Important things financial advisors would say to their younger selves

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For anyone entering adulthood, financial matters can be one of the most difficult aspects.

This can even be the case for those who go on to become financial advisors.

For these professionals, some of the advice they now regularly give their clients after years of additional training and hands-on experience was unfamiliar when they were younger. And there are some important things they would say to their younger selves if they could.

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Here are more articles on divorce, widowhood, income equality and other topics related to women’s investment habits and retirement needs.

For example, certified financial planner Marguerita Cheng said she was heading into adulthood knowing she should save money — that is, put it in a savings account — but investing that money in the stock market wasn’t initially on her radar .

“Today I would say to my younger self, ‘It’s great that you’re working and saving money, but make sure you understand the difference between saving and investing,'” said Cheng, CEO of Blue Ocean Global Wealth in Gaithersburg. Maryland.

“You build wealth by investing,” said Cheng, who serves on CNBC’s Financial Advisor Council.

Regular savings accounts generally pay interest rates that don’t keep pace with inflation, which was 8.5% annually in March (well above the Federal Reserve’s 2% target rate). This means that hard cash loses purchasing power over time. In contrast, the stock market has averaged about 8.3% annual gains over the past 30 years, after accounting for inflation.

But there are now many good reasons to save money in case of an emergency.

CFP Diahann Lassus, executive director at Peapack Private Wealth Management in New Providence, NJ, learned a great lesson from not having any savings as a young adult.

I’ve learned that you need to plan ahead and focus on what might happen, rather than spending everything you have today.

Diahan Lassus

Managing Director at Peapack Private Wealth Management

Lassus had to learn how to replace a broken water pump in her car’s engine herself because she couldn’t afford to pay someone to install it – and she needed her car to get to work.

“Establish an emergency fund,” said Lassus, who also sits on the CNBC FA Council. “I’ve learned that you have to plan ahead and focus on what might happen, rather than spending everything you have today.”

Advisors generally recommend saving at least three to six months on living expenses.

Suggested Guide Reading:

“The Psychology of Money” by Morgan Housel. “The book offers valuable lessons on how to think about money and investments and personal finance. It would be a great introduction for anyone looking to make money, save and invest,” said Cathy Curtis of Curtis Financial Planning in Oakland, California.

“A walk on Wall Street‘ by Burton Malkiel. “It really makes you think about the lack of predictability in financial markets,” said Diahann Lassus of Peapack Private Wealth Management in New Providence, New Jersey.

“Getting Good With Money: Ten Simple Steps to Become Financially Healthy” by Tiffany “The Budgetnista” Aliche. “It’s a process that helps readers find peace of mind and financial stability. She shares her personal experiences to help others achieve financial success on their terms,” said Marguerita Cheng of Blue Ocean Global Wealth in Gaithersburg, Maryland.

Lassus also said that if she was able to save some money, it was with a specific short-term goal in mind – ie, buying something that caught her eye.

“I’ve never looked beyond the short-term,” Lassus said. “There were a lot of positive things that might have happened sooner if I had longer-term goals in mind.”

Buy a house

CFP Cathy Curtis said she wishes someone had spoken to her about the true cost of owning a home.

“It’s really easy to overlook some important details that can add thousands of dollars to your household budget over the years,” said Curtis, founder of Curtis Financial Planning in Oakland, Calif., and also a member of the FA Council.

“There are expenses beyond mortgage, property taxes, insurance, routine upkeep and even home improvements that you want to make in the future,” she said.

For example, she said, look carefully at the yard. If there are large trees on the property, you need to consider that they may one day need regular pruning or felling, both of which can be costly depending on various factors including the height of the tree and the equipment needed to do the job. The same goes for lawn and garden maintenance when you end up having to hire a professional to take care of what you can’t do.

It’s also important in the buying process to carefully read the seller’s description as well as the home’s inspection report, Curtis said. Both will alert you to problems with the home that could end up costing you money to fix. Or the issues uncovered could lead to the seller negotiating a discount.

“The point is to go in with your eyes wide open,” Curtis said. “Don’t let your emotions get the better of you with a purchase this big.”

https://www.cnbc.com/2022/05/09/key-things-that-financial-advisors-would-tell-their-younger-selves.html Important things financial advisors would say to their younger selves

Gary B. Graves

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