If you're a small investor, where can you turn and what can you do when you need investment advice?
Free and pay investing advice for the small investor
With investing, it's like an alphabet soup. You've got the 401(k), Roth IRA, traditional IRA, SEP, and one and on. But when you open up one of those plans, that's just the house. What furniture will you put in it? Those are the actual investments you've got to make a decision about.
The financial service industry is not geared to anybody who's not Daddy Warbucks. If you're a small investor, it seems like you have nowhere to turn. But there is hope.
Vanguard, Fidelity, T Rowe Price, Charles Schwab, and TIAA-Cref all offer free or low-cost guidance to the small investor. Vanguard and Fidelity in particular will even work with a surviving spouse to actively manage money in exchange for a small fee. Vanguard Advisor will give you direct guidance if you have $100,000 or more for a tiny price -- less than one-third of one percent!
If you want more handholding, it's always a good idea to pay for advice from a fee-only financial planner via NAPFA.org and Garrett Planning.
But before you can really think about investing, you've got to go back to basics. First, you have to spend less than you make so you have some money left over to invest. That's not something a financial planner can help you with. Second, you can also check my investment guide. It has advice for everybody from beginners to advance investors when you're ready to get started or take a step up to the next level.
There are options, you've just got to seize them. Just be sure to stay away from commissioned salespeople like those at a full commission stock brokerage house such as Merrill Lynch. They don't have what's called "fiduciary duty" to you under the laws of the United States. In plain English, that means they're free to put you in inappropriate or unsuitable investments to score themselves more money on commission.
Worse yet, they can charge up to 1.5% in typical management fees. I want you paying .5% or less. If you're paying anything over .5%, I seriously want you to consider only contributing at work up to the company match. After that threshold, any additional money you save for retirement should be done in an IRA or Roth IRA outside of the workplace. See my investment guide for my favorite low-cost investments when you're ready.