Meet with a Dave Ramsey endorsed local provider?

[minimalistgamer]

Greetings,

I recently came in contact with a Dave Ramsey's endorsed local provider. I am wondering if it would be worth my time to talk to a financial advisor. Here is my current financial situation -

https://docs.google.com/spreadsheets/d/1Vt31mwTJ5-6Ow4EHtEpFAvx8YL0pxk5m3GcLcOBtMrY/edit?usp=sharing

Currently, in addition to my 401k and Roth IRA contributions (both are maximized), I am contributing quite aggressively to my brokerage account as well. 100% of the money in my brokerage account is invested in VTSAX. Is this strategy too simplistic? I am 34 years old, married, no kids, no debt. We paid off our hours at the beginning of this year.

Is there any reason for me to consult with a financial advisor or should I continue doing what I am doing?

Thanks for your advice.

[extremedefense]

Your finances look fine to me, if you feel like you want to diversify some, why not mix fine international into the mix?

[yachi]

Dave Ramsey is helpful in motivating people to pay off debt, but I haven't heard anything good about the investing advisers he recommends.  I think they tend to favor higher fees.

[plog]

You really came to the wrong place to ask about hiring a financial advisor.  This site will skew towards not using them, you should also post a thread on another forum that skews toward using them.  That way you can get opinions from both sides and make your own decision. 

With that said, I think you are fine and on the right track all by yourself.  In fact, most people on this site are investing very similarly to how you are.

[fatcow240]

I think too simplistic isn't really a thing.  I pretty much use the same strategy.  My work 401k is in a low cost fund similar to VTSAX/VTI and I contribute everything in my brokerage to VTSAX/VTI.  Before you talk to the adviser I would read "The Simple Path to Wealth: Your road map to financial independence and a rich, free life." 

[Uturn]

I set up a meeting with one of his financial ELP's a few years ago.  I told him that I carry no debt besides $90k mortgage on a $200k house at 3%, max out 401k, HSA, and IRA.  The rest goes into VTSAX.   He laughed and said the I don't need his services.  Sadly, he said that I'm only the second person that he has ever talked to that did more than max the tax advantaged accounts. 

[dandarc]

If I had to do it over again, I would not have used a DR ELP.  American funds for investing (5.75% load, .5% ERs), only sold me term life insurance begrudgingly.  Could have done much better without him, and in fact have done much better since we got away.

Suggest reading the stock series http://jlcollinsnh.com/stock-series/ - long read, but in the end the recommended portfolio is Total Stock + Total Bonds.  I personally add Total International.  Simple is good - the less complicated your plan is the more you're likely to stick to it.  Most long-term investing "failures" happen not because the market fails to provide adequate returns, but because the investor has behaved poorly, usually trying to time the market.  If you just pick a reasonable allocation for yourself, invest regularly and rebalance annually, you'll do fine.

You didn't disclose income, but your asset list looks OK.  If you accumulated this on $50K/yr of income, it is more impressive than if it was $250K/yr, but nothing obviously "wrong" in the account list.  You do have a lot of cash - about $45K.  With a paid-off house, maybe you can move some of that into investments?

[dandarc]

One thing you could look into is if your 401K will support a Mega-Backdoor Roth IRA.  Some plans do, some sort-of do, some don't.

Requirement is to have after-tax contributions allowed.  These are not the same thing as Roth contributions.

Then it works best if your plan allows in-service rollovers.

http://www.madfientist.com/after-tax-contributions/

[BlueSky45]

I set up a meeting with one of his financial ELP's a few years ago.  I told him that I carry no debt besides $90k mortgage on a $200k house at 3%, max out 401k, HSA, and IRA.  The rest goes into VTSAX.   He laughed and said the I don't need his services.  Sadly, he said that I'm only the second person that he has ever talked to that did more than max the tax advantaged accounts.

+1

I had been using a Ramsey ELP for a couple of years when I found MMM.  I ran the numbers of using his services versus a low cost option like VTSAX and it was obvious that I'd been paying too much for mediocre returns for too long.  Once I showed the ELP the numbers he said "you don't need me anymore".  Too bad it took me so long to figure out that simple investing is the best method (for me anyway).

[DarkandStormy]

I'd invest the cash unless you're saving it up for a new house or car.  36% of your assets (not including home equity) is sitting in cash.  You're losing value on this if it just sits there.

Do you have an HSA option through employment?  That's another pre-tax option.

I'd stick with what you're doing and search some of your tax optimization options - the Roth ladder, mega backdoor Roth, capital gains harvesting, etc. which may lower your target FIRE date if you've budgeted for taxes.

[minimalistgamer]

Thank you all for your replies. I will address each response individually.

I'd invest the cash unless you're saving it up for a new house or car.  36% of your assets (not including home equity) is sitting in cash.  You're losing value on this if it just sits there.

Do you have an HSA option through employment?  That's another pre-tax option.

I'd stick with what you're doing and search some of your tax optimization options - the Roth ladder, mega backdoor Roth, capital gains harvesting, etc. which may lower your target FIRE date if you've budgeted for taxes.

I am planning on investing $10000 into VTSAX in my brokerage account tomorrow. I contemplated investing the money into a CD because my thoughts were that I wouldn't need the money right away, but if that was the case, then stock market is the best way to go. There is more risk of course, but that's the nature of the game.

> Do you have an HSA option through employment?  That's another pre-tax option.

I do not have a HSA unfortunately.

The consensus here seems to be that visiting a financial advisor who may or may not be a fiduciary is not a great idea, and I am definitely leaning more towards not going there.

Short answer, no.  Financial advisors are a waste of money except when you want to minimize taxes or start a company.  For personal investing, I would read as many books as I can find, Buffett letters, Bogle, Random Walk Down Wall Street, Intelligent Asset Allocater, etc.

