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Financial Planning: Dangers of Doing it Alone

| August 05, 2015
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America is fascinated with the Do-it-Yourself (DIY) concept. Partially as a result of the Great Recession, Americans have taken on tougher tasks around their homes and in life in general in an effort to save money. Sales at home improvement retail giants are on the rise as DIYers tile bathroom floors, install kitchen sinks, and redo the siding on their homes. When it comes to your money though, there is a big difference between laying tiles and hammering nails, and investing in your future security. Before you trying financial planning for your own future, consider the dangers you'll face in doing it alone.

Your Emotions Might Take the Wheel

The biggest problem most people face is letting their emotions take the wheel and drive. Fear and greed can have a disastrous impact on financial security. Greed leads people to invest in stocks that are soaring now, regardless of the ability or potential for that stock or fund to go any higher. Likewise, fear often results in selloffs when prices are low. In reality, financial success depends on buying low and selling high.

Emotions can also interfere in sensible daily spending habits. Feeling secure in their finances and in a good mood, people waste their hard-earned dollars on products they don't need and vacations they cannot afford.

Not Enough Time in the Day

Although many people take pride in the title Jack of All Trades, it isn't always a good idea. For example, just because someone thinks they can remodel their own basement doesn't mean they'll have the time to finish the job without causing stress for other people living in the home. Financial planners have already put in years of study and worked for other financial planning firms to perfect their craft.

In addition to working, raising a family, taking care of a home, and trying to enjoy free time, most people don't have enough time left in the day to become well versed in the circumstances influencing the market. Additionally, the ever changing financial regulations make it tough for the average individual to keep pace.

Retirement Prep & Management are Tricky

Planning for retirement isn't just a matter of setting aside enough money to cover future expenses. In order to prepare a proper financial plan, numerous factors have to be taken into consideration, such as:

·         Monthly budget

·         Taxes

·         Insurance

·         Estate management

·         Investments

·         Retirement accounts

The ability of any individual to retire will depend upon their adherence to a budget, proper management of investment funds and estates, risk management policies, and balancing investments between accounts that subject their finances to taxes now and in the future.

 

Retirement is Lasting Longer Now

As a result of healthier behaviors and better healthcare systems, people are living longer than ever before. According to the Social Security Commission, the average life expectancy for an American who lives to age 65 is 84 for males and 86 for females. The Social Security Commission also found that as people age, the likelihood they live longer than expected rises.

For example, a 60-year-old man born in 1953 has a life expectancy of 83.4 years. If he lives to age 66, his life expectancy extends to 86. This boils down to the simple fact that the longer you live, the longer you could live. The same data showed that one in four people alive at age 65 can expect to live past 90 now.

Financial Advisors are Trained to Work for You

If you've come to the conclusion that financial planning is a difficult undertaking, you're right. Financial advisors spend countless years studying accounting, investing, and financial planning systems. The average CERTIFIED FINANCIAL PLANNER™ completes an intense course of study at college/university, and passes a two-day exam to earn the CFP® title. That exam, it's worth noting, only has a 55-60% success rate. Long before you sit down at a desk across from a CFP®, that individual has completed a minimum of three years of work to further their craft.

Before you take on the daunting task of guiding your own financial plan, consider the dangers of doing it alone. Stay smart, and find the right CFP® for your future. Investing in your financial future will pay you back in the end with peace of mind, and strength in your accounts and holdings.

 

These are the views of Social Advisors, and not necessarily those of the named representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

 

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Richard L Farrar is a registered representative of Lincoln Financial Advisors Corp. Securities offered through Lincoln Financial Advisors Corp., a broker/dealer (Member SIPC). Investment advisory services offered through Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. CRN-1265051-080415

 

 

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