Advice On Handling Money?

Dec 7, 2019 46 Comments

I feel like I am at a point where my savings and income is so high (relative to what I am used to) that it’s almost uncomfortable and I don’t feel capable to manage it. I’m signing up for a financial planner to manage it and help me make a plan so they can help me out.

Has anyone else gone through a point where you feel this way? Back when I was making $9 an hour it was easy - I knew exactly where everything should go and what I can and cannot afford. I’m thinking I will be good as long as I listen to my financial planner and maintain transparency with them. Has this been true for you, or did something else help you handle this?

I completely get that this sounds like humble bragging and almost icky - sorry. But I grew up poor in America, I am not psychologically used to this and am having some trouble. No one in family to talk to openly. Any tips, resources, stories may be useful.

TC 290k

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TOP 46 Comments
  • Capital One / Finance Rexxar
    I recommend a plan similar to this...

    1) pay off any credit card or other high interest debt if you have it

    2) build a nice 3-6 month emergency fund, use gross income not expenses

    3) put some cash aside for purchases intended in the next year (new phone, car, etc)

    4) max your 401k match, then Roth IRA (backdoor), then 401k in total. Usually index funds are recommended here

    5) if you have kids hit up a 529

    6) HSA max if you have it (acts as best tax advantage inv account)

    7) take what’s left and put it into your brokerage of choice (recommend: fidelity, vanguard, Schwab) and do a basic split into index funds

    8) ignore looking at your money, and pre-plan all your expenses and save the money in advance to avoid touching your savings/investments

    9) retire and live awesome
    Dec 7, 2019 11
    • SAP DVOw73
      Good question. For me, I decided on insurance for a catastrophic case first. Limit my maximum obligation. Then I looked at what is minimizing my obligations per year. As far as I know you have to have a HDHP for an HSA. It was clear that a HDHP was the right choice for us, so that caused the HSA. To;dr: Insurance needs before investing needs.
      Dec 7, 2019
    • Google rbtrnndsnw
      OP
      @Nfck20 here’s a great video by Dave Ramsey on HSAs https://youtu.be/eGNSRTcWcNY
      Dec 7, 2019
    • Capital One / Finance Rexxar
      In terms of HSAs, you can pull the money out for any expense once you hit legal retirement age. Before than you can pull it out tax and fee free for any medical expense. You also don’t pay taxes to put the money in.

      In terms of premiums, it comes down heavily to what the plan offers. Premiums on HDHPs should be less than a normal plan because you pay much more out of pocket.
      Dec 7, 2019
    • Wayfair Nfck20
      ^ in my case the alternative plan is a 0$ premium with no out of network coverage
      Dec 8, 2019
    • SAP DVOw73
      Kaiser or such? Sounds good, I though don’t have experience as I value choice of doctor.
      Dec 8, 2019
  • Cisco Hjkb55
    Open an account at vanguard and invest in index funds (VFIAX, VTSAX and similar). Make sure you fully fund retirement (max 401k and backdoor Roth) also investing in index funds. Check out online resources like financial independence subreddit and bogleheads. Financial advisors can be useful but the also generally have high fees and generally are on some sort of commission (idk about what your companies internal plan looks like). Also for some specific advice, never buy an annuity and never buy whole life insurance
    Dec 7, 2019 8
    • Cisco Hjkb55
      1% is really high dude. Suppose inflation adjusted stock market return is 8% (can argue but a reasonable value). So over 30 years, at 7% your return will be 8.1 times the principle, and at 8% it will be 11 times the principle. Also don’t think of it as “I’m paying him 1%” think of it as “I’m paying x amount of money”. If you have 1 million dollars saved (perfectly reasonable given income level) you’d be paying him $10,000 a year in perpetuity (it would actually go up as you make money). And investment really doesn’t take that much time if you figure it out (Id say under an hour a month). See other people’s comments below that are much more detailed than mine for better advice
      Dec 7, 2019
    • Google rbtrnndsnw
      OP
      Okay thanks. I am considering only doing this for a few years while I am learning more. Then the funds can be transferred to me. The group also offers a one-time planning fee of $5k. But the 1% management fee includes this benefit.

