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How should a young professional look to invest his savings?

I'm 25 years old. I have no outstanding debt. I have a healthy emergency fund, I'm maxing out my employer's 403(b) contributions, and I make about $95K/year.

In addition to my emergency fund, I have around $35K sitting in my savings account making 1%. I want to invest this money in order to see it grow a little more. How do you recommend doing this? I don't envision needing any of this money for at least 5 years.

I've researched different kinds of advisors, and it appears that I either don't meet the account minimum, or there are large upfront costs.

I'm not particularly investment savvy, so I will need some help choosing the right investments. Is there something a little more hands-on than a robo-advisor, but less cost-prohibitive than a CFP?

Investing, Starting Out
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May 2017

Great job!

Robos are too cookie-cutter and not personalized enough, and CFPs are too expensive. So what do you do if you don't want to self-direct and risk making expensive mistakes?

Due to your starting point, most brokers are going to want to sell you a product that pays a fat commission to make it worth their time. You can get around this by asking if they owe ALL CLIENTS a fiduciary duty at ALL TIMES. With a product sale, you aren't going to get any planning help, which is where the most value is for you right now. That means you can't go to any of the big name Wall Street banks and "wirehouses." What's left?

Some Registered Investment Advisors ( https://www.investopedia.com/terms/r/ria.asp ) have custom plans for millennials. I can't speak for everyone, but since my firm offers this sort of arrangement, I can at least tell you how it usually goes. You pay a flat quarterly retainer fee based on your Net Worth. In exchange for that, the firm manages your assets (including your 403b) and gives you basic financial planning advice, (eg., how to invest, what type of account, what to put in the 403b versus another savings vehicle.)  As your life gets more complicated, you'll need more help, and you'll need to revisit your arrangement.

I like the Net Worth retainer-fee pricing for someone like you because it means you can really get charged for what you actually need, and the offering can grow with you. Don't expect to pay the same rate at 40 that you pay at 25, but you'll also need a lot more help at 40. Makes sense, right?  It also incentivizes the planner to give you comprehensive life advice rather than making it all about investments. The entire offering is distance-based. So it includes software you'll need, and meeting are conducted via webinar or phone. So that drives down the cost of offering the service for the advisor.

Economically speaking, you are a poor short-term investment for an advisor, but you are an excellent long-term investment. So, younger advisors are probably more likely to be willing to work with you now because they want a client for the next 60 years! You are a future multi-millionaire if you do this right. Kudos to you for already thinking about the big picture!

Hope this helps!

May 2017
May 2017
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May 2017