# Narstar — Full Article Text > Complete prose from all educational articles published at narstar.capital. Author: Pavel Naruta, Investment Adviser Representative, NarStar LLC (CRD #337496). Fee-only, fiduciary, state-registered in Utah and Texas. This document contains the full text of every article on narstar.capital for AI indexing and citation purposes. --- ## Article: What Is a Fiduciary Financial Advisor? URL: https://narstar.capital/articles/what-is-a-fiduciary-investment-adviser/ # What Is a Fiduciary Financial Advisor? A fiduciary investment adviser has a legal obligation to act in your interest. Not a marketing claim, not a voluntary pledge. A legal obligation under federal securities law, enforced by regulators. The term gets used a lot in adviser marketing these days, and it does not always mean the same thing. This article explains what fiduciary duty actually requires, who has it and who does not, how it differs from the Regulation Best Interest standard, and how to verify a specific adviser's status before you work with them. Investing involves risk, including the possible loss of principal. Definition ## What "Fiduciary" Actually Means The word describes a legal relationship, not a marketing position. A fiduciary is a person or entity that is legally required to act in the interest of another party. In the investment context, the fiduciary duty of an investment adviser comes from the Investment Advisers Act of 1940, as interpreted by the SEC and courts over decades. Registration as an investment adviser does not just grant a title. It attaches a legal obligation. The duty has two components. The first is the duty of care. An adviser must provide advice that is in the client's best interest, based on the client's individual situation. Generic advice that happens to benefit the adviser does not meet this standard. The second is the duty of loyalty. An adviser must put the client's interest ahead of their own. When a conflict exists between what is good for the client and what is good for the adviser's business, the client comes first. Any material conflict that the adviser cannot eliminate must be disclosed in writing, in advance, in Form ADV Part 2A. Together, these duties mean that a fiduciary investment adviser cannot recommend a product primarily because it pays the adviser more than the alternative. They cannot hold client assets in a way that benefits the firm at the client's expense. They cannot hide relationships with third parties that affect what they recommend. None of that makes an adviser immune to bad judgment or poor outcomes. Investing involves risk, and fiduciary duty does not guarantee results. What it does guarantee is that the legal obligation runs to the client, not to a commission schedule or a parent company. Who Qualifies ## Who Has Fiduciary Duty and Who Does Not The legal standard depends on how the firm is registered, not what it calls itself. Investment advisers registered under the Investment Advisers Act of 1940 are fiduciaries. This covers registered investment advisers (RIAs) registered with the SEC or with a state securities regulator. The fiduciary duty applies to the full scope of the advisory relationship, not just at certain transactions. A state-registered adviser like Narstar owes that duty continuously, from the moment the advisory agreement is signed through every portfolio decision made afterward. Broker-dealers and registered representatives are not subject to the same fiduciary standard. They operate under a different regulatory framework, discussed in the next section. The distinction matters because many firms hold both registrations and a client may be dealing with either one depending on the service being performed. Fee-only investment advisers are typically pure RIAs with no broker-dealer affiliation. A fee-only adviser who holds no broker-dealer registration cannot flip into a lower standard for any particular transaction. Fee-based advisers often hold both registrations. They may owe fiduciary duty when acting in their advisory capacity and a lower standard when acting as a broker. The standard that applies depends on what the adviser is doing at that moment. This is legal and disclosed in Form ADV. It is also genuinely confusing for clients who assume the fiduciary label applies uniformly. If you want to understand how each structure handles compensation, the fee-only vs. fee-based article goes into more detail. Comparison ## Fiduciary vs. Regulation Best Interest The SEC introduced Reg BI in 2019. The name implies equivalence. The legal reality does not. Fiduciary Duty vs. Regulation Best Interest vs. Suitability Standard Applies to When it applies Disclosure required Fiduciary duty (Investment Advisers Act) Registered investment advisers (RIAs) Continuously throughout the advisory relationship Form ADV Part 2A, before engagement and kept current Regulation Best Interest (Reg BI) Broker-dealers and registered representatives At the point of each specific recommendation Form CRS, at or before first transaction Suitability (pre-2019 broker standard) Broker-dealers (historical) Per transaction Not required in a standardized form Regulation Best Interest, often called Reg BI, requires that broker-dealers act in the best interest of a retail customer at the time of a specific recommendation. That is a meaningful improvement over the previous "suitability" standard, which only required that a recommendation be appropriate for the customer's situation, not necessarily the best option available. But Reg BI is not the same as the fiduciary duty that applies to investment advisers. The key differences come down to timing and ongoing obligation. Fiduciary duty is continuous. An investment adviser owes a duty of loyalty throughout the advisory relationship. If a conflict of interest arises that was not disclosed upfront, the adviser must disclose it as soon as it becomes material, not wait for the next transaction. Reg BI applies at the transaction level. A broker meets the standard if each individual recommendation, at the moment it is made, is in the customer's best interest. There is no ongoing duty between transactions. The disclosure requirements also differ. An investment adviser must disclose material conflicts in Form ADV Part 2A before the advisory relationship begins, and keep those disclosures current. A broker discloses conflicts at the point of recommendation through the relationship summary, or Form CRS. The practical result is that a fiduciary investment adviser and a broker operating under Reg BI may look similar from the outside. Both are using the language of "best interest." The legal obligations are different, and so are the consequences when something goes wrong. Verification ## How to Confirm You Are Working With a Fiduciary Three checks. None of them require trusting the adviser's marketing materials. First, look up the adviser on the SEC's Investment Adviser Public Disclosure system at adviserinfo.sec.gov (opens in new tab). Search by name or CRD number. A pure investment adviser will show registration as an RIA without a parallel broker-dealer registration. If the record shows dual registration as both an investment adviser and a broker-dealer, the adviser wears both hats and the standard that applies may vary by transaction. Second, read Form ADV Part 2A. It describes the advisory services the firm offers, compensation structure, any affiliations with broker-dealers or other financial industry firms, and disciplinary history. If the disclosures mention services provided in a non-advisory capacity, the adviser has told you directly that fiduciary duty does not always apply. Each Form ADV is a public document. Mine is linked from the footer of every page on this site. Third, ask the adviser directly: "Are you a fiduciary for every service you provide to me?" The right answer for a pure investment adviser is yes, always. There are other questions worth asking before you hire anyone, and fiduciary status is just the first one. If the answer involves any qualification, you now know what you are dealing with. One more note: fiduciary status does not mean the adviser is free of all conflicts. An adviser charging a percentage of assets still has an