Have you ever said those words when talking about the person making your investment decisions? Your Guy is making a living off of you, and they are selling you a product. Why not do your own investing?
Fees
Knowing how you are paying Your Guy is important. Everyone needs to make a living. Is Your Guy selling you something because it is best for you or because it pays them?
If your guy is recommending anything but term life insurance, RUN! Often they will get paid 90%-100% of the first year’s commission.
If you think whole life insurance makes sense for you, read this article. It may make sense for some high-income earners as a tax shelter.
https://www.abovethecanopy.us/the-overwhelming-case-against-whole-life-insurance/
If Your Guy is buying exchange-traded funds, index funds, or individual stocks, know your assets under management fee. This can range from .25% – 2% a year. The fee is usually deducted four times a year; it doesn’t matter if your account is up or down.
Your Guy could be selling you mutual funds, and the fees could be front-load, back-load, or no-load fees. Even if you pay the fees at the front or back, you will also pay yearly fees. Hidden in those fees is a commission to the Financial Advisor. Below is a link explaining front-load, back-load, and no-load mutual funds. This kind of advisor is often found at a firm like Edward Jones or a local bank.
https://www.investopedia.com/ask/answers/125.asp
Your Guy Won’t Beat The Market
Almost 90% of actively managed fund managers fail to beat the market. What makes you think your guy can?
You don’t need to beat the market. You need to mirror the market. Index Funds or Exchange Traded Funds can do that for you with almost no fees. Vanguard Total Stock Market Index Fund Admiral Shares or VTSAX as of 9/30/21 has returned at 10.74% the last 15 years. Their current fee is .04%. Vanguards ETF VTI does the same thing.
How To Start
Step one read The Simple Path to Wealth – By JL Collins. This will give you the confidence and understanding of how to do your own investing.
https://interestingdollar.com/book-recommendations/
Step two open an account with an online brokerage. My favorites are M1 Finance and Fidelity.
https://interestingdollar.com/financial-services-that-i-use-recommend/
Decide if you are opening a Traditional IRA, Roth IRA or an after tax account.
https://www.m1finance.com/articles-1/brokerage-account-vs-ira/
Once you have opened your account, invest in a Total Market Index Fund or ETF. If you are nearing retirement or want to be a little more conservative, feel free to look into a Vanguard Target Date Fund. This would not be my first choice, but it would be a good option.
Summary
If you are starting on your financial journey, invest in yourself. Start by reading and doing research. If your fee is one percent, that may not seem like much. However, it is a yearly fee; think about how much that will be as your portfolio grows once your portfolio hits $100,000 that will cost you $1,000 each year. Once you hit $1,000,000, your yearly fee will be $10,000—all for somebody who most likely will not beat the market.
How $16 A Day Can Make You A Millionaire!
Only you have your own best interest at heart. Continue to learn and evaluate your portfolio. The important thing is you save and invest for your future. If you feel comfortable with Your Guy and know where their fees are and how much they are making off of your investments, that is up to you. Personal finance is personal.