Finances – It is a big green world!

Lately I have been having conversations with my younger coworkers trying to figure out how to invest in their 401k accounts. During the conversation I realized how little we are informed about how to invest. It is one thing to have the discipline to save money away into your 401k, but it is an entirely different type of discipline to learn about investments on your own.

There are a couple different schools of thought on the matter. The one is that we the individual do not have the skills or training necessary to invest on our own and so we should use a financial planner. They not only help diversify your investments according to your risk level, growth desires, and assist with minimizing taxation impact the accounts, but they can also put together a total financial plan for your life. You may not be a person disciplined enough to be saving as much as your need or know how much or what type of insurance you need. Life events happen like getting married, buying a house, and having children. They can guide you through the financial decisions that may need to be made and explain the financial impact of each of the options. They are definitely a valuable resource if you are not one to be financially minded, but they come with a steep cost, which some forms may appear to be hidden to you, but they exist all the same.

Another school of thought is to do it all yourself. You end up spending lots of time researching, reading articles, and pondering how they best apply to your situation. You re-balance your investments annually. You negotiate with insurance companies trying not to be oversold, but still acquire adequate insurance for a fair cost. You carry the weight and stress wondering, “Am I doing enough, saving enough? Will we (I) be okay if X happens?”

With advancements in technology a newer methods have arouse with varying levels of assistance for the do it yourself-ers. There are guided retirement planners, investment tools to view all financial accounts in one place, robo-advisors that automatically invest your funds, re-balance, and compute tax loss harvesting based on timeline and financial goals.

There truly are a myriad of options available to the modern day investor. There is so much knowledge available, research and reports published, reviews written by users based on actual experiences. It is hard to say, that one method is better than another. It is all so dependent on the person, their comfort level with risk, their comfort level with technology, their social preferences, and their adeptness to learn financial subjects and terminology.

For my wife and I, we take a mixed approach using all the above methods. So obviously the financial planner does not do it all. He actually does very little. We have our term insurance policies through him. I manage our 401ks trying to diversify with the limited funds available and avoid the target date funds. I manage the H.S.A. investments as well. I use a robo-advisor, Betterment, to manage the IRA accounts and taxable investments (long-term savings).

All-in-all I hope I am showing why finance is one of the three topics I chose to focus my blog on other than faith and family, which of course take precedence in my life. Finances is such a huge topic touching so many aspects of life, has so many opinions and options, does not seem to be well understood in American culture, and can be an area from which people remove their faith. Hopefully I will be able to provide some perspective in areas that may be a little cloudy, but ultimately the choice is yours for which path you will take.

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