Many of you who I have had the opportunity to talk to have heard me use the analogy of investing being like auto repair. There are the “Do-it-yourselfers,” the “Take-care-of-it-for-me” folks, and the “Manage-it-with-me” people.
When I was a teenager with my first car, my dad tried to teach me to be a “Do-it-yourselfer”; anytime that old ’77 Thunderbird wasn’t running right, my dad and I would figure out what the problem was, then run down to the local parts store to pick up what we needed, then put it back together.
But even with that training, the realization is that now, 20-some years later, I don’t have enough time with two active teenagers and a full-time job, or the expertise with the more modern computerized engines to barely change my own oil! In the investment world, the Do-it-yourselfers do research and analyze where their money should be invested and monitor it for long-term success. These types of people can save money if they know what they’re doing, but if they mess up, it could end up costing them far more than if they had utilized professional help in the first place (for either investing or automobiles!).
On the other side, you’ve got people who don’t know or care about vehicles — cars are a necessary evil to them and if their vehicle makes a funny noise or has a warning light turn on, or they get stuck on the side of the road, they turn the vehicle over to a mechanic and simply ask, “How much was it?” when the repairs are done. These are the “Take care of it for me” folks. There are also investors who turn over full decision-making power to professionals. These types of people generally end up on the higher end of expenses paid (again, for both investing and cars).
Well, fortunately with the knowledge my father gave me regarding cars, I now fit more comfortably in the last category — the “Manage it with me” group. When something goes wrong with my truck, I drop it off at the shop (of my trusted mechanic) and tell him my unprofessional diagnosis and he calls me later with his professional diagnosis; then we decide together what needs to be done and how to most economically accomplish the task. For most folks, this is the best solution for them for their investments, too. It is your retirement and ultimately you are responsible for its success. However, you may not have the time or the appropriate knowledge to manage and then monitor your investments properly. A good advisor/consultant can be your partner in finding success.
The warning flag I’ll wave for you here is that there are many magazines, websites, and large financial management firms that promise they can give you the “tools” necessary to save money and do it on your own. With the complexity of the investment world today, however, there are many products to choose from, like individual stocks, bonds, mutual funds, ETFs, DRIP investment plans, REITs, private equity managers, and many more. That can all sound good, but to differentiate what’s best (and frankly appropriate) for your personal risk level or investment needs is often very difficult for the novice to properly evaluate. Back to my analogy — it’s like going to the Internet to get advice about how to evaluate, then change, engine parts on my truck. Easy stuff for a trained professional, but a potential disaster for me all by myself! It's no different with investments. A good investment professional can help you navigate these different products and solutions to find an appropriate plan that fits your personal risk tolerance and helps set realistic expectations for your investments.
Your retirement options within the FCMM plan are some of the best I’ve ever seen for an employer sponsored plan. There are quality cost-effective options for each of the different types of investors I described above; most folks would have to have a unique situation not to be able to take advantage of the opportunities available within the plan. For a better understanding of each of the options, please feel free to contact us.