Investment success: The role of financial advice

If you’re feeling ill, would you gamble with your health by not seeing a doctor? Of course not. The diagnosis may be more severe than you thought. This is the same type of thinking that should be applied to your finances. In this case, an independent financial adviser (IFA) can provide you with an accurate ‘diagnosis’ based on an analysis of your situation. He/she can also determine mistakes you may be making and assist you in rectifying them.

An independent financial adviser can assist you in avoiding these common investing mistakes

  1. Investing without a plan

A strategic financial pan can be seen as a critical starting point to achieving your financial goals. The old saying, ‘If you don’t know where you’re going, how will you know when you get there?’ may be a good way of thinking about your financial journey. An IFA can help you develop an actionable plan to suit your personal financial needs. 
2. Investing in the incorrect product

There are numerous savings products in which you could potentially invest. However, each product typically has different tax implications and is generally aimed at fulfilling a specific objective. An IFA can provide you with information so you can make an informed choice about the product that best suits your needs.
3. Forgetting about inflation

Time can lead to the erosion of your money’s value, leaving you with a situation where you’re buying less for the same amount of Rands previously – this is called inflation. An IFA can recommend which investment is likely to provide you with favourable, real returns that, at least, meet the level of inflation.
4. Dipping into your retirement savings when changing jobs

When changing jobs, people may feel that dipping into their retirement savings is a worthwhile way to supplement income. Rather, it’s a better idea to preserve retirement savings so that you have the ability to live a comfortable life in retirement. An IFA can succinctly explain the consequences of making this decision and encourage you to try keep your savings intact. 
5. Concentrating only on one asset class or market 

Diversification of investments can be the key to financial success. There are numerous asset classes which include but are not limited to cash, bonds and equities. Investment managers may invest in a combination of these assets depending on the investment product. An IFA can help you diversify your portfolio so that you may have exposure to a variety of investment options. 

6. Letting your emotions get the better of you

In times of financial uncertainty, you may make emotionally charged decisions that could hurt the value of your investments. You may be tempted to withdraw and switch to another investment product that may be showing better returns. However, more often than not, you’re going to lock in losses. An IFA can educate you about the necessity of keeping a level head and thinking rationally during these times. 

By taking into consideration the abovementioned advice, your investment success can be enhanced.