Home Education The key things that financial advisors would say to their young

The key things that financial advisors would say to their young

The key things that financial advisors would say to their young

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For those starting adulthood, financial issues can be one of the most challenging aspects to navigate.

This may even be the case for those who continue to be financial advisors.

For these professionals, some of the advice they regularly give clients now – after years of further education and real experience – was unknown to them when they were young. And there are some key things they would say to their young if they could.

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For example, certified financial planner Marguerite Cheng said she was heading into adulthood knowing she had to save money – that is, put it in a savings account – but investing the money in the stock market was not to her liking at first.

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

“You create wealth by investing,” he said Chenserving on CNBC Financial Advisory Board.

Ordinary savings accounts usually pay interest rates that do not keep up with inflation, which in March was 8.5% per year (much higher than The Federal Reserve’s target rate is 2%). This means that the money left over from cash eventually loses its purchasing power. In contrast, the stock market averaged about 8.3% of annual returns over the past 30 years, adjusted for inflation.

Meanwhile, there are many good reasons to have money in savings in an emergency.

CFP Diahan Lasus, managing director of Peapack Private Wealth Management in New Providence, New Jersey, has learned a great lesson from the fact that in her youth she put nothing off.

I learned that you need to plan ahead and focus on what might happen, instead of spending everything you have today.

Diahan Lasus

Managing Director of Peapack Private Wealth Management

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

“Create an emergency fund,” he said Lasus, which is also a member of the CNBC Council of England. “I learned that you need to plan ahead and focus on what’s going to happen, instead of spending everything you have today.”

Counselors usually recommend hiding the cost of living for at least three to six months.

Recommended reading from consultants:

“Psychology of money” from Morgan Housel. “The book provides valuable lessons on how to think about money, investment and personal finance. It will be a great management for those who want to earn, save and invest money, ”said Katie Curtis of Curtis’ financial planning in Auckland, California. .

“A casual walk down Wall StreetBurton Malkil. “It really makes you think about the lack of predictability of financial markets,” said Diahan Lasus of Peapack Private Wealth Management in New Providence, New Jersey.

“Make good money: ten easy steps to becoming financially whole” Tiffany’s “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 Marguerite Cheng of Blue Ocean Global Wealth in Geiserburg, Maryland.

Lasus also said that if she was able to save money, she meant a specific immediate goal – to buy what caught her eye.

“I never looked beyond the short term,” Lasus said. “There were a lot of positive things that could have happened earlier if I had looked further into long-term goals.”

Buying a home

CFP Katie Curtis said she would like someone to talk to her about the true value of home ownership.

“It’s really easy not to notice some important details that can add thousands of dollars to your home budget over the years,” he said. Curtisfounder of Curtis Financial Planning in Auckland, California, and a member of the FA Council.

“There are costs other than mortgages, property taxes, insurance, routine maintenance and even home improvements that you want to make in the future,” she said.

For example, she said, look closely at the yard. If there are large trees on the property, keep in mind that one day they may need to be pruned or cut regularly, and both can be expensive, depending on a variety of factors, including the height of the tree and the equipment needed to do the job. The same goes for lawn and garden maintenance, if you end up needing to hire a professional to take care of what you can’t.

During the purchase process, it is also important to carefully read the seller’s disclosure as well as the home inspection report, Curtis said. Both warn you about problems with the house, the solution of which can cost you money. Or, potentially, identified problems could lead to discount negotiations from the seller.

“The point is to come in with your eyes wide open,” Curtis said. “Don’t let your emotions take over your mind with such a big purchase.”

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