Nervous about investing

[Anonymous]

We have ~100k sitting in a high interest savings account but we know we could be putting it to better use. We aren't really savvy about investing so it probably makes sense to work with a financial adviser, but I for whatever reason have a general skepticism about paying someone else to invest my money. For only having 100k at stake, do you think its worth having someone manage this money for us? If not, what would you do instead?

[Anonymous]

First, I'm dying to know what you're high interest rate is on your savings.

[Anonymous]

No, read a personal investment book or two. Personally, I would open an account at either Fidelity or Vanguard and either pick several index funds (total market index; international index; bond index, etc.), or check out some of their comprehensive funds that invest in several different funds.

[Anonymous]

Anonymous wrote:First, I'm dying to know what you're high interest rate is on your savings.

Not much, .85% currently. I'm not sure there's anything better out there for savings that isn't an intro rate.

[Anonymous]

I think you can do fine with reading some books, or checking out CNN/personal finance's "Money 101", or hanging out at bogleheads, but the question is whether you have the time/interest/comfort level to do that. If you don't, then I think it's fine to find a fee only adviser and pay for a few hours of consultation (which might run you $500-1000). I don't think you need someone to manage it on an ongoing basis, but again if you want to that's fine too.

You have to start with asset allocation and your risk tolerance and then decide what you want to put in stocks vs bonds etc. Personally, for money I wanted to be very safe about (emergency funds, for example), I would start rolling some into i-bonds (10k/per year/pp can't access it the first year and small penalty in first 5 years but good rate, otherwise liquid, and safe). For money you want to put in the stock market, you can do fine with Vanguard index funds (or ETFs).

Someone did a series on "lazy man portfolios"-- basically different ways to get good exposure to different markets/asset classes with just a few funds. If you google a little you could probably find them. Might be worth considering.

[Anonymous]

Op, I was in your shoes, but with less and for different reasons. We used to be with First Command, which got a pretty bad reputation, on top of that the recession came, so we just let our mutual funds sit there for probably about five years.

I finally made the decision to be more proactive and pay someone at Morgan Stanley. Yes, there's a fee of 1.4%, which sucks, but my point is I doubt you'll do much more than keep it I. Savings and buy one or two mutual funds, and potentially miss out on some gains.

Just my two cents.

[Anonymous]

Spend some time on the Bogleheads forum. They give great advice.

[Anonymous]

Here are some tips:

With $100k and in your situation, I might go to a fee only financial planner. Here's where to find a licensed one: www.napfa.org. I would think for about $600-$1500, they could set up a financial plan for you. Just make sure you know how this person is paid, but a flat-fee consultant like this should not be paid based on what they recommend to you, so you should be good.

Agree with others on reading personal finance books and sites: Stuff like "A Random Walk Down Wall Street", Bogelheads, etc. You should definitely education yourself, it will save you tons of money in the long run. Also read & watch Dave Ramsey, Suze Orman, etc.

Take a personal finance class at your community center or church.

Just don't be afraid of the topic. The only way it will hurt you is if you DONT read or seek out the right advice.

[Anonymous]

I chose my own investments, for the most part. I have an MBA in finance, and a job in a related field, but I have almost no interest in investing. I did work for an investment consulting firm after college, so I do know the basics of mutual fund research, diversification, etc.

Yeah, the market is scary. It's hard to invest $100K and see it sometimes worth $90K or even $80K. But in the long run, it's still better than my checking/savings account which literally netted me about $0.25 in interest last month on a $10K balance. And my rollover IRA did grow over the last year by thousands, with no new $ coming in. That's better than $0.25/month. For me, I just invest and then only look at the statements a couple times a year. That keeps me from making knee-jerk decisions based on fear.