Online Savings or Hire Professional? At what point?

Discussion in 'Community Discussion' started by Calvinatir, Mar 14, 2007.

  1. Calvinatir macrumors 6502


    Nov 8, 2003
    Just a question for the most established members on Macrumors.

    At what point does it pay to have a professional handle your money as opposed to just keeping it in a high yield savings acct (5.05% [currently 6%]) with HSBC? Is there a magic number where the benefit outweighs the costs/risk? I am trying to make this decision right now and am wondering if I'm even on the right track.

    Thank you in advance for the responses!
  2. rose red macrumors member

    Jul 3, 2005
    nw england
    Even if I was mega-rich I would always handle my own finances/investments. I feel that I can do it well, I recently sold some shares just before the tumble on the international markets, just luck on the timing but I was smiling ok. My father once had some advice from a professional, but when I looked at his recommendations I was appalled - it was unsuitable for my father and I advised against it. It's a matter of getting the right balance of security and risk for your own circumstances. My husband gave me some money a few years ago to see what I could do, and at the end of the period of time, he got his money back and I bought an iBook.
  3. Dr.Gargoyle macrumors 65816


    Oct 8, 2004
    lat: 55.7222°N, long: 13.1971°E
    First of all, for a long term investment (more than 5-10 years) saving accounts is just bad business. That said, I would never enter the stock market at this point. Just to much going on right now: huge US deficit, possible crash landing of the real estate market (New Century Financial, double digit drops in house sales) and the Asian stock market turmoil. All this could eventually affect US consumer confidence which more or less sets the level of the economy. A small drop in consumer confidence will have big implications on he stock market. So right now, high yield avings accounts is not such a bad idea.

    Now to your main question. You are basically asking how much you need to have to get a professional to handle your money. My experience is that most serious financial institutions wont go near you unless you have more than $750K to invest. USB had a minimum of 500,000 ChF (about $420K) couple of years ago. BUT, with that kind of money you wont be a particularly important client, on the contrary in fact.

    Bottom line, stay in safe papers until this recent turmoil is over. If you think Iran could be the next Iraq, then you might spice up things by putting some money into oil. Whatever you do, stay away from real estate!!
    Invest in several globally diversified funds when things calm down unless you have at least $1-2M to spare.
    How you invest is really down to how much risk you are willing to take, and how long your investment horizon is. The suggestions above reflects a cautious strategy.
  4. Caezar macrumors 6502

    Jun 9, 2004
    Between a rock and a hard place
    Whether you invest in safe asset classes (money market, cash) or riskier ones (stocks) depends on how much money you can afford to lose, but as importantly on your investment horizon.

    If you need that money within 5 years, I'd say put it in the bank (HSBC) or money market instruments. If you invest for at least 10 years, there's a strong chance that stocks will generate higher returns.

    Now, remember to diversify and do not rotate your portfolio too much (try to minimize taxes and brokerage fees). Also, do not use a professional money manager. Just buy a plain old broad-index cheap mutual fund or an ETF from Vanguard or Fidelity (Spartan series).

    Markets are jittery right now. If you decide to invest in stocks, do not put your money all in one time. Try to maybe to spread your buy orders over a period (dollar-averaging).

    Good luck!

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