Rowan Financial LLC
Dave Rowan, MBA, CFP® is the founder of Rowan Financial, LLC. His mission is to enable his clients to achieve a future that is even brighter than their past and present.
Dave primarily attracts clients who are contemplating or experiencing a career transition. This includes moving from one employer to another while remaining in the same field, pursuing an entirely new profession, starting up a small business or embarking upon an encore career. Dave provides his clients with the short-term guidance necessary to successfully navigate these often stressful transitions with more confidence and financial security than they had ever imagined was possible.
Dave transforms the lives of professionals and entrepreneurs across the country with his expertise through his free online newsletter and blog. Each issue contains high value content that enables readers to make the most of their career transitions, not only from a professional development standpoint, but also in terms of their financial and personal goals.
Dave is a Certified Financial Planner® and is also a member of the Financial Planning Association® (FPA®). His background also includes a BS degree in Chemical Engineering from Penn State and an MBA from Lehigh University.
Dave is a sought after expert in the financial news media. He has been featured in various online publications including US News & World Report, NASDAQ.com, The LA Times, Yahoo! Finance, Investopedia, and The Christian Science Monitor.
Dave grew up in the Lehigh Valley of Pennsylvania and has lived in the area for most of his life. He currently resides in Bethlehem with his wife Stacy and their two daughters. He loves walking and hiking in nature, football, lacrosse, yoga, reading, writing, shopping at local farmers’ markets, eating healthy food, an occasional battle on Clash of Clans, and bringing positive energy to his work and his relationships with family and friends.
BS, Chemical Engineering, The Pennsylvania State University
MBA, Management of Technology, Lehigh University
Dave Rowan | Rowan Financial
Everyone's new to investing in stocks at some point - good for you to ask this very basic but important question right up front!
The short answer is, yes you can. However, there is also the question of should you buy stocks in individual companies, which I'll cover later.
In terms of buying a stock yourself, the easiest way to do so is to open up a brokerage account with a discount provider such as Charles Schwab or Scottrade. Once your account is open and funded, you can login and buy and sell shares of stocks as often as you'd like. Most discount brokerage providers charge about $8 or $9 per trade.
Make sure you look up the correct stock symbol and do your trading during the hours when the market is open rather than after hours when bid/ask spreads tend to widen and you could end up paying a premium for shares. For thinly traded shares (small companies that average few shares traded per day), consider putting a Limit Order in place to make sure you don't pay a premium. Here's a link that talks about what Limit Orders are:
However, rather than buying stocks in individual companies, you may want to consider investing in low cost ETF's (Exchange Traded Funds) that track major market indices such as the S&P 500. By buying shares in the ETF, you are effectively buying stock in dozens, if not hundreds of different companies and spreading out your risk rather than putting all of your eggs in one basket.
I personally no longer buy shares of individual stock for this very reason and recommend the same to all of my clients. If for some reason you still feel the need to buy stocks in individual companies, consider limiting this to no more than 5-10% of your total portfolio.
Good luck with getting started!
With Kind Regards,
Glad you are asking this question. Minimizing commissions and fees can have a HUGE impact over the course of your entire investing career. Here are 3 ways:
- Invest in Exchange Traded Funds (ETFs) rather than Mutual Funds. The expense ratios are almost always lower for an ETF versus a comparable mutual fund. It is now very easy to build a low cost, well diversified portfolio using ETFs with an expense ratio of 0.25% or less per year.
- Avoid products with front-end loads, back-end loads, or 12b-1 fees. These are typically found within Mutual Funds, but not ETF's. Read the fund's prospectus to know whether these fees are associated with any product you are investing in.
- Seek out ETF's with no trading fees. Many asset custodians charge between $7.95-$9.95 per trade, however, a growing number of fund families are waiving trading fees on their ETF's. As an example, Charles Schwab offers a full range of ETF's that have no trading fees.
- If you do decide to invest in a fund with a trading fee, try to invest over $1,000 per fund. To keep the math simple, let's say you are investing in a fund that charges $10 per trade. If you invest $1,000 in that fund, you will pay 1% ($10 out of the $1,000) for your initial investment and another 1% when you sell the fund for a total of 2%. However, if you are only investing $100 in the fund, you're paying the equivalent of 10% for the initial investment ($10 out of the $100) and another 10% when you sell for a total of 20%. You'll need to earn an awful lot of return to overcome those trading costs!
- If you decide to work with a financial advisor to help you with your investments, look for one who charges 1% or less of Assets Under Management for their services.
Thanks for the great question and good luck keeping those fees to a minimum so you can keep more of your money growing in your accounts on your behalf!
With Kind Regards,
Thanks for this question. The expense ratio is continuously charged and is reflected directly within the price of the ETF. You will not see this charge listed as a separate fee on your statement.
As an example, let's say that you purchased one share of an ETF that was trading at $100, with an expense ratio of 0.25%. Let's also say that you held it for a year and that it increased in value by 7%. If there were no expense ratio, the price of the ETF at that time would by $107, reflecting your entire 7% gain. However, the price you'll see is $106.75, reflecting the 0.25% expense ratio charged for the year.
Hope this helps!
With Kind Regards,
First, congratulations on many years of diligent savings to be well-prepared for your retirement. Kudos to you for that!
There are two perspectives to take with this decision - the financial perspective and the personal life choice perspective.
From a financial perspective, I'd recommend working with a financial planner to see if your nest egg will last for what will likely be a 30-50 year retirement. It is helpful that your living expenses will be covered; however, this is a very long time period to make your savings last.
The second, and more important question to me is - is this the most important thing for me to do right now, even if I risk having a somewhat reduced standard of living for myself later in life as a result of retiring early? If you just read this and immediately answered "yes" without hesitating, then it's the right choice. You can always "make the numbers work," with a $700,000 nest egg via making the right standard of living choices.
A related question is also - is taking care of my parents a full time job? If it's not, there are many options to pursue part-time work in retirement to supplement your income either within your current field or in an area you've always wanted to try. Consider checking out www.encore.org for some good ideas in this area.
My favorite thing about this last question that I always encourage of my clients is that it is "both" thinking rather than "either/or" thinking. In this case, "How can I take care of my parents while also making sure I provide for my own retirement?"
Good luck with this important financial decision and with your pending relocation should you choose to go that route!
With Kind Regards,
There are several different ways to interpret your question. If you are looking to buy stocks of individual companies, I'd limit this to no more than 5% or 10% of your total investable assets. I personally do not buy individual stocks given that I view stock-picking as a full time job and one that only a very small number of investment advisors are successful at doing over a long-term period of time.
If you do still feel the need to do this, consider making sure that all of your other major saving and planning goals are covered first. These include, among other things, a full funded Emergency Fund, saving for your retirement, and a college savings account if you have children.
If you're like me and want to buy stocks by investing in a market index, then consider opening a brokerage account and purchasing low cost ETF's. Look for expense ratios of 0.25% or less because unnecessary high fees can really hamper your returns over the long run.
For a perspective on how fees can impact your returns over time, check out:
The article discusses high fees in 401(k) plans, but really applies to any type of investment account.
Whatever you decide, good luck getting started!
With Kind Regards,