      It seems like the 3 fund portfolio + maxing investments is the way to go. But I don’t have the time or confidence to validate that statement. Another factor is level of anxiety (high) and role models to talk to (low) that needs to be accounted for. So I see an advisor as a teammate, if only until I get a bit older.
      Dec 7, 2019
    • Cisco Hjkb55
      Cool yeah just make sure you read everything you sign so that you are sure you can withdraw your money whenever and there are no fees for doing so. Also make sure you are good at saying ‘no’. Keep in mind financial planners are basically sales people and when you try and leave you will likely have to sit through some sort of hard sell to keep you to stay

      Also I would advise against investing in ‘actively managed’ funds even if planner suggests it. And watch out for fees on funds he advises since those fees would be on top of management fee
      Dec 7, 2019
    • Google / Eng uyfv
      I hope you get a genuine financial planner. Otherwise investing is simple if your retirement is not close. Just put everything in vtsax and vtiax
      Dec 7, 2019
    • Barclays PLC / Eng swoog
      I’ve never used a financial planner but when I hear people recommend them they say to go for a flat rate vs percentage , may be something to look into
      Dec 7, 2019
  • Qualcomm $)
    For easy, stressfree investment (that outperform 90% of financial planners) - Go with simple three fund portfolio or lazy portfolios (look them up). Read - “a random walk down Wall Street” ......or https://www.bogleheads.org/wiki/Getting_started
    Dec 7, 2019 5
    • Google rbtrnndsnw
      OP
      so you invest all of your $$ (after retirement) into the 3 fund portfolio? This seems like the right approach but I don’t have time to research enough to validate it
      Dec 7, 2019
    • Qualcomm $)
      You are young and it’s ok to make mistakes. My issue with financial adviser/robo adviser investing your money is - they try to lock you in ........ e.g. even though you realize your portfolio choices are bad (or you are paying too much commissions) ..... since money has appreciated after few years ..... pulling out will have tax penalties. E.g. Wealthfront direct indexing is prime example. Most financial advisers do the same
      Dec 7, 2019
    • Google rbtrnndsnw
      OP
      Oh wow, I will definitely ask what the fee is to pull it out and I will get their response in writing as part of the contract.

      In my team at work, we’ve started trying to use “decision documents”. In this case, it’s a contract and I this piece of information would really belong there.
      Dec 7, 2019
    • Google / Eng uyfv
      Even if there is no fee, you will end up paying 20% capital gains tax.
      Dec 7, 2019
    • Google rbtrnndsnw
      OP
      Interesting, you would think they would be able to just transfer it over to you without that hit. I’ll ask
      Dec 7, 2019
  • LinkedIn rintintint
    Learn about investing basics here and in Bogleheads: www.firetobiz.com/investing-basics .

    This is actually extremely simple, and the best solution.
    Dec 8, 2019 0
  • New
    scheme

    New

    BIO
    Started blind to get some break from work. Now, I work to get some break from blind.
    schememore
    Many posts today asking for financial advice. Lookup Dogecoin. You can't go wrong with that.
    Dec 7, 2019 0
  • SAP DVOw73
    You make less than you think. Start here to educate yourself on financial literacy. It will help to understand the function of money, budgeting, short and long term planning.

    Easy and excellently presented

    https://www.bogleheads.org/wiki/Video:Bogleheads%C2%AE_investment_philosophy
    Dec 7, 2019 3
    • Google rbtrnndsnw
      OP
      What do you mean I make less than I think? My first reaction is to be defensive because I have a pretty good idea of total saving post tax and post expense. But I’m reality, perhaps there is something more to learn from your statement.

      My other assets are $$ saved so far and earning potential in the future, need to plan for this too
      Dec 7, 2019
    • SAP DVOw73
      I suspected that you’re pretty young, unmarried, no kids, Bay Area resident. I make more than you and my choices with three kids in the Bay Area are all well thought-out, after being stupid and living “the big life” in my early 30s. Without discipline, I’d do a disservice to my family. When I look left and right, I see people making a lot of money but burning through it and having high debt. They do that because they adjusted their lifestyle beyond their income level. All of them have advanced degrees.

