Investing 101 help

[cloud9nd]

Hello,

I introduced myself last week and I have recently pulled most of money away from an investor that over years was doing me no good at all.

Now, of course I see there are stock market games happening and though I have some money I don't understand it at all.

I mean it literally is Chinese to me.

Now I see some investment businesses can't or won't let people claim their money in the recent booms.

How do I find an investor that makes me money and lets me get that money?

I have no clue about self investing and I'm not willing to throw it all away.

I wish someone could explain the concept or how I get into the market at a basic level.

I have money sitting here that I could have invested and changed my retirement goals forever.

This is obviously frustrating since we have worked hard to save it, and just as frustrating seeing no returns in 6 years on hundreds of thousands

I really need help here.

 

[Ready]

The best thing you can do for yourself is to take the time to learn about the basics of investing. There are thousands of books and guides on the subject. My personal favorite is the book “Investing for Dummies” (https://www.amazon.com/Investing-Du...s=Investing+for+dummies&qid=1612023214&sr=8-6) because it is written in a very easy to understand format.

If you go looking for a financial advisor to give you advice you run the risk of them investing in products that make them money rather than investing in what is best for you. By taking the time to learn investment basics you can avoid that pitfall, and you will most likely find that you don’t need an advisor to make good decisions.

 

[REWahoo]

cloud9nd, I find this online book (free) to be very good: Investment Guide: Road Map for Investing Success

 

[38Chevy454]

You are getting confused at the micro level, when you need to understand the macro level. All the recent individual stock discussion is a small subset of the total market. I agree that you can learn a lot from the books. You can also learn a lot here by just reading and soaking up what you can. Ask questions to help your understanding, like your post starting this thread.


As to what you should do, first thing you need is to have an account at some brokerage firm where you will do your investing. The common big 3 Vanguard, Fidelity and Schwab area all good choices. Once you have the account(s) for your after-tax (that is your cash you are sitting on), and any rollover IRAs or Roth IRAs, you can then start making investment decisions.


Easiest and fastest way to get into the investment game would be to actually talk to a rep at one of the brokerages, to help set up the accounts. You do not have to use their paid financial advisor services, although they would be happy to do that for a fee. That is where self directed comes into play and you are your own financial advisor. You will need to educate yourself some, but to be safe, start investing with broad diverse low fee mutual funds. You can also use ETFs (Exchange Traded Funds) that are similar to mutual funds. Just pick finds that are low fees, less than 0.10% is a good target. There are even fee-free funds that Fidelity has: such as FZROX (total US market), FZIPX (extended market) as examples. You can do fine sticking with these as a start. Just beware these, like any stock investment, is subject to the market gyrations and volatility. Being broad diversified funds with hundreds of companies, they will basically follow the market results. No big swings like the recent individual stocks have seen. Just ignore that recent individual stuff while you are learning and educating yourself.

 

[cloud9nd]

Thank you all for these suggestions!

The place I was going through uses Schwab, I don't understand that either. Seems like a middle man to me.

 

[Sunset]

Thank you all for these suggestions!

The place I was going through uses Schwab, I don't understand that either. Seems like a middle man to me.

Your "investor" is a middle man, between you and your brokerage that holds the money.

 

[cloud9nd]

Your "investor" is a middle man, between you and your brokerage that holds the money.

This is what I don't understand is how to get away from them. Where do I put the last 401K we have with them currently so I'm not paying them fees anymore?

We have one account left with him which is a 401k of my wife's I've been telling her to get away from him.

We don't know where to take her 401k that is just sitting out there. I told her to roll it into her current 401k.

But I would like to take our finances to one place and get it figured out I can't seem to do that.

Today I asked him on the off chance just to see what he'd say if he could do any investing for us since the markets are obviously going crazy in certain areas.

he said they don't do those kinds of investments I'd have to do it myself through an account he can open for me. I also see Edward Jones and others aren't allowing people to take their money anyway that they've been making in the market recently.

 

[jurgs01]

Save your money in an interest bearing savings account until the next time the market drops 20% or more, then when it looks like the worst time to invest because everyone is scared throw your money into a diverse allocation of mutual and index funds.

 

[OldShooter]

... I really need help here.

@cloud9nd, the first important thing to understand here is that there is no rush. If you hurry and make a mistake, you will remember it for the rest of your life. If you take some months to understand and get things right, in a couple of years you will not even remember those months.

The best thing you can do for yourself is to take the time to learn about the basics of investing. ...

Yes. Wise words.

My most-recommended basic book is: "The Coffee House Investor" by Bill Schultheis https://www.coffeehouseinvestor.com/ Bill has recently published a sequal, but before buying it you should read his first book.

Others have mentioned alternative books here. You can try to "audition" them by reading some pages on Amazon, but don't be afraid to buy a few and pick out the one or two that suit you best. Toss the rest or give them to your local library. This is not money wasted; it is money invested and it is a pittance compared to your assets.

