Who has your financial best interests at heart?

Some of my friends and coworkers have been surprised to hear that I write a Personal Finance blog. I admit it's a little out of character for me. Like when I bought and drove a Volvo. But I thought I'd share why I got into this.

In 1999 I got a 8-5 full-time Job plus some freelance weekend work. This left me with a little extra cash. I was not used to this so I sought a way to invest it so I wouldn't spend it on stupid crap. Which was my modus operandi at the time (More on Sam's club later). I got an advert from American Express Financial and decided it was time to talk to someone.

I met with Adam. A young fresh suit who was there to help. He talked me into a "Whole life" plan. Which was an insurance product that "grows" tax free but the fees for these accounts can run from 2%-6%. It's hard to tell because financial insurance products are not regulated by anyone. Not even  the SEC. So they do not have to explicitly disclose all of the fees associated with a fund. They are most often buried deep in the fine print.

I met with my accountant a few months later to do my taxes and informed him of WHAT I HAD DONE! He smirked and told me to get out and get out fast. He asked me how much I was into this scheme. About a thousand bucks, I replied. Kiss it goodbye, he said. It's like a band-aid, Just rip it off. You will do nothing but bleed cash to these people if you stay there. So I fired Adam the next week, forfeited one thousand bucks, and have never been happier. Adam was shocked and when he demanded to know why I was getting out, All I had for the guy was "My accountant told me to run".  Stay away from insurance products unless you know what you're doing they have a very small niche that 99.9% of do not need.

This financial waste made me ask myself - Who has your best financial interests at heart? YOU DO!. Well you better get financially literate quick. So that's it. I have been interested in it as a serious hobby for 10 or 11 years now.

So feel free to ask a question. I learn as much or more from the process. You can email me and ask for your question to be anonymous. I will strip out any ID details. Don't get ripped off like I did!

thefettler@yahoo.com

Nominal

I think one of the reasons I enjoy financial management is that I can relate to it in my work-life. As a sound person you try to balance everything that you hear so that they are just the right level for listening. This is also true in asset allocation. Re-balancing is a lot like setting everything to nominal or equalizing. When a particular asset does really well. Small caps, for instance have been doing quite well over the past few years. When I re-balance I take the profit and reinvest it in my portfolio in a "cash" equivalent account. After I have culled the winners I decide who, what, and if I should buy into other sectors.

I regret not taking profit more than I regret being low in a certain asset class. Example? Europe, my asset allocation lists 2% but I have 0% currently. I will stick with cash for that 2% until I see some Euro zone cooperation. I used to have 4% in Europe but I moved 2% to Scandinavia and 2% to "cash". I don't think I will put more than 2% in Europe ever again but who knows.


I'm sorry I am on such a re-balance kick but it's probably the most important part of being your own financial manager. After the last month I sure am glad I rebalanced in May!