Financial Adviser - worth seeing one?

[Eelementary]

I've come into some money courtesy of my late dad's life insurance. My lawyer and my sister's friends all insist I should see a financial adviser before doing anything, but all preliminary talks have gone the same way: put the money into your super, invest it or buy an investment property.

My idea is simpler - buy a house.

What exactly does a financial adviser do, and is it really worth paying the fee they will charge?

 

[IFR33K]

Not sure what an adviser will advise you, but IMO, if its decent amount, buy a house, unit or townhouse. If its not enough to buy outright and you are currently employed, don't be scared of borrowing money from the banks. Invest wisely and resist temptation to throw money away on petty shit, such as a flash car.

Advisers I believe would be a waste.

 

[muzby]

It us worth seeing a GOOD financial adviser if you have a bit of coin (condolences, BTW)..

I stress the word GOOD.

Plenty of blokes out there who offer advice, you need one with a good reputation and proven results. And from my experiences avoid the one who works for a bank. Amazingly the best investment options in the market are always with their very bank..

Whoever you chose, do your homework as all decisions will ultimately come down to you. Your adviser will just be that - advising.

At the end of the day he will also earn a commission off whoever he invests your money through, so always do your own research on his advice.

 

[Eelementary]

I see the merit of a good financial adviser, but my idea is to use the money to put it towards a house and then borrow the rest of the money. As it stands, I wouldn't have to borrow much, and my mortgage (in theory) would be small and easy to manage. It seems, to me, the sensible decision to make - buy a place and live in it.

But everywhere I turn, people keep suggesting I see an adviser. But they can never give me a good enough reason - I am sure they are helpful, but what I really need to do is speak to a mortgage broker or someone like that.

I've also been told buying a house is a bad investment. I am not very interested in economics, but I can hardly see how buying a house whereby I borrow a smallish amount is a bad investment - specially if I get to live in it.

 

[Eelementary]

And thank you for your opinions, guys. I really appreciate it.

For every person who suggests I see an adviser, I have two who tell me if I know what to spend it on, then I don't need one.

 

[umina panther]

I'll tell you what to do with your money for a smallish fee

 

[Twizzle]

Like all professionals, there are good and bad.

Finding a good one is the tricky bit, do your homework and ask around.

Find out how they charge you, some work on an hourly rate and so they wont try and get you in over your head like those who will ask for a commission and try and max you out.

 

[madunit]

Buy a house. If you need info about specific properties, PM me.

 

[Eelementary]

So far it seems like they will charge a fee and then take a commission.

If I opt to buy a property, I will have to pay for the inspections, taxes, lawyers, etc., and I don't want to have to have another bill for someone to "advise" me if it isn't necessary.

I have a pretty good idea what I want to do with the money and have a tacit pre-approval for the loan amount of the difference, so I am not sure why spending more money is a good idea.

I had an unofficial meeting with an adviser who is a family friend, and he said it would be wise to put the money into my super or buy shares. But why? I need a place to live - I will be able to have a small, stress-free loan to pay back. It would seem silly to me to NOT take this course.

 

[Eelementary]

I appreciate all your input, guys. Gives me some perspective.

 

[Twizzle]

So far it seems like they will charge a fee and then take a commission.

If I opt to buy a property, I will have to pay for the inspections, taxes, lawyers, etc., and I don't want to have to have another bill for someone to "advise" me if it isn't necessary.

I have a pretty good idea what I want to do with the money and have a tacit pre-approval for the loan amount of the difference, so I am not sure why spending more money is a good idea.

I had an unofficial meeting with an adviser who is a family friend, and he said it would be wise to put the money into my super or buy shares. But why? I need a place to live - I will be able to have a small, stress-free loan to pay back. It would seem silly to me to NOT take this course.

This is important as well, sometimes its not just all about money

 

[Different kind of Rabbit]

Depends on your situation and what you wish to achieve with the money. I'm thinking you are a young bloke, not married. Either boarding with mates or family or renting by what you've already said. If this is the case, then an advisor would give you some strategies around maximizing your borrowing capacity and or diversifying your investment so that it's not just a house you are staking your money on. He might suggest a small share portfolio or an investment in a diversified fund as well. Just so you don't put all your eggs in the property basket.

If this sounds interesting, then go see an advisor. If not, then just buy a house.

If you go with the house option, I have some pointers for you.

1. Pay off any other debt you have first. If it's credit card debt, pay them off and cut them up. Ideally, you want your mortgage to be the only debt you have.

2. Set up a seperate account for your mortgage payments and divert enough pay to cover them into this account. Then set up the mortgage so that your repayments are made weekly. You can wipe 8 years off a 30 year mortgage just by doing this.

