Save Money On Fees When You Control Your Own Portfolio
BY: MICHAEL SANDUSO ON THURSDAY, MAY 24, 2018
Does your financial advisor always have your best interest in mind? They may have the best intentions, but the advice you pay steep fees for isn’t always advice that works for you. Take this example from MoneySense, which involves a couple who saw their $2.2 million retirement lose 90% because of an advisor who said $2 million wasn’t enough and encouraged them to take unnecessary risks. Their advisor worked with a big bank and lost them millions. One of the most common complaints between advisors and their clients is the suitability of the investment.
Financial advisors are licensed professionals who are held to a “suitability standard.” That means they have to make decisions with your money based on your suitability. The problem is defining just what that means. If your portfolio is deemed to have a medium to high-risk tolerance, even if you want something more conservative, you may wind up stuck with risky investments that could lose more than they could gain. In fact, in a 2014 “mystery shopping” effort, Canadian regulators found 29% of advisors didn’t wait to learn enough about their clients’ goals before recommending investments.
If you’re paying a commission, even when your retirement portfolio is doing well you wind up paying a lot of money for the privilege. You might be surprised how easy it is to manage your own portfolio. You don’t have to pay fees to an advisor and you can make the decisions that feel right for you. There are several ways you can take control of your retirement portfolio.
1) Open an Online Brokerage Account
A brokerage account allows you to buy a number of different equities through a broker, including stocks, bonds, mutual funds, and futures. A brokerage account may also come with fees, but it’s an effective solution for investors who are sick of bad advice and pressure tactics from negligent financial advisors. A brokerage account lets you call the shots on your own retirement.
Before you strike out on your own, it’s a good idea to brush up on investment fundamentals. Understand the principles of financial planning, insurance, and the tax implications. Once you’re familiar with the risks and pay-offs of different investment strategies, including stocks, bonds, and futures, you’re all set to start defining your own financial future.
2) Alternative Assets
Alternative assets like real estate, silver, gold, or other commodities are all things you can buy independently. When it comes to investing in silver and gold the process is straightforward. You have several options for buying and selling gold and silver: local gold shops, TV gold dealers, and online gold dealers. Usually you can find the lowest premiums on gold and silver from online gold dealers, as they don’t need to sink so much overheard into marketing or a physical location. If you can get free shipping, an online gold dealer is almost always a better deal.
Silver and gold are great physical assets to own. There may be storage or insurance costs, but there are no fees you have to pay a financial advisor. You can also buy gold and silver as part of your RRSP, which means it’s tax-advantaged. Gold and silver are often used by investors to beat inflation and as an insurance policy against the risks they take on the stock market.
3) Trading with Cryptocurrencies
As cryptocurrencies like Bitcoin gain acceptance as a mean of payment, you can also trade with Bitcoin. If you’ve invested in a cryptocurrency and you want to diversify your portfolio, you can now buy gold with Bitcoin directly. Other asset classes will inevitably follow suit.
The best financial advisor you have on your team is you. Never let a financial advisor push you into a decision you’re hesitant about. If you start feeling pressured or belittled by a financial advisor, it may be time to strike out on your own. Even if your main goal is just to save money on fees, managing your own portfolio shouldn’t be intimidating. Take time to learn about investing and the decisions you make. You can be as active or as passive of an investor as you like, take the risks you believe in and avoid risks that make you uncomfortable. It may be time to take control of your financial future.
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