I've had a roth IRA and a mutual fund thru Northwestern mutual for just under 2 years. I'm 23, I wanted to get started early so I can buy a business with the money some day. I don't trust the guy that is in charge of my account. My 2 accounts are up less than $100 COMBINED during the lifetime of my contributions (23 months) . Should I take my money out and invest in Robinhood myself? Anyone have any good suggestions? I'm open to anything, please let me know what you think!!
I have a friend that works for Northwestern Mutual. Limited insurance type products is what he sells. Hardly a 'financial advisor' IMO.
My boys have growth stock mutual funds and index funds. They were up 20% in 2017, down 8% in '18, up to all-time highs in '19.
If you were in equities as you should be, you should be up way more than $100 unless the account value is $1000 or something real small. What's the % gain?
My guess is fees are eating your lunch. 80% of FAs don't beat the market anyway, so may as well invest in no load index funds.
Exceptions to index funds would include a large, complicated estate. Check out The Simple Path to Wealth by JL Collins or I Will Teach You to be Rich by Ramit Sethi and get your investments on auto-pilot (without gotchas).
Also, having success in the market over the last 10 years is like having success in real estate. When the tide rises, all ships go up with it. An advisors worth is what your portfolio does when the market starts to crash, which it will.
Unless you are doing analysis of companies and industries, delegate that. Most advisors are doing that anyway.
The ones doing the analysis are called portfolio managers or fund managers. Your typical financial advisor picks funds and managers 9 times out of 10 these days. It scales better.
Agreed David. Stocks, like any investment can be a solid investments for those that are true stock investors. For me; it's real estate. Haven't paid taxes in about 9 years. One day I will however it will be with much cheaper dollars way far down the road!
Originally posted by @Account Closed: Originally posted by @Ivan Barratt:
@Nick Farrell have you read "Fake" by Robert Kiyosaki. Great foundational book for financial education. The book also answers your question directly.
Ivan, I'm a big fan of Robert, I have not read "Fake" yet but I did watch several of his videos promoting "Fake" including some extensive interviews. Robert goes on to call the stock market "Fake assets" and explains why, but just so you know he did invest in stocks in the past as per this video: https://youtu.be/iY_OgRhYH7Q?t=75 It does make sense that the stock market is fake assets, but I think it is also wise to diversify your portfolio. Another thing that Robert says about the stock market is that you pay high taxes on your profits vs. not paying tax at all on REI (Robert claims he doesn't pay any taxes). There is some truth to that, RE investors can potentially not pay taxes legally if they play their game right.
Robert is a very wise man, I like a lot of his content incl. books and Youtube videos.
@Nick Farrell As someone who works in the industry, there's no reason why you shouldn't be up more than that given the type of market environment we are in. But as others have said, there's no way to tell unless we know the underlying funds or products you own. I would look closely at what products he has you invested in. Perhaps he labeled you as a more 'risky' client because of your age. If he simply invested you in the S&P 500 or and comparable index fund, check to makes sure he's not 'churning' the account.... buying and selling to generate a commission. This day and age a lot of advisers are 'fee based' meaning they charge 1% on AUM rather than 'Brokerage' and charging a fee on every purchase and sell.
Bottom line: Ask him if he is fee based or brokerage. Then ask him to print out a list of your current holdings and look up the 'tickers'. You can do this for free on Morningstar and see a breakdown of the stocks or mutual funds and their recent performance. While it sucks you have to do this and it shouldn't be your job, its a good way to figure out whats going on.
lol @Account Closed yes I can! My biggest ROI is investing in my own financial education! :)
LP's; if they play the game well can at least offset gains and re-invest them to kick the tax can down the road. Thanks to the new rules; one can pull this off without use of 1031 exchange. The new rules have changed the game!
Next; cap gains tax break. That tool will be used at some point to juice the slowing economy!
A lot of good advice in this forum so far. Northwestern Mutual actually has a lot of good insurance products. The question is: Why are you taking financial advice from an insurance salesperson?
