The Truth About Investments
Myth: I don’t need an investment advisor. I’ll save money and my investments will do just as well if I use online brokerage services.
Truth: Always trust the important stuff to the pros. Professionals have years of training and experience, and it is their full-time job to manage your investments.
We’ve all seen the clever online brokerage ads offering free trades, “supercharged” services, and even investment apps for your phone. These companies have made do-it-yourself investing easier and cheaper, so the question isn’t can you do it, but should you?
Cheap Isn’t Always Better
Most online brokers lure you in with 100 free trades and fees that are less than $10. It’s easy to think you’ll save on commissions or other fees you’d pay a pro to do the same job. But, because online brokers make it so easy to buy and sell, the do-it-yourselfer ends up trying to time the market—and losing money along the way.
Based on the history of the S&P 500, a benchmark for stock market performance, investments held for 30 years average 12% annual growth. Timing the market can reduce returns by more than 7%.
Investors who use an advisor simply don’t buy and sell as often, which makes it more likely for them to reach their investment goals because they aren’t trying to time the market.
Take a look at some popular brokerage sites, and you’ll probably find an option offering professional advice. Even the folks promoting do-it-yourself investing know you’ll need some advice somewhere along the way!
So why not start things off under some professional guidance? An investment advisor will help you nail down your investment goals, identify problems and opportunities, understand future tax implications of your investments, and stay on top of new products and rules.
And, when difficult times come, like the 2007–2008 market downturn, your advisor will be there to stop you from selling in a panic, keeping you on track.
How Do I Find A Good Investment Advisor?
A good investment advisor will have experience, expertise and the heart of a teacher. Dave Ramsey, whose common-sense principles have taught more than one million families how to live debt free and build wealth, has developed a network of professional investment advisors called Endorsed Local Providers (ELP). ELPs don’t work for Dave, but they base their investment advice on his teaching and can help you get started the right way. Connect with one in your town.