Do you ever think about money and what the future holds? Maybe you’re thinking ahead to buying your first house or upgrading to your dream home. Perhaps you want to start a family and build a nest egg for your children. Or it could be that you’ve got your heart set on retiring young.
What’s your plan? How are you going to get there? Or do you just feel it’s nothing more than idle daydreaming, never likely to happen?
Yes, as in hiring a financial advisor. You might be thinking at this point, but hang on a minute, financial advisors – they’re not for people like me. Financial advisors work for wealthy people. Older people. People at a different stage of their life who have already made their fortune and can afford to pay someone to make the most of it.
It’s a common misconception that professional financial advice only becomes relevant once you have already accumulated wealth. But think about it. How do people become affluent in the first place? When you look at that dream home or the luxurious work-free lifestyle you aspire to, how do you think anyone gets there?
A key part of it is, they make good decisions with their money. They plan ahead and work to a strategy. A strategy suggested by a qualified professional expert who makes a living making the most of money. And critically, these wealthy people don’t wait until they are already well off to approach a financial advisor and put their strategy in place. They get things started early.
Because very few people get rich overnight. In most cases, affluence or even financial comfort take time to achieve. Time and knowledge of how you are going to get there.
There are many moments in our lives when we are faced with big decisions. Money will inevitably be a factor in many of these. Things like whether to buy a house for the first time, which for many people nowadays has to start with building up a deposit. That doesn’t just happen, nor does it happen quickly.
Then there are things like marriage, and yes, the flipside, divorce too. You might want to save up for a big marquee wedding, or upgrade your home to start a family. When relationships break down, one of the messiest parts is often uncoupling the finances of separating partners.
There are big decisions to be made at all these ‘big’ moments in our lives. Understanding the financial implications and having a clear view of the different options before you is crucial. At any of these points, a financial advisor can help you choose your path with better anticipation of where it might lead, regardless of your current financial circumstances. Their assistance will certainly increase the chances of you ending up at your desired destination.
Long term investment
Professional financial advice makes sense at any keystone moments in your life when big financial decisions have to be made. But at the same time, few decisions can be made in isolation. Many things you wish to achieve financially have to be planned for over longer periods of time.
Take saving up for the deposit on your first house, for example. Given the current housing market, that’s a project that takes several years for most first-time buyers these days. Similarly, if you have aspirations to retire at an early age, or simply want a comfortable lifestyle in retirement, it takes 30, 40 years of prudent investment to build up a sizeable pension pot. These are not decisions you can take at the last minute. You need to think ahead and plot your financial course accordingly.
Financial advice is often about playing the long game. A professional advisor can help you with things like budgeting and managing your income so you have enough wriggle room to save and invest. They will help you cut unnecessary costs, including making your tax affairs more efficient.
Financial planners will also recommend where to invest your money according to what your goals are. This will include looking at realistic timescales and putting measures in place to mitigate risk.
In short, a financial planner will help you make your income go further and your investments work harder. Repeated over many years, this is how wealth accrues. But there is a degree of complexity involved in putting together an investment portfolio that will provide stable wealth creation. Investment management is very much something to entrust to an experienced professional.
But it is also something that takes time to bear fruit. The sooner you start, the better the chance you are giving yourself.