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Investing for Beginners – Step 5 (Matriculation)


Last week we addressed investors’ expectations, reasonable and otherwise, and the potential to affect long-term success and happiness. Today, we move ahead to “adulting” your money. This step begins once the groundwork has been laid and accomplished in your investment portfolio. Typically, this stage comes when the investable assets are north of $100,000 by a comfortable margin.

At that time, most investors would benefit from establishing a relationship with a fee-only, fiduciary, Certified Financial Planner® (CFP® ), organized and operating as a Registered Investment Advisor (RIA). Many RIAs have minimum account sizes, but most will accommodate at no cost an investor who requests a meeting to discuss his or her situation. Some planners will take on smaller accounts held by serious, dedicated savers and investors. There are also planners who work on an hourly basis.

Expect a visit with a CFP® to include a comprehensive overview of your own situation, as well as an education regarding investment risk and return. Today’s financial software is very advanced, measuring your personal risk profile, your long-term goals, and planning portfolio design and construction to best fill your expectations. We suggest meeting with at least three fee-only planners or planning firms before making a decision. A long-term relationship is based on trust and respect, which must exist on both sides.

As a direct result of an initial meeting (Van Wie Financial refers to our initial discussion as the “Suitability Meeting”), further diversification should be justified and implemented. As we explained earlier, there are seven fundamental Asset Classes, and the goal should be to select assets from as many of those classes as needed to satisfy expected risk and return goals. This is integral to a comprehensive personal financial plan.

No longer is a financial plan in the form of a written document with pretty pictures, graphs, and charts, nicely bound in a three-ring binder and placed in a drawer in the den. Instead, modern software is online, accessible, and flexible enough to accommodate a changing life, changing markets, and a changing world.

Many recent studies have shown that a relationship with a fee-only CFP® produces investment results well in excess of the fees paid to that planner or firm. Don’t limit your own future by shying away from paying a professional advisor. Fees are normally deducted from the investment account, and do not require the client to write periodic checks out-of-pocket.

Van Wie Financial is fee-only. For a reason.