incentive to grow the account rather than recommend other uses for the money. Those remaining conflicts are required to be disclosed in Form ADV. For our disclosures, see our about page. Narstar manages three model portfolios (Income, Growth, and Speculative), each with a different approach to risk and volatility. Narstar is a fee-only investment adviser in Utah, registered in Utah and conditionally registered in Texas, with no broker-dealer affiliation. Our fiduciary duty applies to every account we manage, from the first trade to the last. If you want to verify that, the public records at adviserinfo.sec.gov are the place to start. ← Previous How to Roll Over a 401(k) to an IRA Next → Fee-Only vs Fee-Based Adviser Contact --- ## Article: Fee-Only vs Fee-Based Financial Advisor: The Real Difference URL: https://narstar.capital/articles/fee-only-vs-fee-based-adviser/ # Fee-Only vs Fee-Based Financial Advisor: The Real Difference The terms fee-only and fee-based sound almost identical and they describe very different ways of getting paid. The choice of adviser usually comes down to this distinction. This article explains what each one actually means, why the distinction matters, and how to verify which kind of adviser you are talking to. Investing involves risk, including the possible loss of principal. Fee-Only ## What "Fee-Only" Actually Means The whole fee-only vs fee-based financial adviser question starts with how the adviser gets paid. Fee-only: An investment adviser who earns revenue exclusively from client advisory fees, with no commissions, product sales, or third-party payments of any kind. A fee-only adviser is paid only by clients. The fee can be hourly, flat, a retainer, or a percentage of the assets under management. The exact dollar amount and the schedule are written in the adviser's Form ADV Part 2A, which is a public regulatory document. There are no commissions on product sales. There are no kickbacks from fund companies or insurers. There are no "concessions" for placing client money into a particular share class. If money flows to the adviser from any source other than the client, the adviser is not fee-only. Most fee-only advisers are registered investment advisers, either with the U.S. Securities and Exchange Commission or with a state securities regulator. As a registered investment adviser they have a legal fiduciary obligation to act in the client's best interest and to disclose any material conflicts in writing. Fiduciary obligation is not the same as fee-only structure, but the two often go together. A fee-only structure reduces many of the common conflicts that come from product commissions. It does not remove every conflict. An adviser charging a percentage of assets under management still has an incentive to grow the account rather than recommend that you pay down a mortgage, give to charity, or hold cash. Those remaining conflicts are required to be disclosed in Form ADV Part 2A. Our ADV spells them out. Fee-Based ## What "Fee-Based" Actually Means The word looks almost the same. The compensation is structured very differently. A fee-based adviser is paid by clients and by third parties. They charge a client-paid fee for some services, and they also receive commissions, trail payments, or other compensation when they sell certain products. Common examples include front-load mutual funds, annuities, life insurance, and proprietary funds offered by an affiliated broker-dealer. The term itself is, in practice, a marketing label. Some industry groups treat fee-based and fee-only as functionally similar; the SEC and state regulators do not. Form ADV Part 2A makes the distinction explicit by asking the firm to disclose every form of compensation, including commissions, 12b-1 fees, and revenue-sharing agreements with affiliates. If the disclosures show third-party compensation, the adviser is fee-based, not fee-only, regardless of how the firm describes itself in marketing. The structure is not automatically bad. A fee-based adviser may have access to insurance products that a pure fee-only firm cannot offer. The trade-off is that compensation now varies based on which product the adviser recommends. Two products that are roughly comparable for the client may pay the adviser very different amounts. Disclosed conflicts are still real conflicts. Why It Matters ## Why the Distinction Matters The pay structure changes which recommendations are available and how they get framed. When the adviser is paid only by the client, the adviser's incentive is to keep the client. That is not a perfect alignment, but the friction points are limited. When the adviser is paid by the client and by product issuers, the incentive structure is more complicated. A product that pays the adviser a 5% commission and a product that pays nothing may both be appropriate for the client. They are not equally appealing to recommend. A practical example. Two no-load index funds from different fund families may behave nearly identically in a portfolio. If one of them shares revenue with the adviser's broker-dealer and the other does not, a fee-based adviser has a financial reason to consider the first one more often. The recommendation is permitted as long as it is suitable, and as long as the conflict is disclosed in Form ADV. The client still pays for it through fund expenses, and the adviser still gets paid more for it. The distinction also changes the standard of care that applies. A registered investment adviser owes a fiduciary duty under the Investment Advisers Act, which is enforced by the SEC or by state securities regulators. A broker-dealer or registered representative owes the lower "best interest" standard under Regulation Best Interest. Fee-only advisers are typically pure investment advisers. Fee-based advisers often hold both registrations and switch between them depending on the transaction. The client's protection level changes accordingly, and the change is not always obvious from the title on the business card. Verification ## How to Verify Which One You Are Talking To Three checks. None of them require trusting what the adviser says about themselves. First, ask the adviser directly whether they receive any compensation, of any kind, from any source other than client fees. The right answer is a flat no for a fee-only adviser. If the answer involves any qualification, the adviser is not fee-only. Second, read Form ADV Part 2A. It describes how the firm is paid, discloses any broker-dealer relationships, covers soft-dollar and revenue-sharing arrangements, and lists any third-party referral or compensation arrangements. Every registered investment adviser files one and it is a public document. Third, look up the adviser on the SEC's Investment Adviser Public Disclosure system at adviserinfo.sec.gov (opens in new tab). The CRD record shows registrations, disclosure events, and current Form ADV filings. A fee-only adviser will be registered as an investment adviser without a parallel broker-dealer registration. A fee-based adviser will typically be registered as both. The system is free and run by the regulators, not by the adviser. Narstar is a fee-only investment adviser in Utah, registered in Utah and conditionally registered in Texas, with no broker-dealer affiliation. We manage three model portfolios (Income, Growth, and Speculative), each designed for different goals. The homepage shows what our fees would be at any balance. If you want to verify any of this, the public records linked above are the right place to start. ← Previous What Is a Fiduciary Investment Adviser? Next → How to Find a Fee-Only Financial Advisor Contact --- ## Article: Robo-Advisors: Pros, Cons, and Who They Fit URL: https://narstar.capital/articles/robo-advisor-vs-fee-only-adviser/ # Robo-Advisors: Pros, Cons, and Who They Actually Fit Robo-advisors are legitimate products. They are low-cost, well-diversified, and built by companies that owe you a fiduciary duty. They are also one specific approach to investing, and not every approach fits every investor. This article explains how they work, what they do well, where they have limits, and how to tell whether one fits your situation. Investing involves risk, including the possible loss of