Investing is a crucial aspect of financial planning, whether for immediate goals or long-term security. The decision to invest by yourself or with the guidance of a financial advisor is significant and depends on individual needs, expertise, and preferences. Here, we explore the advantages and disadvantages of both approaches to help you make an informed decision.
Investing by yourself
If you’re investing by yourself, you’re in charge. For some people, taking responsibility for their financial future is a challenge they relish. For others, it can be a daunting prospect. It all depends on your character as well as your level of knowledge. Either way, investing by yourself means you are free to make your own decisions and enjoy the satisfaction of directly managing your investments. You also have the flexibility to explore any investment opportunity that takes your interest and to tailor your portfolio specifically to your own interests and risk tolerance.
In addition to the freedom and flexibility that comes with investing by yourself, you could also save some money. This is because it might be possible to avoid certain fees that might otherwise be applicable if you use an advisor.
Of course, having freedom and flexibility comes at a cost. If you’re going to be successful, it’s up to you to put in the time and effort needed to do the necessary research and to monitor the performance of your investments. Understanding complex financial products, regulations and tax laws is no easy task. Investing by yourself also carries with it the risk of being taken over by emotions which can lead to greater risk taking.
Using an advisor
It’s precisely to save you the time and effort needed to invest successfully that using an advisor might be a good idea. With professional expertise and guidance, an advisor can still help you to develop an investment strategy that is tailored to your interests and risk tolerance. What’s more, an advisor should be emotionally detached, making emotionally driven decisions less likely. In addition to helping with investments, advisors also have the knowledge to assist with a more holistic approach to your finances.
Against this, one must keep in mind any fees and costs that might apply. It’s also important to make sure that the advisor really puts your best interests first as it is possible for conflicts of interest to arise which can could the advisor’s judgement. And, of course, at the end of the day, the responsibility for taking investment decisions is still yours unless you opt for a discretionary portfolio management service, in which case some day to day decisions would be delegated.
In conclusion, the choice between self-investing and using a financial advisor depends on your financial literacy, confidence in making investment decisions, and the complexity of your financial situation. Investing by yourself can be empowering and cost-effective for those with the time and knowledge to manage their investments. On the other hand, a financial advisor can provide valuable expertise and peace of mind, particularly for those with more intricate financial needs or less experience in the market.
Before making a decision, consider your financial goals, the time you can dedicate to managing your investments, and the potential costs. Remember, it’s not an all-or-nothing choice; some investors find a middle ground by consulting a financial advisor for major decisions while handling the day-to-day management themselves. Whichever path you choose, staying informed and proactive about your investments is key to achieving your financial objectives.
If you invest in any product you may lose some or all of the money you invest. The value of your investment may go down as well as up. MeDirect Bank (Malta) plc, company registration number C34125, is regulated by the Malta Financial Services Authority and is licensed to undertake the business of investment services under the Investment Services Act (Cap. 370).
