Being your own financial advisor can be a daunting task. But it is also one of the most important steps you can take towards achieving your financial goals. With the current economic climate, it has become more important than ever to be in control of your own financial future. In this post, we will explore some of the reasons why being your own financial advisor is important. And how you can take the first steps towards being in control of your finances.
The Power of Being Your Own Financial Advisor
- One of the main reasons why it is important to be your own financial advisor is the cost. Hiring an external financial advisor can be costly, with some charging annual fees of up to 1% or more of your invested assets. This can add up to thousands of dollars over the years and eat into your investment returns. Robo-advisors, for example, typically have lower fees than traditional human advisors, averaging around 0.25% of assets under management. By being your own financial advisor, you can save on these costs and keep more of your money working for you.
- Another reason why being your own financial advisor is important is the control it gives you over your finances. When you hire an external financial advisor, you are essentially outsourcing the management of your finances to someone else. This means that you are relying on someone else to make important decisions about your money. By being your own financial advisor, you have the power to make your own decisions and take control of your financial future.
- Being your own financial advisor also allows you to make more informed decisions about your money. When you are in charge of your own finances, you have access to all of the information you need to make informed decisions. You can research different investments, read financial news and articles, and consult with experts in the field. By being your own financial advisor, you can be sure that you are making the best decisions for your money.
- Finally, being your own financial advisor can be empowering. It allows you to take control of your financial future and to make the most of your money. It gives you the tools and knowledge you need to achieve your financial goals and to live the life you want.
Don’t get caught up in the Danny Kruger effect
The Dunning-Kruger effect is a cognitive bias where individuals with low ability, expertise, or experience in a certain task or area of knowledge tend to overestimate their ability or knowledge. Additionally, some researchers include the opposite effect for high performers, where they tend to underestimate their own skills in that area.
Becoming your financial advisor you have to study to know how to perform better in your investments and don’t fall into beginner’s traps.
In conclusion, being your own financial advisor is important for many reasons. It can save you money, give you control over your finances, and allow you to make more informed decisions. It can also be empowering and help you achieve your financial goals. If you’re ready to take control of your financial future, it’s time to start being your own financial advisor.