Don't Be Scared of Investing! 5 Options.

Posted on February 08, 2025 by Dee Zimmerman, One of Thousands of Money and Finance Coaches on Noomii.

Are you hiding under the sheets when it comes to investing? "“I know I should invest wisely—so it can grow for my future. But I don’t like it, I don’t have the time, and no one every taught me this stuff. Should I just hire someone to do it for me? Or pick some funds in my 401k and hope for the best?”

The investment world is confusing, with mixed messages and so many options, not to mention the hype and hysteria. Put all that aside, and decide on this FIRST: your investment management choice. That is, who will manage your savings during the accumulation stage. If you get help, where? And if you decide to manage it yourself (you absolutely can), how to keep it simple—so you can get out from under the sheets!

Here are five options to consider. Think on these, learn a little bit about them, do it, and have peace-of-mind that you are building for your future!

HIRE A FINANCIAL ADVISOR
The best for planning services are Certified Financial Planners (CFP credentials), and are fee-only fiduciaries (obligated to act in the client’s best interest). In addition to investment (asset) management, they can provide other guidance. Most will charge 1% to 1.75% of your assets annually, depending on the size of your investments. That’s on top of the underlying fees of trades and holdings. It can be worth it if you don’t want to learn about investing, or you feel you would react emotionally to the market. Note this is rarely an option for your 401k funds because financial advisors can’t be paid from those investments.

ACTIVELY TRADE YOURSELF
Scalping, day trading, swing trading, or position trading. Huh? You don’t have to be familiar with these! But if you are, I would caution you. Will you beat the market? It’s possible, but not probable. With investment fees, taxes, and human emotion working against you, you’re more likely to win through luck. And that luck will run out.

CHOOSE A TARGET-DATE FUND AND BE DONE!
These funds automatically rebalance your portfolio with a mix of stocks, bonds, and money market accounts based on age. Your estimated retirement year is your “target date” and the fund adjusts to more conservative holdings as you age. It takes the guesswork out of investing. These will either be actively managed by a team, or passively managed. Actively managed funds can be quite expensive (1.5% or more), but passively managed are low cost. If these are an offering in your 401k, always check to see what the expense ratio is.

BE A COUCH POTATO!
I’ll be honest—I love this one. You’ll need a bit of education, but not much. It’s called couch potato because you don’t do much! The simplest model is choosing two low-cost index funds or ETF’s, one being stocks and the other bonds. You choose how much in both, and leave them alone. Once a year, you’ll rebalance (maybe stocks did well in the past year so you’re weighted more than the allocation you intended). This approach offers significant returns in the long run because of extremely low fees (index funds are cheap and you’re not paying someone else to manage). Almost all 401k’s offer index funds, in both stocks and bonds. Believe it or not, this approach has historically and consistently outperformed professional money managers—as long as you remember the couch potato part!

OR DO YOU LIKE ROBOTS?
Robo-advisors have soared in popularity in the last ten years, and can be a good option, outside of your 401k. They’ll cost you something, but not as much as a financial advisor. The management fee is usually around .25%, plus the expense ratio of the investments. Adding those two fees together, you might pay around .3% to .6% of assets annually. A robo-advisor is a computer algorithm that invests your money based on your answers to a few questions, such as when you need the money, your tolerance for risk, and how much you have to invest. It then automatically builds a portfolio to fit your needs, usually rebalances your portfolio for you, and implements other automated services such as tax-loss harvesting (in taxable accounts). Larger brokerage firms like Fidelity, Schwab, and Vanguard have also started offering them, and some plans have access to a CFP.

So what will you do? What feels right for you? Don’t be afraid to learn more about these options—they may seem intimidating, but with just a little bit of knowledge, YOU CAN DO IT!

P.S. If you want to learn more, consider retirement coaching. We’ll take you through a six-session program where you can plan your retirement and how you’ll get there, including how to manage those investments on your own, couch-potato style!