Comments on: When should someone use a financial advisor? And what is a fair amount to pay for such services?

By: J. Money

J. Money — Tue, 31 Dec 2019 20:25:51 +0000

In reply to Liz. Great setup!

By: Liz

Liz — Tue, 31 Dec 2019 13:11:11 +0000

In reply to Tonya. You can't open a Roth IRA in your sons name unless he has earned income. I guess that's the downfall? but on the positive side you don't have a ROTH IRA established yet so it might be the kick start to getting one opened up :-) . My Roth is with fidelity it was pretty simple to open up and I picked index funds such as FIDELITY TOTAL MARKET INDEX FUND and FIDELITY ZERO TOTAL MARKET INDEX. They charge .015 per 1,000 and the last one charges 0%. They both have done well for me. I'd make sure when picking a mutual fund to look at the fees because some of them can be ridiculous. I set up a monthly transfer from my bank to fidelity and then I have it invest the money automatically into each mutual fund. I like to keep all my accounts separate so I get why you would want your son to have his own "account" but you could always keep the money separate within the roth. So this 1 mutual fund is for college and this other 1 is for my retirement.

By: Tonya

Tonya — Mon, 30 Dec 2019 22:28:03 +0000

Thanks for the info Liz! I actually wondered about this. What then is the benefit to a 529 versus a Roth IRA? Can I open it in my son’s name or does the amount I contribute to his college Roth count toward my $6,000 max (or $12,000 max for my spouse and I)? Thanks for sharing. I’m going to check it out.

By: J. Money

J. Money — Fri, 27 Dec 2019 12:09:48 +0000

In reply to Petra. Thanks for chiming in, Petra!

By: J. Money

J. Money — Fri, 27 Dec 2019 12:08:44 +0000

In reply to Tammy. Haha... sounds about right :)

By: liz

liz — Fri, 27 Dec 2019 02:15:51 +0000

In reply to Tonya. Tonya see my comment (comment 20) below. For some reason it wouldn't let me "reply" on my cell phone.

By: Liz

Liz — Fri, 27 Dec 2019 01:54:33 +0000

Tonya,

I went to a financial advisor through my job. He said a lot of people use Roths as college funds. You can withdrawal penalty free after having the account for 5 years. That way if he doesn’t go to college you still have the money.
https://www.schwab.com/ira/roth-ira/withdrawal-rules

By: Lee S.

Lee S. — Thu, 26 Dec 2019 22:35:37 +0000

In reply to J. Money. Just the investments that you have with them. Help you come up with a goal number and help you reach it and every quarter they touch base and see if anything needs to change. Anything outside of that you'd need a planner.

By: Tammy

Tammy — Thu, 26 Dec 2019 19:56:26 +0000

In reply to J. Money. I used to use one of Ramsey's advisers, he was smart and competent but after I learned about Vanguard and index funds, I sat down with him, ran through my long term index fund plan and asked him to tell me what else I needed to know. His response was that I didn't need him anymore :)

By: Petra

Petra — Thu, 26 Dec 2019 04:01:12 +0000

I think a 1.5% fee is very high. In retirement, you’re supposed to live off of roughly 4% of your savings (the safe withdrawal rate). So the 1.5% advisor fee means that a wopping 37.5% of your annual income goes to your financial advisor! That means if you want your portfolio to last, you’ll only have 2.5% per year of your savings left to spend on your other expenses!

So, Doris, I’d go with a one-time advice from a fee-only fiduciary advisor, who can create a plan for you on how to handle the next five years or so. Then, five years from now – or maybe just before you actually plan to retire, reach out to them again to create your next “battle plan” for the next couple of years.

Most often this will be a lot cheaper than 1.5% of your portfolio per year, and it will still help you create a solid plan that you can execute by yourself.