Finding a good first financial planner / advisor in Los Angeles?
Question:
Or, are there some resources on the web that will allow my to efficiently do my own planning?
Answer:
I suggest you go to Dave Ramsey's website and click on ELP (endorsed local provider) for investments. You put in your area and an ELP in the investment area will contact you or you contact them.
The ELPs listed with Dave Ramsey are very professional and help teach their clients about the process instead of just putting you in stocks or mutual funds you don't understand.
Financial planning is easy as pie. E-mail me any questions you have and I'll probably know the answer. I'm not selling anything either. I'll be happy to stick my nose in your business for free.
You need to be very careful when choosing someone else to manage your money for you. The first thing you should ask is"how do you get paid?" If the answer is anything other then "I get a flat fee based solely on the amount of money that I manage for you", then take your business elsewhere. Many so-called finanancial advisors get paid a commission based on how much of a certain company's mutual funds they sell to you. If you think this makes them more of a salesman then a financial advisor, then you're right. Because they get paid for selling you a certain mutual fund, whether or not it actually is a good investment, they don't have your interests at heart. The second question you should ask is "what are you're long-term investment results?" Make sure they have solid long term returns. If they say they have doubled their money, ask over how long a term. If someone doubles their money over 20 years, that's far from impressive. If you must hire someone to manage your money, start here:
http://www.napfa.org/
This is the National Association of Personal Financial Advisors, and they only endorse Fee-Only financial advisors.
I personally think that with just a little bit of time and effort, you can manage your own money. I use the Motley Fool website, which I think is a great resource. I also read whatever books I can find on investing. Anything written by Peter Lynch, Warren Buffet, Benjamin Graham, John Bogle or David Dodd are valuable resources. They use different styles, but they all have achieved amazing results. If you are looking for a "fire and forget" investing style, go with the Bogle book. However, there is no such thing as an investment you never have to worry about or do research on.
If you're not into books and websites are more your style, try the Vanguard mutual fund website, Index Fund Advisors or the above mentioned Motley Fool.
Whatever you do, avoid advice from stockbrokers or anyone else who has a can't-loose investment tip.
Unless you have a net worth of $1million or more, I don't advise a financial planner. Remember that one way or another, they make THEIR money from YOUR money - either in fees or commissions.
The key to successful investing is to keep it simple. Even experienced, full time investors rarely beat the market. For that reason, it is foolish for most investors to get into individual stocks. You will do far better OVER THE LONG TERM investing in mutual index funds. These funds have very low cost of ownership. You can find good index funds through Vanguard http://www.vanguard.com or Fidelity http://www.fidelity.com
Don't buy loaded funds (they have fees to buy into them) or managed funds (they charge 2% or more a year in fees). An indexed fund is run by computers, and keeps track of a market index. You will not do better with most of your investment than to be in the Vanguard Total Stock Market Index. You need at least an initial $3000 to invest in that fund, and you can then add money each month by automatic transfer from your bank.
Also, you should NOT change funds frequently. You should re-evaluate once every six months at most. Index funds will move up and down with the market, and over time WILL make a reasonable profit for you.
Buy the "Investing for Dummies" book, go to the library and take out books on personal finance, and read the education sections on these sites:
http://www.vanguard.com
http://www.fidelity.com
http://bobbrinker.com
http://fool.com
(A note of warning - Bob Brinker's 'market timing' is an advanced investment technique - I'm not recommending it. However, his website has good educational sections that you can apply to your own case).
Remember - only no-load indexed funds; never pay a fee to anyone to get into or out of a fund. Don't pay an advisor for something you can do yourself!
Also remember THE best investment is an employer matching 401K. If you employer has such a scheme, put in the maximum match amount that they allow. After that, put money into an individual IRA up to the amount allowed. And after that, use a standard investment account. You can set up an IRA or standard account with Vanguard online.
I am not a salesperson, or an advisor; I do my own investing and I have used Vanguard for the past 5 years - they've been a terrific resource.
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