Alex’s Reviews > Saving for Retirement > Status Update

If a financial advisor does a financial plan for you, ask to see other plans that they've done as well, preferably for someone with similar circumstance as you. If all the plans look alike for all individuals, it is possible that the advisor isn't offering much value.

Target Date funds. These are designed for one purpose–to grow your money as much as possible by the time you reach the target (i.e. typically your desired retirement year). Simply choose a target and the fund manager will appropriately adjust the stocks and bonds within the fund throughout your working years as you get closer to that date. If you buy this type of fund, you will not have to buy any other type of fund.

A broker who works off commission is likely to have you spend more money than you need to. There's no need to get an advisor to select an index fund for you. It defeats the purpose of having a low cost index fund (which is low-cost because there is no stock picker that needs to be paid. most people should be able to pick their own index fund without having a broker do it.)

Unfortunately, some of the cheapest (low fee) funds that are sold by mutual funds are not available to people who do not have a lot of cash. For example, they may ask for an initial deposit of $2500-$3000. DO NOT let this deter you. There are funds that will let you invest as low as $50 as long as you do it monthly until you have hit the minimum initial investment amount.

What is the Dow? The Dow index contains an array of 30 powerful companies from every industry. They are looked at as a group and used to take the "temperature" of the economy or to get a glimpse of the perceived health of America's corporate economy.

Here is what an index fund does. They don't hire fund managers to navigate stocks for you. The fund simply buys everything in the stock market. When you buy a S&P 500 index fund, or a total stock market fund, you are buying the full array of stocks that make up the stock market. The trick is that they charge very low fees and you keep more of your money than you would in a fund managed by a stock picker.

"If you're starting an IRA and are overwhelmed with the thousands of choices, look into what is known as a low-cost index fund. you may find one called something like '' total stock market index fund,' hold it forever, feed new money into it every week, month, or year; and stop worrying about how to discriminate between all the funds with all the wack names"

"When examining a fund, you need to take a quick look at one number–the expense ratio. That number will show you what percentage of your money goes toward paying all of your expenses for having the fund. [If you have 2 similar funds, go with the one with the lowest expense ration. It could save you thousands over the years.]"

"Try to avoid paying what are called 'loads,' which are nothing more than a fee you pay a broker or an advisor to select funds for you. Instead, select what are called 'no-load' funds. In other words, they don't charge you for advice."

In "The Portable MBA of investment" Paul Bernstein notes that if the average investor missed just 10 of the very best days in the stock market over a 9-year period in the 1980's, his or her return would've been reduced by a third. Removing just 30 of the best days cut returns by 70 percent. [In other words, don't wait to invest or pull your money out of a down market]