Should You Manage Your Own Money?
By TLB Contributing Author: Erica
You work hard for your money. You scrimp and save every dollar you can. You invest every bit you can. You watch closely, probably too closely, to the daily market fluctuations. After awhile, you start to see your nest egg grow. You’re happy with the amount you’ve grown your portfolio and decide to take it the next level and hire a financial advisor. It only gets better from here, right?
The financial advisor claims to have your best interest in mind and tells his fees. It seems like a nominal price for all the extra money you’ll be making.
Over time, you start to see the fees adding up. Every trade that your broker decided to make on your behalf? You get charged for that. Depending on the broker, it could cost you north of $50. On top of that, many brokers will also charge either a flat fee or an hourly fee for the time they work for you.
Furthermore, they also charge a percentage your total assets; some up to 3%. While that doesn’t seem like much, consider this. If you save a million dollars over the course of your working career, that comes out to $30,000 for just that fee. Take into consideration the hourly rate and trade fee; it’s not uncommon to pay hundreds of thousands of dollars in fees.
What’s the alternative? For beginners, enlisting the help of an online brokerage such as TD Ameritrade or Fidelity can be a great option. While they are not completely hands off, they offer much lower fees if you’re willing to do a little research to find what options fit you best. Looking for something completely hands off without the price gouging? Then you might want to look into a robo advisor such as Betterment or Wealthfront. They will invest based on your preference for a small fee.
Ready to venture out on your own? Check out the best online brokerages to see what options are for you.
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About the Author: Erica is a concerned individual who sees the corporate structure taking advantage of the uninformed, hard working citizen, and has made it her mission to bring to them the alternatives and options they need to prosper in a corporate dominated world.
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