Financial planning requires a certain level of understanding of taxes, investments, and budgeting. Some people might find it easy to understand these concepts, but for others, especially beginners, it may be essential to seek help from a financial advisor to understand their finances and plan them in a better way. Often, even though you have an understanding of how taxes, personal finance, and investments work, you might still end up in a situation where you need the expertise of a financial advisor Honolulu.
But when is the right time to hire a financial planner? Let’s look at some key events when it might be ideal to seek expert help.
The ideal time to hire a financial advisor is when:
You’re Beginning To Consider Retirement
Most people work for years with one core goal of saving up enough for a comfortable life after retirement. There are various avenues of investment to help build a retirement corpus, but it takes the help of a financial advisor to help you figure out the right use of money to make your retirement fund. Hence, you should seek a financial expert when you start to think about retirement.
You Earned A Pay Hike
Earning a pay hike at work is a reason to celebrate. But after the initial excitement, there is a dilemma of what you would do with the extra funds. In case you have debts or an obligation to settle, then you could redirect your funds to those areas. However, if you are unsure about where to put the extra funds, you should take the help of a financial advisor. Financial advisors have years of expertise to rely on, and thus they can assist you in utilizing the raise to increase your long-term wealth.
You’ve Received Windfall Gains
When you receive a large sum of money in the form of windfall gains, you may be unsure how to make the best possible use of those funds. For example, if you receive a hefty inheritance, you will have to handle large sums of money. This is a great time to seek a financial planner so that you can get all your queries sorted. Without expert guidance, there is a risk of making uninformed or hasty decisions.
You’ve Just Earned Your First Paycheck
Under some circumstances, the best time to hire a financial advisor is when you get your first paycheck. If you have a high-paying job that leaves you with a large sum of money at the end of the month, then you may find it difficult to manage the money on your own. The expertise and knowledge of a financial planner can help you make the right investment decisions and can also help you with the tax planning process.
You’re On The Threshold Of A Major Life Event
Major life events require you to take a closer look at your finances. For example, if you have a baby, start your own business or even lose an earning member of the family, you will find that your money needs to be overhauled. During such times, financial advisors prove to be invaluable because they can offer you the assistance and guidance you need in order to navigate these events.
You Want To Reduce Your Tax Burden
An increase in pay, a change in the tax regime, or a capital asset sale could quickly increase your income. Higher-income means a higher tax burden, making it necessary to hire a financial planner. As per your taxpayer profile, a financial planner can help you reap all the benefits available for you and reduce your tax liability considerably.
Pros And Cons Of Hiring a Financial Advisor
A financial advisor helps you in making the right investments and handles accounting and other business operations. They ensure that your finances are managed properly since they’ll take that responsibility off your hands.
The biggest challenge for incorporating a financial advisor is that they might not have your business interests in mind. Another drawback is that when you don’t have enough cash, you may not be able to hire a reputable financial advisor since most of them consider your business portfolio.
However, hiring a financial advisor may be a good idea if your finances are complicated. A financial expert will draw up financial plans and recommend investment products that suit you best. They will help you manage your finances and align your investments with your risk profile and goals. This, in turn, will enable you to reach your goals as planned and on time.
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