retiring

[KennyG]

Whether you use an advisor or not, you need to educate yourself on investment options, tax impact etc. If you use an advisor, make sure he's really fee only. Investments with the highest commissions necessarily have higher risk or lower returns for the investor.

I've done almost all my own investing, focusing on index funds or broad based low overhead funds, both stocks and bonds, and have done very well. It's not that hard if you are patient and don't panic. I've invested with advisors recommended by friends a couple of times with small amounts to see how it would work and performance was very poor.

Some years ago (before it was practical to trade stocks yourself), I bought some stock which was highly recommended by a broker. When it tanked, I deduced that it was because of a transient condition and wanted to double down and buy more. The broker wouldn't return my calls (probably because there were so many irate clients) and I missed the chance to make a small fortune when it recovered, as I expected.

I have no interest in working with any advisors now. Because of the size of my investments, I regularly get solicitations from Fidelity and Vanguard (who I recommend highly) to use their free advisor services and I just politely decline.

 

[Chris616]

I think at least some financial advice is also warranted during the accumulation phase. After all, you can't spend it if you don't accumulate it.

I've known people who put most of their 401k money in a fixed low return fund because they don't want to lose their money. If someone walked them through what their expected long-term nest egg would be, they might develop more tolerance to risk.

I don't think that we have different opinions on this, Rick. I'm just saying that most people don't need to pay a financial advisor (either directly or via commissions) to be told how to accumulate a retirement fund, because the basics are pretty simple. If they're interested enough to consider getting financial advice it isn't difficult to educate themselves on the basics.

What you've mentioned brings up what I see as a looming issue coming down the pipeline, though. For many in my parents generation, working for a company for most of their life meant a pension (assuming that the company stayed solvent). Most companies have gone away from "defined benefit" pensions to "defined contribution" systems where they and the employee contribute and it's up to the employee to manage that money. The problem is that many people are ill-equipped to manage their own investments and will do things like the example you gave. They might be a great plumber, engineer, nurse, etc., but most people just don't have an interest in learning about how to invest their money to provide for their retirement income.

Chris

 

[Travelover]

My experience is that by the time you learn enough to competently evaluate a financial advisor, you know enough to do it yourself. My advice for anyone who has no interest to learn would be to go to Vanguard, Fidelity or Schwab and just invest in a Target year fund. You choose the year that you will probably retire and the fund balances the stock / bond ratio year to year with an eye on the end date. No excessive fees, automatic balancing. At Vanguard you can even move it to retirement fund where they will manage the withdrawals and send you regular checks.

 

[bird dogger]

My experience is that by the time you learn enough to competently evaluate a financial advisor, you know enough to do it yourself. My advice for anyone who has no interest to learn would be to go to Vanguard, Fidelity or Schwab and just invest in a Target year fund. You choose the year that you will probably retire and the fund balances the stock / bond ratio year to year with an eye on the end date. No excessive fees, automatic balancing. At Vanguard you can even move it to retirement fund where they will manage the withdrawals and send you regular checks.

Travelover, that's another excellent suggestion/option for those that want very low fee and hands off investing. I forgot about those. I think you can even choose your investing style in those, whether it be safe, moderate, aggressive, etc. Those three firms you mentioned are all high class firms for any investor from novice to expert.

I don't know if its been mentioned earlier, but I remember as a youngster going to some investing classes within those continuing adult education courses. You might pay a very small fee for a 1 to 5 night class in the evenings. The ones offered by maybe a math guru teacher or similar, at least not anyone that's associated with a brokerage firm, etc. They're completely unbiased and are just there to give you the basics and explain the ins and outs of the different things that make up the investment world. They'll (the good ones) will tell you what to watch out for, what questions to ask a prospective advisor, what fees to expect or avoid, and just about anything you need to get you going on your own. And everyone in the class is a greenhorn and there to learn so you don't feel out of place or behind at all. at today's prices they might still be well under $100. Money well spent for some good unbiased education starting form ground zero. A call to the local high school, chamber of commerce, college should turn up something on that order.

 

[goeduck]

My advice for anyone who has no interest to learn would be to go to Vanguard, Fidelity or Schwab and just invest in a Target year fund.

I do not have experience with Schwab but I can attest to both Vanguard and Fidelity. Both very good investment houses. I also like T Rowe Price.

 

[dnw64]

Travelover, that's another excellent suggestion/option for those that want very low fee and hands off investing. I forgot about those. I think you can even choose your investing style in those, whether it be safe, moderate, aggressive, etc.

To make a target year fund more or less aggressive you just choose a target date sooner (less aggressive) or further out (more aggressive) than you actually plan to retire.

 

[RickB]

This is one of the more informative and generally on point TBN threads I have participated in in a long time. No matter what your experience level I bet you read SOMETHING here and thought; hmmm.

 

[Travelover]

I don't know if its been mentioned earlier, but I remember as a youngster going to some investing classes within those continuing adult education courses. You might pay a very small fee for a 1 to 5 night class in the evenings. The ones offered by maybe a math guru teacher or similar, at least not anyone that's associated with a brokerage firm, etc. They're completely unbiased and are just there to give you the basics and explain the ins and outs of the different things that make up the investment world. They'll (the good ones) will tell you what to watch out for, what questions to ask a prospective advisor, what fees to expect or avoid, and just about anything you need to get you going on your own. And everyone in the class is a greenhorn and there to learn so you don't feel out of place or behind at all. at today's prices they might still be well under $100. Money well spent for some good unbiased education starting form ground zero. A call to the local high school, chamber of commerce, college should turn up something on that order.

Some of those adult Ed classes are good and some are taught by people in the business trying to find customers, so if they offer more help outside of class for a price, run. One excellent source of self education is the Bogleheads site. There is a ton of information on investing as well as a forum. John Bogle started Vanguard and the Bogleheads are people that prescribe to his low fee, indexing philosophy.

 

[Jstpssng]

This is one of the more informative and generally on point TBN threads I have participated in in a long time. No matter what your experience level I bet you read SOMETHING here and thought; hmmm.

My employer sponsored 401k allowed me to choose 1 of four plans, or do it ourself. After finding out last fall that my fund actually went down, while the stock market was doing well, I moved 1/2 of my account into the safest slot that I could find and put the rest into Vanguard, based on comments made by some of the more savvy members here on TBN. We just changed providers, apparently I was not the only dissatisfied participant.(Wells-Fargo... go figure. ) I havent had time to log in and see what it looks like.

 

[Travelover]

My employer sponsored 401k allowed me to choose 1 of four plans, or do it ourself. After finding out last fall that my fund actually went down, while the stock market was doing well, I moved 1/2 of my account into the safest slot that I could find and put the rest into Vanguard, based on comments made by some of the more savvy members here on TBN. We just changed providers, apparently I was not the only dissatisfied participant.(Wells-Fargo... go figure. ) I havent had time to log in and see what it looks like.

Not all 401k plans are employee friendly. Some have high fees and bad choices. Until recently, employers did not have to reveal charges, so it pays to ask questions and look for low cost index fund options.