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Totally clueless with investing, $100k sitting in the bank earning 0.05%. How do I get started? Please advise. (self.personalfinance)

submitted 3 months ago by nieceandtows to c/[email protected]

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I have been putting part of my paycheck into a high yield savings account, but haven't bothered with investing it in a responsible manner partially due a fear of losing the money due to bad investments. I'm finally realizing how much potential money I've lost by letting my money stagnate. Please advise me on how to responsibly invest my money, thanks!

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[–] [email protected] 12 points 3 months ago (4 children)

How does one find a good financial advisor? How do you spot flakes or bad ones?

[–] [email protected] 7 points 3 months ago

I've been suggested some legit ones by my credit union, upon request. Your mileage may vary, but I suspect most recommendations from a bank or CU have been vetted.

[–] [email protected] 5 points 3 months ago

Ideally, you should be paying them for their time, and they shouldn't be getting any commissions other than you paying for their time. Look for a "fee-only advisor" who has a license that lists them as a fiduciary, which means they have a legal obligation to act in your best interests.

But honestly, you probably don't need one. Personal finance is relatively simple:

keep 3-6 months cash in an emergency fund
pay off high interest debt - where high interest is usually something >6% or so
invest in low-cost index funds - if you're unsure, find a target date retirement fund with fees <0.20% (anything up to 0.50% is still "low" though)

But if you're not confident, find a fee-only fiduciary advisor to educate you about investing. A good one will help you feel more confident and provide options, they won't be pressuring you into any particular decision.

[–] 200ok 2 points 3 months ago

Ask them about their investment strategies. If they put all your money on mutual funds, ETFs, etc (i.e. managed accounts that you can choose yourself in a self-directed account) then run.

Advisors often get a kick-back for getting their clients to invest in managed accounts where they have a relationship with the fund managers. AND you pay the fund management fees to the fund company on top of whatever your advisor charges you for their own fees.

[–] [email protected] 1 points 3 months ago

The need to be acting as a fiduciary which has a legal definition.