Smart Investments: How a Financial Advisor Can Help
Thursday, May 7, 2020, 6:00 AM | Leave Comment
You are thinking of investing and possibly hiring a financial advisor to guide you but aren’t sure how one can help.
The following are a few ways an advisor could help you with your investments.
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A Cultivated Temperament
It may not seem like a big deal, but a good financial advisor has cultivated a specific temperament that allows him or her to make smarter investment decisions. You might be surprised how many newbie investors allow their emotions to rule.
The relationship most people have with money is quite emotional even if they don’t know it, which ends up guiding stock market decisions. A professional will help you avoid these emotional decisions so that you can get ahead in this new world. Since this person is going to be guiding your financial decisions, make sure you learn how to find a financial advisor you can trust, which normally means asking a lot of questions dealing with experience and success.
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Understanding Companies
The amount of companies in the stock market is overwhelming, and what makes things worse is that to make smart investments you have to know a lot about a company before investing. The problem is that most regular people don’t have time to learn about each business.
A good investor is going to learn what they produce, how they do it, their stock history, and many other details. The good thing is you are going to be working with a financial advisor, and that means you can use this person’s knowledge. These individuals know most of the companies in the stock market well enough and have the time to learn more, which can help you make an informed decision.
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Help You Plan Ahead
When your mind is clear regarding the companies you invest in, you are likely to understand why you invested in certain stocks. An advisor is going to use your downtime to help you understand each stock in your portfolio. This is important because it helps you see clearly when it’s time to sell a stock and when you need to hold it.
A lot of people, especially beginners, end up buying stocks at high prices and selling them low, which is something you don’t want to do. With the help of your adviser, come up with a list of reasons to keep a stock, like its vision or the company’s leader. On top of that, you’ll come up with reasons to sell the stock, such as the company losing a major customer or the company moving in a new direction.
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Tips on Buying
The next thing you have to keep in mind is that a good financial advisor is going to help you purchase stocks more smartly. Believe it or not, there are specific strategies that can help you purchase stocks better than just throwing lumps of money into the stock market hoping that something will stick.
One relatively popular strategy is the dollar-cost averaging method, which just means you set up an investment schedule allocating small amounts of cash every week or month for stocks. There’s also the buy-in-thirds method, which splits up the money you have to invest in three stocks. This helps spread the risk and multiplies your chances of success.
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Help Avoid Hyperactivity
Having a financial advisor also helps protect you from hyperactivity. Most first time investors get obsessed with the price of their stocks and begin to pay attention more than they need to. You don’t need to check on your stocks every day; checking on these investments every few months is more than adequate because you are in it for the long haul.
If you continue to pay attention to the market, you might start to make decisions you didn’t need to make. You may start to take in all the numbers you are seeing as proof that you have to sell or buy. The stock market fluctuates a lot, so basing your decision on a few changes is not smart because what you need to do is focus on trends, which develop over time.
These are just some things a financial advisor can do for you as you begin to invest. Talk to one to find out more about their services or to get clarification on something you’re interested in as an investor.
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