Though I have primarily managed my own money and investments thus far in my personal finance journey, I know this level of involvement is not for everyone. Somehow, my detail-oriented brain can handle the information despite its inability to understand math! Plus, I have been exposed to this content all day, every day by working at AAII for nearly seven years. At this point, I dream in financial metrics (a new genre of nightmare!). My goal for this blog is to show you how I make educated decisions in the hopes that you will follow along and learn how to make the right decisions for yourself. But what if you can’t wrap your head around all this stuff?
I have friends come to me asking how they can save better; expressing how they, too, are afraid of going to tax jail; or concluding that they just can’t keep financial information in their brain. Believe me, I’m with you! If you feel like you don’t have the time or capacity to manage your own investments, don’t try to force it. I don’t want you losing your hard-earned money in some stock that Robinhood thinks is a good asset for maybe five minutes. You deserve to put your money to work just like everyone else.
If you’re having trouble implementing your desired investing strategy, or you don’t have a strategy at all, it may be time to look to a professional for help. There are numerous types of financial advice that you can seek. I imagine my fellow beginners will have less than $25,000 or even less than $10,000 in investments. Though advisers usually only work with people who have more assets, a certified financial planner (CFP) or Chartered Financial Analyst (CFA) is also qualified to help you.
When you decide it’s time for a financial adviser, there are two main types: fee- and commission-based advisers. You will want to avoid the commission-based professionals, since they will likely try to recommend investment products you don’t need just to make a little extra money for themselves. The fee-based adviser will charge you either an hourly fee or a percentage of your assets. Echoing what Ramit Sethi said in “How to Get Rich,” go for the hourly fee that will only be charged when you meet with your adviser. Over time, even 1% is too much for your adviser to take from your earnings.
If you would prefer not to work with a human being, in true millennial and Generation Z fashion, there are also robo-advisers. Robo-advisers will implement an automated investing strategy based on your answers to a survey. With some, you can choose your level of involvement if you want to have more of a say in what the robo-adviser does for you. According to Ken Schapiro of The Robo Report, the best overall robo-adviser in the industry has also been around the longest: Wealthfront. Be wary of robo-advisers that have just been developed in the last year or advertise that they are using new artificial intelligence (AI) technology. It’s best to use something tried and true in this industry so you don’t get ripped off by the robots!
A good relationship with a financial adviser should strike a balance somewhere between a colleague and a friend, but you should not be asking your friends for investing advice. My parents instilled this in me from an early age, and I remember meeting with their financial adviser around the time I went to college. He was very friendly and helpful, but he wasn’t someone they met or were recommended to work with through a friend. They found him independently, he had verified credentials and already had a long-standing career behind him. You can use the database provided by the National Association of Personal Financial Advisors to find someone reputable. Be sure to also do your own research and read reviews of anyone you are looking to meet with. Good luck, and happy, safe investing!
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