I’m attempting to imagine my kids telling me, when I’m 84, that it is time to hire a financial planner. When that point comes, I may not be so captivated with it myself. Maybe I should bookmark this column.
Towards the top of her life, I took over the management of my mother’s funds. She seemed hesitant, but she knew it was time. I believe she still saw me as her little boy, although hundreds of clients and readers turned to me for advice that she was reluctant to just accept.
Manage your investments yourself and save fees
If you expect to pay $35,000 a yr in fees on mutual fund investments, Laasya, that is just speculation, but you almost certainly have $1.5 million to $2 million price of investments. Mutual fund management expense ratios (MERs) are embedded fees paid every year out of the fund’s earnings. They average about 2%, but can range from under 0.5% for low-cost, passive index funds to three% or more for special funds run by insurance firms.
If you’ve gotten $1 million or more to take a position, there are discretionary portfolio managers who use stocks and bonds or proprietary mutual funds and will charge 1% or less of your portfolio value. (Discretionary means the portfolio manager makes buy and sell decisions in your behalf.)
You could, after all, spend money on exchange-traded funds (ETFs), and there at the moment are many easy asset allocation ETFs (also called all-in-one ETFs) that may provide investors with a one-stop shop. Fees are within the 0.25% range.
Why self-directed investing might not be the answer
The problem with buying an ETF, Laasya, is that your kids will worry about you investing on your personal. And in the event that they desired to be self-directed investors, they probably would have offered to assist you manage your investments. But they didn’t. So if you happen to pull back your investments to administer them yourself again, you might be putting your kids in an ungainly position because they might must grow to be DIY investors sooner or later if you happen to are unable to administer your personal investments.
Self-investing could seem easy to individuals who know what they’re doing, but I still imagine that some people won’t ever have the opportunity to administer their very own investments, regardless of how easy it becomes.
Have you thought of a robo-advisor?
I often joke with my wife that I’m excellent at a brief list of things in the world of financial planning, but not much else. There are many things I could probably study housekeeping or other areas of life that I actually have little interest in. I’d moderately pay an authority.
