If only I had Known Sooner

So, here are six valuable points to consider adding to your knowledge bank.

Tip 1: Take It One Step at a Time

“The best financial advice I received was that preparing for my financial future would take time and a plan. It does not require ‘heroic’ efforts. The key is to do all the little things well, such as saving, participating in company retirement benefits and not spending beyond your means. It is easy to feel overwhelmed by the tasks ahead at any age. When you are young, just keeping the kids in diapers was an accomplishment. Yet, somehow the kids managed to leave the house with clothes that fit, learned to drive and even graduated college. There will be new challenges in the years ahead. The way to navigate uncertainty is to take it one step at a time.”

Tip 2: Taking Some Risks Can Be Good

“The best advice I received was during my first job, which was a non-financial role. It was to start saving money right away to leverage compounding interest and to take the risk of putting it in the stock market. So, when I was young, I started buying U.S. companies that I thought would be profitable. By the time I was in my 40s, I was working for a bank in a financial role but left the bank to attain my financial licenses. Quite frankly, you don’t have to be licensed to be in a financial position at a bank. After getting my series 6 and 7 licenses, I started working on the investment side of the business. My time working outside the world of finance helped me understand that the simplest advice might be the best.”

Tip 3: Let Your Winners Run

“Let your winners run and keep losses small. Though this sounds easy, it requires tremendous patience and humility. Waiting over long periods for great companies to compound wealth requires patience, while admitting mistakes requires quick humility. Also, quantify your intuition by backing it up with facts and figures.”

Tip 4: Don’t Be in Financial Bondage to Anyone

Probably the best bit of advice I have received (from numerous sources) is very short, simple and clear: Owe no one anything. Or put another way, don’t be in financial bondage to anyone. It is important to be on the right side of the interest equation, meaning it is better not to pay interest, but instead collect interest.”

Tip 5: Truly Assess the Value of What You Buy

“When I was 13 or 14, my grandfather told me that when you buy things, first understand the intrinsic value of them. Whatever you pay for an item above the intrinsic value is the premium for the brand or your ego. This way, you’ll always know the difference between utility and luxury. This advice provides a way to assess the total premium your lifestyle is costing you. The advice meant nothing when I first heard it. It means a lot more to me now.”

Tip 6: Focus on What You Can Control

“We have a normal human tendency to worry about things that have only a marginal impact on our financial outcomes, such as politics. The two biggest things we can control are 1. spending and 2. asset allocation. Regardless if you are in the accumulation years or the decumulation years, having a solid plan matters. Two powerful drivers are to know how much you are spending and how much you are investing. This knowledge leads to long-term growth and the ability to achieve the goals you have for yourself, for supporting your family and for making an impact on your community.”