A headlight on my car burned out. A repair shop said they could replace it for me for $75. I pulled out the car’s manual from the glovebox and looked it up. Although I’ve never done it before, the instructions in the manual don’t appear to be too complicated.
I went to RockAuto, an online store where I bought air filters for my car before. Standard-issue replacement bulbs cost as low as $3 each. Then I saw a category called “improved visibility” bulbs. I thought If I was going to open it up I might as well replace it with a better bulb.
I bought a pair of GE Nighthawk Platinum bulbs, which claim to give 90% more light than standard ones. I often drive at night in remote areas. 90% more light would be great. I paid $20 for two bulbs.
After I received the bulbs from Amazon, I followed the instructions and unscrewed a couple of screws to get a plastic piece out of the way, removed a bottle-cap like cover, pressed on a steel wire spring, and voila, there was the dead bulb. I put in the new one, put everything back and did the same to the other bulb even though it hasn’t burned out yet. The whole job to replace two bulbs took maybe 20 minutes.
Compared to letting the repair shop do it for me, I saved $55 but I also spent time on learning about the bulbs: standard vs enhanced, types (low beam, high beam), and sizes (H4, H7, 9004, 9007, …). Not that I care that much about headlight bulbs, I have to order the right type and size or else they wouldn’t fit. I also spent time on replacing the bulbs. If I’m not writing these down, I probably will forget what I did by the time I will have to do it again.
Is $75 a ripoff when a bulb only costs $3 and it won’t take them more than 10 minutes to do? No, because letting the repair shop do it for me would be a completely different experience than doing it myself. All I have to do is drive over, wait 10 minutes, and pay. They are selling their knowledge and experience, not just the part. Because they don’t get a job like this every 10 minutes, I will also have to pay for the idle time and overhead.
Is saving $55 worth doing it myself? Not really, for something that only happens maybe once in five years, but I did learn something and I ended up with a better product. If I don’t know any better, the repair shop would probably just throw in a standard after-market replacement bulb.
Are GE Nighthawk Platinum bulbs the best? I don’t know; probably not. Do they really put out 90% more light? Maybe not. They are good enough for me. I read on the Internet there are a ton of people souping up their cars with HID Xenon bulbs, whatever that means. I’m not in that league.
This experience makes me think about using a financial advisor to manage one’s money. Using an advisor and doing it yourself are completely different experiences. If you want the luxury of not understanding anything about investment, a financial advisor will do it all for you. It’s just that it will cost you money, often a lot of money.
Rick Ferri, a low-fee investment manager, openly admitted that he couldn’t take a client for $500 a year. His firm charges a minimum $3,700 a year. If you want one-on-one help from a human advisor, it’s very hard to escape from paying a few thousand dollars per year. An advisor with the level of knowledge and education you want will want to make a living commensurate with his or her level of knowledge and education. $500 per client per year only works if the company has a huge marketing funnel that makes an advisor’s every hour a billable hour.
But, if you are willing to back away from “just do me” you will save a lot more money than from replacing a light bulb yourself. You also end up with a better product to boot. A little education goes a long way.
A good book only costs $20 or so. Used books are less. Books from the library are free. Vanguard website and brochures are free. Follow the model portfolio in the books by Burton Malkiel, David Swensen, or a number of other authors; they are all good enough. Invest in or mimic a Vanguard Target Retirement fund; they are also good enough. Get portfolio recommendation from a computer; a number of startups offer this now.
I still believe the average investor should use an investment advisor, but they can’t just use an average advisor. It has to be a low cost one: good books, copying a Vanguard Target Retirement fund, the Vanguard Financial Plan service, new services that deliver advice from a computer model (Wealthfront, Betterment), etc.
Say No To Management Fees
If an advisor is charging you a percentage of your assets, you are paying 5-10x too much. Learn how to find an independent advisor, pay for advice, and only the advice.