5 Reasons Why Guided Wealth Portfolios Are Ideal for First-Time Investors

What Are Guided Wealth Portfolios, and How Do They Work?

When you hear the term portfolio as a first-time investor, you might be concerned since you have limited investing experience. Luckily, there is an option that can help you build your portfolio from the ground up and guide you toward success with future investments. A guided wealth portfolio is an online program that uses technology to help you determine which investments are best for your goals. The way guided wealth portfolios work is through algorithms. These algorithms pick up on your current investments, your timeline, and the goals you want to have for your wealth. The leading sponsor of guided wealth portfolios is the broker-dealer firm LPL Financial LLC.

Why Is the Convenience of Guided Wealth Portfolios Appealing to New Investors?

A pivotal appeal to new investors for guided wealth portfolios is that they can access one without years of investing experience. Here are a few reasons why they are ideal for first-time investors.

1. Low Cost

Guided wealth portfolios work as an alternative to traditional investment advising, which can be expensive for the investor due to fees. While guided wealth portfolios still have fees, they are typically less and based on your assets. The typical requirement to start your portfolio is $5,000, which is enough to spread out across different investments.

2. Personalization

When you're creating your guided wealth portfolio, it is a highly personalized process. You know the financial dreams and goals you have in mind, and you know when you want to reach them. Guided wealth portfolios take all these things into account:

• Time Sensitivity. You know when you want your goals met, such as a graduation or anniversary. Whatever deadline you have for your investments will be put into your guided wealth portfolio to help you reach them on time.
• Ethics. Specific investment options exist that you may or may not want your money to go into based on your values. If you are concerned about where your money is going, make a personal list of where you feel comfortable investing your money.
• Taxation. Everyone has different tax liabilities. Since your tax bracket is unique, your guided wealth portfolio will consider that to ensure you can incorporate tax-efficient strategies for your investments.
• Goals. It's important to know what financial needs or wants you want before you begin your portfolio. Is it time for you to replace your car, which has been consistently breaking down? Are you ready to start searching for a new house? You need to consider and prioritize all these questions for how you want to invest.
• Milestones. While learning how to build your guided wealth portfolio, you must adjust it as necessary. For example, you'll want to let your financial advisor know if you are experiencing a significant life change, like a new baby or a family tragedy. These events could influence your financial well-being, so it is crucial to analyze how they could affect or change your goals.

3. Automation

Human error is one of the stumbling blocks we face when dealing with our finances. We tend to overspend or accidentally forget a payment. When forming a guided wealth portfolio, new investors benefit from automation. Having automated payments that can go directly into your portfolio is incredibly helpful to your accountability as an investor. Since algorithms play a vital role in automating your investments, it's important to know the different ways they work.

• Robo-advisors are standard automation with guided wealth portfolios. A robo-advisor is a person-less tool that gives you recommendations for managing your money. They typically use surveys to make your account personalized. Based on your answers, the robo-advisor uses algorithms to suggest strategies to meet your investment needs. Something to remember about robo-advisors is that they lack the professionalism of an in-person financial advisor. While this is a great tool, you should check in with your financial institution first to ensure you are on the right track with your chosen investments.
• Automation tracks things like tax-loss harvesting, which is when you try to offset your capital gains from your investments. Since automation can track potential outcomes, it can guide you in making decisions based on which taxes will have a more complex impact on your money and keep you from growing your wealth.

4. Guidance

When you begin investing on your own, there are so many questions, concerns, and loopholes you may need to go through to know which investments are the best for your strategy. Guided wealth portfolios provide you with the help you need, so you don't have to worry about managing your finances alone. There's nothing wrong with seeking financial help; guided wealth portfolios provide an easy way to get it 24/7.

5. Accessibility

Since guided wealth portfolios aren't limited to nine-to-five office hours on weekdays, they provide you with access to your funds at any time. Having a digital portfolio gives you the confidence you need to stay on track with your investments and reveals if any adjustments need to be made. This constant access could help prevent you from becoming passive and watch out for potential obstacles in your investment journey.

What Makes Guided Wealth Portfolios a Smart Choice for Building Long-Term Wealth?

If you're entering the investing world, you likely have a vision of how you want it to go. Your dreams of owning a new vehicle or taking an extended vacation are all long-term plans that impact your wealth and financial planning. Guided wealth portfolios allow you to achieve these ambitions by keeping you ahead of your finances to ensure you're taking the right actions to have the money you need to pay for them. Since technology helps these portfolios to be easily accessible, you are forming positive habits for managing your finances. This guidance will help you to be mindful not only of your investments but of your overall financial wellness. It's important to know that the National Credit Union Administration does not insure any investments.

Begin Your Investment Journey with Leaders Credit Union

Beginning your guided wealth portfolio doesn't have to be scary. While investing is an ever-changing financial activity, you can feel confident in pursuing your financial future using this tool as you pursue your goals.

Are you ready to start your guided wealth portfolio but have some questions? Leaders Credit Union has a team of Investment Champions who can help you choose which investment options suit you and your risk tolerance. To learn more about investing, check out our free Investing 101 Guide.

Disclosures

This site is for informational purposes only and is not intended to be a solicitation or offering of any security and:

• Representatives of a Registered Broker-Dealer (“BD”) or Registered Investment Advisor (“IA”) may only conduct business in a state if the representatives and the BD or IA they represent (a) satisfy the qualification requirements of, and are approved to do business by, that state; or (b) are excluded or exempted from that state’s registration requirements.
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