What is the true value of a broker to manage your money?
The internet has changed the way we manage our money, and there is more information out there than we could ever need. This wealth of information available empowers us to take money management into our own hands.
For many reasons, this is great. But unfortunately having so much information at our fingertips can also provide us with a false sense of security. Just because we can do everything ourselves, it doesn't mean we should — especially when it comes to managing our money. For this reason, many people choose to go through a broker. A broker essentially acts as a middleman between you and your investments.
Here are some real advantages to getting a broker to manage your money instead of doing everything yourself:
1. Brokers are professional traders
This might seem obvious, but it's the most important point that many people often overlook. Just because you can do something, it doesn't mean you should do it. Brokers are professional traders and part of their job is to stop people from making bad investment decisions.
Although there is never a guarantee that investments will work out in your favor, using a professional broker who does this for a living increases your chances of things working out. If you're considering investing large amounts of money but you're not feeling entirely confident about it, using a broker is probably a good place to start to help you get on your feet. Once you've managed to get a bit of experience, you'll be able to step out on your own.
Before you decide which broker to use, it's a good idea to check out some reviews. You want to avoid websites that have been paid to advertise a specific broker, and instead choose one that allows you to read reviews from real people. Platforms like Investimonials are a great way to find out more information about specific brokers and read some genuine user reviews.
2. It will save you lots of time
Brokers are paid to carry out extensive market research for clients. Doing it yourself might save you some money, but you'll certainly have to spend more time going in circles and trying to figure things out — and likely questioning and second-guessing yourself, if you're new to investing — than you would if you hired a professional broker.
3. You'll be less vulnerable to scams
While managing your money yourself will be cheaper in the short-term, it could harm you in the long-run. If a good broker can help you to avoid unwise decisions or help you to spot opportunities, it is probably worth spending that extra money (which, face it, you'd probably lose anyway).
4. You'll learn faster and reach your goals more quickly
Spend time doing anything with anyone more experienced than you, and you'll learn something valuable. Hiring a broker will drastically reduce the learning curve — especially if you decide to go for a full-service broker who can offer you their investment advice and services in exchange for payment or commission.
A good broker will also take the time to ask you a lot of questions to make sure they fully understand your objectives, and work together with you to make sure you achieve your goals. They will also be able to clearly explain the reasoning behind any decision that they make.
5. They can help you with the paperwork
Many people don't think much about the administrative side of investing, but the reality is that if you're going to start investing, you'll be required by law to keep records of your investments, including your profits, losses, and trades. If you don't have much experience with this, it can seem overwhelming. Having someone to help you out can relieve a lot of this pressure and give you more time to focus on your investments.
6. It will make you a better trader in the long run
Working with a broker instead of jumping straight into trading and trying to do everything yourself will give you the opportunity to educate yourself on the ins-and-outs of the market. This will give you a better grounding and set you up for success in the long-run, as opposed to just diving in head-first without any background knowledge.
There are many advantages to using a broker — but remember, nothing is guaranteed when it comes to investing. Using a broker doesn't mean you'll definitely make money on your investments. It's not unusual for brokers to still make money, even if your investment falls through. And although brokerage fees have drastically decreased over the years, using a brokerage will still cost you more money than it would to make the investments yourself.
If you do decide to use a broker, make sure you thoroughly research your options before deciding which one to use. And remember — only ever invest what you can comfortably afford to lose!