      Just a kind word of warning, didn’t want you to become defensive. I should have worded more carefully, my apologies!
      Dec 7, 2019
    • Google rbtrnndsnw
      OP
      Yes you got my demographic right. Yeah life style inflation is real. I’m looking for a new apartment this weekend and will keep that in mind, good to be reminded there are examples of this left and right and I’m not special to avoid the trap.
      Dec 7, 2019
  • Indeed YsQD63
    Managing wealth can be deeply overwhelming and a financial planner can help you feel more confident, but imo paying for an advisor to manage your assets is rarely worth the cost especially in the $$ range you’re dealing with, i.e. you’ve got enough money that it’s worth being thoughtful about how it’s managed, but not enough that it really is beyond your ability to manage yourself.

    For me the way I dealt with how overwhelmed I was feeling was opening an account with a robo advisor. Once I had the account I saw that it was actually just a really simple programming problem, I saw ways to optimize it, and started to I felt confident tackling it myself. I did some reading, wrote some of my own scripts, and now I manage it on my own and save myself a lot of money in fees.

    You might consider seeing if you can find a fee only advisor (there are definitely ones that charge like $500 not the $5k you mentioned above!), one that will have a meeting with you and help you set up a plan, but I think you’ll find you can build the confidence to manage your assets yourself! You figured out how to go from $9/hr to $290k/yr, believe in your ability to learn wealth management too!
    Dec 7, 2019 2
    • Google rbtrnndsnw
      OP
      Thanks for the reply. Yes “overwhelm” is the perfect term to describe what I am feeling - that is exactly it.

      It is a lot, the 1% fee. I’m not planning to do this my whole life, just 1-3 years max. Still a bad idea?

      I could consider robo again for part of my portfolio. Might not be a bad idea.

      This person can also be fee only but the fee is $5k. I haven’t saved $500k in non-retirement accounts yet so it’s cheaper to do 1% of non retirement accounts.

      I don’t think I’m going to find the confidence anytime soon. Hopefully in 2-3 years. I have a diagnosed anxiety issue that needs to be considered, since money management isn’t just math but also an emotion-problem.
      Dec 7, 2019
    • Indeed YsQD63
      Idk that I’d feel like it’s an actively bad idea to sign on with an advisor for a couple of years, that was my first instinct, but I am glad that I personally decided to not sign up with an advisor and just wrestle thru the emotion+math problem. It really is one that I think you’ll find you’re capable tackling (even with professional advisor help) for way way way less than 1% of your assets under management/yr.

      Try tossing $5k in a robo advisor. Schwab’s is decent and they’re very simple accounts to open and close. I started there and ended up moving my assets out to Ally because they’ve got a better interest rate on savings and an API that I like.
      Dec 7, 2019
  • Facebook leetworld
    Do not get a financial planner. Read and learn about this stuff yourself. The financial planner would be rich and not helping you if they knew any special knowledge about the markets and investing.
    Dec 7, 2019 1
    • Amazon misa-misa
      True. Learn it yourself. All the common advice also hides things people don't want you to know. I've learn to bit the bullet and do my own research here.
      Dec 7, 2019
  • Hire someone to help you lay out a plan. Then stick to it. Update with them every year or so as life changes.
    The key is take emotion out of it
    Dec 7, 2019 1
    • Google rbtrnndsnw
      OP
      I think this is the best solution. Do you have any thoughts on their price tag of $5k for a plan?
      Dec 9, 2019
  • Qualcomm $)
    @rbtrnndsnw My 2 cents ...... do talk to financial planner for ideas/suggestions ..... but I would advise to invest on your own.
    Dec 7, 2019 2
    • Google rbtrnndsnw
      OP
      How about just for 1 year I will have a planner and then the following year I may be more equipped to do investing on my own, probably. I’m only 28 so any mistakes I make early are very costly. It’s too hard for me right now flying solo on this.
      Dec 7, 2019
    • Qualcomm $)
      See my other post ....... you don’t need to fly solo. Use Morningstar discuss forums (portfolio design forum) ..... professional and career investors will provide feedback on your strategy ........ also, once you have invested and have a plan ........ then have a session with Financial planner.
      Dec 7, 2019

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