My husband (who has a knack for keeping our DVR stocked with BBC period dramas) and I watch faithfully.
Whenever something financial crops up — from Thomas' ill-advised get rich quick scheme to general income inequities — I get a little more excited.
And boy, the Series Three premiere dropped a great big money problem on the Crawley family. Lord Grantham has made a huge investing mistake. He put a great deal of money in one stock, a Canadian railroad company, and that company tanked. Goodbye to the principal, to say nothing of the potential gains that have evaporated.
Watching that episode of Downton reminded me that, when it comes to long-term investing, it's important not to forget the basics — no matter what someone “in the know” tells you about the next hot thing.
Basics of Long-Term Investing
As you consider where to invest your money, it's important to think about making a plan, and then sticking with it. Here are some of the basics to remember when it comes to long-term investing:
Diversity: The main thing was that Lord Grantham put way too many of his eggs in one basket. When you invest, you want to make sure that you have adequate diversity. This includes investing in different asset classes, as well as making sure that there is some diversity across sectors, industries, and geographies. Diversity is one way to hedge risk to your investment portfolio.
Value: Look for value investments. Long-term value often means that you need to pay attention to the fundamentals. It's not about what's hot, and what's going up in price right now. It's what offers a good value for your investing dollar. Look to something that has solid underlying fundamentals, and you'll be more likely to choose an investment with staying power.
Don't panic: Long-term investing requires big-picture thinking. If you want to be successful, you can't panic and unload everything at the first sign of trouble. Volatility tends to smooth out a bit over the long-term. If you have decent diversity, and if you have invested in value, your portfolio will likely make it out of the latest crisis mostly intact for the long-term.
Consistency: You probably don't have a huge chunk of capital to invest, like Lord Grantham does, but you can still build your assets over time. This requires a certain amount of planning, and it requires you to stick to your plan. Dollar-cost averaging can be a way for you to consistently invest over time. You can consider investments like DRIPs, index funds, and ETFs that make it easy to buy partial shares and get started with a small amount of money. Invest consistently, and you'll increase your chances of doing well over the long haul.
The basics of successful long-term investing are generally rather boring. However, in many cases, a good plan and an adherence to the basics can help you build your wealth over time. Consider your plan, and resolve to stick to the basics, and you might be surprised at how positive the result can be.
When it comes to managing your money, sometimes it makes sense to get a little help. The right financial adviser can help you create the right financial plan for you, and provide you with solid budget suggestions.
A good financial adviser can help you figure out what you need to do next to keep your finances successful, from recommending a retirement savings program to helping you find the right investments for your income portfolio. Choosing a financial adviser can be a little bit trickier, though. Put some thought into it, and use the following 3 tips to help you make your decision:
1. Fiduciary Responsibility
One of the best things you can do is look for someone who is required to show fiduciary responsibility. This means that the financial adviser has to put your financial well being ahead of other considerations — like his or her potential commissions. While even a fiduciary might not husband your money as well as you might like, you can still trust this type of adviser a little more than someone who can put his or her own financial interest ahead of your own. Consider using a Registered Investment Advisor, or some other certified financial planning professional who must act as a fiduciary.
2. Reasonable Fees
Another consideration is the fees charged. There are a few options when you are choosing a financial adviser. Some advisers charge a flat hourly fee, or charge a flat fee for certain planning packages. Others charge you a percentage of the assets you have under management. Still others make money on commissions from products that they get you to use.
Carefully consider which fee structure works best for your situation. You should also look for those with more reasonable fees. Remember that there might be management fees and transaction fees. Research fees as closely as you can, and look for an adviser that charges reasonable fees, and that recommends products with relatively low fees.
3. Personality
You also need to be able to trust your financial adviser. Consider the personality involved. Often it makes sense to sit down and have an “interview” with a potential investment adviser. What are your first impressions? Do you feel comfortable with this adviser? Do you think that he or she knows the subject, and understands your situation?
Consider checking references of other clients. You can also check up on licenses and certifications. You are sharing personal financial information with your financial adviser, and allowing yourself to be guided. You really do need to be comfortable with him or her — and with the situation.
