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The choice between ‘fee’ and ‘free’


The choice between paying a performance fee or free is usually not a difficult choice!

We understand it.

Plus, some things are much more satisfying doing them yourself than paying someone else to do them. But when it comes to managing your investment portfolio, the choices you make today don't just affect now, tomorrow or the weeks to come. These are decisions that can determine your long-term financial health. We're talking about the impact on the rest of your life.

A financial advisor can help you invest strategically and make a thorough plan. Of course, getting help costs money, and a performance fee can be a waste, especially if you're not sure what you're paying for. But when it comes to your investment portfolio, it's usually more expensive to take the do-it-yourself route. The costs of managing your portfolio yourself are often higher than you think.

Here are four reasons why we see expat investors losing money:

1. Investing Without Expertise

Suppose you have a euro, and you toss nine times. All nine are leading. On the tenth coin toss, someone asks you to bet on it.

If you don't know anything about probability, you might want to take a chance. You may think that because the last nine times were heads, it will be heads again. Earn easy money! Or you would pick coin because you think coin should really fall right now.

But if you do know anything about probability, you would know that regardless of the results before or after, the probability of this coin toss is still an even split - 50% heads, 50% tails - so you shouldn't be taking that bet at all.

If you base your investments on how those investments have performed in the past - "past returns" - then that is the "buzz because it's always been upside" reasoning. When you make investment decisions with "your gut", the reason is "coin because it is long overdue for coin".

With an advisor by your side, you would have a smart, supportive plan with a much greater than 50/50 probability to help you decide.

2. No Maintenance

If you were managing your own portfolio, how much time would you spend on it each week? Be sure to factor in all the time you would spend educating yourself on the different investment options available to you. Oh, and all the tax implications and optimization strategies for each potential investment. And after all that, are you prepared for the ongoing maintenance and adjustments you'll have to make to keep that portfolio on track, healthy and growing?

A good consultant should be able to explain everything to you in much less time than it would take you to figure it out on your own.

3. Gamble With Your Future

With cryptocurrency, meme stocks, and NFTs dominating financial conversations today, one might believe that the markets are experiencing a gold rush of sorts right now. Perfect time to get in, right?

Not so fast. This is not Vegas, and your financial future is not something to gamble with. No one really knows how these new asset classes will fare in the long run, at least not yet. With an experienced advisor you have in-depth knowledge and experience to ensure that you are still confident about your core investments if you do want to go on an experimental tour.

4. Procrastinate While Inflation Gains

In uncertain times, putting money aside for the future can feel like a luxury. But cash - money you haven't invested, or perhaps money sitting in a savings account - is losing purchasing power every day.

Working with a financial advisor can give you the expertise and he can also ensure that investment decisions are made rather than delayed.

Your time is precious

Building a house, fixing your own plumbing or car... if you've spent 15 minutes scrolling through Instagram or TikTok, you know you can learn pretty much anything yourself. And at Expat Wealth At Work, we agree. With enough research, tools, and time, we know you can probably manage your money just fine on your own.

But that's about it - it's about research, tools, and most importantly, time. If managing your own portfolio is worth the time it takes to learn all the ins and outs or subtleties to get the job done right, then we say go for it!

But if you choose the do-it-yourself route because of the potential cost of a consultant, then we recommend that you read this blog again!

Expatriate clients are cost-sensitive, and an expert financial advisor will prove their worth - whether it's in building your pension pot, saving you costs during the process or ensuring that your money works harder and lasts longer. Let's talk more if you're interested: hello@expatbeleggen.com