No matter what you think about money, the fact remains that money is a requirement in our society. You must deal with it in some form every single day.

This article is about when to seek assistance from a financial planner or financial advisor.

Do you:
•spend too much time worrying about your financial situation?
•feel overwhelmed and unsure of what to do with regards to your savings, taxes, investments etc.?
•not have the time to stay on top of your finances and investments?
•not have the desire to take care of the details with regards to your financial plan?
•continue to procrastinate in dealing with your finances?
•not save enough money nor have a plan for your saving?
•and your spouse fight way too much about money and finances?
•hate talking about and dealing with money?
•have a history of making poor investment decisions on your own (buying at the highs and selling at the lows)?
•want to retire in the next few years but you don’t know if you can or should
•own a small business and are not sure how to maximize your choices and what is legally required by you for your employees?
•not know the state of your finances?

Saying yes to even one of these questions can mean you should seek financial assistance.

Play to your strengths

This means you should do what you are good at and what you enjoy. Yes, we all need to do some things with regards to money to be financially responsible yet having assistance can pay off in so many ways – financial, time, less worrying and emotional well being.

Let the experts be the expert

For example, I hate doing my own taxes. Yes, I am capable of doing it but it is something I don’t enjoy doing for myself. It causes me too much angst and my accountant (hopefully) does a better job than I could. Plus I like knowing I have someone else in my corner if anything on my income taxes is questioned.

Another example of this relates to investments. We here at Main Street Financial Solutions are not big fans of investing in individual stocks. We do not have the time or the resources to research stocks like the experts who do it all day, every day. We believe in diversifying your risk with ETFs and mutual funds. We research and select mutual fund managers who have performed well in the past and that we trust. They are the experts at selecting the investments for their funds.

Here are some of the advantages of having a financial advisor and not doing it yourself:
•They help you see your blind spots
•They are objective and not too emotionally involved
•They help you know the different options so you can make a more informed decision more quickly and easily
•They can help hold you accountable so action is taken
•They are (hopefully) experts who you can trust
•They keep you on the right path and take care of details you don’t have the time or desire to do
•They help you clarify your goals and set up a plan for achieving them
•They help you know the relevant facts. With knowledge comes power.
•They can teach you and answer your questions so you feel more comfortable
•They have access to tools and information that you do not.

The Key Is:
How do you FEEL about your finances and your financial plan?

If you don’t like where you are financially and are having issues taking care of it yourself then I recommend you take some different actions. One option is to call an expert or your current advisor if you already have one.

Most people do not take action until they are so uncomfortable or unhappy that they finally do something about it. You don’t have to wait that long.

Many people don’t work with financial planners or advisors because they are afraid of being taken advantage of, don’t like sharing their situation with others and are afraid of judgment, or they think it is too expensive.

You should be able to find a financial planner or advisor you trust.

Whoever you work with should make you feel comfortable with their knowledge and demeanor. They should answer your questions and listen to you and what you want. Listen to your gut and work with someone you like and trust.

How much would you pay to have someone help you accomplish your goals if you knew that would GREATLY increase your chance of success?

We all waste so much money on things we do not need. Dealing with your finances is something you need to do. It is a wise investment to have a good financial advisor so you know you are taking smart actions and doing the right things. This will pay off in more ways than you can possibly imagine.

It truly is priceless.

As a financial planner I see over and over again people who put off or procrastinate taking care of their finances. Since it is not a fire with a firm deadline like taxes or something most people want to do, they just keep putting it off till another day.

For example I hear, “I will start contributing to my 401k next month” and then years later realize they still have not started contributing to their 401k plan.

(This is why the law changed to make employees automatic be “IN” the plan and you have to take action to not be contributing to the company retirement plan.) The government is try to save us from ourselves and our inertia.

We are all human.

We do the things we WANT to and HAVE to do. Although, even those things that we know we “should” do, like eat healthy, work out or set up a Will often get put off for another day.

We all have seen the charts that show if you put money away at the age of 25 and then start at age 35 or 45 how different the size of the numbers are. These charts are trying to create a sense of urgency. You will be thousands of dollars better off if you start saving when you are younger but I think mentally it still doesn’t feel “urgent.” Or maybe it just doesn’t feel real.

Coaches and financial planners are beneficial because then you have someone else holding you accountable and creating deadlines that force you to take action. Hopefully they also help make the process less overwhelming and painful.

