Financial Advisors- Do you need one?

Your money and your future. Should you entrust yours to an individual or a firm? – The jury is out on this. I have spoken with about half a dozen different financial advisors, ranging from the most notable, long-standing trusted firms to the “hottest firms pushing education on the YouTube platform and honestly, I have to say, I’m just not that impressed.


When I think of investing my money, I often think of information, risk, my family’s future and all of the sudden I’m overwhelmed. I’m terrified to live in poverty as I had to do when the recession hit. No financial advisor is going to feel that way about my money. That is the first thing I am going to share. Remember, no one will care about or take care of, your money the way you would.

The second thing I would share is that before you decide to use a financial advisor or not to utilize one, educate yourself. With the invention and boom of the internet, there is no reason not to be educated. If your thinking of investing money, then certainly you can afford access to the internet. Research everything and don’t move on until you understand what you’re looking at.

There are certainly a lot of “Guru’s” out there, and most of their ideas hold true but under individualized circumstances. Let’s take for example Mutual Funds that are pushed hard by Dave Ramsey. Dave pushes these because they absolutely do work, over time. They have a proven track record to work consistently over a long period of time. But with them comes many fees that absolutely will add up and 3% of your assets may not sound like all that expensive now as a fee, but what about 35 years from now when you’re sitting on 1.5 million dollars? That’s a $45,000 fee each year. Now, that’s on the high end of fees but you get the point. He doesn’t push specific mutual funds, only that when you get to investing you branch out and diversify into at least 4 categories of mutual funds so that you’re diversified, which is certainly great advice. But he leaves you wanting more. You have no examples of what mutual funds he’s speaking of, no ticker symbol. This is what speaking to an advisor can feel like at times, you’ll be found wanting, feeling unsure once more. Now, this is not true for every advisor, I am just speaking from all of those I have spoken with and believe me I tried different techniques, dumb investor, unsure investor, educated investor, the know exactly what I want investor and so on.

If you have the ability to educate yourself, then I would say not to use a Financial advisor, but let me tell you why. With reading just a few books, such as Dave Ramsey’s The Total Money Makeover and The Smart Investor etc. etc. you can get a general idea or direction and this is important. Once you have a direction, you can begin to push your research into that direction. You can even google how to begin for heaven’s sake. Such as knowing you will need a brokerage account, I would suggest utilizing Vanguard for this. They are the most trusted and one of the longest standing brokerage firms, the founder invested Index funds for crying out loud.

Once you have opened an account which you can do here you will have completed the first step. Next, you will need to choose if you want to open an IRA account. IRA or ROTH IRA, depends on your situation but I would say ROTH IRA if at all possible. You can only fund this tax protected account up to $5,500 a year. Everything after $5,500 you can invest it using your regular brokerage account. So once you have money in there, from there you can buy a stock or bond, mutual funds, index funds, just about every security possible. So far, I would say you don’t need a financial advisor to do this..

Before you buy any security (stock, bond, or funds) you need to research them. Let’s say for example – my favorite fund to use one that looks like or matches the S & P 500 market. Good or bad, rain or shine, it’s going to match it pretty spot on, every single day. That fund can be purchased in a few ways under Vanguard as I am using them as my example.

  1. Purchase the ETF which is an Exchange Traded Fund. It’s like a mini fund with a lot of different stocks that are traded just like a stock itself. This is under the ticker symbol of VOO. It’s purchased just like a stock, itself. You receive dividends etc. I would say to use this if you can afford the next option.
  2. Option two is to buy into the fund directly. Once you buy into the fund, which just means you have to have a minimum amount you place into the fund to begin, yes you still keep the money, you can set up automatic investing and continue to contribute $1 a month into the fund if you wish. This is a great option if you want to invest regularly and have the money go from your account on a regular basis and be invested automatically. The minimum buy-in here is $3,000 and its worth every penny at least for me. This is the ticker symbol for it VFINX.
  3. Last option stays on the same fund and the ticker symbol would be VFIAX. It’s nearly the same as option number two, but the minimum buy-in is $10,000 and the only real difference to get into this class is the fees are slightly different. The fees under VFIAX are 0.04% while under VFINX 0.14% HEY it’s less than a quarter of a percent, we can deal with it, LoL.

If you have been able to follow along thus far, then you should know that these types of index funds are numerous. There are specific index funds that are specific to industry sectors like finance, home goods, and healthcare, the list goes on. Me personally, I enjoy tracking the market. Its hard to consistently beat the market anyway over time so why not just invest in the market itself. The three above are how I do it and I invest in this fund and others I like on a regular basis.

I also buy stocks in companies I like, most of the companies I buy their single stocks in are ones that pay our a dividend payment each quarter, which is like a mini paycheck just for owning a share in their company. I do this with companies I like and see continued success, such as Apple, Amazon, Alphabet, AT&T, Verizon – Companie that are so ingrained in everyday life. Everyone on the planet it feels like, has a cell phone, no better company than Apple in my opinion, so I purchased stock, they need service for the cell phones, I personally liked AT&T and Verizon as they are the largest and most widely used. Do you see where I’m going with this?

