Is hiring a financial planner worth it for new biglaw associates? Forum

[Fireworks2016]

Warren Buffet has had some bad investments recently. A top analyst on CNBC announced on the air that he would mortgage his house to buy Alibaba stock if it went as low as $255. Two days ago, a billionaire investor lots almost all of his fortune in one day due to a margin call. (He was on the Forbes 400 list of wealthiest people in the world.)

If you think that you will become a savvy investor--regardless of your level of risk tolerance--by reading an article or two, then that is your call. If you are comfortable with your student loan debt whether you are earning major money or not, then at least you have made a thoughtful decision.

It is your money, your debt, & your career.

I don't think anyone is telling OP to be a day-trader and worry about daily stock prices or margin calls. Assuming that an investor is able to stay disciplined, they have always come out ahead by buying and holding for the long-term. It's absolutely a viable strategy that requires very little specific investing knowledge.

[Anonymous User]

Warren Buffet has had some bad investments recently. A top analyst on CNBC announced on the air that he would mortgage his house to buy Alibaba stock if it went as low as $255. Two days ago, a billionaire investor lots almost all of his fortune in one day due to a margin call. (He was on the Forbes 400 list of wealthiest people in the world.)

If you think that you will become a savvy investor--regardless of your level of risk tolerance--by reading an article or two, then that is your call. If you are comfortable with your student loan debt whether you are earning major money or not, then at least you have made a thoughtful decision.

It is your money, your debt, & your career.

(OP) thank you, those are good points, but just to clarify, I am definitely not looking to be an investor that beats the market or anything like that. My default reaction is to stockpile every cent in my bank account where it can't be lost. However, because so many people have told me that inflation makes it unwise to keep more than your 6-month emergency fund in your bank account, I just want to put the excess money in a very safe investment where it can passively grow.

[Anonymous User]

Warren Buffet has had some bad investments recently. A top analyst on CNBC announced on the air that he would mortgage his house to buy Alibaba stock if it went as low as $255. Two days ago, a billionaire investor lots almost all of his fortune in one day due to a margin call. (He was on the Forbes 400 list of wealthiest people in the world.)

If you think that you will become a savvy investor--regardless of your level of risk tolerance--by reading an article or two, then that is your call. If you are comfortable with your student loan debt whether you are earning major money or not, then at least you have made a thoughtful decision.

It is your money, your debt, & your career.

(OP) thank you, those are good points, but just to clarify, I am definitely not looking to be an investor that beats the market or anything like that. My default reaction is to stockpile every cent in my bank account where it can't be lost. However, because so many people have told me that inflation makes it unwise to keep more than your 6-month emergency fund in your bank account, I just want to put the excess money in a very safe investment where it can passively grow.

Exactly right IMO. I keep six months of expenses in my Ally savings account (that I can easily access - instant transfers between checking and savings) and the rest of my money in broad, market tracking ETFs. Vanguard, Fidelity, and Schwab are the big three. Consider which one you like the best - maybe because you have a 401k there, maybe you prefer their website or app - and then, based on whichever you choose, plug your capital into VTI, ITOT, or SCHB. Once you buy it, hold it for at least a year to minimize taxes. I usually buy some every month after I've paid all bills, with whatever's left over. Then I forget about it. Very, very easy.

[CanadianWolf]

Again, it is your choice. Some folks do not mind having significant debt, others prefer to have little or no debt. Maybe I am a bit biased as almost everyone in my area has federal government security clearances which must be renewed so debt is a risk factor that should be eliminated or minimized.

No one is suggesting that OP become a day trader. My point is that even the most sophisticated & most conservative (Warren Buffet) investors experience bad years.

Maybe the base point is whether or not a student loan debtor envisions ever paying off the total indebtedness.

Over decades, having a very high credit score can save one substantial money. So you will probably pay a hidden cost for remaining in debt without realizing it.

If you want to keep money safe & minimize interest rate risk / inflation risk, then consider laddering money market or short term bank FDIC insured CDs. A poor strategy overall in light of your interest accumulating debt, but it seems to be your preference.

[Anonymous User]

I have a government security clearance. No one cares about my student loan debt, which isn’t $220k but is nonetheless substantial. (I agree that “debt” writ large can be an issue, but student loan debt doesn’t trigger anything unless you default on it.) I also have an 800+ credit score. Again, no one cares. If you’re one of those people trying to get admitted to the bar with $500k+ debt that you’ve never made payments on and have no way of paying it back, maybe, but those were also the days before IBR plans.

Also interest is currently on hold until covid forbearance is lifted.

[hoos89]

Warren Buffet has had some bad investments recently. A top analyst on CNBC announced on the air that he would mortgage his house to buy Alibaba stock if it went as low as $255. Two days ago, a billionaire investor lots almost all of his fortune in one day due to a margin call. (He was on the Forbes 400 list of wealthiest people in the world.)

If you think that you will become a savvy investor--regardless of your level of risk tolerance--by reading an article or two, then that is your call. If you are comfortable with your student loan debt whether you are earning major money or not, then at least you have made a thoughtful decision.

It is your money, your debt, & your career.

Or just don't make ludicrously risky investments in individual stocks? If you lose all your money investing in a broad market ETF then I don't think the fact that you have $200k+ of debt will matter because the global financial system won't exist anymore.

Making more than minimum payments on a loan accruing ZERO interest is just insane. If you're literally that risk averse that you must pay it off ASAP you'd still be better off putting the payments you would have paid in a savings account. Not to mention that giving up liquidity for no actual gain is just bad.

