Thursday, April 8, 2010

Know What it Costs

I have been on a kick lately to encourage all of you to really understand what you are doing with your money. Where are you spending your hard earned dollars? What is affordable given your current income situation? Are you saving enough? etc.

Here are two great web sites you should check out that can help you have a better understanding of where your money is gwesabeoing: and – The best part is it’s FREE (which also happens to be my favorite price)!

True story:

Like any good finance guy I personally started a Roth IRA as soon as I had earned income. I eagerly plopped down my hard earned money and took advice from a guy who I thought was an expert. Looking back I now realize that several “Not Cool” things took place and I understand that I was taken for a ride.

“Not Cool” Event #1: The advisor told me that I was investing in an international mutual fund. I really wanted to be investing in an international fund and I specifically wanted to be exposed to the asian markets. The reality was that he sold me a Large Cap Blend fund that has less than 15% in the international market – nice. I am a young man and I have a relatively aggressive investment profile so it makes me especially annoyed to now know that the fund he sold me also has nearly 6% in cash and fixed income! This was a completely inappropriate pick for me. 

“Not Cool” EventMutual Fund #2: The advisor sold me the most fee-heavy class of shares possible. For a long term investor, aka every young person who opens a Roth IRA such as myself, the suitable mutual fund classes are “A” shares and “B” shares. “B” shares are by far the best choice for a long term holder but are often unavailable. Really in no-event is the “C” share class appropriate for a retirement investor, unless of course the guy who is selling the product wants to make more money. Guess what? This advisor sold me “C” shares, the average annual cost of my investment: 2.43% – Outrageous!

“Not Cool” Event #3: Since we met for the very first time several years ago, this “advisor” has contacted me 1 time. So much for being an advisor.

My take away: I clearly did not understand what I was doing with my money.

I now have some more knowledge, experience and understanding of the investment world and can evaluate the quality of securities. The problem is, I already made the mistake back when I didn’t understand!

My experience is just one of what I am sure many of you have had dealing with less than scrupulous financial “professionals”. The guy that I worked with not only blew it with me but now has the pleasure of giving me content to blog about my terrible experience.

This is just one example of the type of stuff we are trying to help you avoid. I don’t think that I can say it enough: you have to understand what you are doing with your money! We are here to help fill in the gaps and give you insight into the decisions you are about to make. Stop by, give me a call or shoot us an email. 

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