However, you should also consider that you might not want to choose someone who is a friend or relative. Even though you might trust him or her, you might not want to deal with the social ramifications of working with someone who has such a personal relationship with you outside the professional relationship. Working with someone you know means that you might not feel comfortable switching if you feel your finances demand it. It's often a good idea to keep these relationships separate.
One of the best ways to build wealth over time is to invest. Investing can help you amass wealth at a faster rate than you would likely be able to otherwise. This holds true whether you are saving for retirement, or whether you are saving up for college.
If you are looking for a way to increase your chances of helping your child pay for college, you can use a 529 college savings plan to set money aside. While there is the risk of loss, there is also the potential to build up some wealth — especially if you start relatively early.
Five years ago, I opened a 529 account for my 10-year-old son. I contribute monthly, and it has been gratifying to watch the account grow over time. By the time he uses the account, when he is 20, there will be 15 years worth of savings and growing with the power of compound interest.
Look for a plan that is fairly versatile in terms of where you can use the money. Most 529 plans are set up by states. However, just because a 529 college savings plan is set up by a particular state, it doesn't meant that you have to attend school in that state. Many plans allow you to contribute if you live out of state, and you can also use the money to pay expenses at thousands of educational institutions across the country.
Make sure that the plan you choose is versatile, so that your child has more options when it comes to deciding which school to attend. Look for a versatile plan, with fewer restrictions.
2. Look for a Variety of Investment Options
One of the reasons I like the 529 plan I use for my son is that there were a number of investment options to choose from. The plan offered a number of index funds and ETFs. Some plans only offer a few investment options, so you are limited. This can be very disappointing, especially if there is a particular fund that you are interested in. Choose a 529 plan with a variety of investment options that fit your needs. Simple investments, like index funds and ETFs, can give you a big advantage, while offering a degree of diversity, and a lower risk. Don't choose a plan that limits you to investments that you aren't thrilled about.
3. Avoid Plans with High Fees
Just as costs are coming down for various funds, it's also possible to find 529 plans with low fees. Compare the fees charged by different plans. The higher the fees, the lower your real returns. While you can't completely avoid fees, you can reduce what you pay in fees. You can save on fees when you choose low-cost ETFs and index funds for your 529 plan. Before you commit, look at the fee schedule so that you understand what you will pay for the privilege of investing.
Chances are that you can find a 529 plan that offers you versatility, various investment options, and low fees. Many states are trying to make their plans attractive to investors, and that is to your advantage. Do your homework, and you will be more likely to find a solid 529 for your child's college education money.
As a young adult, there will be many financial decisions that you will make over a lifetime. These decisions will determine your financial picture that will carry you through life. One of the wisest decisions you can make is to start investing while you are young. There are several ways to do this. By making the right financial choices, you can make sure you are prepared for money challenges in life.
Current retirees depend heavily on the Social Security program that subsidizes retirement income. The Social Security program is weakening every year, as there are not enough workers to contribute tax funds to support the ever-growing retiree population. It is predicted that there will no longer be funds available by the time today's young workers are ready to retire. Young workers are well-advised to make their own provisions for income after retirement.
Retirement Accounts
One of the best investment strategies is to open an IRA. An IRA or an individual retirement account allows you to save and invest during your working years and enjoy your earnings after you retire. Most young workers save with an IRA through their employer. There are, however, options available for the self-employed and young business owners.
If you own your own business or are self-employed, many banks offer the SEP-IRA (simplified employee pension) account that is great for freelancers and small businesses that hire employees.
The Power of Compound Interest
Albert Einstein once described the principle of compound interest as one of the most powerful forces in the world. While he may have been exaggerating, there is some truth to that statement. Compound interest, to put it simply, is the interest that your interest earns, month after month, year after year. If you put your money into an interest-bearing account, the money you earn in interest will also earn interest. This causes your money to snowball at a staggering rate.
One of the strongest advantages that you have is your age. A person who starts to save and invest at 20 has a distinct advantage over someone who starts at 30. The thirty-year-old would have to save almost double the amount of money of the twenty-year-old to earn the same returns at age 65. By starting when you are young, you can save less money and earn more in interest over time.
