Benefits of Investment Advice

All Olympians have a coach to thank when it comes time to collect their medal. They may be the best in their sport, but without their coach, they lack a tailored game plan, full of their strengths and challenges, designed to help them win. Investing is no different. It is quite easy to feel like an expert after digging through the vast pile of online investment information. But without a financial advisor to give you investment advice, you may be missing the target with your capital growth. So, when talking investment plans, what can an advisor help you with?

Investment Advice – A Plan Tailored to Your Needs

Have you ever received advice that did not quite fit your situation? Even though there are some tried and tested investment tips that are generally good advice, most people have vastly unique situations, with personal goals, risk tolerance and financial circumstance. Perhaps your main goal is to retire early or invest while paying down your home loan. You may have challenges along the way that are unique to your own journey. This is where a tailored plan or investment advice, with check ins along the way is so valuable for your capital growth. Your advisor should be asking you questions specific to your own situation, in order to tailor a plan to ensure your goals are realised.

Investment Advice to Diversify

One of the most important reasons why diversification is a good idea for investment, is risk management. If one asset class is failing, then hopefully others within your portfolio will be more stable. This in turn, serves to protect your wealth for the long term and hopefully help you to weather a few investment storms.

Spreading out your investment funds across different positions will also allow you more return opportunity. Having a wide variety of investments will allow you more opportunity for wealth creation. Making sure your portfolio is well diversified is one thing, however checking in with your financial planner to make sure your portfolio is well positioned and diversified throughout shifting markets is also important. Perhaps during a market cycle, one asset class has fallen out of favour. Your advisor will hopefully pick this up and make adjustments along the way. Overall, no one necessarily wants to see a huge amount of volatility with their hard-earned cash. Your adviser will work hard to provide investment advice to ensure your investment portfolio is diversified appropriately to have difference positions offset each other and an overall steady rise over the course of time.

Get to Know (and Minimise) Your Tax Implications

 

Having lower tax on your investment portfolio will allow you to see faster capital growth. Your financial planner will be able to work with you to minimise tax and see your investment dreams come to pass sooner as a result.
You need to have investment income included on your tax return, including what you earn in interest, dividends, managed funds distributions, capital gains and rent. However you can claim deductions for buying, selling and managing your investment, with specific rules applying to this. Your adviser will fill you in on what you can and cannot claim and show you opportunities to save on your tax as part of your investment advice.

Investment Advice Will Help Understand Your Risk Tolerance

A lot of people like to mention risk tolerance, but not many really know the ins and outs of what someone’s risk tolerance really is. This is a great subject to talk about with your advisor at your initial meeting. Investors that know their risk tolerance well and can have a portfolio designed around this will benefit greatly long term. Age is a general factor of risk tolerance. Young people generally have more time in the market and can afford to invest in stocks rather than fixed income. However, it is not always as straight forward as this. Many people over 65 are aggressive investors due to having a higher net worth and more money to spend. Assessing your priorities with your investment plan and working out with your advisor what you are working towards financially will help you ascertain your risk profile, amongst many other factors.

Time in the Market, Not Timing the Market

Research and experience shows that those who stay invested in the market over the course of time, with a well-diversified investment portfolio, will tend to always outperform those who attempt to time moments in the market. Speaking with your financial planner on a regular basis will help you to keep yourself mentally and emotionally in check, especially during tumultuous times. A good financial advisor has walked through many market changes and trends show that the market will naturally shift and change over the course of years. It is tempting when you are left to your own resources to make some changes and attempt to avoid investment peril. Your advisor will help to remind you of your goals during times like this. Perhaps some corrections and changes can be made to your portfolio along the way, but the most important thing is to have someone to remind you of why you are invested in the first place.

Consolidate and Grow Your Super

Consolidating your super keeps things straight forward, by moving all of your super into the one account, thus avoiding unnecessary fees and save you overall time and money. When everything is in the one place, there is less paperwork and an easy to manage balance. It is important however to speak to your advisor before you consolidate your super. You do not want to lose out on insurance and pay fees that you could have avoided. Consolidate the right way, and your super will hopefully be ‘super’ straightforward forevermore.

Investing your hard-earned cash is always a good idea. Going it alone, without the right investment coach is not. Having a good financial advisor on your team is key to ensuring your capital growth performs in the long term and your financial dreams are realised. For more information get in contact with Elliot Watson Financial Planning on 02 4038 1623.

The information within, including tax, does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. The views expressed in this publication are solely those of the author; they are not reflective or indicative of licensee’s position and are not to be attributed to the licensee. They cannot be reproduced in any form without the express written consent of the author. Elliot Watson Financial Planning Pty Ltd ABN 70 610 168 646 is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.