Let me start out by telling a little story that happened to me a few years ago. My wife and I were referred into a financial advisor to get her set up on a 403b retirement program. The broker went through the options for the fund and towards the end asked if we were ready to make a decision. Since I had never dealt with a broker before, I decided to ask what the fees were. My dad had told me that day to research the actual mutual fund fee on my own 401k, so the question was stuck in my head. The reponse that I got next still shocks me to this day. 5.75% on every dollar that I put into the fund, right off the top. Not only that, but the actual mutual fund he was directing me to charges 1.5% annual fee.

I was shocked to say the least. This same broker had just painted my wife and I a scenario, in which if we put in $250 a month and earned a conservative 7% a year, we would be rich when we retired. Imagine my surprise when I did the math and learned that actually, if we earned 7% a year, we would be DOWN money because of his fees. As we left I got more angry, thinking about the fact that the school district had referred us into this person (as well as countless other teachers) and here he was, running a racket. When I questioned him why his fees are so high he responded that we are paying him for advice on which funds to pick. Advice? How much is there to know? How do you know if you are getting a fair shake? Read below!

Financial advisors serve a purpose, there is no question. But, I've seen friends that I KNOW don't know a lick about finance, go through a training program and 8 weeks later become an expert. I don't doubt that they learned something, but they are not qualified to charge me 6% as a fee for their wisdom! If you are starting out and want to get involved in investing. Take some time and get the basics down. Some resources can be found at Vanguard.com. After that, determine what kind of investing you want to do.

In most cases I've seen, someone wan

ts to get started in something uncomplex as a way to get into the market. Mutual funds offer the ability to do that at a very low cost. Typically, a discount brokerage will be your easiest and cheapest way to do that. Examples of discount brokerages are Trowe Price or Vanguard. The only fees that you will pay is an annual fund management fee of anywhere from .25%-1.25%, depending on the fund. The fund company will tell you the makeup of the fund, the performance, and the morningstar rating. These are all tools to help you determine if you are picking the right fund for your stage in life. If you need help, then call the number and ask for more information about a particular fund. By learning a little about the process, you are saving yourself a lot of money going forward.

I understand that most people are intimidated about money. I have heard people tell me constantly that they don't understand money, so they listen to their advisor. That is fine, that is what advisors are paid to do. That's the problem though, they have to put food on the table too! So, look at the value of that initial meeting that you had. The one where he put in plain English how easy investing was. Think about him taking $345 of your $6K you invested that year and the year after and the year after. Pretty soon you have got to start thinking, "What he was doing wasn't that hard! He hasn't even done anything for that initial meeting!". So, if you need an financial planner for some more complex situations, then fine. But, I think its worth your money to get educated on the basics.

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