First off, I understand that this forum is really catered for those that like to DIY when it comes to finance.

But with that said, for someone who just doesn't have the time or desire to learn everything necessary to ensure they are maximizing all of their options for their situation, I am looking into getting help for these matters.

My question is, if you were to use someone to help with where to best invest excess income, where would you start? Or possibly more important, where should I avoid?

and "in" before someone recommends bitcoin

Foamcows said:

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First off, I understand that this forum is really catered for those that like to DIY when it comes to finance.

But with that said, for someone who just doesn't have the time or desire to learn everything necessary to ensure they are maximizing all of their options for their situation, I am looking into getting help for these matters.

My question is, if you were to use someone to help with where to best invest excess income, where would you start? Or possibly more important, where should I avoid?

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I would avoid anyone that tries to sell you a product. Or sell you on performance beating the market. Or anyone that isn't willing to explain in a teaching manner what it is they are recommending.

You should look for a CFP and you should ask a lot of questions about their philosophy and expectations for service and contact management.

You should interview multiple FAs I believe.

BIMS O1 said:

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A lot of smart people think the keep it simple stupid portfolio of low cost vanguard total market index, bond index, and international index at splits of 60/30/10 or 70/20/10 are better than just about any financial advisor. If there is an annual management fee plus being out in funds that have higher expense ratios, advisors more often than not will come out behind this method.

Can adjust the above ratios based on how aggressive you want to be base on your risk tolerance and age. Interested to see what others will say.

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I was assuming they would understand other types of investments other than just throwing it in the market. Is understanding/explaining my other types of investment options something out of scope for their typical services offered?

Guess I feel like throwing all my excess income at the market feels a bit like all my eggs in one basket. But if thats what they are going to ultimately do after taking their cut, perhaps this DIY thing isn't all that tricky.

BIMS O1 said:

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A lot of smart people think the keep it simple stupid portfolio of low cost vanguard total market index, bond index, and international index at splits of 60/30/10 or 70/20/10 are better than just about any financial advisor. If there is an annual management fee plus being out in funds that have higher expense ratios, advisors more often than not will come out behind this method.

Can adjust the above ratios based on how aggressive you want to be base on your risk tolerance and age. Interested to see what others will say.

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Your assuming the average investor has the discipline and emotional stability during bear markets to make the right decisions. They don't.

The facts are that the average investor underperforms their own investments over the course of time. This has been proven time and time again.

The value of a good FA is not portfolio management.

I would argue if you aren't yet maxing all tax deferred vehicles then don't get an FA. I did it for us into my mid-40's and we turned out just fine simply following basic diversification strategies you can learn about in an hour or two on any major financial platform like Fidelity or Vanguard. The only reason I finally got one is because we are beyond maxing everything and the tax side of things go complicated and I didn't want to delve into the tax world on my own. That and we needed some estate planning.

Follow something like this first and read about allocation strategies for your age group and risk tolerance. It's really not that hard at all if you aren't maxing everything yet and you are still relatively young. Set it and forget it.

I think I'm pretty much where you were before making the plunge and getting an advisor. I fly all the way through the chart you have posted its those last few boxes are where I am having questions of where to go next. Im a bit worried about my tax exposure as I'm not too far from the income Biden is planning on targeting.

1. Have Insurance Deductibles covered in cash
2. Contribute to your employer retirement plan up to match
3. Pay off high interest debt
4. Emergency fund of 3-6 months
5. Max out Roth IRA
6. Max out HSA
7. Max out Employer Plan
8. Wealth Accumulation through taxable brokerage
9. Education or other future expenses
10. Pay off low interest debt (mortgage, car, etc)

That's just a general rule. #'s 6 through 9 are interchangeable depending on your situation.

ehrmantraut said:

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1. Have Insurance Deductibles covered in cash
2. Contribute to your employer retirement plan up to match
3. Pay off high interest debt
4. Emergency fund of 3-6 months
5. Max out Roth IRA
6. Max out HSA
7. Max out Employer Plan
8. Wealth Accumulation through taxable brokerage
9. Education or other future expenses
10. Pay off low interest debt (mortgage, car, etc)

That's just a general rule. #'s 6 through 9 are interchangeable depending on your situation.

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Guess thats the question I am struggling with... if you have done 1-10, whats 11, or is it just more brokerage?

