Avoid Guarantees and Promises
One thing you might not know about financial advisors is that their knowledge on the market is about the same as yours. Unless they are participating in insider trading, they cannot predict the market. So you should be wary of anyone who promises you guaranteed returns.
There are very high chances that they might be selling you something. The market is volatile and has diverse factors that can affect it. So if you get an offer or investment advice that sounds too good to be true, it is. Don’t be swayed by promises and guarantees of high returns, and invest wisely.
Pay Your Debt and Stay Out of It
An advisor’s goal is to grow your investment portfolio as it also keeps them paid. Thereby, they are not likely to advise you to pay or pre-pay your debts as it might affect the investments. They will be more concerned with maximizing your investments and minimizing the risks.
If your investment is on track, you should pay your credit card debt and/or car loans. Depending on several facts, including investment allocation, risk tolerance, rate of interest on the debt, it might make sense to pre-pay the debt. It might not align with the interest of your advisor in growing your AUM, but you should consider paying your debt.
Diversify Your Retirement Income
Basically, don’t put all your eggs in one basket. There are several ways to invest aside from the stock market. It is very beneficial to have a diverse source of income for your retirement. This can range from rental property, small business, self-employment, or pursuing a hobby.
This has its own set of challenges but pays off in the long run. This advice is hardly given by many advisors since it compromises the AUM that they are managing by lowering it.
Your advisor ultimately aims to keep your AUM high and stable, therefore, they will not recommend anything that takes money away from it. Diversifying your retirement income can increase your income and lower risks as well.
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