Answering Your Investment Questions
The last time we answered some of your questions, there were more questions than the number of words I am allotted per article. So … here we are, back again, with another round of answers to the rest of the questions.
I hope you find this informative and your own question may be answered in this article. If not, please be sure to email your question to us to be answered in a future article!
Question: When I sign up for a 401k at work, is it better to invest in it myself or to just choose “aggressive,” “moderate,” etc. in terms of portfolios selected?
Answer: Well, I guess the answer here is: how confident are you about stock trading now that you’ve been a TheSavvyGal reader for a length of time? If you feel you understand the market and would be adept at managing your own retirement account, I think you should go for it. If you’re ever going to learn how to do this, why not experience success in an account not needed for many years? This way, if you do lose on a particular stock, for example, you will have time to make it back with better stock picks.
On the other hand, if this makes you nervous as a tic, don’t do it. Let someone else do it. Make sure the organization managing your retirement account is one without a vested interest in selling you and other clients their own products. Check with your employer to see who does manage the retirement accounts of its employees. You always have the option to self-manage, and, given the choice between an organization wanting to sell its own products to their customers and yourself, I’d always choose yourself.
You can pick two or three stocks to invest in and then sit back and let them grow. Or, if you’d rather, go with an ETF that is a basket of stocks within a particular sector you believe will do well in the future. This is an account that is going to be growing and growing over the next few decades, so you want to make sure it is overseen well and in an unbiased fashion.
Question: What are investment clubs and are they worth joining?
Answer: When I first started speaking and teaching on women’s finance issues, a group of ladies came to me to ask if I would oversee a ladies’ investment club. This group is still going strong … twelve years later! I have also presided over five other investment clubs – some for men and women, some very large – during the last decade or more. Three of them are still in existence, including the first one mentioned above.
Are they worth it? You bet. It’s a fun and social way to learn about the stock market slowly and safely. You can ask stupid questions, your mistakes are not so dire as you’re on the learning curve, and the ultimate result is a few really good friends you didn’t have before and an investment portfolio worth a lot.
All of the investment clubs have also taken profits at one time or another to spend as the ladies saw fit. Some paid for new kitchen floors, others took trips, still others opened up their own personal brokerage accounts and reinvested the funds in stocks they had been introduced to in the club. It’s a great way to learn and grow and have fun doing it.
Question: Should I get a financial planner? Are they worth the cost/fees?
Answer: It depends. How much do you earn and how much planning will a financial planner need to do with you and/or you and your spouse? If you have a lot to work on, a financial planner might make life easier and more organized for you. Do you need wills, trusts, insurance, mortgages? If so, a financial planner can direct you to people who can help while he/she is overseeing the future of your money.
If, on the other hand, you just need some general guidance, you could always read a book, write down questions you have as you read, and then go find the answers. It’s more work, but it also involves you more in your money, which I always think is good.
Remember: no one cares about your money like you do.
Also, costs and fee plans vary from financial planner to financial planner. So if you really feel you must have someone hired to do your financial planning, ask around. Get recommendations from people who have used a particular financial planner. Don’t just let your fingers do the walking. There are lots of bad financial planners out there who will not only lose your money, but charge you for it.
And this is not very savvy on your part.
So be careful, be slow to choose someone, and be sure you are putting your money into good hands.
Keep the questions coming! We are here to serve. Please email me at Rita@TheSavvyGal.com.