I passively follow the stock market post on here and have had a great 2020 in the market (thanks to everyone who posts on there), just feel like it takes up a good amount of my time and energy, not to mention the stress of it all.

Foamcows,

Do you have access to a deferred compensation plan? That's an option to defer income and plan distributions when it's favorable for you.

Monywolf said:

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Foamcows,

Do you have access to a deferred compensation plan? That's an option to defer income and plan distributions when it's favorable for you.

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Outside the traditional options, 401k, HSA, Im not finding anything... what specifically were you thinking?

Foamcows said:

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ehrmantraut said:

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1. Have Insurance Deductibles covered in cash
2. Contribute to your employer retirement plan up to match
3. Pay off high interest debt
4. Emergency fund of 3-6 months
5. Max out Roth IRA
6. Max out HSA
7. Max out Employer Plan
8. Wealth Accumulation through taxable brokerage
9. Education or other future expenses
10. Pay off low interest debt (mortgage, car, etc)

That's just a general rule. #'s 6 through 9 are interchangeable depending on your situation.

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Guess thats the question I am struggling with... if you have done 1-10, whats 11, or is it just more brokerage?

I passively follow the stock market post on here and have had a great 2020 in the market (thanks to everyone who posts on there), just feel like it takes up a good amount of my time and energy, not to mention the stress of it all.

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You're in the mass accumulation stage. You're doing everything right.

Start thinking about real estate. Beyond that, more brokerage.

If you're still looking for tax deferment, you could look at a variable universal life policy.

I bleed maroon said:

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Well, there's your issue. That thread is for ACTIVE traders, not investors, who not only watch their portfolio hour-to-hour, but minute-to-minute. You don't sound like someone who should even follow that thread. Ignore it. Invest in a market basket of diversified Index funds or ETFs, and don't worry about missing the rare big win. You want a bunch of wins over the longer haul that don't take up your valuable time, attention, and give you stress. Stick to the basics, and you'll be fine, and probably outperform most of the people (including me) that post on that thread.

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Pretty solid advice there, I assume everyone on that thread is either bald or completely grey or a mix of both. Like I said, I was just passively doing it, picking up things here and there. Got lucky and it paid off great when oil crashed, helped take my HSA investment account up nearly 10x from where I started. But you are right, I definitely didn't feel comfortable putting in anything more than I was ok with completely losing as I have zero idea what i was buying and why. Also I am a bit concerned about how the gains will impact me...

I guess long story short, I do understand that I am going to be giving up some gains to anyone that helps, and there are limited guarantees. But I also recognize I do have the typical responses when the market crashes (difficult not to sell) and feel some sense of FOMO when its going up.

So with that said, what are the types of questions I should be asking when approaching a wealth manager? Obvious ones are the fees and how are they structured, but what else?

When does it make sense to go with a flat rate versus a fixed percent? When does it not?

What are some red flag terms to listen for? (I have read about being sold high commission life insurance packages)

Ask them how they get paid, and then ask them what their value is for that cost.

And then just go with your gut. You'll know if someone is BS'ing you.

If their value is focused on portfolio management, or "maximizing return while minimizing risk" then you're in the wrong place.

The right advisor will examine your situation in full and then tell you exactly how they will help, and they'll convey it in a way that's easy to understand and makes sense to you.

Quote:

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I do understand that I am going to be giving up some gains to anyone that helps,

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Wrong way to think about it. Their "help" should lead to more gains over time. And not through superior investment selection, but through strategic planning and ongoing advice.

A deferred comp plan is a non qualified plan that allows the participant to defer compensation tax deferred to some period in the future. In the interim, the funds they defer are invested and the notional value is paid out according the schedule the employee chooses. If you are a w2 employee and your company offers this, you would probably know about it. Something to look into, even if self employed.

The two ehrmantraut posts above have very good advice. The only thing I'll add is that if you decide to go with an advisor versus DIY, the main benefit you'll gain is avoiding common investing mistakes (such as tax-inefficient gain-taking, misallocation of assets, and succumbing to chasing individual stocks via stock tips).

If you have a CPA, ask them for a recommendation.

A lot of CPA's I talk to seem to know who the good and bad ones. They are very opinionated on the ones they think aren't treating a client very well.