principal. How They Work ## How Robo-Advisors Work "Robo-advisor" is marketing language. The product is an automated platform that builds and manages a diversified ETF portfolio based on your answers to a short questionnaire. You sign up online, answer 8 to 15 questions about your goals, time horizon, and how much volatility you can handle, and the platform assigns you to a model portfolio. That model is usually a mix of stock and bond ETFs weighted to a target risk level. From there, the platform handles automatic rebalancing, tax-loss harvesting in taxable accounts, and dividend reinvestment. No human analyst picks the individual holdings. The fund selection and allocation rules are written into the algorithm by the firm that built the platform. When something changes in the market, the algorithm responds according to its rules, not based on judgment about your specific situation. Most major robo-advisors are registered investment advisers and owe a fiduciary duty under the Investment Advisers Act. That obligation is real. It's exercised through the design of the algorithm rather than through case-by-case judgment about each client's account. Fees are typically 0.25% per year or less on assets under management, on top of the expense ratios of the underlying ETFs (usually 0.03% to 0.20%). Account minimums are low, often $0 to $500. Communication is generally through chat, email forms, or a help center. Strengths ## What Robo-Advisors Do Well These are genuine strengths. For a lot of investors, they are exactly what they need. Low cost. On a $50,000 balance, a robo-advisor at 0.25% costs about $125 per year before ETF expenses. For someone who wants broad market exposure and wants to keep costs low, that is hard to beat. Broad diversification. Most robo-advisors put you into hundreds or thousands of companies through a small number of ETFs. You get exposure to the broader market, minus the platform's fees. A bad quarter for one company does not sink the portfolio. Automatic rebalancing. When your allocation drifts from the target, the platform rebalances it automatically. You do not need to log in and make any decisions. Tax-loss harvesting. Many platforms include automated tax-loss harvesting in taxable accounts, which can reduce your tax bill by selling positions that are down to offset gains elsewhere. Low minimum to start. Most robo-advisors require $0 to $500 to open an account. For someone just starting out, that removes a real barrier. Simple setup. The questionnaire takes less than 15 minutes. After that, the platform manages it. There are no month-to-month decisions to make. Limitations ## Things to Know Before You Start These are not flaws. They are design choices. Worth knowing so the product matches what you expect. You own ETFs, not individual companies. Robo-advisors invest in fund baskets, not specific stocks. If you want a managed account that holds individual companies, a robo-advisor is a different product from what you are looking for. Communication goes through a platform, not a specific person. There is no individual adviser assigned to your account. Questions go to a help center, chat support, or a call-center team. That is by design and it keeps costs low. It is worth knowing before you sign up. The questionnaire is a simplified model. You answer a short set of questions and get assigned to a risk category. That category determines your allocation. The model does its best with the information it has. It does not change unless you log in and update your answers. Diversification does not eliminate risk. A broadly diversified ETF portfolio will still drop in a broad market downturn. Holding hundreds of companies through ETFs protects against a single company failing, not against the market falling broadly. All investing involves the real possibility of losing money. Premium tiers add cost. Some robo-advisors offer higher tiers with access to human advisers. Those tiers typically cost more. Read the full pricing before assuming the base fee covers everything you want. Who It Fits ## Who a Robo-Advisor Fits Best The honest answer depends on what you actually want from the relationship. A robo-advisor is probably a good fit if: - You want broad, low-cost exposure to the stock and bond markets through diversified ETFs. - You want to set it up and not think about it. Day-to-day decisions are not something you want to make. - Keeping fees low is your top priority. The 0.25% fee structure is genuinely inexpensive compared to most alternatives. - You do not need direct access to a specific person. A help center or chat support is enough. - You are just starting out and want a simple, low-minimum way to begin investing. If all of that matches what you are looking for, a robo-advisor is a reasonable and well-built option. The Alternative ## If You Want Something Different Not everyone fits the robo-advisor model. Some investors want individual stocks and a person they can reach directly. Some investors want to own individual stocks in a focused portfolio, not fund baskets. Some have questions that a questionnaire cannot capture. Some want to understand exactly what they own and why, and want to be able to ask someone directly. Those are legitimate preferences. They also describe a different kind of product from a robo-advisor. Narstar is a fee-only registered investment adviser. We manage three model portfolios at Interactive Brokers, starting at $100. We invest in individual companies, not ETF baskets. You can reach us directly by email. Our fees are higher than a robo-advisor's: 0.60% for the Income portfolio, 1.20% for Growth, and 1.60% for Speculative. Higher fees do not guarantee better outcomes, and a focused portfolio carries more concentration risk than a broadly diversified fund. The homepage shows what our fees work out to at your balance. NarStar LLC is registered with the State of Utah (CRD #337496) and conditionally registered with the State of Texas. You can verify both at adviserinfo.sec.gov/firm/summary/337496 (opens in new tab). If a robo-advisor is actually the better fit for your situation, we will say so. The goal is for you to end up with the right structure, not to sign up for something that does not serve you. ← Previous How to Find a Fee-Only Financial Advisor Next → What Is a Stock? Contact ## Not Sure Which Fits You? If you are weighing your options and want a straight answer, send the question. We'll give you a straight answer about whether Narstar fits your situation, or whether a robo-advisor is the better call. --- ## Article: How to Find a Fee-Only Financial Advisor URL: https://narstar.capital/articles/how-to-find-a-fee-only-financial-advisor/ # How to Find a Fee-Only Financial Advisor To find a fee-only financial advisor, start with the SEC's free public database at adviserinfo.sec.gov. Every registered investment adviser is listed there — including their fee structure, registration status, and disciplinary history. No directory charges for placement. No ad results. This article covers how to search it, what to verify, and the questions worth asking before you hire anyone. Investing involves risk, including the possible loss of principal. The Basics ## Start With the Term Fee-only and fee-based sound similar. They are not the same thing. A fee-only financial advisor earns revenue exclusively from client advisory fees. No commissions, no product sales, no third-party payments of any kind. If money flows to the advisor from any source other than the client, the advisor is not fee-only. Fee-based sounds almost identical but means something different. A fee-based advisor charges a client fee and can also earn commissions when selling certain products. The two words describe two different compensation structures, and a standard Google search for "financial advisor" returns both without distinguishing them. Why it matters: an advisor who earns commissions has a financial reason to recommend some products over others, regardless of which one is better for you. The conflict does not make the recommendation wrong, but it is a real conflict. A fee-only structure removes that particular source of friction. It does not remove every conflict, but it removes the most common ones. A registered