Published on May 2, 2021
Thanks to the explosion of information on the internet, we all know about the various financial products and the importance of a sound investment plan. But can we build a tangible plan by just accessing the information? No. We need a guide or a coach who will help us to design the plan, implement it and help us to understand where we are going wrong.
Similarly, a coach for your finances is a Financial Advisor in Dubai.
A financial advisor is someone who has an in-depth understanding and expertise to tell you when and how much to invest, how often to review things, and what corrective measures need to be taken. While you may have the awareness and knowledge about investing, you may not always have enough time to execute everything by yourself. This is where a financial advisor steps in. His role is not just to help you build and manage your portfolio, but to educate you about the importance of financial health and stability.
To help you achieve your goals, a financial advisor follows a system-driven approach which helps him to track all the investment decisions and provide the corrective course of action. This systematic approach helps him to strike a balance between the market movements and your personal finance equation. He does so by conducting an in-depth income-expense and goal-based discussion, risk profiling assessment as well as periodic reviews.
A tips from financial advisor, just like a teacher, explains to you the concept of saving, budgeting in the initial phases. As you move up the learning curve, he introduces the importance of investing, financial assets, diversification, taxation, and overall wealth building.
As an individual, it is natural to panic when the market goes through a downturn. However, a financial advisor helps you to understand the importance of long-term planning and that there is no need to panic. Any drastic step such as panic selling or reshuffling of a portfolio only sets you up for losses. Hence, staying invested for the long-term is more important whereas downturn and volatility are just temporary phases that need to be ignored.
For most of us, financial planning just entails building enough funds so that we can retire happily. B
ut that’s not what it is all about. A financial advisor is the one who helps you to understand how you need to plan for each of your goals be it retirement, vacation, education, insurance requirement, purchasing a house, or paying off debt. He will help you set SMART – Speciﬁc, Measurable, Achievable, Realistic, and Time-bound goals. Moreover, this tip from a financial advisor also explains that the approach for each of the goals must be different.
The key to holistic financial planning is to understand the importance of diversification. A financial advisor analyzes your risk appetite and designs a portfolio that has optimal allocation across the asset classes. If one of the classes fails to perform, then the other asset class will act as a cushion. A typical portfolio will consist of equities, bonds, gold, real estate, and insurance in a proportion that is aligned to your goals and risk appetite.
Technically, inflation means a rise in the cost of living or a decline in the value of the currency over a period of time. A financial advisor points out to you that you should not just aim for good returns. In fact, you must aim for inflation-beating returns. For this, the outlook has to be long-term. Just saving money today might not be sufficient for surviving in 2040 after accounting for inflation. Thus, a financial advisor empowers you to make educated and informed decisions so that inflation doesn’t eat into your savings.