4 Times You Don’t Need a Financial Adviser

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If money pours like water through your fingertips, the right financial adviser can be a godsend. An expert can help plug the leaky holes in your budget, transforming you into someone who is thriving instead of scraping by.

But many folks — workers and retirees alike — find there are times when a DIY approach to savings and investing is all they require.

Following are a few situations where relying on your own financial wits is just as likely to produce the right answers as paying a professional to help with the task.

Your retirement income flows mostly from a pension

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If you have a pension, consider yourself among the lucky few. Just 16% of private-sector workers participate in a pension plan, down from 35% in the early 1990s, according to government statistics.

Retirees with a pension typically can choose to have their benefit paid in one of two ways:

  • Take a pension annuity and get the benefit in the form of a monthly check.
  • Take a lump-sum distribution, in which the money is paid out all at once.

If you choose option No. 1, you can basically set it and forget it. Your money will simply roll in on a regular basis, much like a Social Security benefit. A financial pro can still help you decide how to budget or invest that pension money, but many people won’t require this type of assistance.

On the other hand, option No. 2 may demand more thought. Once you receive the lump sum of money, you need to manage it in a way that serves you well over the course of a long retirement. In this case, you might want to talk to a financial adviser if you don’t feel comfortable making such decisions on your own.

You choose index funds when investing

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“Market timers” listen to their hunches and dip into and out of the stock market based on these whims.

Think twice before you join them.

Trying to guess for yourself where the market is going — or listening to the predictions of investing “sages,” including know-it-all financial advisers — is a fool’s errand, as numerous studies have shown.

A simpler — and likely more successful — approach is to park your money in a plain-vanilla stock index fund. These mutual funds give you access to a wide range of companies and spread out your risk. History has shown index funds to be a no-fuss, no-muss way to get rich over the long haul.

You can learn more about them in “9 Tips for Sane and Successful Stock Investing.”

You build retirement savings through a target-date fund

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Another investing option is to consider a target-date fund, which tries to match your investment asset allocation with your projected retirement date.

These funds are designed to keep your investment mix tilted toward risk when you are young, before gradually dialing down that level of risk as your golden years approach.

By their very nature, target-date funds allow you to put your investing on autopilot. You simply purchase shares of the mutual fund and let your money ride as the asset allocation automatically adjusts over the years. No adviser is necessary.

To learn more, check out “5 Questions to Ask When Picking a Target-Date Fund.”

You commit to dollar-cost averaging

Happy man with dollar
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Dollar-cost averaging is probably the simplest way to invest. You commit to regularly investing a given amount of money on a scheduled basis, and then let the market work its magic.

For example, say you plan to invest $10,000 annually in the stock market over the next decade. You then break that yearly $10,000 down into 12 equal amounts — $833.33 — and invest that amount on the first day of every month, come heck or high water.

In a nutshell, that is dollar-cost averaging. If the market is high on the first of the month, you invest $833.33. If it’s low, you do the same. And you repeat that investment every month over the 10-year period.

Clearly, you do not need anyone — even a financial adviser — to help with this. In fact, you can arrange for your mutual fund provider to withdraw this money directly from a savings account each month. That way, you literally do not have to think about the process again for the next decade.

Should you use a financial adviser after all?

Financial adviser
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Now, just because you can skip using a financial adviser doesn’t necessarily mean you should. Yes, some folks can do these things on their own. But others can benefit from tapping into the wisdom of a financial pro.

For example, let’s say you commit to dollar-cost averaging. For a couple of years, your investments soar and all is well.

Then, the stock market suddenly tanks. Will you still have the courage to put your money on the line if stocks steadily decline for months — or even years, as they did in the early 2000s?

A good financial adviser can talk you off the financial ledge and remind you of why you committed to that strategy in the first place — and how it is likely to pay off in the long run.

That is just one of the ways a financial pro can be worth the money you spend on him or her. So, if professional help sounds like the right choice for you, stop by our Solutions Center and find a great financial adviser.

Or, consider enrolling in our online course Money Made Simple.

This course features lessons on 13 key financial topics. You’ll learn using short, easy-to-watch videos, as well as jargon-free articles and worksheets. The chapters cover everything you need to know about:

  • Setting and achieving goals
  • Organizing your finances
  • Budgeting
  • Living more while spending less
  • Banking
  • Destroying debts
  • Credit
  • Buying and owning cars
  • Income taxes
  • Real estate
  • Estate planning

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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