Announcement

Collapse
No announcement yet.

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

Collapse
X
Collapse
First Prev Next Last
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • StarTrekDoc
    replied
    Congrats on being a taxpayer!

    Doesn't sound like debt at all and saving 20% from the very start. Win and win. Last two wins....live like a student still to keep expense creep. And invest easily in a target fund for the first years while getting your financial legs.

    You dont need a CPA or financial advisor doing a 1040EZ or putting 25k into a target fund.

    That said, that's only your first years. Develop your targets for retirement and setup budget goals to get there and all the big commits inbetween.....house kids college fund marriage fund.....that will be your roadmap.

    Do all that. Then if you find that your savings rate will outpace your budget or if you want more than a simple 3 fund index system that's boglehead based because you want to be more actively engaged, then that's the time to get a FA fee only to help massage your game plan.

    Leave a comment:


  • Lordosis
    replied
    If you are a W2 employee you cannot get your own 401K.  You are stuck with the one they provide for your.  It is still very beneficial to use it even without a match for the first year.

    95% of the work of investing is done up front.  Once you learn what you need to know keeping it up over the years is trivial.  Even the busiest practice owner can spare a few hours a year.

    You seem a good candidate for JLC stock series.  https://jlcollinsnh.com/stock-series/

    If you have some time give his blog a read.  I like his simple approach.

    That being said not everyone wants to DIY.  If you really just want to hand it over to someone when you get to that stage make sure you understand the fees.  Understand that with AUM you will be paying tens of thousands a year that could have been working for you.  It is pretty hard to screw up investing so much to justify the fees.

     

    Good luck

    Leave a comment:


  • DDStigers
    replied


    401
    Click to expand...


    My employer does not match my 401k until after the first year.  I don't think I'll be working for them for more than 2 years.  Should I still use their 401k plan or get an individual one?

    Leave a comment:


  • DDStigers
    replied




    “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.
    J. L. Collins vs WCI


    Consider: US, , International , Emerging Markets, Total Bonds.



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


    Would picking one of these 150 portfolio's and duplicating it be wise?

    Leave a comment:


  • jacoavlu
    replied
    Asset allocation. Age in bond or age minus 10 or 20 in bonds. Depends on your risk tolerance. The remainder in equities, with 30-40% of that international. Three funds. Use Vanguard. That’s it.

    Leave a comment:


  • DDStigers
    replied







    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.
    Click to expand...


    Asset allocation.  Choosing the right investments.  Once I own my own practice I will be spending most of my time running that and don't want to spend extra work and time researching the best investments.

    Leave a comment:


  • gap55u
    replied
    I went from DIY to financial advisor back to DIY.  If I had this site, or someone had pointed me to the three fund portfolio, I would never have used a 1% AUM financial advisor.

     

    They were a fiduciary, they just didn't tell me everything (like, they didn't discuss a back door roth until I learned it here, and that was one of the things that led me to question what I was getting for 8K/yr).  They were helpful for getting advice/hand-holding along the way about stuff like a financial plan, 529, life insurance, disability insurance.  But I started with them after I'd weathered a bear market, so I didn't really need the behavioral finance part of "don't chase stocks/returns, don't panic when the market goes down"

     

    In your case, I heartily agree with vanguard's 0.3% service, if you don't want to just do it yourself.  For the amount you're putting in and your stage in life, Target Date is just fine.

    Leave a comment:


  • Lordosis
    replied




    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).
    Click to expand...


    MaxPower makes a good point.  If you invest that 4K in something reasonable you would have to make a lot of other investing mistakes to make an advisor worth it.    A lot of us started where you are and decided to DIY when you see the crappy other options.

    In your case it is pretty easy since you can likely get everything in a tax advantaged account.  If you really want to set it and forget it just pick a target date fund as mentioned above.  You will still be ahead of 75% of everyone else.  Savings rate matters so much more in the early days!

    Leave a comment:


  • jacoavlu
    replied
    Advice here is free. Whenever you have a question about what to do, first, do nothing. Come here and ask. And just hang out and read. You’ll learn quick and realize it’s not that difficult. Your goal is to be average, control what you can (fees).

    Leave a comment:


  • nephron
    replied
    4K is excessive, but I wouldn't rule out the benefits of meeting with a one time fee only adviser.  Sometimes the amount they can save you (eg making sure that you are in low cost index funds, assessing your risk tolerance, making sure that you have the right insurance, etc) can easily make up the difference of paying their one time fee.    It's usually the stuff you don't know about that ends up costing you in the long term.  That being said, if you are willing to read a few good personal finance books, you probably could learn enough to do it yourself.  I just would be cautious about trying to do it yourself if you don't really know how to do it yourself.   I was looking for whole life policies after listening to a "personal finance" radio show (the Ray Lucia show) and had already met the northwestern mutual guy that my boss used to purchase her policy when I met with my fee only adviser.   Wouldn't spend more then 1 K for it though, it shouldn't take them more then 3-4 hours of their time to go through your assets.

    Leave a comment:


  • G
    replied


    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.

    Leave a comment:


  • PhysicianOnFIRE
    replied




    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.

     

    Leave a comment:


  • AR
    replied




    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.

    Leave a comment:


  • MaxPower
    replied
    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).

    Leave a comment:


  • octopus85
    replied
    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

    Leave a comment:

Working...
X