Would a financial advisor help?

[Anonymous]

We've recently had a few big salary jumps (for us) and now are at $400k HHI. I'm not sure I'm making the most out of our money available for savings and investments. For example, we're funding 529s above the amount that is annually tax deductible in Maryland - is there a better way to save that money? Should we be doing a backdoor Roth with additional savings? What about bonds? Right now I'm just putting anything extra into a vanguard brokerage account.

Generally, it feels like we have enough income that I could be maximizing our savings and investments a bit more but perhaps those savings/gains would not be enough to offset the cost of a financial planner. I'd appreciate feedback from folks who might be in similar situations!

[Anonymous]

If you do decide to go with a financial planner, only go with one who charges you a fee, not a percentage of your assets or investments or whatever.

If you don't know where to start, I suggest you ask your accountant. They might be better at these questions anyway, since some of them are tax-related.

Good luck!

[Anonymous]

Anonymous wrote:If you do decide to go with a financial planner, only go with one who charges you a fee, not a percentage of your assets or investments or whatever.

If you don't know where to start, I suggest you ask your accountant. They might be better at these questions anyway, since some of them are tax-related.

Good luck!

Thank you for the well wishes!

We also don't have an accountant so perhaps I should look into that.

[Anonymous]

You make enough, where consulting a financial advisor won't hurt. Like PP suggested, do not pay an annual % for them to manage your money, but use them to educate yourself on your options. I consider myself reasonably savvy, but I still consult with a financial planner every 5 years, just to make sure I am not missing anything. Congrats on the salary jumps. Make sure you save more now that you are making more. A financial advisor is unlikely to tell you something that is going to make a huge difference, but you have enough money to see for yourself and get a peace of mind.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you do decide to go with a financial planner, only go with one who charges you a fee, not a percentage of your assets or investments or whatever.

If you don't know where to start, I suggest you ask your accountant. They might be better at these questions anyway, since some of them are tax-related.

Good luck!

Thank you for the well wishes!

We also don't have an accountant so perhaps I should look into that.

I would go with a financial planner, rather than an accountant. Your finances do not seem too complicated, and a good financial planner takes into account tax implications.

[Anonymous]

Depending on your balance with Vanguard, you might be able to contact them for planning..or at least have a (free) conversation.

Do you have a 401k? They might offer help too.

I agree with PP, be aware of AUM fees if you sign up with an advisor. And be sure they are a fiduciary.

[Anonymous]

Anonymous wrote:Depending on your balance with Vanguard, you might be able to contact them for planning..or at least have a (free) conversation.

Do you have a 401k? They might offer help too.

I agree with PP, be aware of AUM fees if you sign up with an advisor. And be sure they are a fiduciary.

I have both traditional and Roth IRAs at Vanguard - I'll see what they might have to offer as well as looking at a fee-based fiduciary advisor. Thank you!

[Anonymous]

Anonymous wrote:We've recently had a few big salary jumps (for us) and now are at $400k HHI. I'm not sure I'm making the most out of our money available for savings and investments. For example, we're funding 529s above the amount that is annually tax deductible in Maryland - is there a better way to save that money?

No-- the main advantage of a 529 is the tax-free treatment on gains, not the state tax deduction for contributions. However, you might compare plans and find a plan in another state (like Utah) which has as good or better investment options and lower fees and either roll your current 529 over to them or make contributions above the MD tax deductible limit to the out of state 529

Should we be doing a backdoor Roth with additional savings?

Yes, unless you have existing traditional IRAs

What about bonds? Right now I'm just putting anything extra into a vanguard brokerage account.

You need to decide on an asset allocation (bonds vs cash vs stocks) for these savings, based on your risk tolerance and timeline for when you might need these funds. Vanguard has an online questionnaire that might help (https://investor.vanguard.com/tools-calculators/investor-questionnaire) or you can try to figure it out. I would say, assuming you have a decent stash in a HYSA, that half in ibonds and half in a low cost stock index fund wouldn't be a bad place to start (but again this is a very personal decision).

Generally, it feels like we have enough income that I could be maximizing our savings and investments a bit more but perhaps those savings/gains would not be enough to offset the cost of a financial planner. I'd appreciate feedback from folks who might be in similar situations!

[Anonymous]

Congratulations, OP, but you’re not exactly a Rockefeller just yet.

Maximize your 529 and retirement contributions, make sure you have six months of living expenses set aside in a money market account, then just put all the rest into a brokerage account and invest in the S&P 500 fund. And then just forget about it. You don’t need a financial advisor.

[Anonymous]

Here’s all you need to know. In order:

1. Emergency fund: 1 year expenses
2. Max 401ks: 47k per year - 85% S&P 500, 10% international, 5% bonds.
3. HSA - $8.5k per year. 100% S&P 500.
4. Backdoor Roth: 14k per year. 100% S&P 500.
5. 529s - Contribute up to the 10k in state tax deductions in state investment plan (not prepaid). Most aggressive portfolio available. Beyond that contribute to the Utah plan via Vanguard. 100% VTSAX.
6. Everything left contribute to taxable brokerage account: 100% S&P500.

Maybe not smart, but I also keep a tiny bit of powder dry to pick up stocks (NVDA) or Bitcoin when they are clearly heavily discounted.

[Anonymous]

529 MD state max deduction is only $5k for two parents. You can always add that and then move the 529 money to a different state plan. The MD state plan has a decent low fee SandP 500 plan as well as a good global equity account (roughly 70% US stock and 30% global).

I like the global equity account for diversification. Worked well this year particularly.

[Anonymous]

Anonymous wrote:Congratulations, OP, but you’re not exactly a Rockefeller just yet.

Maximize your 529 and retirement contributions, make sure you have six months of living expenses set aside in a money market account, then just put all the rest into a brokerage account and invest in the S&P 500 fund. And then just forget about it. You don’t need a financial advisor.

Thanks - this was my question. It doesn't feel like we make enough to need a financial advisor, but now that we finally have a little bit to invest beyond 401ks and 529s I'm not entirely sure whether outside advice would be helpful. We are basically doing exactly what you say at the moment.

[Anonymous]

OP here - thanks for the kindness of these comments and the thoughtfulness! Having enough income to actually consider some investments is new and makes every decision feel weightier. Appreciate it!