Aditya Birla Sun Life Mutual Fund

Believe your Doctor's opinions? Say yes to the Financial Advisor

Jan 21, 2019
5 mins | Views 2021

My friend Raghav was a knowledgeable guy. He worked in a leading MNC and made a 7-figure salary. He also handled his finances himself choosing which investment avenues to invest in and which to avoid. However, few years down the line when a medical emergency struck his family, Raghav didn’t have enough liquid funds at his disposal or a valid health insurance policy to pay for the expenses. He had to avail a loan for meeting the medical expenses which would not have been required if Raghav would have been careful with his financial planning.

The story of my friend would resonate with many of you who do their financial planning on their own. We all think we know exactly which avenues to choose, how much to invest and how to build a good financial portfolio. But do we really know?

Let’s take the example of your health. There are various over-the-counter medicines which come to your rescue when you have a headache or a common cold and need a cure. But what if the headache or cold persists over a long period of time? Do you self-medicate or do you consult a specialist?

You consult a specialist for long-term care, don’t you? Then why take risks with your finances? Isn’t an expert financial advisor or a money doctor required for handling your long-term finances?

Yes, a money doctor is required for building a long-term financial portfolio. If you are still wondering why, here are the reasons –

  • For financial goal planning

    Investing is useless unless you invest towards a specific goal. In life, you have various financial goals like child future’s planning, buying a house, retirement planning, abroad holiday etc. You save towards your goals so that, when required, your investments would provide you with the desired funds. To understand your life goals, ascertain their financial requirement and then to plan your investments for each goal the help of an expert is required. So, if you want to chalk out your goals and a separate investment for each, you need a money doctor.

  • For asset allocation

    Do you consider your risk appetite when investing? Everyone has a different risk tolerance capacity. Some like to take risks while others are conservative. Your investments should be based on your risk profile. If you are risk-averse investing in equity could be a bad call. At the same time, investing all your money in debt could bring down your returns. That is why you need a proper asset allocation where your investment is invested as per your risk appetite and goals while at the same time the returns are maximised. Can you do this yourself?

  • For a diverse financial portfolio

    Is there one medicine which is a panacea? No, there isn’t. Similarly, one investment avenue cannot take care of all your financial goals. You should have a diversified portfolio which would be the answer to all your financial requirements. My friend Raghav didn’t plan an emergency fund or invest in health insurance as a result of which he faced a financial difficulty. You should learn from his mistakes. Your financial portfolio should be diverse. It should have an emergency fund and different goal-based funds so that every financial requirement that you face in life could be taken care of. Building such a diverse portfolio requires expert assistance which can be provided by a money doctor.

  • For tax planning

Tax planning is also an important task which should be done so that you can save taxes on your investments. If tax planning is not done, you lose your hard-earned money on paying taxes. Moreover, you cannot even judge the tax efficiency of your investments which is necessary for maximum returns. An expert financial advisor knows the tax rules and helps you plan your taxes to your benefit.

Given these reasons, what do you think? Don’t you require a financial advisor?

You do. Even if you are well aware of the financial world, you cannot keep abreast of all the developments and changes happening around you and understand how the changes would affect your finances. Even if search engines can give you knowledge, they cannot provide you solutions. For instance, you can find out medical treatments and procedures online, but can you perform them yourself? So, seek the help of professional financial advisors and create a long-term portfolio which would take care of all your financial needs and secure financial independence.

Mutual fund investments are subject to market risks, read all scheme related documents carefully.

 

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