Financial planning is more than “investments”
A common misconception people have about financial planning is that it’s only about deciding where to invest your money. And we can’t fault anyone for thinking this way, as large sections of the financial industry have led many to believe that financial planning simply means, “buying an insurance plan” or “putting your money into an investment portfolio”.
But it’s so much more.
Financial planning involves managing your cash flow, planning your insurance, preparing for retirement, estate planning (which includes wills, trusts and a Lasting Power of Attorney), and more.
Without the proper advice and guidance, you could be wasting time, losing money and perhaps most importantly… missing out on special moments with your loved ones, because you’ve been busy managing your finances (and not even being financially rewarded for doing so).
How many hours are you spending on financial management?
This is a paradoxical question to answer, because if your answer is too low – it means that you’re not giving your finances enough thought (and are possibly making either inefficient or risky financial decisions).
Conversely, if you’re spending dozes of hours each month on your finances, are you really making good use of your time?
Here’s an example.
With over 20 insurance companies in Singapore, each offering dozens of products, the amount of time needed to simply decide on what products meet your protection needs, can be staggering. Imagine meeting 20 insurance agents to discuss your ideal term plan… then going back home to decide which of your 20 (or so) choices is the best.
Now repeat those steps for your accident insurance, hospitalisation plan, critical illness coverage, whole life plan, etc.
What’s more, the calculations above assume that you’re making these decisions without taking the time to become an expert at insurance products. Now imagine the amount of time you’ll need to set aside, should you wish to be highly proficient at insurance, investments, retirement planning and estate planning!
If you’ve heard of the “10,000-hour rule”, then you’ll know that experts say it takes about 10,000 hours to become an expert in a skill (such as financial planning). Even if you don’t wish to be an expert at financial planning, you’ll still need to put in hundreds of hours (at least) to become proficient at it – and as a professional, your time is money.
Think about it, how much will your company or clients need to pay you, should they want a few hundred hours of your time? That’s how much you’re paying in opportunity costs, when you spend that time learning about financial planning.
That’s why at Soul Wealthy, we believe,
Time is money.
Time is more money.
Time is more than money.
Because your time is valuable. Invest it well.
Are you missing out on time with loved ones?
We’ve already spoken about how valuable your time is, and how time is realistically worth more than money (because money can’t buy time) – and we truly live by those ideals.
Think about this. On average, after spending 8 hours sleeping, 10 hours at work, and 2 hours on meals, we’re left with 4 hours to spend on our hobbies, friends and loved ones.
While you could dedicate an hour of this precious time each day to studying financial planning… is it really worth doing so? Or would you rather spend those moments creating amazing memories with the people you love?
Remember, a financial advisor has dedicated years to studying financial solutions and instruments, and is highly skilled at creating effective financial plans. Also, because it’s their full-time job to do so, financial advisors are also constantly updated on the latest happening in the financial world.
Here’s the good news – you can leverage on their expertise for a very affordable fee, allowing you to spend your precious free time on yourself and your loved ones.
DIY investing can be dangerous
Yes, DIY investing can indeed be dangerous – whether you’re a risk-taker or incredibly conservative with your investments. Let us explain what we mean.
For starters, many “DIY financial advisors” end up not taking any action – simply because of paralysis by analysis. They look at the vast ocean of information available… and never start, because they never arrive at a decision.
DIY financial advisors also may have ineffective investment strategies – usually due to a lack of expertise in the area. This could lead to lower returns than if their investments were managed by a qualified financial advisor.
Another common issue is a lack of diversification. DIY financial advisors may use an investment vehicle they’re comfortable with (whether it’s a certain type of insurance product or investment platform) and keep repeating the cycle. This not only leads to lower investment growth potential, but can also open you up to more risks (due to this lack of diversification).
In fact, a study from Vanguard Research shows that you can increase the returns you get on your investments by well over 100%, just by hiring a financial advisor (instead of managing your own investments).