investment adviser owes a fiduciary duty to act in your interest and to disclose any remaining conflicts in writing. Search ## Where to Search Three sources worth starting with, ranked by reliability. NAPFA directory. The National Association of Personal Financial Advisors admits only fee-only members. Searching at napfa.org/find-an-advisor filters out fee-based advisors by design. You can search by zip code or state. Not every fee-only advisor is a NAPFA member, but every advisor listed there has confirmed their fee-only status. SEC's Investment Adviser Public Disclosure. The IAPD at adviserinfo.sec.gov (opens in new tab) is the public database for all registered investment advisers in the United States. You can search by name, firm, or CRD number and filter results by state. This is where you verify credentials, not where you browse for recommendations. Your state securities regulator. Advisers managing less than $110 million typically register with their state, not the SEC. Most states have a searchable database through NASAA (nasaa.org) or through the state securities division directly. A state-registered adviser is not a lesser option. It simply means the firm is smaller and regulated at the state level. General Google searches and advisor-matching services can supplement these sources but are not a substitute for the public records above. Marketing language cannot be verified. Regulatory records can. Verification ## What to Verify on IARD Four things. Each one takes less than two minutes. CRD number. Every registered investment adviser has a Central Registration Depository number. Any advisor who is reluctant to give you their CRD number is a red flag. Enter it at adviserinfo.sec.gov and confirm the record matches what you were told. State registration. Confirm the adviser is registered in the state where you live. An adviser who is not registered in your state cannot legally provide investment advice to you, with limited exceptions. The IARD record shows every state where the adviser is registered. Form ADV Part 2A. This is the adviser's regulatory brochure, filed with the SEC or state regulator and available in full on IARD. It describes how the firm is paid, discloses any broker-dealer affiliations, and covers any referral compensation arrangements. Look for the fees and compensation section. If it mentions commissions or third-party payments, the firm is not fee-only. Disclosure events. The IARD record shows any regulatory actions, customer complaints, or legal proceedings on the adviser's record. One old complaint does not disqualify anyone. A pattern of complaints, or anything involving fraud or misappropriation, is a different matter. Due Diligence --- ## Article: Types of Retirement Accounts: 401(k), IRA, Roth, and SEP Explained URL: https://narstar.capital/articles/types-of-retirement-accounts/ # Types of Retirement Accounts: 401(k), IRA, Roth, and SEP Every retirement account has its own contribution limits, tax treatment, withdrawal rules, and investment options. The differences are not just technical. What kind of account you hold and where you hold it determines how your money is taxed now, how it is taxed later, and what you can actually invest in. This article covers the main types. It is general education, not tax advice. Your specific situation depends on your income, employer, and filing status. Consult a tax professional for anything that needs to be applied to your numbers. Investing involves risk, including the possible loss of principal. 401(k) ## The 401(k): Your Employer Runs It A 401(k) is offered through your job. You contribute from your paycheck, and the investment menu is set by your employer's plan. A traditional 401(k) takes money from your paycheck before it is taxed, invests it, and taxes you when you withdraw in retirement. A Roth 401(k) flips that: you contribute after-tax dollars and withdrawals in retirement are tax-free, assuming you meet the holding requirements. Many employers offer a match on contributions up to a certain percentage of your salary. That match is additional compensation. Not contributing enough to get the full match means leaving part of your pay on the table. The contribution limits are substantially higher than IRAs. For 2025, the limit was $23,500 for people under 50 and $31,000 for people 50 and older (with catch-up). These amounts adjust for inflation, so verify the current year's limits at IRS.gov (opens in new tab). The significant trade-off is the investment menu. Your 401(k) can only hold what your employer's plan administrator offers, which is typically a set of mutual funds and target-date funds, not individual stocks. You cannot take money out before age 59.5 without a 10% early withdrawal penalty in most cases, and you will owe income tax on the withdrawal on top of that. At age 73, traditional 401(k) holders must begin required minimum distributions (RMDs), whether they need the money or not. When you leave a job, you have three options for the old 401(k): leave it in your former employer's plan, roll it into a new employer's plan, or roll it into an IRA. Most people roll it to an IRA to get wider investment options and consolidate accounts. Cashing it out means paying income tax and the 10% penalty. That is almost always the most expensive option. Traditional IRA ## The Traditional IRA: You Open It, Pre-Tax Growth An Individual Retirement Account you open and own yourself, independent of any employer. A traditional IRA works on the same tax logic as a traditional 401(k): contributions may be tax-deductible now, and you pay income tax when you withdraw the money in retirement. The key word is "may." Whether your contributions are deductible depends on your income and whether you or your spouse are covered by a workplace retirement plan. If you are covered by a plan at work and your income is above certain thresholds, the deduction phases out. The IRA itself still functions the same way whether contributions are deductible or not. Consult a tax professional for where your income falls relative to the current phase-out ranges. The annual contribution limit for 2025 was $7,000 for people under 50 and $8,000 for people 50 and older. This is a combined limit across all of your IRAs: traditional and Roth together. You cannot contribute more than the combined limit across accounts. Like 401(k) limits, IRA limits adjust periodically, so check IRS.gov (opens in new tab) for the current year. The major advantage of a traditional IRA over a 401(k) is investment flexibility. An IRA held at a brokerage can hold individual stocks, ETFs, bonds, mutual funds, or whatever the custodian supports. There is no plan administrator limiting your menu. Withdrawals before 59.5 carry the same 10% penalty as a 401(k), with some exceptions. RMDs begin at 73. Loss of principal is possible regardless of account type; the tax wrapper does not protect against investment losses. Roth IRA ## The Roth IRA: Post-Tax In, Tax-Free Out You pay tax on the money before it goes in. In exchange, qualified withdrawals in retirement come out tax-free. A Roth IRA is funded with after-tax dollars. There is no deduction when you contribute. The trade-off is that qualified withdrawals in retirement are tax-free, including the growth. For someone with a long time horizon, that tax-free compounding can matter a lot. It is worth noting that "tax-free growth" describes a tax treatment, not a performance outcome. Investments in a Roth IRA can still lose value. The account type does not change the investment risk. Roth IRAs have income limits that traditional IRAs do not. For 2025, the ability to contribute to a Roth IRA began phasing out at $150,000 in modified adjusted gross income for single filers and $236,000 for married filing jointly. Above certain thresholds, you cannot contribute directly. There is a workaround called a "backdoor Roth IRA" that involves contributing to a non-deductible traditional IRA and then converting it. Whether that makes sense in your situation depends on factors your tax professional can evaluate. One feature that distinguishes Roth IRAs from traditional IRAs and 401(k)s: there are no required minimum distributions during the account owner's lifetime. That gives you more