Looking for Free Financial Advice? It May Cost You Dearly

Oct 10, 2018 | 4 months ago | Read Time: 3 minutes | By iKnowledge Team

Free advice on financial planning comes to you in the form of friends, family members and others claiming to be financial advisors, often confusing you further. We tell you how you should plan your finances wisely.

Financial Planning Advice - Aegon Life

So how do you deal with financial planning? You start by taking stock of what stability means for you. For you to live your life the way you want rather than the life you can afford, sit down and look at the numbers, especially if you know you’re in mounds of debt but you’re not sure how bad it is. You need to think of it this way – ‘Yes, it’s unpleasant now, but you’re saving yourself from more of the same later’.

Tracking your expenses is a daunting task and reveals a lot about you, but it is necessary. You need to start by tracking your spending all the way down to your 3 am snack runs. Every 2-rupee coin adds up to show you exactly where you are bleeding money and most of all the numbers in front of you force you to think of how every expense you make is tangible.

Once you know where you stand financially, you can see beyond it to know where you want to be. It doesn’t matter whether you’ve just started working and your lifestyle expenses are piling up or a retiree looking to invest in your grandkid’s future. We all want our money to work for us rather than against us.

The biggest priorities in our life revolve around being debt-free. We want an emergency reserve fund, like a year’s worth of income sitting in some FD. Lastly, a retirement account that we can use to fulfill our 30’s dreams. Based on what you currently have, it is important to map out where you want to be at which stage of your life. After that, call in the pros.

Firstly, why do you need a professional financial planner?

Simply put, a financial planner’s job is to monitor your finances and ensure that you stick to your financial planning and achieve your goals. They coach you to do the right things and most importantly, avoid doing the wrong things. According to a Vanguard study, advisors can add up to 3 percent per year to client returns by helping them allocate assets, rebalance appropriately, and stick with the program when times are tough.

On a fundamental level, you can think of financial planners as fitness coaches. We join the gym and hire a personal trainer only to understand what tough love means. They customize the workout routine for our body type, personality, and fitness level. In the event of an injury or a change in lifestyle, the trainer can adjust the routine and help us get through it.

Your wealth needs just as much attention as your health.

If you’re healthy and fit, you enjoy life more and you age better. The same principle applies to your wealth and you cannot ignore either if you intend to live a successful life. Contrary to what you might think, financial advisors are affordable for most people. If you can afford to join a fitness club or get a gym membership, you can probably afford an advisor for your financial planning needs. Even then, the benefit of financial planning done by a professional far outweighs the cost. A survey conducted by Vanguard revealed that for every 1 percent you pay to an advisor, his service potentially gets you an additional 3 percent in returns annually, which looks like a good deal.

But I have a friend who can… Stop

Free service is a myth, one that could quickly turn into a trap for those who aren’t careful. Financial advice from free sources tends to be irregular, is heavily generalized, and based off the assumption that one-size-fits-all. Bad financial advice is costlier than bad financial planning. In the short-term, your plans are ruined and in worst cases the impact can even last a lifetime. In most cases of bad advice, whoever does your financial planning shares no responsibility for the outcome of their recommendations and you are left to deal with the consequences. Better to be safe and smart than sorry.

For solid financial advice, explore Aegon Life’s iKnowlegde. Here our experts offer you guidance, tips and investment solutions for all your financial needs. Know what works best in the finance and life insurance sector and stay updated about the industry trends, here.

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