Three Pieces of Advice I Would Give My Younger Self

Hindsight is 20/20 and whether or not we have regrets, there are plenty of things we wish we knew when we were younger. Not only have I personally learned from my choices and mistakes, but as a financial advisor, I’ve also had the opportunity to see the consequences and rewards of other people’s decisions.

With nearly two decades of experience as an advisor under my belt, I look back at my younger years and wish I would have known what I know now. While this isn’t possible, I can do the next best thing: share my wisdom and lessons learned to clients, their children, Millennials, and other young people in hopes of helping them make smarter financial decisions.

Here are three pieces of advice I’d like to share.

Move Back Home

Rent is one of the biggest expenses young people face. With job competition and rising housing rates, it’s no surprise that it’s the first time in the modern era where more 18- to 34-year-olds are living at home with their parents than not. It may not sound like the most exciting living arrangement when you’re young and independent, but think about it in terms of your finances and retirement savings.

When I was in my early 20s, I believed that saving for retirement was important, but I wasn’t aware of how much money I needed to put away. I was saving and investing, but I was only saving 10% into my company’s 401(k) plan because 10% seemed like a nice round number. Had I stretched myself to a higher deferral percentage, I would have had even more money working for me at a younger age, leading to a higher amount saved for retirement today.

However, by living at home, I invested what would have been my rent and living expenses into non-retirement accounts that were accessible to me without penalty prior to age 59½. These investments enabled me to take on a smaller student loan when I pursued my MBA, and provided for a larger down payment for my first house. Most importantly, moving back home helped me jumpstart my retirement savings at the age of 22, a feat that not many people have the luxury of achieving. Instead of spending your money on rent, invest your savings, whether it’s to eventually purchase a home, contribute to a 401(k), or pay off student loan debt.

Stick to Your Goals, Not Market Activity

I started investing during an exciting time. It was the dot-com era and in one of my non-retirement accounts, I was trading individual stocks. I was stressed if my stocks dropped after I bought, and I was anxious when the stock reached a high. Should I buy? Should I sell? What’s the best investment option at the moment? What will the market do next?  What should my next move be?

In hindsight, I could have alleviated so much stress by focusing more on a strategy than individual holdings and sticking to it for the long haul. Whatever your tolerance for risk or your level of investment savviness, I recommend focusing on a strategy built around your goals. There’s no beating the markets and you can’t predict what will happen next. However, you can plan for different outcomes, which can help alleviate stress and anxiety.

Seek Out the Advice of an Advisor

We like to think of our friends and family as our confidantes. While they may serve as your compass for some decisions and choices, don’t assume their word is gold when it comes to financial advice.

My first job out of college was with Franklin Templeton, where I specialized in mutual funds. Because I worked for a financial company and knew about funds, I fooled myself into thinking that I knew everything there was to know about financial planning. However, the biggest challenge came in trying to piece together the information in a cohesive strategy because I couldn’t figure out which investment was best for me. It became so difficult to make a decision that at one point I had more than 12 funds!

With so many resources available online and in the media, it’s easy for someone to become an expert at just about anything. However, financial planning and investing aren’t two of them, namely because they are unique for everyone. There is no one-size-fits-all investment portfolio or retirement plan distribution percentage that will work for everyone. Financial decisions should be made with your specific circumstances in mind, not someone else’s.

As I grew older and became an advisor, I learned that growing wealth is more about creating a strategy and sticking to your plan. A comprehensive financial plan involves more than just investments. It’s important to also understand how insurance, estate planning, and other tools aim to balance out your plan and offer protection should the unexpected happen.

Looking Forward

After reviewing these three tips, do you see any financial missteps you may have taken? Or, do you have questions about what you could be doing differently with your finances? Whether you’re fresh out of college or ready for retirement, there is always a chance to plan for the future. I’d be happy to chat with you about where you are today and how you can work toward your goals. To set up a meeting, call my office at (949) 536-2030, or email me at michael.loo@trilogyfs.com.