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  • Edmonton Financial Planner

Reasons Why you Need a Professional Financial Planner

Most of the economies globally are in a mess due to the COVID-19 pandemic, and confusion about the best investment opportunities is at an all-time high. People often invest their money without seeking professional advice as to how they should go about it. It's not only risky, but also a complete shot in the dark. By studying your income and expenditure patterns, only financial planners can tell you how much you should be investing, and which funds suit your profile. Here are six reasons why you need a professional financial planner:

1) They make better investment decisions

Professional planners have a thorough knowledge of the market trends and research results from reputed institutions worldwide. They're updated with the latest happenings that could affect your investments – domestic or international – thereby increasing the chances of yielding better returns.

2) They recommend the right funds and investment instruments

These professionals analyze your investment portfolio and consider the time horizon of the corpus, industry sector, risk appetite, and tax bracket to help you decide on which funds or instruments would be more appropriate for you. Therefore, they might guide you to invest in stock markets, mutual/retail funds, and fixed deposits (FD), instead of recommending gold Exchange Traded Funds (ETFs) or Unit Linked Insurance Policies (ULIPs).

3) Optimized investments

Over a while, it has been observed that if an investor is not well-versed with financial products and his investment decisions are solely based on commissions offered by various companies – whether insurance, brokerage, or mutual fund – they stand to lose a lot. That is because these agents work for monetary benefits and have a commission-based plan to push you into buying or selling certain products, thereby losing out on the bigger picture.

4) They help save tax

Investments can be divided into two categories – capital gains and income. Income from investments is taxable, whereas investment gains are taxed at 10% if held for more than one year under the 'long term' category. Since professional planners stay updated about the latest changes in taxation policies, they will guide you on which fund gives maximum tax benefits (without compromising on risk).

5) Portfolio balancing act

Financial planners analyze your total expenses, savings pattern, and liquidity and need to recommend appropriate financial instruments that align with your overall objectives. By allocating a portion of your investments in debt and liquid funds, planners help you manage liquidity concerns to meet potential emergencies.

6) They find the right time

Since it's impractical for any individual investor to keep track of market trends, these experts perform thorough market research and check economic scenarios before suggesting investments. In this way, they ensure investors don't take unnecessary risks with their hard-earned money. In short, they ensure that you enter or exit at the right time to be benefited from gains/losses. That saves the client from barging into markets when everyone is selling off, leading to large-scale losses.

No one knows the kind of life they will live in future; that is why every journey through life requires careful planning to ensure that we achieve our milestones on time. Financial planning enables you to be prepared for all eventualities by making sure that at any point in time, whether during times of success or crisis, there will always be enough money coming in and going out so that you'll never find yourself without cash. Fortunately, financial planning professionals can give you maximum returns by minimizing maximum risk.

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