Saving now for your retirement is the best way to ensure that you will have enough money to live comfortably after your working days.
Too often, we plan our investments to get us to retirement; we forget that it's a good idea to plan to continue investing through retirement. With life expectancy rising, most of us can expect to be living in retirement for 25, 30, or even 40 years. This means that you can't just put your retirement on automatic, trusting that your portfolio will carry you through without changes. Between inflation, continued fees, and market volatility, it doesn't make sense to assume that the portfolio you have at retirement is the end.
Instead, you need to keep up with your investment planning. While you don't need to become a day trader, there are some things to think about when investing during retirement to make sure that your portfolio survives throughout your golden years:
1. Reconsider the 60/40 Stock/Bond Allocation
You don't have to keep sticking with the same old thing, especially since we saw how it can be a real problem with an asset allocation that focuses exclusively on stocks and bonds. Instead, think of how you can add something a little different to your portfolio. The longevity that many of us can expect in retirement means that if you are 55, you can use a 20 or 25 year horizon for part of your portfolio. There are some alternative investments (you can tap into commodities with the help of ETFs), as well as a number of options that, if appropriate to your risk tolerance, can be added to your portfolio.
Don't think that you have to shift everything to bonds as you head toward retirement. While you want to include those types of investments, your retirement is likely to be a long one, and you'll want to keep building assets with a portion of your portfolio during retirement.
2. Diversify Your Income
Retirement is a great time to look for income in diverse places. You can start a side hustle, or turn your hobby into a money maker. Working a little in retirement, if you are doing something you love and that brings in another income stream, can be a great way to invest in your future.
You can also consider a little wider view of “income investing.” Many retirees think of income investments strictly in terms of bonds. However, there are other opportunities. Dividend stocks can provide you with better returns than Treasuries — especially in a low-rate environment. Think about your options, and your risk tolerance. It might be that you can handle the addition of dividend aristocrats in your retirement portfolio as you move forward.
3. Watch Out for Cash
Many retirees like cash because it's safe. After all, you can't lose when your cash is housed in FDIC or FOMC insured financial institutions, right? Unfortunately, this isn't true. Inflation is a big deal, and it's highly unlikely that you will be able to beat inflation with the meager returns you get on cash — especially if your retirement lasts more than 20 years. While having some cash isn't the end of the world, don't switch everything to cash as you retire. Instead, look for other options, and consider that you will need to adjust your asset allocation, and look for new opportunities, throughout your golden years.
In the past year I've reviewed quite a few online brokers on this site. Many of them were very highly reviewed by customers and industry press alike. One that stands out among the pack, however, even with all the other great brokerages out there is TD Ameritrade .
TD Ameritrade has received accolades from such publications as Barron's, Kiplingers and Smart Money. Their slate of investing tools, research and commitment to customer education is second to none. It's a great place to invest, especially for long term investors.
So today I thought I'd do an in depth TD Ameritrade review, examining the history of this company, talking about the multiple awards they've received, as well as ticking off some of the important details like fees, mobile options and more. So here we go.
History Of TD Ameritrade
TD Ameritrade has a history that goes back to the 1960s when it's investment banking business roots started via a company called Rahel, Knack and Co. From Wikipedia:
The company started as an investment banking business named Rahel, Knack and Co. in the 1960s in Omaha, Nebraska. It was purchased in 1975 by J. Joseph Ricketts, Robert Perelman, and David G. Kellogg, renamed First Omaha Securities, and became one of the first firms to offer negotiated commissions.
Ricketts acquired the company completely from the other two founders in 1981. The company became AmeriTrade Clearing in 1983. In March 1997, Ameritrade became a publicly held company. In 2005 Ameritrade acquired TD Waterhouse and was renamed TD Ameritrade.
TD Ameritrade has grown significantly since those early days inthe 60's and now they have over six million customers in the U.S. If you include international customers it's even higher.
TD Ameritrade is member of SIPC, which means your investments are protected by SIPC insurance up to $500,000 and $100,000 of it can be in cash. This means that you are protected against TD Ameritrade becoming insolvent, although this of course does not mean that you are protected against market losses. Investor beware.