I spoke with a “Financial Advisor” yesterday, and he seemed very disorganized and completely unsure of my questions. (Which were basic questions I assure you.) He did not make me even feel remotely at ease, even nonchalant about some of my concerns. No interest what so ever. If he was sounding like this or making me feel like this, I wonder if he would treat my money the same way? What if he was having a bad day and just got tired of dealing with the hassle of selling out of a company position because it was too much of a hassle to do that today because he was having an “off day.” I don’t know about you, but I have never had an off day when it comes to my money.

Another one I spoke to seriously just said, “send me your monthly funds and we invest it for you. Every month we will send you a statement of your account.” REALLY! I realized that was a shady company. That one was the only one that responded to me that way, the others seemed more professional in nature but still not right. The main point is, no one is going to look after your money like you.

Take the time to educate yourself. Read a few books, scour the internet on Google and Youtube, read blogs for peoples experiences. Once you start doing it, you will come to greatly enjoy it. It doesn’t have to be a chore. It can be fun, especially once you see your money starting to work for you. Personally, I am going to steer clear of “Financial Advisors.” Remember what I said – You are responsible for You.




Invest or Downsize

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Should you invest additional money month over month, increasing your investment contribution so that you can retire from your job earlier or should you downsize to reduce outgoing cash flow?

In my opinion, both. But let me tell you why.

If I reduce my costs or expenses that go out month over month, then I am also reducing the amount of money needed to actually retire on, so the amount I will need to invest changes. If I am going to work until I am 65 or 70, then the amount I will need to invest is small month over month if I have a small expense list. If I have a lot of bills every month and I’m riddled with debt I’m constantly having to pay on like high-interest credit cards and evil car loans then I have less to invest with and I obviously need more cash or income every month just to get by. But this also means I will certainly have to work until I’m 65 or 70 because I’m having to pay on said debt. Clear as mud right!

To clear said ‘mud’ up a bit lets provide an example. Say I have a household income of $60,000 a year after taxes. The average household income which includes both parents working. I know some make more and some less, but this is the average. Both have cars which are financed, the average car payment is right around $500 a month. Since both have cars that are financed, that $1,000 a month just in car payments! That $12,000 a year, gone… Now add on full coverage insurance for the cars which is another $200 a month, there’s $2,400 a year. That’s already about $15,000 of our income, out the window.  Now tackle credit cards which the average American household has 6 credit cards. Have you noticed we haven’t even started paying on the bills we need to pay just to survive such as home, food, water, electric, nor have we gone over insurances, clothes or travel costs. Our average apartment rents are $1,200 per month for a two bedroom apartment and for a three bedroom home $1,500 per month in a mortgage. Personally, I think we are in another housing bubble because we didn’t learn from the last one.

Debt payments, take away the number one asset building tool we have; our income. But, what if we were to downsize? What if we bought a small tiny home on a small piece of land we paid cash for. Or RV or toy hauler? Now I don’t have rent or mortgage payments to contend with. The big house doesn’t impress anyone because honestly, nobody cares about your home or fancy clothes. Only you and your ego care about how big your home is or if you have the latest fashion line. What if I paid off my debts, my credit card debt, car loans debt. What is instead of $30,000 of my family’s income being paid out in debt payments could be utilized on investing for our future? Check out my post on investing for my compound interest spreadsheet. But just for a quick summary, $30,000 divided out over 12 months is $2,500. If I placed that same $2,500 inside my investments, starting from absolutely nothing, making market index average returns each year, I would hit the one million dollar mark in just 14 years and hit the 2 million dollar mark, just shy of six years later. That where you’re paying your debt payments to. Making other companies and bank filthy stinking rich off of your monthly payments.

On the flip side of that, if you didn’t have to pay all of those monthly payments out each month, would you really need a million dollars in order to retire?….. The answer is a resounding, no. Without major debt expenses you income need reduces. Getting all of your income needs down to the basics, as in Electric, water, food, travel expenses, little entertainment each week. How much do you really need for that? Each month, roughly $2,000 a month, on the super high side. If all of your expenses only added up to $2,000 each month, going on the safe withdrawal rate of 4% from your investments, total assets to pull from $650,000. This actually gives you a little more than $2,000 each month pulling out at 4%. This leaves money in there still growing as well because the markets on average make more than 4% so effectively you’ll never run out of money.

If you have enough month inside your investments to pay your bills each month at only using the safe withdrawal rate of 4%, then you can effectively retire. So reduce debt payments, eliminate them then invest heavily. once your ready to retire then go retire from what you have to do and start doing what you love to do. If your lucky enough to love what you do, then never retire.

Let me know what you think. Agree, or disagree?