Having a sound investment plan in place is very important. If you do invest and plan for the future, you could build a sizable nest egg that will allow you to enjoy financial freedom. When you are going to start investing, you will have the option of hiring a broker or investing on your own. There are several factors to consider when determining which option is right for your situation.
Investment Experience and Knowledge of a broker
When you first start investing, you may feel like you do not know where to start. As there are thousands of stocks, funds, ETFs, and other investments you can buy, choosing the right one can seem complicated. While experienced and knowledgeable investors will be able to make some good investment decisions, those that are less experienced should consider hiring a broker as they will be able to help you develop and implement a sound investment strategy.
Cost and Fees
As you are determining how to go about investing, factoring in the costs of each option is also important. When you invest on your own, typical online self-guided brokerage services tend to have very low commission rates today. However, if you hire a broker to help guide your investment decisions, you should expect to spend much more on fees. While brokers do provide value that could make it worthwhile, the fees you pay will dilute your returns.
One issue that some investors have when investing on their own is that they get more risky and aggressive than they even realize. This can include investing in securities and other investments that they may not fully understand. While this risk could lead to big returns for a while, it also comes with the chance for significant declines in value. A broker can help you to identify these risks and put in place a strategy to mitigate them.