Dick contributed to an article by Miranda Marquit of allBusiness.com about her July 18, 2011 article on investing tips for “do it yourself-ers.”
Dick Van Dyke, a financial planner and retirement educator, and the guy behind Annuity Rates Instantly, knows that technology offers plenty of opportunities for those interested in DIY investing. “It’s the day we live in,” he told me. “The Internet allows people to see that they can do it themselves. Investing used to be shrouded in mystery, and now you can do it yourself. However, sometimes it’s almost as though you have too many options. It’s like going to a restaurant and having this huge menu. How do you choose what you want?”
Before you decide on an online broker, Van Dyke suggests that you take a step back and evaluate your options. “So many investing options sound good at first, and you need to look behind the scenes a little bit.” He said that your first check should be of fees. Look at what fees are being charged for transactions, and find out more about other fees the online broker might charge.
It’s also important, if you are planning to invest in funds, to be aware of what fees the fund charges. “Funds come with their own fees,” Van Dyke pointed out. “A run of the mill fund will run 1.5% in fees — just the upfront fees. You also have to look for transaction fees within the fund, as well as ongoing commissions to the broker. When everything is factored in, costs easily average 2%, and that can really make a difference in your overall gains over time.”
Van Dyke recommended that DIY investors consider index funds, rather than actively managed mutual funds. “Younger investors can really benefit from index funds. It’s so hard to time investments to hit it just right, but if you stay in it over a long period of time, stocks have traditionally outperformed everything else. Index funds and some ETFs can follow the broader trends of the market, and usually have much lower fees.”
If you are in doubt about your options, it might be worth it to consult a professional. “You can meet with a financial professional to chart a course, without committing to a long-term relationship,” Van Dyke said. “Many financial planners and investment advisors have a flat fee for a consultation, or an hourly rate. You can meet to chart a course for your investments, and then take that plan and implement it yourself.”
Be careful when getting advice, though. “Finding someone is sometimes hard,” Van Dyke acknowledged. “You should ask around. Find out from friends and family who they like. Your financial planner should be properly licensed and certified, and should have references that you can speak to.”
Whether you are a truly DIY investor, heading out on your own to invest, or whether you want a little direction and guidance, there are plenty of options. Technology has made it easier than ever to invest, and to earn returns that can help put you on the path to financial freedom.
The full article can be found at allBusiness.com.
