I am completely ignorant to this kind of stuff and going to keep it with simple numbers. If the financial advisors fee is $100 a month and the long term goal is to make 10% on the investment. How much do you have to contribute a month to cover their fee and actually make money? So if I'm putting in $500 a month and paying $100 fees and the long term goal is to make 10% 500 - 100 = 400 400 x 10% = 40 loosing $60 before I'm getting started Am I looking at this right or not?
What is the long term goal? 10 years? Then $100 is a lot. Or are you asking how these fund managers make money, outside of the obvious $100.00 a month.
You lost me at paying 20% to a financial advisor. lol. I haven't looked at them in a while, but I think most financial advisors used to ask for around 1% of your assets under investment. I don't know since I've never used one. You should also ask them if you can get your fees + any losses back from them if they don't hit 10%. Financial advisors are probably good if you've got stuff like complex taxes and/or an estates to figure out or plan ahead of time or even if you just aren't a person who knows squat about anything when it comes to handling finances (but somehow are good at making money). If you really want a financial advisor, shop around and see how much they all charge - don't just go to one or two. You could put your money into an S&P 500 fund or something and pay less expense ratio than that. And nobody can guarantee you 10%.
It’s not, just like paying any expert isn’t. You’re paying for their expertise and time. Obviously you could put the time and energy into becoming something of an ‘expert’ yourself but that’s your time that you’re spending and you have to put a value on that.
Most FAs can't beat an index fund. It's basically understood the ones that do are blind luck. It's a waste of money.
There's that also. If you have a very special or difficult circumstance an FA can be worth while (most of the time it's more for the legal advice than it is the 'making money' stuff). If you're Joe the Plumber and just want to make your money grow any index fund can do that for you with very minimal overhead. And of course there's always bitcoin if you wanna be a gigachad galaxy brain like us.
Find the right one. Ours scammed / misled us on over mil study the above and realize that plays outside ETFs are tough and better be worthwhile. Define your goals
He might be financially illiterate, in which case it's probably a good investment. I always wondered how FA was even a career anymore given what we know about the industry nowdays. This thread shows some habits die hard I guess lol.
free financial advice, just buy a set dollar amount of bitcoin with each paycheck and never touch it for ten years. Set it and forget.
Again I am completely ignorant to this kind of stuff. I have a roth IRA that I started in my early 20's. For some reason it became inactive. Several years ago I went to a investment company to see if they could get it reactivated. Well the guy that got it going again passed me off to a new guy. The new guy did a great job of breaking everything down, but now I'm see the fees. To me It looks like I'm paying more in fees than I'll be making. He said I'm just seeing the effects of 2022 and no the big picture.
Based upon the way you spelled it out, it seems like you're losing 20% off the bat for every contribution you make monthly which, to me, is insane. The rest of it doesn't matter because no one can guarantee whether you'll have 10%, 50%, or 70% returns based upon what they do and they get rewarded whether they fail or not in getting you the 10% you want. Again, based upon the way you stated, I'd be looking for someone else. Your problem may be that your portfolio is too small to where any fees will eat into contributions and returns - I don't know. My finances aren't complex enough to require a financial advisor (yet), so I don't have experience with them. Like I've said, I always heard advisors usually only take about 1% of assets invested, but I don't know if that's still true or not. Maybe your portfolio is small and they force you to give them a flat fee of $100 to do their work to make it worthwhile. I don't know. The best way to find out is to call other advisors and tell them what you need and how much you're trying to invest.
Unless you can invest in the medallion fund just put it in an index fund. 93% of money managers aren't going to beat it. It is a waste of money getting an advisor.
Doesn't seem rights , but as always it's depends on circumstances. I pay myself what I need,and keep the rest under my practice account to lower my income taxes, the remaining fund goes into passive investment managed by FA, it's almost nothing substantial but doesn't really matter bc everything will taxed at 50% after reaching certain threshold. FA admin fee (my guess never really read their statement carefully ) is quite low and tax deductible FA helped me alot with insurance of all type, planning and such ,but won't call it a wealth maker