Accolades And Awards
TD Ameritrade has consistently been ranked among the top brokerages in the industry. Among the awards they've received in just the past few years:
Kiplinger named them #1 Best online broker for 2011 and called them “a great value proposition for long-term investors“.
Barron's ranked TD Ameritrade #1 Best site for novices in their 2012 annual review of online stock and option brokers.
Barron's ranked TD Ameritrade #2 Best site for long term investing in their 2012 annual review of online stock and option brokers.
Barron's ranked TD Ameritrade #3 Best site for options traders in their 2012 annual review of online stock and option brokers.
Smart Money recognized them as the #1 discount brokerage firm, tied with one other company in SmartMoney's 2011 review of online brokers
Stockbrokers.com ranked TD Ameritrade #1 overall broker in their 2012 broker review.
So if you're a long term investor like me you can see that they're a great value proposition for us, as well as being rated #1 in many reviews on online brokerages. So you know they're going to be well worth a look.
TD Ameritrade Fees, Commissions And Minimums
One of the most important things when it comes to your retirement accounts are the fees, commissions and minimums on the account. Depending on how much you're paying, it can cut into your gains pretty significantly. TD Ameritrade has no account minimums, no maintenance fees and low costs when it comes to other things you'll need to do.
Stock Trades
TD Ameritrade has a low cost $9.99 stock trade, which is in about average or slightly above average for the industry. Considering all the tools and research you're getting, it's definitely a decent price.
Options Trades
For option trades, they also charge $9.99 per trade, plus 75 cents per contract.
Account Minimums and Fees
There are no monthly minimums, inactivity fees or account maintenance fees with TD Ameritrade
Broker assisted stock trades are $49.99. To see a full schedule of their fees, head on over to their site.
Want to open an account? There is also no minimum account funding level to open a cash account. The minimum is $2,000 to open an options or margin account.
Trading Tools
If you're looking for trading tools, TD Ameritrade has a bunch of great tools that you can access on their site. Their Trade Architect tool-set has custom charts, earnings and probability analysis, watch lists for your favorite stocks, as well as an integrated community to help you out when you've got a question.
TD Ameritrade's Thinkorswim Trading Platform was given the honor of being the number one trading platform by Barron’s, so you know that their tools will be helpful. Add to that the fact that they have award winning mobile trading apps. Apps are available for Blackberry, iPhone, Ipad, Android, or Windows phone. Making trades while not at home has never been easier.
If you need research, TD Ameritrade has reports available from Jaywalk Consensus, Research Team, Market Edge, S&P Columns, and S&P Research. You can also buy Premium reports from a variety of sources for an extra cost if you need more in depth analysis. Most people probably won't need that, but if you do, it's there.
Available Account Types
TD Ameritrade has a variety of investing and saving account types to choose from. You'll have the standard IRA and Roth IRA accounts along with a variety of other savings and specialty accounts.
Standard Accounts: Individual, Joint Tenants, Tenant in Common, Community Property, Tenants by the Entireties, Guardianship or Conservatorship.
Retirement Accounts: Traditional and Roth IRAs, Rollover IRA, SEP IRA, SIMPLE IRA
Education Savings Accounts: 529, Coverdell ESA, UGMA/UTMA.
Specialty Investing Accounts: Trust, Limited Partnership, Partnership, Investment Club, LLC, Sole Proprietorship, Corporate, Non-Incorporated Organization, Pension or Profit Plan for Small Business.
TD Ameritrade is one of the first options I would recommend when opening an online brokerage account. They are definitely one of the most awarded and most recommended options by industry press, receiving countless awards for long term investors over the past couple of years. Their fees are low or in line with industry average, and the commissions are more than reasonable. They also have a great slate of trading tools, investing research and mobile apps.
One of the best things you can do is look for someone who is required to show fiduciary responsibility. This means that the financial adviser has to put your financial well being ahead of other considerations — like his or her potential commissions. While even a fiduciary might not husband your money as well as you might like, you can still trust this type of adviser a little more than someone who can put his or her own financial interest ahead of your own. Consider using a 
