There are many facets of life where, once we develop a baseline of core competency, we can conduct on our own without much peril of downside consequences. Investments tend to not fit in that category.
The Areas
These areas might include time management, socializing, meal planning and nutrition, household chores, and lifestyle choices.
However, other areas may have higher consequences if we don’t seek objective counsel from professionals.
For our wellness these may be medical, psychological, and spiritual.
It could apply for homes’ plumbing, remodeling, electrical work, landscaping.
Lastly, for our autos they would be repair or maintenance.
Financial Life
If we extend this paradigm to our financial life, we can consider that items such as budgeting and saving are easily self conducted. Those 2, while seemingly easy to perform, really come down to self discipline in the form of delayed gratification and in the form of selective spending.
But, the more complex any of the above aspects becomes, the higher the stakes are.
The Risk of Assumptions
Within the sphere of our financial lives, something as seemingly innocuous as insurance or employee benefits can sabotage our financial health and well being if we make assumptions about what is sufficient for us.
Also, our assumptions about our future financial needs lie here. Having conversations with our friends or reading a book about investment models is a great place to start, but not to end.
Making assumptions regarding what is optimal for any area of your financial life has possible consequences.
The Impact of Assumptions
They reverberate way beyond just that specific area. For example, self diagnosing your own tolerance for losing money in any part of your portfolio, whether for long term (eg retirement and education) or for short term (eg buying a home) goals.
This scales out to assumptions about what the right mix of asset classes should be (International emerging bonds? Domestic mid cap stocks?) as well as type (Mutual Funds? Exchange Traded Funds?).
Worth The Risk?
While you may get it right in self diagnosing what is best for you, you want to ask yourself what the consequences are of getting it wrong.
The value in working with an external 3rd party is not only getting objectivity about your goals. It’s also in having the conversations that challenge assumptions and explore areas of your financial life that you may not have considered or given much weight to.
Self diagnosis makes so much sense in some areas of our lives. But in order for any of us to live our best life, we need to be able to know where low risk self diagnosis ends and where external 3rd party diagnosis starts.
Next Step
Ready to take the next step and work with a fee-only CFP? Reach out to schedule a Discovery Meeting to learn more.