Here is an interesting link to get the real ELP story:

https://hubpages.com/money/Confessions-of-a-Dave-Ramsey-Endorsed-Local-Provider-ELP

Here is a good thread on Ramsey:

https://forum.mrmoneymustache.com/welcome-to-the-forum/distancing-myself-from-ramseyism/

Thank you for your reply. I am going to read through those links you posted. It appears that his ELP program is basically brokers who make money through commissions (nothing wrong with it), but that is not something that is best for me considering I am capable of investing myself.

[minimalistgamer]

Your finances look fine to me, if you feel like you want to diversify some, why not mix fine international into the mix?

I definitely want to diversify, but I am not sure what international fund I should be contributing to. I really don't know much about international markets, and how much exposure is good for me. Therefore, I have largely stayed away from them. I invested a little bit into an international fund in my 401k account, and while that fund has done well this year, I am not contributing to it anymore. Perhaps I should consider doing so.

You didn't disclose income, but your asset list looks OK.  If you accumulated this on $50K/yr of income, it is more impressive than if it was $250K/yr, but nothing obviously "wrong" in the account list.  You do have a lot of cash - about $45K.  With a paid-off house, maybe you can move some of that into investments?

My income is $3481 each month. That is my take home pay after taxes and 401k contributions. I am saving at least 90% of this income each month since January. I have been investing it into VTSAX in my brokerage account. We have been living on my wife's income, which is around $1000 per month.

I think too simplistic isn't really a thing.  I pretty much use the same strategy.  My work 401k is in a low cost fund similar to VTSAX/VTI and I contribute everything in my brokerage to VTSAX/VTI.  Before you talk to the adviser I would read "The Simple Path to Wealth: Your road map to financial independence and a rich, free life." 

Thank you for your suggestion. I am going to look into this book. While you are right that simplistic may not be a thing, I just want to make sure I am not making any serious mistakes dumping everything into large cap funds. Its all well and good when the market is doing as well as it is, but who knows how long this ride is going to last. My main goal is to have an actual plan based on my goals, and the problem is I do not have clear goals. Perhaps I should spend some time thinking about what my goals are...

[frugaliknowit]

Dave Ramsey is great at the psychology of personal finance (paying off debt/controlling expenses), but knows Jacksxxt about investing.  Don't waste your time and money on his ELPs.

I follow Paul Merrimen.  He knows what the flip he's talking about.  He's got suggested portfolios based on family funds and what percentage (if any) you want in fixed income.  We're talking total diversification.  He understands risk.

This is the real deal:  http://paulmerriman.com/mutual-funds/  for fund mixes, otherwise study the site Paulmerriman.com.

[fatcow240]

I think too simplistic isn't really a thing.  I pretty much use the same strategy.  My work 401k is in a low cost fund similar to VTSAX/VTI and I contribute everything in my brokerage to VTSAX/VTI.  Before you talk to the adviser I would read "The Simple Path to Wealth: Your road map to financial independence and a rich, free life." 

Thank you for your suggestion. I am going to look into this book. While you are right that simplistic may not be a thing, I just want to make sure I am not making any serious mistakes dumping everything into large cap funds. Its all well and good when the market is doing as well as it is, but who knows how long this ride is going to last. My main goal is to have an actual plan based on my goals, and the problem is I do not have clear goals. Perhaps I should spend some time thinking about what my goals are...

My plan is to continue to dump everything into VTI.  When I am ready to retire, I will likely move toward an 80/20 or 90/10 split on VTI/BND.  As of right now I don't have a retirement date set in stone.  If the market drops, then I will work and buy while stocks are on discount.


If I don't need the money for the next five years, I am willing to leave it solely in the stock market.  At some point your fund is going to drop in value.  What is your plan?  Are you going to panic and sell, or ride it out?

[minimalistgamer]

If I don't need the money for the next five years, I am willing to leave it solely in the stock market.  At some point your fund is going to drop in value.  What is your plan?  Are you going to panic and sell, or ride it out?

I am thinking the same thing. If I do not need the money within the next 5-6 years, I am not going to put in the savings account, I will continue to invest in my taxable account (my retirement accounts are maximized).

What I am more concerned about is my asset allocation. At the moment, I have over 90% of my portfolio in stocks...I am not sure if this is the right way to go. So I wanted to speak with an investment professional who would help me figure out the ideal asset allocation.

[Guide2003]

It sounds like you are already headed down the road that JL Collins recommends in "The Simple Path to Wealth" and with so much time ahead of you, you will grow more confident in your own abilities as your goals and plans will firm up and then you'll find yourself at FI sooner than you thought. Nice job on saving so much!

Collins advocates (and practices) not incorporating international indexes in his portfolio, saying they add unnecessary risk due to a couple factors and also blue chip US companies are heavily invested overseas and so expose you to international markets. I don't know enough to disagree with him on that point.

[tralfamadorian]

What I am more concerned about is my asset allocation. At the moment, I have over 90% of my portfolio in stocks...I am not sure if this is the right way to go. So I wanted to speak with an investment professional who would help me figure out the ideal asset allocation.

According to this guy (http://www.doughroller.net/investing/dave-ramseys-endorsed-local-providers/), Ramsey ELPs are commission based brokers who recommend front loaded mutual funds.  Both are strongly frowned upon in the MMM community (one short thread but full of good advise- https://forum.mrmoneymustache.com/ask-a-mustachian/experience-with-this-certain-kind-of-adviser/)

You don't need these clowns.  Use one of the Bogleheads lazy portfolios (https://www.bogleheads.org/wiki/Lazy_portfolios) and rebalance once a year.