If you are looking for an actual financial advisor check out NAPFA's advisor search, XYPN or CFP.net. Find an advisor who:
Does not accept commissions for selling you things (Fee Only preferred)
Is held to a fiduciary standard (insurance agents are not)
Is a CFP Practitioner
and who has some experience in your Niche (working with real estate investors for example if that fits you)
If you want you can PM me and I'd help you figure out why your returns aren't what you expected.
@Nick Farrell that is not a Financial Adviser. You are dealing with a sales person at Northwestern Mutual who gets paid to sell mutual funds and insurance. Both are heavily loaded with fees which destroys your return.
I have my ROTH IRA through TD Ameritrade and it is completely online. I am invested in very low fee index funds. No sales people call me and I just pick my own diversified investments.
Seriously... no reason to be with a full commission house or the like or whatever Northwestern Mutual is... Go to one of the low fee houses. Schwab, Fidelity, Vanguard. At your young age, put it in all stocks... a total market ETF or something with super tiny fees.
(pretty much what Joe Splitrock just posted above me).
@Nick Farrell I'm curious as to why an IRA was recommended when your goal is to start a business. You may want to make sure your advisor is aware of your financial goal. Ask your advisor/cpa what tax liabilities may ve triggered when you are ready to use your IRA funds for your business.
Additionally, use FINRA's Broker Check. I feel Broker Check is under utilized by consumers. You can access it to help make informed choices about brokers and brokerage firms-and it provides easy access to investment adviser information.
°Tells you instantly whether a person or firm is registered, as required by law, to sell securities (stocks, bonds, mutual funds and more), offer investment advice or both.
° Gives you a snapshot of a broker's. employment history, regulatory actions, and investment-related licensing information, arbitrations and complaints.
@Nick Farrell Motley Fool is the BP of stocks. Check them out. I INVEST ( not trade) in individual companies for the long run. I don’t own any ETFs/Mutual Funds. I have 0 plans to sell my stocks. But you also have to be realistic with your goals. You won’t become rich overnight. The market on average returns between 8-12% a year. There is so much to unpack with stock investing. Send a PM if you would like to learn more.
if you want to set and forget about your portfolio, you should become a boggle head investor (google
Never buy from an insurance person/salesman, annuities are the worst product out their FEES out the yang yang they keep changing the name of annuities still the same old cow. The mutual funds they have are heavy in fees too, avoid big banks too!
Buying single stocks is gambling buy a good index fund based on your age, risk tolerance.
Fee-only financial planners are registered investment advisors with a fiduciary responsibility to act in their clients' best interest. They do not accept any fees or compensation based on product sales. ... NAPFA is distinguished both by the competence of its advisorsand their method of compensation.
@Nick Farrell get a vanguard account and invest in low cost etfs (index funds). The expense ratio on these funds are the lowest you are going to get ...or at least close to it. Also when you buy their etfs they do not charge a fee to buy the fund. Your financial advisor will not be able to consistently beat the market and honestly you won’t be able to either. Luckily if you just match the market you are doing way better than most and especially at your age!!! You are already killing it!
For more info I really like “money, master the game” by tony robins. The audio book is solid.
Also, the real money is in yourself. Invest in yourself, your education, your business, your ideas, your health, your happiness and wealth will follow. Chase the process not the goal.
99% of financial advisors are useless. Most are simply salesmen who peddle the products pushed on them by Wall Street, they have no true analytical experience in the markets. If they did, they'd be working at a hedge fund, not Northwestern Mutual. If you're going to invest in the stock market, you're better off saving yourself the commissions and investing yourself. I'd recommend learning how to use stock options... it's really not difficult to learn how to use them properly, and you can collect nice cash flow from selling options or use them as insurance against your existing portfolio
Better yet, don't put your money in the stock market and keep it as liquid as possible (money market, T-bills) to invest in real estate!