General Question

Snoopy's avatar

Do you manage your own retirement investments or do you consult w/ a financial planner?

Asked by Snoopy (5778 points ) January 22nd, 2009

Or do you split the difference and invest in a life cycle fund?

If you eschew a financial planner, why?

I just finished watching this show about retirement and found it rather alarming…

http://www.pbs.org/wgbh/pages/frontline/retirement/view/

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8 Answers

miasmom's avatar

We do it all ourselves through Vanguard, we look for good mutual funds with long term gains.

I used to have a planner, but then realized with a little bit of work on my part, I didn’t need one and in the end I’m saving money because I cut out the middle man.

wundayatta's avatar

I second Vanguard. Paying a financial planner is kind of worthless when all you’re doing is buying mutual funds. And anyone can read a little and do lifecycle planning. Investing is really all standard stuff, even if it’s tough to follow. Like now. Staying in the market because you believe it will be back up in ten years or less. And if you buy a little every month, you’ll do fine what with dollar cost averaging.

What did frontline say? We should all have planners?

Snoopy's avatar

@daloon The Frontline I watched was originally aired in 2006 but still timely today.

Its core theme was that there has been a general abandonment of traditional pension funds for 401Ks as they are less costly to the company. They find that people in higher income brackets do fine at managing their own accounts….but those in lower income brackets tend to struggle w/ investing and sometimes don’t even bother to sign up. So, no they were not necessarily advocating a CFP.

Personally, I use a CFP. For me to “do” something, be it professional or personal (like finances), I have to understand it entirely. W/ the volume of info available as well as the amount of choices, I felt overwhelmed. Also, our personal financial situation is slightly more complex which makes me uneasy at going it alone….

Thankfully, I have found a CFP who does what we want, understands our risk tolerance and charges a reasonable fee. I save money w/ the CFP as there is no ongoing “management” of the account. I make all of the buys over the year and pay the CFP a flat hourly rate on an as needed basis (typically 1x – 3x/year).

wundayatta's avatar

Ah, yes. Financial literacy. Perhaps we should be teaching that in high school? 401Ks are replacing pension plans, because the costs are fixed. You pay the employer match, and are done with it. No worries about investment risk. No worries about your pension burden being higher than you can afford. No worries about going bankrupt. No. Wait. That one’s on the employee side.

If you do use a CFP, your way sure sounds like the way to do it. I read Jane Bryant Quinn’s, Making the Most of Your Money.

JellyB's avatar

From now on i’m doing this all on my own. I made 2 small investments (retirement annuities, whatever), and over the year they’ve been there, i’ve only lost money. I’ll never put money in there again.
I’ll be providing for my later years in property, or something like that. No more financial advisors or pension funds and the like. I’ll only take advice from people who are well off and know what they’re doing from personal experience.

Urban's avatar

I manage mine myself and I earn a great return because I’ve spent the hours spitting out financial models. Most people will not do anything beyond looking at fact sheets and snap shots or taking it on faith that third party raters are correct – like morningstar. For equity, I spent 100s of hours learning how to derive enterprise value, developing my own growth rates, calculating free cash flows (most analysts will use EBITDA out of laziness and sometimes the small differences in numbers are a huge error), et….I project my models out 5 years and back into a stock price for those years. If they are higher than what the stock is going at now then I take a long positions, if not, I short the stock.

I’m young so I have a long time horizon and don’t really know much about day trading so I do long term calculations. Most financial planners can offer decent returns on managed accounts, but I would not give me money to an advisor unless they had a CFA, many have CFPs, which is all right, but if you want returns, you want a CFA.

The other thing I am trying to learn in depth is debt/derivative investing, and I don’t just mean finding a bond/cd/leasing note/options and investing money in it. I mean full on learning how to maximize durability, utilize coupon stripping, using a black scholes model how to properly hedge using options/forex. Debt investors are the fucking smartest people on the planet as far as finance goes, period.

I guess in short, if you want to do it yourself, don’t half ass it – it’s not something that can be half assed. If you’re going to slack on educating yourself and be lazy about it, get an advisor.

*I wasn’t directing my comments at you, just in general : ]

YARNLADY's avatar

Hubby does all our investing, with some imput from me. We both have a good understanding of financial matters and believe in doing the in depth research necessary to make it worthwhile.

plethora's avatar

I AM a financial planner and I don’t do my own myself. I don’t cut my own hair either. Somehow, no matter how good a grasp I have of haircutting technical skills, I just feel that someone else can do my own better than I can. I don’t do my own surgery either. I don’t cut my own grass. I don’t change my own oil. I don’t do my own auto repairs. I don’t do my banking, baking or party planning. I don’t build my own house. I don’t build my own yacht, I don’t build my own car, I don’t diagnose my own illnesses. I don’t lift weights alone. I use a trainer. I don’t breed dogs, I don’t raise cattle, I don’t build fancy interiors for homes. I don’t fill my own teeth.

I don’t know. I guess I’m just a dumb shit. You’d think if I had as much sense as all those who “mis-manage their own finances” that I could handle mine too. There’s not much to it, ya know.

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