I know from my own experience that having a scheduled meeting with my coach forces me to take action and complete promised work before the meeting or a deadline.

We all need to be financially responsible by taking care of the present requirements and planning for our future.

Most people say they want more money in their life. Why not take some action TODAY that will help make that happen instead of just wishing for it and not thinking it is possible?

What action can you take? What action would you like to take?

How can a financial planner (or anyone) help make this easier or create a sense of urgency so people do take action with regards to their finances?

I would love to hear your comments and ideas.

I am often asked the question, “Is real estate a wise investment?”

My answer to this question is yes, I believe in investing in real estate as an asset class for the long term.

But no, I am not a fan of investing in individual real estate properties as an investment.

I want to clarify; I am talking about buying real estate as an investment outside of or in addition to your home residence.

I know there are many people who may disagree with the opinions expressed here. Yes, there are exceptions to the general rule and if you know what you are doing, are an expert at speculative real estate and fixing up homes and comfortable with the inherent risk of owning property you can be successful at using real estate to increase your wealth. But I would say these people and situations are now the exception.

I always find it interesting that you hear so many stories about people that made tons of money in rental real estate, but rarely about the frequent disasters as people don’t talk about those as much. Just like you always hear about the amount of a gambler’s winnings but rarely the full amount of their losses.

One of the most important aspects of owning an individual investment property is understanding the numbers and viewing it as a business. If you are not sure what the Net Operating Income (NOI) is for the property you are considering, you should NOT buy it.

Here are the primary reasons why I do not recommend directly investing in real estate properties:

1) Real estate is one of the few investments that can cost you significant money and time.
Owning property as an investment can include such costs as: interest on the loan, closing costs, cost of finding renters, cost for months without tenants, cost of additional insurance, cost of repairs and upkeep on an investment property just to name a few. Many people do not consider all the costs of owning a real estate property.

2)Real estate is a leveraged investment which increases the risk.
Most people take out a loan to buy the investment whether it is a house, apartment building, or land. They are leveraging their initial investment and betting that the investment will be worth more. Leverage magnifies both gains and losses. (This is great on the upside, bad on the downside.) If the real estate market has dropped in value, you may not be able to sell the property for what you put in and you still have a cash outflow requirement every month.

3) A Real Estate property is not a diversified investment.
Most real estate is an investment in one property in one specific location. You are generally putting many of your eggs in this one basket which once again increases the risk. (Diversification is one of the most important tenants of investing. We at MSFS are fans of low cost mutual funds and ETFs due to the inherent diversification of this type of security.)

4) Real Estate is a highly illiquid and non-marketable asset.
Depending on the real estate market it can take a long time to sell a home. Even during good markets, it usually takes more than a month to sell and close on a real estate property. Anyone who has owned a home during a buyer’s market can tell you their nightmare and frustration of having the house on the market for over a year (or years).

How about vacation homes?
Even with regards to vacation homes, if you want a vacation home to enjoy as your vacation home, do it, if that makes financial sense for you. I view that differently than just buying a second house purely as an investment. The enjoyment and pleasure you get by having a vacation home makes up for the risks and costs of the real estate. The main objective of a vacation home is to be used and enjoyed is different than a property bought primarily as an investment. (Often times it is much cheaper and more convenient to rent a vacation house for several weeks a year than to have the costs of owning a vacation home.)

REITs
If you believe in and want to invest in real estate, I AM a proponent for Real Estate Investment Trusts or REITs. REITs are a security that trades like a stock and invests directly in real estate by owning a portfolio of properties and/or mortgages. REITs allow you to own real estate as an investment in this asset class with the advantages of:
1) Having an expert picking the properties
2) Without the hassle, costs and obligation of maintaining an individual property
3) Not incurring the individual property risk due to lack of diversification (because many properties, mortgages, and/or locations may be owned by the REIT)
4) It being a marketable asset that can be quickly bought or sold through a major exchange.
5) A REIT by itself is a diversified investment

Summary
Although I do not recommend buying individual real estate properties as an investment, real estate as an asset class usually improves your portfolio diversification since it has a low correlation to the general market. Therefore, generally I do recommend committing a portion of your portfolio to this class, not as a market call on this sector, but based on my belief in its ability to dampen the overall volatility of your portfolio in the long term.

Please note while I am not a big fans of REITs right now, especially commercial property REITs, I should be in the future as the economy improves and supply lessens due to lower prices.