Quote:
Originally Posted by FrmlyBklyn
Not quite. If the saver visits a (ahem!) financial advisor who helps themselves to a 2-4% upfront sales charge (not uncommon), places the saver in investments with expense ratios of 1% or greater with medium to high turnover, the saver could wind up shelling out more than 1/2 their hard-earned savings in the form of upfront taxes, sales commissions and fees, the remainder of the money goes to work for them but then asset allocation will determine if they get "lucky" or "fall down".
If a saver places their money in low-yielding (read: safe) investments, while inflation is moderate to high and other investments are yielding the safe return plus inflation risk premium - the saver will be left behind. A well-balanced, low-cost and diversified plan will usually beat the pants off of the "safe assets". The assets are safe for a reason - there is no risk, you know the saying "no risk equals no reward". Be an owner first, lender second, borrower last resort.
In other words, it's not so simple to say just save "x%", the magic formula is dependent on consistent and increasing savings amounts, location (tax-deferred or tax-free is preferable) and asset allocation based on risk tolerance. You can select a 100% equity investment plan, but if at the first sign of a decline in the market you run, then all your planning is for naught - you want to be buying when people are selling (buy low), sell when people are buying (sell high). If you can't stay the course, then you have the wrong plan.
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tax deferred isn't always preferable. it does make sense for some of your long term savings to pay taxes now, if possible (like a ROTH IRA/401k) to diversify your portfolio of investments. yes, some financial advisors are expensive, some are not. yes, some funds have high expense rations.
yes, there's no magic number, but i stand by my statement. if you're saving 10-15% of your income, and not making mistakes (like paying 4% to a financial advisor!), you'll be set up fairly well.
all your reply is saying is not to make certain mistakes...i agree. and yes, stay the course, which is why i said "for 30 years"....