There is a lot to be said for becoming a DIY investor and plenty of reasons to rise to the challenge. When you act as your own financial advisor and decision maker, you know that the person handling your money has your best interests at heart.
You can also avoid the many scams and get rich quick schemes that seem to proliferate like never before. In addition, you get to learn about the world of finance and investing, so you can do even better in the future.
Being your own investment advisor has a lot of built-in advantages, but one of the most important parts of the DIY approach is knowing when you need outside help. You do not have to give up control or turn your money over to an expert, but recognizing when you need help is a critical part of being a smart investor. Here are three times when even the most dedicated DIY investor may need to seek advice.
Tax Planning
The tax code is longer than an encyclopedia, and at least as complicated. With hundreds of new pages of rules and regulations being added every single year, just keeping up with the changes is a daunting task.
You may be an expert on stocks and bonds, but understanding the tax implications of your investment decisions is an entirely separate matter. Turning your tax planning over to a professional makes a lot of sense, especially if your investment acumen has netted you a substantial portfolio.
Income Planning in Retirement
Building a nest egg for retirement is one of the most important investment goals there is, but accumulating wealth is only half of the process. Once you have accumulated a nest egg of mutual funds, IRA accounts, 401(k) money and so on, you will need a way to turn that wealth into a steady stream of income.
You only get one chance to get this right, and if you mess it up, your retirement dreams could be thrown wildly off track. That is why it makes so much sense to seek the help of an income planning expert, someone who can design a withdrawal strategy that preserves your wealth while giving you the income you need to enjoy the post-retirement lifestyle you have always dreamed about.
It makes particular sense to seek out an expert who can guide you through the vagaries of the Social Security program. From when to take the initial payout to how marriages and divorce can alter the landscape, there are lots of things to consider when claiming the money you have coming. Chart Westcott, COO of Ikarian Capital, suggests that “you should consider working with an expert so you can avoid common mistakes and maximize your retirement income.”
Estate Planning
You have worked hard to accumulate wealth, and your acumen as a DIY investor has really paid off. Now it is time to leave a legacy for the people you love so your children and grandchildren can benefit from everything you have learned.
Estate planning is another part of your financial life where expert guidance is essential. Chart Westcott states, “An experienced estate planner can help you with everything from college funds for your grandchildren to trusts for your loved ones.” This is another area where you only have one chance to get it right, and you do not want to put your financial legacy at risk.
Even if you are a dedicated DIY investor, there are times when outside help is needed. Part of being your own financial advisor is knowing what you do not know and seeking the right guidance can make your DIY investing plan even more successful.
