Investing 101: Seeking Professional Help

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Maybe you’ve read my last four posts and still aren’t sure you want to tackle investing on your own, or maybe you’ve already got some investments in a managed account somewhere, or maybe you’re already a bazillionaire (in which case, please stop reading this blog and go do something useful), but I’m sure some of you are still thinking that you would rather hire someone else than have to think about all this gobbledygook on your own. You know what? That’s OK. This is a space of no judgments. (Ok, maybe a few, but not on this particular topic…)

But how do you decide who can help you? Sadly, there’s no magic machine that will make money for you.

Your best bet, hands down (apart from doing it yourself, of course), is to hire a fee-only advisor — someone who you pay a flat fee to give you advice. I know this sounds cuckoo given my previous rants about fees, but think of the alternative: if you’re not paying them a fee, how do they make their money?

Yep, they work on commission. Great for them, but big mistake for you.

Many “financial advisors” (which go by many names, including stockbrokers, broker/dealers, advisors, and planners) earn money based on what products they sell you. Seem like a conflict of interest? It is. The crazy part is that this is how the system is designed to work. Disclosures of fees are often limited and confusing, and you the investor are often left thinking that the “advisor” is working in your best interest. They’re not.

Instead, broker/dealers and the like must meet a standard of “suitability” — is the product they’re selling “suitable” for your needs? What that means, I have no idea, nor do they, nor do you. Unlike attorneys, for instance, there is no required “fiduciary” standard that says your stockbroker should recommend investments based on YOUR best interests rather than theirs.

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Investing 101: Be Your Own Mechanic

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I was driving back from a camping trip last weekend with a girlfriend who told me a story about how when she was in college she and another friend of ours would do their own car repairs. They bought a manual, borrowed tools from our friend’s dad, and figured out how to change their oil, replace brake pads, and repair an alternator. To say the least, I was impressed. I don’t even know what an alternator is!


Needless to say, car repair DIY is not my specialty, so if that’s what you’re here for, you made a wrong turn somewhere. But as we were talking about all things life — cars, houses, money, emergency preparedness kits (for reals) — I realized that the apprehension I feel about trying to repair an alteriminator (that’s what it’s called, right?) is similar to what many of my friends feel about finances and investing. And I suspect these are similar apprehensions in that they’re really not so scary once you dig in.

Once I knew I wanted to invest in something other than the underside of my mattress, figuring out *how* to do so was a surprising hurdle. I had a 401k through Fidelity from my workplace and a Roth IRA that my mom had helped me set up in 2001 through Edward Jones, and I had heard of investment banks like JP Morgan and websites like eShares, but I didn’t really understand what any of these places did or how they were different. I was overwhelmed and ultimately paralyzed by the range of choices, so I did nothing.

This all changed in 2010 when I traveled to South America Continue reading Investing 101: Be Your Own Mechanic

Investing 101: Allocation, My Ass(et)!

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Figuring out an appropriate asset allocation can be one of the most confusing and stressful parts of investing, and its intimidation factor seems to keep many people from investing at all. I’m here to tell you a secret as a new investor: you don’t have to worry this — if the fear of finding the “right” allocation is holding you back from investing, it’s OK to skip this step.

(As I hear the collective gasp from financial advisors everywhere, this is probably an appropriate time to remind you that I am not a certified investment advisor, accountant, financial planner, or anything else of the sort, and the advice I’m giving here is what’s worked for me. It might not work for you — but what I know definitely won’t work is hiding your money under a metaphorical mattress where it has no room to grow.)

There are so many moving factors that can make investing complicated — different accounts (for example, I have a Roth IRA, a 401(k), and a brokerage account); different goals (retirement savings, stable investments to beat inflation with my emergency fund, and making more short-term cash); and a gazillion different investment choices (mutual funds, bonds, individual stocks, ETFs). If this feels paralyzing, that’s normal. But you know what’s even more paralyzing? Letting your money sit in an account where it does nothing except lose value over time due to increasing inflation. Continue reading Investing 101: Allocation, My Ass(et)!

Investing 101: Speaka da Lingo

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True story: I came home the other night and sat down to eat dinner next to my roommate. Instead of asking me a normal question like, say, “How was your day?,” he says, “So are you feeling bullish or bearish about the stock market?” I about spit out my metaphorical soup — pretty sure it’s the first time I’ve been asked that question. Lest you think he is some Wall Street finance douchebag, no. He studies forest fires … not exactly db material.

The cool thing about his question was that I actually knew what he meant, and I had an answer. Ten years ago I would have just looked confused and responded with my best bear impression. (OK, it might be possible I still did that.) I know that investment vocabulary can be confusing and intimidating to the uninitiated, so hopefully this list will help clarify some common terms you might see floating around on places like, say, this blog. At the very least, you can confidently say you speaka da lingo:


I don’t, however, suggest you walk into your nearest stockbroker’s office and bust into song. You will probably get arrested and the last thing I want is that kind of guilt weighing on my cheesy little shoulders. Try some of these vocabulary words on for size instead … Continue reading Investing 101: Speaka da Lingo

Investing 101: Getting Ready

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Welcome to Investing 101! This will be a five-part series covering (1) Getting Ready (2) Basic Vocabulary, (3) Asset Allocation Strategies, (4) Mechanics, and (5) Seeking Professional Help. Please be aware (BEWARE!) that I am not a certified investment advisor, accountant, financial planner, or anything else of the sort. (I am, however, trained to write very thorough disclaimers!) The advice I’m giving here is what’s worked for me, but only you can figure out what will work for you — and that’s something no financial advisor can tell you, no matter how much you pay them.

I came relatively late to the investing game — although I had read and understood theoretically how important it is to “make your money work for you,” I tend to be very risk averse and I didn’t understand enough about investing to feel confident putting my hard-earned cash into an account that could actually go down — scary thoughts after all the effort I had put into earning and saving said cash. Letting my (meager) savings sit untended in an account for ten years probably was not the best approach, but it ultimately gave me the confidence to invest more intelligently when the time came. So, my approach is a cautious one, but I think it’s also a wise one where, hopefully, we can all learn from some of my mistakes.

The first two steps to any wise investment strategy are (1) having money to invest and (2) understanding investment basics. This post covers step 1; subsequent posts will get into the details of step 2.

In terms of having money to invest, it’s important to consider some priorities — investing is not something you have to do and, if you’re struggling with other financial challenges, it might not be wise. Here are my seven spending priorities: Continue reading Investing 101: Getting Ready