3. Pay more than the minimum repayment. If possible, find out how much interest the bank will charge you each month and pay your repayment plus that interest.

4. Don't borrow the maximum that the bank will lend you.

5. Do as much research on the area you wish to buy in as you can. You especially want to know the median price in that area and if possible, you want to spend below that.

Hope that all helps.

 

[Eelementary]

This is important as well, sometimes its not just all about money

I am very keen - I would have to borrow (if all goes to plan) approximately $100,000 (maybe even less), and those repayments would be less than what I currently pay for my car per month. It's very tempting to say I own my own home and can afford to pay off my loan quickly.

 

[Eelementary]

Depends on your situation and what you wish to achieve with the money. I'm thinking you are a young bloke, not married. Either boarding with mates or family or renting by what you've already said. If this is the case, then an advisor would give you some strategies around maximizing your borrowing capacity and or diversifying your investment so that it's not just a house you are staking your money on. He might suggest a small share portfolio or an investment in a diversified fund as well. Just so you don't put all your eggs in the property basket.

If this sounds interesting, then go see an advisor. If not, then just buy a house.

If you go with the house option, I have some pointers for you.

1. Pay off any other debt you have first. If it's credit card debt, pay them off and cut them up. Ideally, you want your mortgage to be the only debt you have.

2. Set up a seperate account for your mortgage payments and divert enough pay to cover them into this account. Then set up the mortgage so that your repayments are made weekly. You can wipe 8 years off a 30 year mortgage just by doing this.

3. Pay more than the minimum repayment. If possible, find out how much interest the bank will charge you each month and pay your repayment plus that interest.

4. Don't borrow the maximum that the bank will lend you.

5. Do as much research on the area you wish to buy in as you can. You especially want to know the median price in that area and if possible, you want to spend below that.

Hope that all helps.

That is supremely helpful - thank you very much!

And for the record - I am 28, have a long-term girlfriend and currently live with my mum (I am lucky I do, too - the time and money it took for the lawyers to sort things out sent me broke).

I have a car with two years left on my loan (and that will be the first thing I pay off), and have one credit card with nothing on it (I think I have to pay $50 which I will do tomorrow, which is pay day).

Investing the money is a solid way to build wealth, but I am very keen on buying my own house and having an affordable place to live.

I am not against seeing an adviser at all, but I think if I have a good idea of what I want, it might be an extra spend of money I mightn't need.

 

[Parra Pride]

Perhaps you should see a financial advisor, and ask him if it's worth seeing a better financial advisor.

 

[madunit]

So far it seems like they will charge a fee and then take a commission.

If I opt to buy a property, I will have to pay for the inspections, taxes, lawyers, etc., and I don't want to have to have another bill for someone to "advise" me if it isn't necessary.

I have a pretty good idea what I want to do with the money and have a tacit pre-approval for the loan amount of the difference, so I am not sure why spending more money is a good idea.

I had an unofficial meeting with an adviser who is a family friend, and he said it would be wise to put the money into my super or buy shares. But why? I need a place to live - I will be able to have a small, stress-free loan to pay back. It would seem silly to me to NOT take this course.

Any opportunity you get to buy a house on the cheap, you should take it with both hands. Given the small mortgage, you'll be able to put money aside anyways in a high interest account or some similar thing and when you need it, you have it.

You only need a broker (to deal with the banks if you don't want to) and a conveyancer for the legal matters, will be a lot cheaper than a lawyer and does the same thing pretty much.

Also, be smart who you get the loan with. Any of the big banks should be avoided. Credit Unions are always pretty good, and some smaller banks, like Bendigo. But definitely shop around in that regard and don't be afraid to ask stupid questions. It's your money. Don't say yes if you're not 100% certain about something.

 

[umina panther]

Isn't Moffo an expert of financial matters?

 

[El Diablo]

Isn't Moffo an expert of financial matters?

only the big stuff

 

[Parra]

Fantastic that your parents have done this for you. Your dad has provided and your mum is obviously very generous as well.

Personally I'd go for the house option. As you said yourself, you need somewhere to live. But my decision would be made on grounds that are not solely financial. Other things are very important as well.

As far as financial advisers go - do you know any that you trust? These guys are in it for themselves. They will sell you whatever gets them the biggest commission and trailing commission. And that is what they do. Nothing wrong with that, they aren't the benevolent society.

You seem to know what you want. And it's not frivolous. Worth seeing a mortgage broker though - same sort of deal as finance advisers, often the same bloke with a different hat on - but you can compare their offer with whatever the bank offers and they can get better deals than retail. Costs you nothing if you don't take their deal.

 

[simostorm]

Hmm.. What would I do with a heap of money?...

I would buy a chair.

Nothing to eleberate.... just a nice, 4 legged chair to sit on..

Now thats living..