2/23/2018


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Get All The Professional Help That You Can Get

When it comes to saving and investing fundamentals, many Americans are functionally illiterate. Many--perhaps most--are not prepared for do-it-yourself retirement funding.

The preparations you make for retirement are some of the most important you will ever undertake. Ever! Americans are increasingly being handed do-it-yourself responsibility for retirement funding, yet most folks are operating with little financial education, little guidance, and often little help. It's like being told that the pilots of the 747 jumbo jet in which you're a passenger have just parachuted out of the plane and --oh, yes--would you mind climbing into the pilot's seat and preparing for landing.

Professional Help Is Vital

The adage that "you are the best person to make investment decisions on your own behalf" is bullroar. You may, indeed, be a skilled investor. You may be an investment professional with extensive experience in the field. But it's much more likely that you lack the time, research tools, or experience to make well-informed, 24-7 investment decisions. It's highly unlikely that you have the time or inclination to continuously track changing economic developments, changing tax rules, investment opportunities around the globe, new funds, and day-to-day risks to successfully invest and curb losses.

Investing skillfully is a full-time job. And there's no shame in admitting to having less than full time to devote to it or having an investment skill level that is less than a pro's. indeed, few Americans have an financial planning or investment education. And for many, that is the particularly disturbing starting point.

Here are the facts. At present, about half of American workers receive educational materials or have access to investment seminars via their employer or 401(k) plan provider to help them invest. However, study after study shows that poor financial education is a national handicap. Few high schools or universities offer much in the way of practical financial training. Many high school graduates lack even rudimentary financial skills, including balancing a checkbook. Most, according to one national organization, "simply have no insight into the basic survival principles involved with earning, spending, saving and investing.

In the words of one Social Security publication, "Most Americans demonstrate a clear need for financial guidance. Only 33 percent of surveyed adults understand the basics of compound interest, and 42 percent do not know why federally insured certificates of deposit have a lower rate of return than privately held mutual funds."

A later study, referring to a poll of hundreds of professional financial planners with more than five years of experience, found that "more than half (51%) of all advisors say their typical client would be more likely to be able to explain the rules of Texas Hold 'Em Poker than they could the principles of asset allocation." In fact, about half of the professionals surveyed in that poll said their clients were "not to knowledgeable" or "not at all knowledgeable" about the great impact that asset allocation has on investment performance.

When it comes to saving and investing fundamentals, many Americans are functionally illiterate. Many--perhaps most--are not prepared for do-it-yourself retirement funding.

Meanwhile, successful investing and retirement planning are becoming more and more complex. For example, the latest "help[ guides" from the IRS provide 295 pages of small print on the preparation of individual tax returns and another 80 separate pages on "Investment Income and Expenses (Including Capital Gains and Losses)" to explain the taxes due on investment returns. No wonder ultrawealthy Americans hire teams of high-powered accounts for help!

At the same time, the kaleidoscope of investment and investment opportunities is fast changing. During the stock market boom in the late 1990s, hundreds of new mutual funds were launched each year. Over the last decade, new Roth 401(k)s as well as Roth IRAs have come into being--and, again, you have to read more small print in the tax codes to understand the differences of these new accounts.

Make no mistake about it. In today's world of complex tax rules, changing investment opportunities, and shrinking retirement benefits, you need all the professional help you can get! That's why I urge you to tap four kinds: (1) online educational tools; (2) seminars about investing; (3) professional asset management; and foremost of all, (4) the guidance of an objective, experienced, professional financial advisor.

About this article and the author:

Jim Schlagheck is a wealth management specialist, the author of "Cash-Rich Retirement", and the co-producer of "Retirement Revolution", a public television series on better ways to prepare for retirement.  He has worked with leading financial institutions and counseled super-wealthy families around the world.  His book guides readers through a 6-step action plan to build savings and reduce investment losses.  His views are not a solicitation to buy any product or service.  You alone are responsible for determining whether any investment, product, or strategy is suitable for you based on your own, independent research, your investment objectives, your financial and personal situation, and the advice of your financial and tax advisors. He has his own investment blog, "Show Me The Money" at www.invest-blog.com.

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