September 29, 2020

Episode #39: My Top 40 Personal Finance Tips

39 minutes

In honor of my upcoming 40th birthday (which may or may not be on October 3rd), this episode of Making Finance Fun is a special edition. In this episode, I share my top 40 investment tips, personal finance tips, and observations from my 13-year career as a financial advisor. I share ten tips in this post. But if you want to hear ALL of the wisdom I’ve learned throughout the years, give the whole episode a listen!

Outline of This Episode

[1:56] My top 40 investment tips
[2:29] Investment tips #1–10
[14:24] Investment tips #11–20
[23:31] Investment tips #21–30
[30:38] Investment tips #30–40

Tip #2: Have a reason you’re investing

Too many people buy an investment without thinking through the WHY. Is it for a short-term gain? Do you want to own it for the long-haul? Do you want to make 25% and move on? Do you like what the company is doing? It doesn’t necessarily matter the reason—but you NEED to have one.

Tip #5: Turn OFF the financial media

2020 has been hard on everyone. The market took a steep drop but has steadily come back to new highs. But the worst thing you can do is bombard yourself with the financial networks that speculate 24/7. They rotate guests who all have different opinions on the market. It’s all about driving dear, and fear leads to poor decision-making.

Tip #8: Remove as much emotion as possible

When stocks go up people get crazy excited—but it’s even harder on the downside. I’ve lived through multiple market downturns. It’s HARD not to get emotional. When you have a plan and a strategy for your long-term investments, it’s easier to let go of the emotion and stick to the plan.

Tip #9: Rental properties CAN be good investments

Many financial advisors disagree with me, but I believe a rental property can be a good source of income. While real estate can be a good investment, it’s also far more hands-on then buying stocks. I talked about it at length with “Money Honey” Rachel Richards in episode #39.

#13: The ups and downs are accelerated

High-frequency trading, hedge funds, large banks, etc. trade quickly. This means drops in the market are accelerated—but so are upswings. We had a huge downturn of 35% in three weeks, followed by 6 months of near constant market increase. Things turn quickly.

#18: Don’t put too much stock into savings projections

Everyone has heard financial advisors say “You have to save this much by this age” in order to retire by 65. The truth is, those projections don’t necessarily tell the whole story. Maybe the people that have $2 million saved by 40 invested in a startup. Maybe their grandparents left them money. The amount of money needed for retirement depends on a LOT of variables. Don’t compare yourself to where others are at—and talk to a financial planner who can help you implement realistic goals.

#27: Performance numbers can be easily manipulated

There are a lot of ways performance data can be manipulated to tell a story. It’s like comparing MPG on a Ford F150 versus a Prius. You can’t compare. They’re two very different things. Time-frames can easily be manipulated to frame it in a way someone wants you to see it. Fees can often be hidden as well—so keep a close watch.

#29: When someone gives you financial advice, take it in context

The best example I can think of is when the CEO of a bond-mutual fund says the market will drop, take it in context. That dude is selling what people buy when they’re freaking out about stocks. When anyone—from friends and family to trusted businessmen—give financial advice, question their motivations or outside influences.

#35: Evaluate your 401k twice a year

I think you should check out your 401k at least twice a year. How is it performing? How is the allocation? Are you comfortable with how much you have in stocks versus bonds? Are you comfortable with what the stocks are? Do you own real estate? What bond funds do you have? If you want an analysis done by a financial advisor, feel free to reach out!

#38: retirement isn’t the finish line

If you retire at 67, it’s not the finish line. If you retire at 45, it’s not the finish line. I’ve heard the misconception that you save, invest, and grow your money over and over again. Then—when you retire—you just live off the interest. That’s not how it works. You still have to grow your money, especially if you’re taking an income from your investments. You want to leave money for your family? It needs to keep growing.

To hear the rest of my investment tips and strategies, listen to the whole episode of Making Finance Fun!

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