk about investments in this way: that this is the best investment method for everyone, and it brings surprisingly high income, everyone should invest money there. And he who does not do this makes a huge mistake.
There are two reasons for such absurd statements:
First, the author really believes in this type of investment. He truly believes that this is the best choice for everyone. Typically, such a person is enthusiastic and perhaps a little misled.The other side of the coin is much more vile. Sellers are too keen on promoting their product and use this kind of trick. They promote cheap stocks of companies that are on the verge of bankruptcy. They want you to buy, and they made money on it. Often the value of securities and interest in them are inflated, like a soap bubble.The correct solution to such issues can be found in articles about this product.
Unless you are a professional investor who has spent his whole life studying financial investments, the best strategy for you is diversification at a low cost.
Investing all your money - and even most of it - in one tool is a bad step, because if the market collapses, you will be left with nothing.
Questionable Tip # 4: No need to be thrifty - you won’t build your wealth with thisFew “tips” annoy me more than this one, because it’s absolutely wrong. I managed to pay a mortgage, a cash loan and pay off my credit card debt.
And I believe that the main component of these changes was personal finance planning and thrift.
What happened when the debts were paid off? I had money that could be invested.
You can be the greatest investor in the world, but if you do not have the capital that you can invest somewhere, you can never get rich.
If you live from paycheck to paycheck , you will not have money to invest.
The only way to find money is to spend less than you earn, and thrift is a key tool to achieve this.
There are completely stupid examples of savings that really do not work, for example, washing plastic bags, remember how they did in the USSR.
Authors who voice such examples say that these actions save no more than a ruble, and cite this as evidence that thrift does not work.
Firstly, there are many ways to save more efficiently than washing packages.Secondly, most methods work because they are regularly repeated. If you manage to save 100 rubles a day, then at the end of the year you will have 36500 rubles.With this money you can go on a trip. This is how personal financial planning works.