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New grad - Is it worth getting a financial advisor? (Fee only or AUM?)

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  • New grad - Is it worth getting a financial advisor? (Fee only or AUM?)

    I just recently graduated dental school and will start as an associate in a month.  My salary will be $130-160K this year and should go up 3-5 years from now with the goal of owning my own practice.  I am wanting to invest 15-20% of my income which will roughly be 25K per year.  Is it worth getting a financial advisor right now?  I have talked to one that charges a fee-only $4,000 per year, but I am thinking it might be smarter to use an AUM or Vanguard advisor (.3%) now until my income increases.

  • #2
    Is your ultimate goal to do all of your own investing? If it is, I would throw your money into a total stock fund and spend the next 1-2 years learning about investing.

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    • #3
      The only advisor I ever talked to was at NWM, on referral from a friend. Luckily I had cold feet and never ended up letting them manage any of my money.

      Shortly after I found this website and bogleheads and have been doing everything myself ever since and never looked back.

      So, do you need an advisor? Probably not

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      • #4
        I don't think I want to invest the time to learn the ins and outs of investing.  My plan has always been to have a financial advisor.

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        • #5




          I don’t think I want to invest the time to learn the ins and outs of investing.  My plan has always been to have a financial advisor.
          Click to expand...


          Most of the people on this forum are going to encourage you to do it yourself because most here are DIY investors and also because it will save you money. It also isn't as difficult as most people think. I'm not up to date on the various AUM firms but I do know that paying $4k per year for investing $25k per year is not a wise move.

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          • #6

            • By the time you've learned enough to hire a reputable financial advisor, you'll have learned enough to do it yourself for cheaper.

            • No one cares about your money as much as you do.

            • The effective $/hr you earn managing your money (offset by the savings from NOT hiring an advisor) likely far exceeds what you make practicing dentistry.


             

            $25k/yr is a good start, but it's nothing extraordinary. Honestly, that amount is just what you need to set aside for retirement. So put it in a target date retirement fund and forget it. That's literally all you need to do.

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            • #7
              Where should I start if I want to invest myself?  I've been on this site a lot and read the white coat investor book, but there's so much info it starts to become overwhelming.

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              • #8
                So 19k 401k and 6k rIRA.
                What is an advisor for exactly?

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                • #9
                  “My plan has always been to have a financial advisor”

                  There are no “ins and outs” of investing. For investing, use the Vanguard service. You will end up with a four or five low cost fund portfolio. You just keep putting money in. A financial planner and good tax advisor (CPA) will give you a plan of attack.

                  I would suggest you rethink using a pure financial advisor to monitor your investments. The core plan is you put money in and the advisor takes money out.Use the advice of a planner and whatever professional you need. Pay for a plan and follow it. The investment advice at Vanguard will suffice. It’s not rocket science.
                  Basic preference, keep it simple.

                  https://www.whitecoatinvestor.com/forums/topic/j-l-collins-vs-wci/
                  Consider: US, , International , Emerging Markets, Total Bonds.
                  https://www.whitecoatinvestor.com/150-portfolios-better-than-yours/

                  Pick a 3-7 AA and you will be fine.

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                  • #10
                    After reading the responses I'm thinking of investing myself for the first few years until my income/assets increase.

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                    • #11
                      Good plan. Presumably, as an associate, you'll be employed. So you'll have access to a 401k? Put $19.5k in there every year, open an IRA and put $6k in there. Have the investments in both set as a Target Date retirement fund. Done.

                       

                      I'll PM you my address so you'll know where to send the $4k management fee

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                      • #12
                        Not trying to be rude, but $25k per year isn’t very much, so if you’re legitimately thinking about paying someone $4k (16% of your yearly contribution), you’re going to lose money from the outset. With that kind of “return” you’ll never catch up.

                        First you need to figure out what kinds of options are available to you. A Roth IRA for you (and spouse?) would be a good place to start, and then what, if any, options do you have through your employer? If they offer a 401(k) then you should do the 401(k) up to any match, Roth IRA for you (and spouse, if applicable), then the rest in your 401(k).

                        And for now (and maybe forever) some type of target date fund would be perfectly fine. I’d wager that you would do better over the long run putting all of your money into a target date fund and NOT hiring an adviser than hiring an adviser and getting into whatever funds they want you to be in (because their livelihood depends on it).

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                        • #13




                          After reading the responses I’m thinking of investing myself for the first few years until my income/assets increase.
                          Click to expand...


                          That's a start, but in the future what exactly do you imagine that your financial advisor will do for you?  Please be as specific as possible.

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                          • #14




                            Where should I start if I want to invest myself?  I’ve been on this site a lot and read the white coat investor book, but there’s so much info it starts to become overwhelming.
                            Click to expand...


                            There is so much info and 99% is irrelevant. That's the point of the financial services industry. Obfuscation.

                            It's not that difficult. Pick an index fund, put your money there, and keep reading. You can do this. If you can't, pick a fiduciary, fee-only advisor with no or low AUM fees to partner with. But have confidence in your abilities. It's much simpler than biochem.

                             

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                            • #15


                              I’m thinking of investing myself for the first few years until my income/assets increase.
                              Click to expand...


                              I fixed that line for you!

                              Hey, when you're a hammer, everything is a nail...and you've posted a question in the hammer shop of DIY personal investing.

                              As has been said above, why don't you just put the money into your (assumed) 401k and any extra into a bdRoth (Vanguard 2050 or 2055) for the next few years.  Do the WCI courses.  In a couple years if you still think you need an advisor, then yeah, do one of the fee-only dude/dudettes.

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