What Would I Do?
If I were a Millennial, which I am not, what advice would I like to receive today that would help me enjoy a successful career, a successful life, and happiness and contentment? As a Baby Boomer we have seen plenty of good times and some rather scary times. So now that I can reflect on my 30+ years of “adulthood”, here are some random thoughts that might be impactful to our up and coming Millennials:
1. Don’t forget to pay yourself.
If you don’t save for the future, you can be assured that the quality of life in your later years will not be as enjoyable as it should be. Short of a large inheritance, taking your new tech company public through an IPO, or lottery winnings, the only path to a comfortable lifestyle in your later years is to save 10% of your current earnings. Seems hefty but better to have excess than a shortage.
2. Save in a tax advantaged vehicle such as an employer 401k, IRA, Roth IRA, or Roth 401k.
The tax advantages will help your money grow even faster. Putting it into a long term retirement vehicle will force you to leave it alone until the future. Since I believe tax rates will continue to be high, I am a fan of any Roth vehicle you have access to as your first place to save.
3. Invest as aggressively as you can stomach.
What do you have to lose when you don’t have much in savings and you have a 30 year time horizon to save towards? Since time is your ally consider putting a piece of your portfolio into the stock market via low cost index funds and ETF’s. Study after study have shown that the risk of loss in the stock market for a 15 year holding period (i.e. your account value at the end of 15 years) has been positive 100% of every 15 year period since 1926. Source Morningstar 2014. If you can stomach some volatility consider international stock market funds and Emerging Markets, since they could provide the most growth in the future as their economies mature and more citizens become consumers.
4. Look for opportunities to open your own business or work for a company that provides employee stock ownership.
More on starting your own business in future issues. If you don’t feel that you are “wired” to be an entrepreneur, how about working for a closely held company where the owner is willing to share ownership with valued employees? It won’t happen overnight, but all aging baby boomer owners need a Succession Plan. Who better to take the responsibility than a highly qualified key employees? To determine which employers might qualify as a good candidate for you to invest your valuable time and energy, make sure you ask them about their future succession plans. They might have children in the business, but might be willing to share ownership with non-family. Ask about the opportunity to buy stock (at a discount), or receive Stock Bonuses. Some of my best clients know that the secret to success is to build a strong team, and as a shareholder you should be entitled to share in the profits based on your ownership. Unfortunately, remember that the owner will probably want to control 51% or more of the vote for a long time, so make sure these agreements are in writing because you don’t want to be disappointed in later years.
To continue this discussion, Don can be reached at email@example.com.
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Don is a Certified Financial Planner (CFP) and has been in the advisory business since 1987. He is a founding partner of Planning Solutions Group, which was formed in 2001. Planning Solutions Group is a leader in family wealth management comprised of 30 employees and over 1,500 clients with offices in Maryland and Virginia Beach. Don’s practice focuses in the areas of wealth management, business continuity planning, fringe benefit design, and estate planning.
Don is a frequent speaker/educator who empowers high net worth business owners. He provides educational workshops and seminars throughout the nation at Colleges, Universities, Clubs, and Associations including Christopher Newport University, Montgomery College, and Johns Hopkins University. He has been a featured speaker for many trade associations including, the DC Bar, Associated Builders & Contractors, Johns Hopkins University-Physicians, Maryland Dental Association, Intermodal Association, National Electrical Contractors Association, Printing & Graphics Association, Virginia Association of Roofing Professionals, and Air Conditioning Contractors Association, and Northeast Equipment Dealers Association. Don is a regular instructor at the NADA (National Automobile Dealers Association) Academy helping dealer candidates and family businesses transition to the next generation. He has been a guest on CNNFN’s TV show for Entrepreneurs Only, as well as a radio guest on WTOP, WEAA, WPGC and on WBAL Radio’s Ron Smith Show.
Don sits on the Board of Hampton Roads Financial Planning Association. He volunteers for the “500 Financially Fit Families Program” in Virginia Beach helping mentor citizens on budgeting and paying off debt. He formerly sat on the Board of Directors for the Johns Hopkins Bayview Burn Center and is a former Board Member of the Easter Seals Foundation of Central Maryland. Don is also the past president of the board of trustees at his church. Don has been recognized as a Five Star Wealth Manager for two consecutive years.