Once you feel comfortable with the basics, then here is a good next step:
"The Bogleheads Guide to Investing" by Taylor Larimore et al https://www.amazon.com/Bogleheads-Guide-Investing-Taylor-Larimore/dp/0470067365

Investing is not difficult, despite the industry's continuous efforts to fool people into thinking it is.

If you have to take some immediate action, just open accounts at Charles Schwab. You can fill out a form there to transfer your and DW's assets from your current advisor. You never have to talk to him or take any more action with him; Schwab will make it happen.

Don't be in a hurry to take recommendations from a Schwab representative. IMO they are generally well-meaning and trustworthy, but remember you are in no rush. If you have investments (stocks, mutual funds) that have transferred just leave them alone. If you have cash, tell the rep you want to put it in Schwab's SWVXX money fund. Never, ever, buy anything you don't understand.

 

[target2019]

Thank you all for these suggestions!

The place I was going through uses Schwab, I don't understand that either. Seems like a middle man to me.

Schwab is a financial institution, like Vanguard, Fidelity, etc.

I fear that you're confusing the institution where you're invested with the financial advisor (FA) who was skimming a fixed percentage.

The terminology is important.

 

[mystang52]

Based on your intro on this thread, and your other thread, I am 100% serious when I suggest you do not "invest" at all, for the foreseeable future. You should put your money into just a few Index mutual funds with Vanguard, or Fidelity or Schwab. Have some liquid savings. Then, over the next couple of years take your time reading some basic investing books. If they seem like mumbo-jumbo to you, just stick with the mutual funds. Investing for above-market returns is over the heads of most people, and should only be done with money you don't mind losing.

 

[RetireeRobert]

Start you own self-directed KISS account---"keep it simple stupid".

Invest moneys in Vanguard mutual funds, 1/2 in Vanguard SP500 index fund, other 1/2 in Vanguard bond index fund.

 

[cloud9nd]

Schwab is a financial institution, like Vanguard, Fidelity, etc.

I fear that you're confusing the institution where you're invested with the financial advisor (FA) who was skimming a fixed percentage.

The terminology is important.

The investor is a private company and their accounts are through Schwab

 

[cloud9nd]

Based on your intro on this thread, and your other thread, I am 100% serious when I suggest you do not "invest" at all, for the foreseeable future. You should put your money into just a few Index mutual funds with Vanguard, or Fidelity or Schwab. Have some liquid savings. Then, over the next couple of years take your time reading some basic investing books. If they seem like mumbo-jumbo to you, just stick with the mutual funds. Investing for above-market returns is over the heads of most people, and should only be done with money you don't mind losing.

Thank you I tried reaching out to vanguard and fidelity yesterday.

 

[OldShooter]

The investor is a private company and their accounts are through Schwab

That will make the transfer even easier. Schwab will tell you, but it may be a simple as revoking your advisors' access and trading authority.

 

[cloud9nd]

That will make the transfer even easier. Schwab will tell you, but it may be a simple as revoking your advisors' access and trading authority.

Do I do that through Schwab?

When I spoke to other local companies I was bothered they all though his strategy was good.

I'm like making no money in 6 years but what we put in (which we stopped after I suspected it was going no where) but I have to pay fees yearly for his service of nothing.

I am not nearly this ignorant /naïve or confused about most subjects in life, this is very frustrating to me.

I guess no time like the present, but I can't even seem to find a compounding interest account that is worth anything.

it seems money is deflating faster than you can save it an any account.

That appears to be by design.

I mean originally this guy said 7% standard growth with him and the market usually is 10% over 10 years.

6 years in and most of them in what most called a good market and I made nothing on my money and in fact it cost me money in a sense based on taxes and fees.

- Is it unrealistic to find an account that pays 6+% compound interest on 300+K? (rates are low)

- What percent can I find?

- I assume most accounts are annual interest?

Using a calc like this

300k, 5%, 3k a month, annually

https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator

I get are:

The Results Are In
In 13 years, you will have $1,203,362.13
The chart below shows an estimate of how much your initial savings will grow over time , according to the interest rate and compounding schedule you specified.

Please remember that slight adjustments in any of those variables can affect the outcome. Reset the calculator and provide different figures to show different scenarios.

 

[target2019]

Schwab is a financial institution, like Vanguard, Fidelity, etc.

I fear that you're confusing the institution where you're invested with the financial advisor (FA) who was skimming a fixed percentage.

The terminology is important.

The investor is a private company and their accounts are through Schwab

I believe you are confusing the Financial Advisor (who is a private company) with yourself, the Investor.

Where your account is held (at Schwab) is called the Investment Company or Financial Institution.

Hope that is helpful.

 

[cloud9nd]

I believe you are confusing the Financial Advisor (who is a private company) with yourself, the Investor.

Where your account is held (at Schwab) is called the Investment Company or Financial Institution.

Hope that is helpful.

I am confused. In this case the company I signed up with uses schwab to put my money in.

I'm saying why don't I just use schwab myself then?

This place is called a wealth management company on their site.

I'd rather not name their brand.

 

[target2019]

I am confused. In this case the company I signed up with uses schwab to put my money in.

