Lesson #129-When to work with an advisor and when to invest by yourself
Whenever I receive feedback from listeners of the show one of the main topics they would like to cover more is investing. I'm always a little hesitant to discuss investing because I am not a registered investment professional.
Yes I can speak to the differences between a ROTH and Traditional account, a 401(K) and an IRA, stocks vs. bonds vs. cash, and the importance of diversification. But not what specific investment is right for you.
I've attempted to learn more and self-educate, but the thing with investing is that if you search around people who are actually qualified, you'll see that it seems like everyone has a different approach to investing. This makes it hard to decipher which is the right way for you.
Of course there is no one right way, but how do you determine whether an investment is right for you or not? Today we are focusing on whether to invest yourself or hire a CFP or advisor to help you choose. Based on a recent study, it's about 50/50 on whether or not you invest or have an advisor help you.
For those of us who invest on our own, we mainly do it by default with our 401(K) at work. We have no clue what to invest, so we pick a few funds and let our co-worker tell us about what they invest in. But there are legitiment reasons to invest in yourself, some of the reasons include:
Again to me, there isn't a one size fits all approach to investing. There are legit reasons to go at it alone and equally legit reasons to have some advice. Of course it will cost you something to invest with an advisor, but if you aren't investing or are investing in a product that is under performing, isn't it worth paying someone to help give you an even bigger return down the road?
Paying a fee isn't necessarily a bad thing, if it is helping you to invest more each year, increasing your rate or return, causing you to knock panic and withdrawl everything over a news event it it well worth it. The fee is bad however if the advisor is just filling out paper work and not really teaching you about investing.
Whenever we do invest in something, either on our own or with an advisor it's important to know
If you know those things with investing you are well on your way. Again I don't think there is a right way or a wrong way. It all depends on your comfort level and knowledge of investing.
In the past Lisa and I have used an advisor to help us out with selecting funds, and we're not against doing it in the future.
Right now we investing primarily in low cost index funds on our own which keeps the costs down and makes whatever the market is doings. But that's just us.
My hope is this lesson provides you with knowledge to decide whether to invest on your own or hire an advisor.
Today's quote of the lesson is brought to you by Audible.com
“It's good to have money and the things that money can buy, but it's good, too, to check up once in a while and make sure that you haven't lost the things that money can't buy." – George Horace Lorimer
Enjoyed this lesson? If so, please consider taking a few minutes to leave a review of the show either in Stitcher SmartRadio, or iTunes. For a step by step video of how that works, please watch this video on how to leave a review in iTunes.
You can subscribe to future podcasts through Stitcher SmartRadio or iTunes, Google Play or by downloading the iPhone app. Or you may listen to the podcast on the JW's Financial Coaching Facebook Fan page.
It is Free