Hi Terry,

You had responded back in January of this year to a question I had about paying off my house versus 529 versus investment accounts. Your advice confirmed I am more or less on the right track.

As I've considered the options and discussed things with my current bank, brokerage, etc., I've learned how everyone has their own interest at heart. My banker has told me it would be unwise to pay off my mortgage and lose the interest deduction; my Fidelity rep is urging me to put more money with them; I am not certain how much I need to save for each of my 3 children's college tuition (they are 11,9, and 7 and I am guessing $250K each UGHHH), etc. They clearly have a stake in whichever way I go. As I consider the details of each of these options, I believe I need an independent advisor to review my situation and counsel me on my options. I only want someone who is fee based and unbiased. It will only be a one time thing (or maybe every few years) so I have no interest in retainers or long term commitments. I do not want someone who has a vested interest in guiding me one way or another. I know you have mentioned www.feeonly.org and www.campaignforinvestors.org as potential sources for researching a CFP. Which one do I start with? Is what I seek even realistic in these days of commission and incentive based compensation? Are you available for private consultation by chance? :)

Thanks for your help and advice.

Terry Says:

You made me smile.  You obviously have been reading my stuff, and pre-empted my standard answers.  Those two websites are great.  Have you gone through the CampaignforInvestors.org site thoroughly?  I’ve always wondered if people would actually do that, take the time to interview planners, and then listen to their advice.

So yes, that’s where to start.  BUT,  I have a funny feeling that you (not everyone, but you) could be your own best advisor.  That is, you could be the “general contractor” and have several different advisors, each covering a different territory. That’s what I have always done.  Every once in a while I get several of them together for dinner — amazing conversation.  It’s nice that they all know each other — and will be able to work together in the future if necessary!

So here are the advisors you need.

1.  Estate planning attorney.  It starts there.  You must have a will AND revocable living trust if you have children.  And, they should probably create an irrevocable life insurance trust to own yhour life insurance outside your estate.

2.  Life insurance agent.  It could be as simple as going to a place like Accuquote.com (Byron Udell) and figuring out “how much” you need — and how long you need it for.  Then you can figure out what type and the cost.  Of course, it will be purchased in the name of your life insurance trust.

3.  College for kids.  There is no better place than Fidelity or Vanguard for one of their 529 college savings plans — where all the money grow tax0free for college.  No commissions — ask your Fidelity rep to open one account, which can be shared by your kids.  How much?  A lot!  Ask grandparents to contribute1on birthdays, holidays.  You’ll never have “too much”!!

4.  Your own retirement.  Save in your 40l(k) and don’t get scared out when the next crash comes.  Keep contributing.  And/or open an IRA at Fidelity.  Use the S&P 500 index fund and put in the max.

5.  Do all your investing inside a tax-sheltered plan — until you get your plans maxed out.

6.  Make sure you have cash in a money market fund for emergencies — chicken money.  With three kids, that should be at least $10,000 — even if it isn’t earning any interest these days. At least with that money you won’t be forced to sell your retirement or college investments because of an emergency.

And that’s all there is to it!!!

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