I'm saying why don't I just use schwab myself then?

This place is called a wealth management company on their site.

I'd rather not name their brand.

The company you signed up with (Wealth Management Co.) = the Financial Advisor.

The financial institution which holds your account and funds = Schwab

Get your paperwork together so you can answer questions. Call Schwab for advice on how to remove the Wealth Management Company from your account(s).

 

[OldShooter]

Do I do that through Schwab?

Yes.

When I spoke to other local companies I was bothered they all though his strategy was good.

Hard to say for sure, but any advisor is a customer or potential customer for them and bringing substantially more assets than you are bringing. There is an important rule that applies: "Do not kick today that which you may have to kiss tomorrow."

That said, what they tell you doesn't matter anyway. Not all advisors make money all the time but it is inexcusable that you are as uninformed and confused as you are. That is more than sufficient reason to dump this guy.

I am not nearly this ignorant /naïve or confused about most subjects in life, this is very frustrating to me.

Well, we were all novices once. I'm sure you are expert in areas where I have no clue. Also, remember that the industry wants you to feel this way so you feel compelled to hire their services.

I'm like making no money in 6 years but what we put in (which we stopped after I suspected it was going no where) but I have to pay fees yearly for his service of nothing.

I guess no time like the present, but I can't even seem to find a compounding interest account that is worth anything.

it seems money is deflating faster than you can save it an any account.

That appears to be by design.

I mean originally this guy said 7% standard growth with him and the market usually is 10% over 10 years.

6 years in and most of them in what most called a good market and I made nothing on my money and in fact it cost me money in a sense based on taxes and fees.

All of that is water over the dam, what the economists call "sunk cost." It's hard, but you need to just forget it ever happened and make decisions looking forward.

Is it unrealistic to find an account that pays 6+% compound interest on 300+K?

Sadly, yes.

What percent can I find?

With low risk, probably 2-3%, maybe less.

I assume most accounts are annual interest?
<snip>
Using a calc <snip> ...

With respect, you really need to hit those books. You will quickly start to understand stuff like this.

 

[cloud9nd]

Yes.

Hard to say for sure, but any advisor is a customer or potential customer for them and bringing substantially more assets than you are bringing. There is an important rule that applies: "Do not kick today that which you may have to kiss tomorrow."

That said, what they tell you doesn't matter anyway. Not all advisors make money all the time but it is inexcusable that you are as uninformed and confused as you are. That is more than sufficient reason to dump this guy.

Well, we were all novices once. I'm sure you are expert in areas where I have no clue. Also, remember that the industry wants you to feel this way so you feel compelled to hire their services.


All of that is water over the dam, what the economists call "sunk cost." It's hard, but you need to just forget it ever happened and make decisions looking forward.

Sadly, yes.

With low risk, probably 2-3%, maybe less.

With respect, you really need to hit those books. You will quickly start to understand stuff like this.

Thank you for taking the time. You are right. I will be taking the time to reflect and learn about finances and how to use the money wiser and to work for me.

 

[38Chevy454]

With your accounts already at Schwab, just do as Oldshooter suggested and talk to them about removing the wealth mgmt co advisor access to the account. Or talk to the advisor and just tell him you want to stop his services. Be strong as he will have lots of good reason why you should stay. Just be firm and say "No" to continuing with his services of any kind. Schwab is a perfectly good place to stay with for now. Once you fire (get rid of) the wealth mgmt co advisor and his fees, your next step is your financial education. Leave the investment decisions alone for now, you can keep it invested in what the wealth mgmgt co advisor has you invested in for now. Being you have both a pretax (401k) and an after tax account, you need to be careful on the after tax to not make a decision that could have significant tax consequences. That is why you need to learn and understand investing as your primary action once you get rid of the wealth mgmt co advisor.


The most important thing you can do is learn. Buy those books. Or get them from the library for free, although with some time limit. You can buy used books cheap on ebay. They still read fine and you can keep them, highlight things you want to ask questions about or to help you remember later.


As suggested in previous replies, the stable interest bearing type savings accounts with very low risk and nearly guaranteed returns are paying very low rates right now. Investment returns follow the risk/reward rule: the higher the risk, the higher potential return. Just keep in mind higher risk also means you can lose some or all of the original investment. Complete loss is not likely in a widely held mutual fund type investment, but you can lose some value if the market drops.

 

[targatom2019]

OP, target day funds are perfect for you. Set it, forget it then go enjoy life.

 

[DrRoy]

cloud9nd
- Is it unrealistic to find an account that pays 6+% compound interest on 300+K? (rates are low)

- What percent can I find?

- I assume most accounts are annual interest?

Yes it is unrealistic. Money market accounts are around .4%, 1 yr CD .5-.6%.

Intermediate term investment grade corporate bonds are 3% +/-, but this is not a guaranteed investment.

Different fixed income investments pay different ways. MM usually monthly. Bonds semi annually.

 

[Out-to-Lunch]

OP, target day funds are perfect for you. Set it, forget it then go enjoy life.

+1!