flexibility in how and when you draw down the account in retirement. You can also withdraw your contributions (not earnings) at any time without penalty, since you already paid tax on them. The same annual contribution limits apply as for traditional IRAs, and the limit is shared across both account types. SEP IRA ## The SEP IRA: High Limits for the Self-Employed A Simplified Employee Pension IRA is designed for freelancers, sole proprietors, and small business owners who want to put more away than a regular IRA allows. A SEP IRA allows contributions of up to 25% of net self-employment income or approximately $70,000 (for 2025), whichever is less. Verify the current limit at IRS.gov (opens in new tab) as the figure adjusts for inflation. Contributions are pre-tax, and the tax treatment mirrors a traditional IRA: you deduct contributions now and pay income tax on withdrawals in retirement. RMDs begin at 73. There is no Roth version of a SEP IRA. The SEP IRA is straightforward to open and maintain compared to a solo 401(k), which is the main alternative for self-employed people. There are no annual filing requirements for a SEP as long as only the employer (you) is contributing. The catch: if you have employees, you must contribute the same percentage of their compensation as you contribute for yourself. This makes SEP IRAs less attractive once you start hiring, because employer contributions for all eligible employees are required. If you are self-employed and looking for even higher limits or the ability to make both employee and employer contributions, a solo 401(k) may allow more total contributions in some situations. That is a comparison worth running with a tax professional against your specific income and business structure. Other Types ## The Rollover IRA and a Few Others Worth Knowing A rollover IRA is what most people end up with after leaving a job. A few other account types come up often enough to be worth naming. A rollover IRA is a traditional IRA funded by rolling over money from a former employer's 401(k) or other qualified plan. The tax-deferred status carries over and the money keeps growing without an immediate tax bill. The key is doing a direct rollover: the money goes from the 401(k) plan directly to the IRA without passing through your hands. If the check is made out to you instead of the IRA custodian, the plan is required to withhold 20% for taxes, and you have 60 days to deposit the full amount (including that withheld 20% from your own pocket) to avoid it being treated as a taxable distribution. A direct rollover avoids all of that. For the full step-by-step process, see how to roll over a 401(k) to an IRA. A SIMPLE IRA (Savings Incentive Match Plan for Employees) is an employer-sponsored plan designed for businesses with 100 or fewer employees. It works similarly to a 401(k) but with lower administrative costs. Contribution limits are lower than a 401(k) but higher than a regular IRA, and early withdrawals within the first two years carry a 25% penalty rather than 10%. If you are an employee at a small business, this may be what your employer offers instead of a 401(k). An inherited IRA applies when you inherit retirement account assets from someone who has died. The rules around inherited IRAs changed significantly with the SECURE Act in 2019 and the SECURE 2.0 Act in 2022. Most non-spouse beneficiaries must now deplete the account within 10 years, and specific RMD rules within that window depend on whether the original owner had started taking distributions. This is an area where the rules are complicated enough that a tax professional's input is worth the cost. Narstar's Scope ## Which Accounts Narstar Manages Being clear about what we can and cannot do is part of the job. Narstar manages accounts held at Interactive Brokers. Those accounts can be: individual taxable brokerage accounts, joint accounts, Traditional IRAs, Rollover IRAs, Roth IRAs, SEP IRAs, trust accounts, and UGMA/UTMA custodial accounts for minors. All of those account types are available at IBKR, and all of them can hold individual stocks, which is what our three model portfolios consist of. We do not manage active 401(k) accounts at an employer's plan. Your current 401(k) stays where it is. We cannot access it and we do not try to. RSU accounts at employer brokerages are also outside our scope. If you hold unvested RSUs or have an active 401(k) at your current job, those stay with your employer's system. What we manage is separate: the accounts you open at IBKR and fund yourself, whether that is a taxable account, a new IRA, or a rollover from an old 401(k) after you change jobs. If you have a mix of account types and want to understand how the accounts we manage would fit alongside the ones we don't, the contact form below is the right starting point. We'll explain what makes sense for your situation without selling you anything. The homepage shows what the advisory fee would be at any balance, and our full background and disclosures are on the about page. ← Previous ETFs vs Mutual Funds Next → How to Roll Over a 401(k) to an IRA Contact --- ## Article: How to Roll Over a 401(k) to an IRA: Step by Step URL: https://narstar.capital/articles/how-to-roll-over-401k-to-ira/ # How to Roll Over a 401(k) to an IRA: Step by Step When you leave a job, the 401(k) from that employer does not have to stay there. Rolling it to an IRA gives you wider investment options and consolidates the account under your control. The process is straightforward if you do it the right way, and costly if you do it the wrong way. This article covers the mechanics, the trap most people don't know about, and what your options are once the money is in the IRA. This is general education. Consult a tax professional for guidance specific to your situation. Investing involves risk, including the possible loss of principal. What It Is ## What a 401(k) Rollover Actually Is A rollover moves retirement money from one account to another while keeping the tax-deferred status intact. When you leave a job, you have options for the 401(k) account at that employer: leave it in the old plan, roll it into your new employer's plan, roll it into an IRA, or cash it out. Leaving it in the old plan is fine if the investment menu is good and the fees are low. Rolling it to a new employer's plan consolidates accounts but keeps the same investment menu constraints. Cashing it out means paying income tax on the full amount plus a 10% early withdrawal penalty if you are under 59.5. That is almost always the most expensive option and permanently removes the money from tax-advantaged growth. Rolling a traditional 401(k) to a traditional IRA preserves the tax-deferred status. No tax is owed at the time of the rollover. The money simply moves from one qualified account to another. Once it is in the IRA, you can invest it in individual stocks, ETFs, bonds, mutual funds, or whatever your IRA custodian supports. That investment flexibility is the main reason people roll old 401(k)s to IRAs rather than leaving them in place. For background on how IRAs compare to 401(k)s and other account types, see the retirement accounts explainer. The Right Method ## Direct Rollover vs. Indirect Rollover: Do Not Confuse Them The method you use determines whether you owe taxes right now. This is the most important mechanic to understand before you start. A direct rollover sends the money straight from your old 401(k) plan to your IRA custodian. The check is made payable to the IRA custodian for the benefit of your account, not to you personally. You never touch the money. No tax is withheld. No 60-day deadline applies. This is the method to use. An indirect rollover sends the distribution to you first. The plan is required by law to withhold 20% of the amount for federal income taxes. You receive 80% of the balance. You now have 60 days to deposit the full original amount (including the withheld 20%, which you must cover out of pocket) into an IRA. If you deposit only the 80% you received, the withheld 20% is treated as a taxable distribution and subject to the 10% early withdrawal penalty if you are under 59.5. You will get the withheld amount back as a tax refund when you file, but the penalty and any