Comments on: Seven Steps to Finding the Right Financial Management Guru for You

By: Glenn Fernandes

Glenn Fernandes — Mon, 08 Jun 2009 12:29:07 +0000

Financial advisors are needed for those who cannot develop good strong financial management on their own. I agree they are helpful for large investments, large expenses. Thanks for the useful tips.

By: RAJEEV TIPS

RAJEEV TIPS — Fri, 13 Mar 2009 16:21:29 +0000

Forget any financial planner .. just invest in index funds .. they tend to do better than most actively managed funds…

By: Kellee

Kellee — Thu, 11 Dec 2008 18:09:27 +0000

In response to Mr. Flintstone, your “advice” is exactly why people need financial advisors. You’re advocating only putting money in the stock market. If you only had money in the stock market and wanted to retire today, you’d be faced with having to work longer, live off less, or both because your investments would be down significantly (20, 30, maybe 40% or more!)

Regardless of your risk allocation, risk is still the possibility of suffering loss. A good advisor won’t be telling you to move mutual funds around. The best way to own those is for the long run. Not only that, but you shouldn’t have all your money in the market. Find an advisor that you trust and go from there.

By: David Mackey

David Mackey — Fri, 21 Dec 2007 00:41:48 +0000

Yeah, can’t see myself getting one of these soon. Can I use Mint as my financial advisor?

By: Fred Flintstone

Fred Flintstone — Wed, 19 Dec 2007 21:13:51 +0000

This is okay advice if you need a financial advisor. Odds are that you don’t. 80% of actively-managed (the kind advisors try to sell you) mutual funds underperform the S&P 500 every year, 100% underperform the S&P 500 over several years. Use Index funds ONLY, not actively-managed mutual funds.

Here’s the best financial advice you’ll ever get:

Use only a fee-based advisor. Commission-based advisors want you in mutual funds and they collect 2-4% of your money (not of your gains, of your total amount!) every single year. They also cost you lots of taxes because they recommend trading often so they collect more in trading fees.

Use an advisor to set up your allocation percentages and go to Vanguard.com and put all your money in Vanguard’s Total Stock Market Index and Total Bond Market Index funds in the appropriate percentages (50/50, 60/40, 70/30 depending on your age and short-term risk tolerance). Put some of your stock percentages in REITs if you like too. And if you’re older, put some in cash just in case you need it for an emergency. Then balance your portfolio no sooner than every year, preferably every 2 years. Then don’t watch the stock market.

Use your fee-based advisor when you need some advice. Or better yet, read some books:

Andrew Tobias’ “The Only Investment Guide You’ll Ever Need”
William Bernstein’s “Intelligent Asset Allocator” and/or “The Four Pillars of Investing”
Burton Malkiel’s “Random Walk Down Wall Street”
Any of John Bogle’s books

Investing is like wine, the industry tries to make it complex so you feel you need to pay more, but it’s all pretty simple.