[sparty99]

Warren Buffet has had some bad investments recently. A top analyst on CNBC announced on the air that he would mortgage his house to buy Alibaba stock if it went as low as $255. Two days ago, a billionaire investor lots almost all of his fortune in one day due to a margin call. (He was on the Forbes 400 list of wealthiest people in the world.)

If you think that you will become a savvy investor--regardless of your level of risk tolerance--by reading an article or two, then that is your call. If you are comfortable with your student loan debt whether you are earning major money or not, then at least you have made a thoughtful decision.

It is your money, your debt, & your career.

Or just don't make ludicrously risky investments in individual stocks? If you lose all your money investing in a broad market ETF then I don't think the fact that you have $200k+ of debt will matter because the global financial system won't exist anymore.

Making more than minimum payments on a loan accruing ZERO interest is just insane. If you're literally that risk averse that you must pay it off ASAP you'd still be better off putting the payments you would have paid in a savings account. Not to mention that giving up liquidity for no actual gain is just bad.

Canadian Wolf has bad takes. Don't waste your time. No one was talking about margin calls or going all in on a stock. The market did a correction a month ago so right now is a buying opportunity before they go back up.

[M458]

Canadian Wolf has bad takes. Don't waste your time. No one was talking about margin calls or going all in on a stock. The market did a correction a month ago so right now is a buying opportunity before they go back up.

Huh? We're literally close to the all-time high for the S&P 500. I don't think that means you shouldn't buy right now (time in the market > market timing), but it's not correct to say that we're in a correction or some sort of dip.

[CanadianWolf]

Either you intend to repay student loans or you don't.

Putting money in a savings account may earn about 1% interest. Student loan interest rate is much higher although on a temporary moratorium.

OP: You have options. If you chose to invest money that would have otherwise been used to repay loans, then you should try for a decent rate of return = greater than your loan interest rate will is scheduled to reappear in October.

Whatever you do, do not try to outguess the market (market timing). If you elect to invest in stocks just use a dollar cost averaging technique.

After reading the advice offered in this thread, it may be wise to hire a financial planner for some experienced expert advice by one who has an understanding of your entire financial situation & of your financial goals.

[CanadianWolf]

Some of the comments in this thread remind me of a Wall Street Journal cartoon from 15 or 20 years ago. As the wife closes the front door of the house with a food delivery in hand, she yells to her husband:

"Honey, I think our financial planner just delivered the pizza."

[hoos89]

I mean...it's objectively better to get 1% than 0%. Personally I'd put the excess in the market but if you were really that conservative it would be an objective loss to pay a 0% loan down rather than have it earn a guaranteed return greater than 0.

[sparty99]

Canadian Wolf has bad takes. Don't waste your time. No one was talking about margin calls or going all in on a stock. The market did a correction a month ago so right now is a buying opportunity before they go back up.

Huh? We're literally close to the all-time high for the S&P 500. I don't think that means you shouldn't buy right now (time in the market > market timing), but it's not correct to say that we're in a correction or some sort of dip.

There was definitely a market correction in the last month on a lot of growth, ev, and tech stocks. Tesla was at 900 now at 660.

[CanadianWolf]

Many stock market analysts believe that the days of a wide ranging stock market correction are behind us. They suggest that corrections are constantly occurring by market segment as opposed to market wide.

OP: A crucial issue is to determine your risk tolerance level in conjunction with a time frame for achieving a clear goal.

It might be of interest to you to read another thread in the legal employment category titled:

"How long did it take/is it taking to pay off your debt in biglaw."

[jotarokujo]

no need for a planner, just put everything in VT. enjoy your free returns

[Itcamefromthesea]

Just one thought on the personal finance education - there is an increasing amount of questionable information bleeding out from Reddit in terms of how to make individual investments, so I would just be aware that is out there. Long term investment strategies are most often going to be market agnostic.

[CanadianWolf]

A commonly used basic stock market direction indicator focuses on interest rates.

As interest rates rise, investors tend to pull funds out of stocks & place funds into low or no risk interest bearing instruments such as bank FDIC insured CDs or into short term T-Bills (Treasury Bills).

Inflationary environments tend to be very interesting for investors. Land, precious metals, & other hard assets do well in inflationary periods.

[legalpotato]

lol this thread has got out of hand.

OP, as a start, just max out your 401(k) donations, and in your 401(k), just have everything allocated to a targeted retirement account - if you are fresh out of law school, maybe a 2060 targeted retirement account.

Buy Random Walk Down Wallstreet and read it to get a very basic foundation of knowledge.

Read seekingalpha.com every day.

It might all sound like greek for a while, but in a few years you will gain an understanding feel a lot more confident about what you are doing and feel good about saving/investing in ways that make you comfortable.

[lonerider]

I graduated in 2015 with $330k debt. I paid it off in December 2020, and could have paid it off a year earlier if I wasn't also contributing aggressively to retirement accounts. Don't use a financial planner.

Just go on Bogleheads. Read the wiki and faq. If you read enough, what you'll probably end up doing is refinance your student loans with First Republic for a very low interest rate, contribute to your 401k and do a backdoor Roth every year with both investments in 100% total stock market index funds, save up an emergency fund for 6 months expenses and use the rest to pay off your debt.

Oh and use YNAB to track your expenses. You'll pay off your loans in 3 years.