additional taxes due are real costs that do not go away. The indirect rollover is legal, but there is almost no reason to use it for a standard 401(k)-to-IRA transfer. Request a direct rollover. If the plan administrator is unclear on the terminology, ask them to make the check payable to your IRA custodian rather than to you. That phrasing usually settles the question. Roth Conversion ## Rolling Into a Roth IRA: What Changes You can roll a traditional 401(k) into a Roth IRA, but it is a taxable event. The conversion rules are different from a straightforward rollover. A traditional 401(k) contains pre-tax money. A Roth IRA holds post-tax money. If you roll a traditional 401(k) into a Roth IRA, you are converting pre-tax dollars to post-tax dollars. The entire amount rolled over becomes taxable income in the year of the conversion. There is no 10% early withdrawal penalty on the conversion itself (though earnings withdrawn too early from the Roth later may still be subject to penalty depending on your age and how long the account has been open). Whether a Roth conversion makes sense depends on your current tax bracket, your expected tax bracket in retirement, the size of the account, and other factors. A large conversion can push you into a higher bracket in the year you convert. This is a decision that benefits from a tax professional's review, not a quick calculation. The general principle: converting is more likely to make sense when you expect to be in a higher tax bracket in retirement than you are today, or when the account is small enough that the tax bill is manageable. If you have a Roth 401(k) (meaning contributions were already made with after-tax dollars), rolling it into a Roth IRA is generally a tax-free transfer, similar to the traditional-to-traditional rollover. Again, a direct rollover is the right method. The Steps ## The Actual Steps In practice, the process involves four decisions and a few forms. First, decide where the IRA will be held. Open the account at your chosen custodian before initiating the rollover. The IRA needs to exist and be open to receive the funds. If you plan to have the IRA managed by an investment adviser, open the account under their advisory agreement before the money arrives. Narstar manages rollover IRAs held at Interactive Brokers, starting at $100. If that is the direction you are considering, see how it works below before you start the paperwork. If you are still deciding on an adviser, understanding the difference between fee-only and fee-based structures matters before you sign anything. Second, contact your old 401(k) plan administrator. Tell them you want to do a direct rollover to an IRA. They will ask for the receiving custodian's name, account number, and often a letter of acceptance from the new IRA custodian. Get this paperwork from your IRA custodian first. Third, confirm the check is made payable to the IRA custodian, not to you. The exact payable-to language typically looks like: "[Custodian Name] FBO [Your Name], IRA." FBO means "for the benefit of." If the check is made payable to you instead, you are now in indirect rollover territory with a 60-day deadline. Fourth, once the money arrives at the IRA, it sits in cash until it is invested. This is an active decision, not an automatic one. The IRA custodian will not automatically invest it for you unless there is an advisory agreement in place. If you are working with a managed account, the adviser will invest it once the funds clear. If you are managing it yourself, you decide where to put it. Cash sitting uninvested in an IRA is still subject to the same tax treatment, but the investment risk of leaving it in cash is yours to account for. Narstar's Role ## What We Manage After a Rollover A rollover IRA at Interactive Brokers is an account type we manage. Here is what that looks like in practice. If you roll a 401(k) into a Rollover IRA at Interactive Brokers, we can manage that account under one of our three model portfolios. The account is yours, held in your name at IBKR. Narstar has trading authority to manage the investments. We cannot withdraw funds or transfer money out. The rollover itself is something you initiate with your old plan and IBKR. Once the money is in the account and you have signed the advisory agreement, we match the account to the Income Portfolio or Growth Portfolio based on your goals and time horizon. The advisory fee applies to the balance in the account: 0.60% annually for Income, 1.20% for Growth, 1.60% for Speculative, billed quarterly. The homepage shows the dollar amount at any balance. We do not charge a setup fee or a rollover processing fee. The only fee is the ongoing advisory fee on the balance. One thing to be clear about: we do not help with the rollover paperwork itself. The process of contacting your old plan administrator and arranging the transfer is between you, your old plan, and IBKR. What we do is manage the portfolio after the money arrives. Before you sign on with any adviser, ask how they get paid, what they invest in, and what happens if you want to leave. If you have questions about what the account would look like once it is set up, the contact form is the right starting point. ← Previous Types of Retirement Accounts Next → What Is a Fiduciary Investment Adviser? Contact --- ## Article: What Is a Stock? URL: https://narstar.capital/articles/what-is-a-stock/ # What Is a Stock? A stock is a fractional ownership stake in a company. When you buy one share of Apple, you own a tiny piece of Apple Inc., with a legal claim on a proportional share of its assets and earnings. That is the whole concept. The rest of this article explains how that ownership gets created, how it can change in value, and how individual stocks compare to funds that hold hundreds of companies at once. Investing involves risk, including the possible loss of principal. Definition ## What a Stock Actually Is Ownership in a company. Not a bet, not a ticket. A legal claim. When a company wants to raise money, one way to do it is to sell pieces of itself to outside investors. Each piece is called a share of stock, or equity. The company divides itself into millions or billions of shares, sells some portion of them to raise capital, and the buyers become part-owners. Shareholders do not run the company day to day, but they do own a slice of it. That ownership comes with specific legal rights: a proportional claim on the company's assets if it ever winds down, and a proportional claim on earnings that the company chooses to distribute. Owning one share of a company that has issued 10 billion shares gives you one 10-billionth of the company. That is a small fraction, but it is a real one. If the company's total value doubles, your share is worth twice as much. If the company goes bankrupt, your share can go to zero. The upside and the downside both scale with your ownership stake, and neither outcome is guaranteed. The price of a stock on any given day reflects what buyers and sellers currently agree it is worth, based on their collective views about the company's future earnings, competitive position, management quality, and dozens of other factors. The underlying value of the business and the price you pay for a share can diverge significantly, sometimes for years. A stock priced at $50 is not necessarily worth $50. It is simply the price at which the most recent willing buyer and seller completed a transaction. How It's Created ## How Companies Issue Stock Stock starts at an IPO. After that, it trades between investors. The first time a private company sells shares to the public, it is called an initial public offering, or IPO. The company works with investment banks to set a price and sell shares to institutional and individual investors. The proceeds go to the company, which uses them for operations, expansion, or debt repayment. Once the shares are sold, they start trading on a stock exchange, and the company receives no additional money from those secondary transactions. After the IPO, a company can issue additional shares through a secondary offering. This raises more capital but dilutes existing shareholders: if a company doubles its share count, each existing share now represents half the ownership