Using Technology To Take Care Of Your Finances

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Finance can be complex and a bit frightening for some people. But with all of the free information on the internet these days, combined with great software and apps, it is not as scary as it used to be.

Many times it does make sense to use a professional financial planner or advisor. Some situations are just too complex for the average layperson. But there are also a lot of people who can save a lot of money by creating their own financial or retirement plan.

Do-It-Yourself Planners
For those who love to be empowered and do things themselves, there are finally a few good options when it comes to retirement planning. It used to be that you had to hire a financial planner to do this for you and they simply created a huge report and mailed it to you.

Now people can use sophisticated software for retirement planning such as WealthTrace. This software is designed with the consumer in mind, but has a lot of the features that powerful advisor-level planning software has. This software is unique in that it doesn’t take shortcuts. It really does take into account all of the complex tax rules, different account types, and retirement income options.

This planning software also allows people to track their investment performance, fees they pay, and historical transactions. So it’s actually more than just a retirement planning or financial planning tool. It is a robust wealth management tool as well.

When You’re Young
Most young people do not have complicated situations and couldn’t afford a financial planner anyway. For them, many of the free apps and websites out there can suffice. There are a lot of good ones that can help younger people with their budgets, such as Mint, and can help them with loan consolidation.

There are also several apps out there that help young people get started with their investing, such as Acorns and Personal Capital. Personal Capital is very good at managing money for younger people and allowing them to track what is happening with their investments.

Determining If You Need A Financial Planner
Do you think you can go it alone or do you need a professional planner or advisor’s help? Here are some things to think about when making this decision:

Taxes
Taxes can get complicated quickly. Keep in mind that you can be your own financial planner while using a CPA to do your taxes. You don’t have to do both. But some people really want the two tied together and hire firms that have both financial planners and accountants. This makes sense for a lot of people and in this case you would want to hire professionals.

 

Complex Estates
If there is one thing where you need a professional, it is estate planning. This can get very complex very quickly, and you don’t want to make a mistake here. If you are wanting to set up trusts to avoid the large federal estate tax rate, it is best to reach out to professionals. One mistake can unravel the entire strategy and leave your heirs with a huge tax bill that could have potentially been avoided.

Wills
Many people create their own wills these days. It is not too complex and there are even free websites out there that can help. Some charge a small fee and it can be worth it. Usually there is no need to hire an expensive attorney to help you create a will.

Investing
This is where the financial industry is changing rapidly. Millions of people now manage their money or use relatively inexpensive “robo-advisors” to help them with their investments. Financial advisors can charge up to 1.5% of your assets if they manage the money for you. But with so much great information for free and websites that help you trade, for many people there is no need to spend the money on financial advisors.

But it is important to understand some important financial concepts such as risk, diversification, and market cycles. It’s easy to get into trouble if you don’t educate yourself at least on the most important subjects before managing your own money.

Insurance
Should you have life insurance? What about long-term care insurance? Be careful using an “expert” here because many insurance advisors are actually just salespeople wanting to sell you expense annuity products. Most annuities are expensive, confusing, and lock people in for decades with high fees and high surrender charges if they try to leave.

It is best to discuss insurance with an advisor who is not paid commissions to sell you insurance products. That way they are on your side instead of in it for the commission.

In Summary
It’s a brave new world where more and more people are taking on financial tasks that weren’t possible just 20 years ago. But today’s amazing technology and gobs of free information have changed this and there is no going back.

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