Becoming Your Own Financial Advisor – Part 2


In part one of our series on learning how to become your own financial advisor we talked about the importance of thinking about and writing down specific and attainable financial goals.

You did do that right?

Well if you didn’t, hopefully you at least have begun to think about it and do your research.

In part two of our series on becoming your own financial advisor, we’ll explore how to set up an investment strategy that will help you achieve your goal.

The Next Step – Your Investment Strategy

As you might suspect after defining goals and calculating how much money you need, we now need to figure out how to make it all happen by creating an investment strategy.

An investment strategy is your blueprint that guides your decisions based on the parameters you set in your goals. It also includes considerations for your risk tolerance, and future capital needs.

How to create a rock-solid investment strategy:

  • Do it now. Seriously. Get. It. Done.
  • Leverage compounding as part of your strategy.
  • Regard anything with high costs/fees as a suspect investment. These types of investments can kill your bottom line
  • Diversify, Diversify, Diversify

Let's discuss diversification.

One of the best ways to reach your financial goals is to put your money in a variety of investments balancing risk and return. This builds in “fault tolerance” to your investment strategy.

Consider this – If you are all in for one stock, what happens when that company goes belly-up? Ugh.

Best practice would be to diversify within asset classes. You could, for example, choose an index fund that covers a broader swath of the market rather than focusing on just one or two stocks, and goes across asset classes, by diversifying your investment by placing a percentage of your savings in each of the asset classes, i.e. stocks, bonds and cash.

It goes without saying that the more educated you are about your investment options, the better decisions you make.

We are going to take a deeper dive and look at some of the retirement and tax-advantaged accounts that are available for incorporation into your investment strategy.

So, let’s look at some common types of investments. We’ll also look at some tips for picking assets so you can achieve your investment goals.

As a recap – you’ve pondered and established goals, plotted your time horizon and risk tolerance, done you due diligence in researching your options and finally made your investments.

It’s time to kick back and relax, right?

How to manage your investments

Hold on there, Tex!

You’ve done some good work, but in order to maximize the performance of your all of your investments and ensuring you’re on track with your stated goals you need to establish a way of monitoring your portfolio to make changes and reallocate if and as needed.

Sure you can keep an eye on each investment by meticulously reviewing your statements. You can track ticker symbols. There are also a couple of other options worth considering.

How about using your mobile phone?

You can harness the power of your Android or iOS mobile device by using a mobile app designed specifically for the purpose of tracking investments. An ever increasing number of apps are available that provide up-to-the-minute details on all your investments in a unified display. You can stay always connected with how your portfolio is doing.

A lot of these apps also automatically sync with your brokerage, IRA and 401(k) accounts.

Portfolio management apps

It's up to you to choose which app best suits your needs. But the following are several of the apps which I've found to be superior than others.

  • CNNMoney Portfolio
  • Personal Capital Money and Investing
  • SigFig Investment Optimizer
  • Ticker: Stocks Portfolio Manager
  • USA TODAY Portfolio Tracker


Another great way to stay on top of your investments is to use a robo-advisor​.

While robo-advisors are relatively new, these online weath management services can be ideal for self-directed investors.

Robo-advisors provide automated, algorithm-based portfolio management advice using the same software that traditional advisors use. They are typically low-cost with low account minimums.

There are about two dozen robo-advisors, and their business models, plus their specific offerings, all differ. For more information on robo-advisors see my in-depth article on them).

  • Some robo-advisors don’t charge a fee for smaller portfolios – but do to manage greater asset sizes.
  • Some robo-advisors are completely automated, while still others use a combine automation and access to specially trained human financial advisors.

Here are examples of robo-advisors

A lot of robo-advisor functionality is being integrated into many traditional money-management and investment firms.

Again, for more in-depth information on robo-advisors and their pros and cons you can check out my previous article that discusses these services.

Developing Your Investment Strategy

You have to be willing to put in some elbow grease to become your own financial advisor. It’s imperative that you understand the various types of retirement accounts and investment vehicles before risking investing any money

Always, always do your homework and research your options. Learn from your mistakes and failure and don’t rest on your laurels but strive to get even better with your successes.

Just because you are your own FA doesn’t have to mean you go it alone.

You might be good at picking stocks but your understanding of tax laws might, well, suck. And honestly picking stocks is a loser’s game.

You should always consult with a qualified tax specialist to make sure you understand the tax implications of your investment decisions. You need to make sure that you report everything appropriately.

Don’t let your enthusiasm trip you up. There’s nothing wrong with –and it’s good to do- consulting with a professional advisor, whether it’s just once, or even occasionally.

There’s no shame in asking for help If you have questions or are unsure about a strategy. Or even if you just want a little hand-holding. Be sure however that you hire a fee only advisor.

Approach your financial health with intention and deliberate action. Successful investing – and meeting your short- and long-term financial goals – requires you to be all in and steering the ship.

To read up on some investment options check out part 3.

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