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Question: We started very late on our 401(k), so we currently only have about $15-20,000. We have about another $75,000 to invest and are in our mid-40s. We could also add $300 per month in additional funds. What kinds of investments would be smart at this stage of our lives? We can’t afford to be too risky, but we know that to have a chance in the future, we have to take risks. And how do you go about finding a financial adviser – ideally experienced and who offers a real return on investment? (Also looking for a new financial advisor? This tool can help match you with an advisor who might meet your needs.)
Answer: We have good news for you: given your age, you still have time before retiring. Of course, it’s best to start saving in your 20s, but you can also build a solid nest egg from your 40s. That said, as you’d expect, you’ll have to take some risks to get there – and you may need to plan, if possible, to work longer.
“Even if you plan to retire at 65, it’s not uncommon for a financial advisor to plan until you’re 90. Living that long is no longer a rarity, meaning you could be planning another 45-50 years. Therefore, being too conservative can sometimes be just as bad as being too aggressive,” says Joe Favorito, Certified Financial Planner at Landmark Wealth Management.
Do you have a problem with your financial advisor or are you looking for a new one? E-mail [email protected].
The pros say you’ll want a diverse mix of stocks and bonds, and as a general rule – although you can work with an advisor to fine-tune this – you might want to think about 70% stocks and 30% of bonds. As for knowing what to invest in, this The MarketWatch Picks guide gives you some options to consider.
Yes, you can work with a financial adviser, but note that many who operate under the asset-under-management model – in which they manage your investments for you and receive a percentage, usually around 1%, of the assets as fees – may have minimum investment amounts that you cannot meet. You can also consider a counselor who will create a one-time financial plan for you, or someone who will offer you hourly help.
When it comes to finding an advisor, the National Association of Personal Financial Advisors (NAPFA) offers fee-based financial advisors, which means they are paid a flat rate for the services they provide to you and do not receive no commission on the products they sell or trade. “By using this platform, you have already done the vast majority of the heavy lifting in ensuring that the company you are working with is a fiduciary, as all NAPFA-registered companies are fee-paying fiduciary planning companies. “, says certified financial planner Adam Koos. at Libertas Wealth. Other options include the Garrett Planning Network and the XY Planning Network. (Looking for a new financial advisor? This tool can help match you with an advisor who might meet your needs.)
From there, the advisor you work with should walk you through their process, which will most likely include a discovery meeting to understand your situation, after which they can educate you on the many different investments out there. They could “make recommendations for a portfolio that’s right for you, based on your income, net worth, liquid net worth, and inflation-adjusted expenses,” says Koos. here are the 15 questions you should ask any advisor you might want to hire, and how veterinary the person too. (Looking for a new financial advisor? This tool can help match you with an advisor who might meet your needs.)
Do you have a problem with your financial advisor or are you looking for a new one? E-mail [email protected].
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