it did before. Dilution reduces the value of each share all else being equal, which is why secondary offerings often cause a stock price to drop. Companies also sometimes buy back their own shares from the market, which has the opposite effect. Most of the stocks that ordinary investors buy and sell are shares that have been trading publicly for years or decades. The IPO price and what happened right after the company went public is history. What matters to an investor today is what the company is worth now, what it might be worth in the future, and whether the current stock price reflects that accurately. Those questions have no reliable, consistent answers. That is the core reason investing involves risk. Returns & Risk ## Two Ways Stocks Can Gain (or Lose) Value Price appreciation and dividends. Neither is guaranteed. Price appreciation is the most visible way a stock creates value. If you buy a share at $40 and sell it at $60, you have a $20 gain. The price went up because other investors became willing to pay more for the same ownership stake, usually because the company's earnings grew, its competitive position strengthened, or the market simply got more optimistic about its future. The same mechanism runs in reverse. If earnings disappoint, competition intensifies, or confidence falls, the price drops. Stocks can and do go to zero. A company can fail entirely, taking all shareholder value with it. Dividends are cash payments some companies make to shareholders, usually quarterly. A company that earns more than it reinvests may distribute a portion of that profit directly to owners. If you own 100 shares and the company pays $1 per share per year, you receive $100 in dividends annually. That cash is yours regardless of what the stock price does on any given day. The critical thing to understand about dividends is that they are not guaranteed. A company's board of directors votes on dividend payments. If business conditions deteriorate, if the company needs cash for its own operations, or if the board simply decides to use earnings differently, dividends can be cut or eliminated entirely. Companies that have paid dividends for decades have still cut them during financial stress. The history of a dividend does not bind the future. Any portfolio strategy that depends on dividends for income must account for the real possibility that those payments will be reduced or stop. Both sources of return, price gains and dividends, carry the same fundamental risk: the underlying company may perform worse than expected. A company with a long dividend history can fail. A stock that has risen for years can fall just as far. The two ways stocks make money are also the two ways stocks lose it. How Markets Work ## How Stock Markets Work A brief look at exchanges, prices, and when trading happens. A stock exchange is an organized marketplace where buyers and sellers transact in shares of publicly listed companies. The two largest in the United States are the New York Stock Exchange (NYSE) and Nasdaq. Both operate primarily during regular market hours, 9:30 a.m. to 4:00 p.m. Eastern time on weekdays, excluding holidays. Pre-market and after-hours trading exists at most brokerages, but liquidity is thinner outside regular hours, and prices can be more volatile and harder to execute reliably. When you place an order to buy a stock, you are matched with a seller who has placed an order to sell at that price, or close to it. The price you see quoted is typically the last transaction price. The bid is the highest price a buyer is currently willing to pay. The ask is the lowest price a seller is currently willing to accept. The gap between them is the spread. For actively traded stocks, the spread is often a penny or less. For thinly traded ones, it can be much wider, which means you may buy at a meaningfully higher price than the current quote and sell at a meaningfully lower one. Market orders execute immediately at the best available price. Limit orders execute only at your specified price or better, which gives you control over the price but not the timing. An order placed at a limit price that the market never reaches will not execute. For most investors with a long time horizon, the difference between executing a trade at $49.95 versus $50.05 matters far less than the quality of the underlying business and whether the overall price paid reflects reasonable value. Stocks vs. Funds ## Individual Stocks vs. Funds The main structural difference and why it matters. An index fund or ETF (exchange-traded fund) bundles many stocks together into a single investment. A broad U.S. market index fund might hold shares in 500 or more companies simultaneously. When you buy one share of that fund, you indirectly own a small piece of all of them. The fund's price rises and falls with the collective performance of its holdings. No single company failing can destroy the fund: if one company in a 500-stock index collapses entirely, the impact on the fund is roughly one-five-hundredth of that loss. Individual stocks work differently. When you own shares in one company, your outcome depends entirely on that one company. If it does well, you benefit fully. If it fails, the position goes to zero. Holding a small number of individual stocks concentrates risk in a way that a broad fund does not. The same concentration can produce better returns if the companies selected perform well and worse returns if they do not. There is no structural guarantee either way. Index funds and ETFs typically carry lower costs and broader diversification. Individual stock portfolios involve more research, more volatility at the position level, and a higher chance of underperforming a broad market index over any given period. Studies consistently show that most actively managed stock portfolios trail the index over long periods, especially after fees. That does not mean individual stock investing is wrong. It means the bar for it to make sense is higher than simply picking companies that seem familiar or popular. At Narstar, we use individual stocks in all three model portfolios, not funds. The Income portfolio holds dividend-paying companies selected for cash flow. The Growth portfolio holds companies with durable competitive advantages. The Speculative portfolio holds a small number of concentrated positions in smaller companies with higher risk. Clients are matched to one portfolio based on goals and tolerance for loss, not balance size. If you want broad, low-cost index exposure instead, a robo-advisor or a self-directed brokerage account with index ETFs may be a better fit. The robo-advisor vs. fee-only adviser article covers that comparison directly. Our Approach ## How Narstar Invests in Stocks Three model portfolios of individual stocks. You are matched to one. All three Narstar portfolios are built from individual stocks, not funds. Each portfolio has a specific purpose, a specific fee, and a specific risk level. After you reach out, we send a short questionnaire about your goals, time horizon, and how you would react to a significant loss. Based on your answers, you are matched to one of the three. We manage it with discretionary authority, which means we make trade decisions without asking you first on each one. You can see everything in your account at Interactive Brokers. The Income portfolio (0.60%/year) holds dividend-paying stocks selected for cash flow. Dividends are not guaranteed, and interest rate changes or sector downturns can affect the portfolio significantly. The Growth portfolio (1.20%/year) holds companies selected for durable competitive advantages, held with a long-term view. Individual holdings can still decline sharply, and the portfolio can underperform broad market indices for extended periods. The Speculative portfolio (1.60%/year) is concentrated in a small number of smaller companies. It carries the highest risk of the three, including the real possibility of sharp losses. It is not appropriate for most investors. All three portfolios carry real risk. Stocks can fall. Companies can fail. The portfolios are not guaranteed to produce any particular outcome, and past portfolio decisions do not predict future results. The minimum account size is $100. If you want to understand what specific holdings a portfolio currently contains before committing to anything, send the question. We explain the positions before anyone signs anything. Narstar manages three model portfolios (Income, Growth, and Speculative), each with a different approach to risk. The homepage shows the dollar cost at any account balance. ← Previous Robo-Advisor vs Fee-Only Adviser Next → ETFs vs Mutual Funds Contact --- ## Article: ETFs vs Mutual Funds: What's the Difference? URL: https://narstar.capital/articles/etfs-vs-mutual-funds/ # ETFs vs Mutual Funds Both ETFs and mutual funds bundle many stocks into a single investment. The structural differences between them — how they trade, how they handle taxes, what they cost — are real but secondary to a more important question: whether holding a basket of hundreds of companies is what you actually want. This article explains what each one is, how they compare, and why Narstar uses individual stocks instead of either. Investing involves risk, including the possible loss of principal. Mutual Funds ## What a Mutual Fund Is A pooled investment vehicle priced once per day, after markets close. A mutual fund pools money from many investors and uses it to buy a collection of securities — typically stocks, bonds, or both. When you invest in a mutual fund, you own shares of the fund, not the underlying securities directly. The fund's portfolio manager, or an index algorithm, decides which securities to hold. Your return depends on how those holdings perform collectively, minus the fund's fees. Mutual fund shares are priced once per day, after U.S. markets close. The price is called the net asset value, or NAV: the total value of the fund's holdings divided by the number of outstanding shares. If you place an order to buy or sell at 2:00 p.m., you do not know the exact price until the NAV is calculated at the end of the day. You cannot trade mutual fund shares throughout the day the way you can trade stocks. Most mutual funds sold through employer retirement plans like 401(k)s are actively managed: a fund manager decides which stocks to hold, with the stated goal of beating a benchmark. Active management adds cost. The fund charges an expense ratio — an annual percentage fee drawn from the fund's assets — typically ranging from 0.50% to over 1.00% for actively managed funds. That fee comes out whether the fund beats the market or not. Decades of data show that most actively managed mutual funds trail their benchmark index after fees over long periods. Low-cost index mutual funds, which simply replicate an index rather than trying to beat it, have largely displaced actively managed funds as the default choice for long-term investors. ETFs ## What an ETF Is An exchange-traded fund. Same pooling concept, trades like a stock. An exchange-traded fund works like a mutual fund in concept — it pools money from many investors to hold a basket of securities — but it trades on a stock exchange throughout the day at market prices, the same way an individual stock does. You can buy or sell an ETF at 10:00 a.m., 2:00 p.m., or any other time the market is open. The price fluctuates throughout the day based on the value of the underlying holdings and supply and demand for the ETF shares themselves. Most ETFs track an index passively. A broad U.S. stock market ETF holds shares in hundreds or thousands of companies in proportion to their market value, with the goal of matching the index's performance rather than beating it. Because passive management requires minimal trading and research, the costs are low. Many index ETFs charge 0.03% to 0.10% annually — a fraction of the cost of an actively managed mutual fund. That cost difference compounds significantly over decades. ETFs also have a structural tax advantage over mutual funds. When investors in a mutual fund sell their shares, the fund may need to sell underlying holdings to raise cash, which can trigger capital gains distributed to all remaining shareholders — including those who did not sell. ETFs use an in-kind creation and redemption process that generally avoids this. As a result, ETF investors typically pay capital gains taxes only when they personally sell their shares, not when other investors in the same fund do. This is a meaningful advantage in taxable accounts. Comparison ## How They Compare Cost, taxes, trading, and minimums. ETFs win most categories. Cost. Index ETFs are generally cheaper than index mutual funds, and both are far cheaper than actively managed mutual funds. The difference between a 0.05% expense ratio and a 0.75% expense ratio is 0.70% per year. On a $50,000 account held for 20 years, that gap — compounded annually — reduces your ending balance by thousands of dollars. The fee runs every year, in every market condition, whether returns are positive or negative. Taxes. In a taxable brokerage account, ETFs are more tax-efficient than most mutual funds because of the in-kind redemption mechanism described above. Inside a tax-advantaged account like an IRA or 401(k), this distinction largely disappears, since gains are not taxed until withdrawal (traditional) or not at all (Roth). If you are choosing between an index ETF and a comparable index mutual fund inside a retirement account, tax treatment is not a meaningful differentiator. Trading. ETFs trade throughout the day like stocks. Mutual funds price once daily. For a long-term investor, intraday trading flexibility is rarely useful — but it does mean ETFs are easier to buy and sell at a specific price, which matters more if you need liquidity on short notice. Minimums. Many mutual funds require a minimum initial investment of $1,000 or more. ETFs can generally be purchased for the price of a single share, and most brokerages now offer fractional shares, making the effective minimum very low. For investors starting with small amounts, ETFs are more accessible. The practical conclusion for most investors: a low-cost index ETF is a reasonable default for broad market exposure in a taxable account. A low-cost index mutual fund is equally fine inside a retirement account. Actively managed mutual funds have a high bar to justify their costs, and the evidence that most clear it over long periods is not strong. Our Approach ## Why Narstar Uses Individual Stocks We do not manage ETF baskets. We pick companies. All three Narstar portfolios are built from individual stocks, not ETFs or mutual funds. That is a deliberate choice, and it comes with real tradeoffs. An index ETF buys every company in the index regardless of quality, valuation, or competitive position. We do not want to own every company. We want to own specific ones: dividend payers selected for cash flow in the Income portfolio, companies with durable competitive advantages in the Growth portfolio, and concentrated positions in smaller companies in the Speculative portfolio. That selectivity is the entire point. The tradeoff is real. Individual stocks concentrate risk in ways a broad index does not. If a single holding has a serious problem, it affects the portfolio more than it would in a 500-company index. The portfolios can underperform a broad market index for extended periods, and they can lose more in a downturn if the specific companies held do poorly. Individual stock investing is not inherently better than index investing. It is different, with a higher variance of outcomes in both directions. We also do not charge mutual fund expense ratios on top of an advisory fee. The only cost is the annual advisory fee: 0.60% for Income, 1.20% for Growth, 1.60% for Speculative. The holdings themselves carry no embedded management fee because they are individual stocks, not funds. The homepage fee calculator shows the dollar amount at any balance. If you want broad, low-cost index exposure to hundreds of companies at once, an ETF through a robo-advisor or a self-directed brokerage account is likely the better fit. The robo-advisor vs. fee-only adviser article covers that comparison directly. Narstar is for investors who want specific companies selected and managed for them, with a clear fee and a human making the decisions. ← Previous What Is a Stock? Next → Types of Retirement Accounts Contact ---