Don’t Believe the Word on the Tweet
Did that grab your attention? Good, because I‘m also here to help you think about your future.
The Word on the Tweet
First, can I say that I’m down with your views on likes, retweets and followers, so make sure you hit me up on Twitter @bullandbaird where I managed to go viral over a dish. That’s right…a dish. My generation is all about nostalgia. If I had brought up Saturday morning cartoons, I might’ve topped Post Malone in followers. God bless the internet.
Speaking of information dissemination, if you’re a millennial, here’s what the world’s been told about you: All you wanna do is take Uber, eat Chipotle, live in apartments and become a social media influencer. You’re also allegedly confused about investing in the stock market, but let’s talk about that later.
Where did all this nonsense come from? Who makes this stuff up? All these assumptions about you are wrong (though I will say that Chipotle is awesome).
Oh, the Stuff You’ll Do!
Your generation is going to do amazing things in the years to come. You and those coming up behind you are three times as big as the Boomers. Talk about a voting bloc! The future of our nation and the world lies in your hands, and I know you don’t have butterfingers (You’ve seen Jurassic Park right? Of course you have).
You’re gonna get jobs, you’re gonna buy a home and a car, you’re probably gonna start a family, and you’re gonna have to save for retirement. You’re also going to struggle in your young adult life. We all did. I understand the burdens of student debt have pushed back your timetable (and that, for some reason, people tend to minimize how significant that is), but I’m here to tell you your life is going to be a wonderful adventure.
And the Stuff You Should
I want to circle back to your views on the stock market because here is where I think mistakes are being made. Bankrate did a survey recently that showed 3 in 10 millennials prefer cash as their favorite long-term investment.
Look, I know you all came of age during the Global Financial Crisis, where you saw everything in your college savings account go to zero, and I won’t minimize how devastating that can be to an investor's psyche. But let’s look at some facts: Here is the probability of the market (as measured by the S&P 500) being negative over a certain time frame (credit WSJ).
Let me sum it up. On a day-to-day basis it’s a coin flip; 47% of the time stocks fall. Over a one-year period they have fallen 26% of the time. But the further you go out on that space/time curve, you’ll start to see the odds of the market being negative approaching (and then hitting) zero.
There is no 20-year time frame where stocks (as measured by the S&P 500) have negative returns. None. In all of recorded history. That’s not to say it couldn’t happen. As our friends in the legal and compliance departments will tell you, nothing is guaranteed in the investment markets. Anything could happen. But what you want to do is make decisions with your money based on high probability.
Time Is on Your Side
If someone suggested you play a game where the odds of success based on 89 years of historical data was 100%, I think you’d play. I would, and I don’t have that kind of time to play with. But you’re young. You have more than 20 years to invest.Don't make the mistake of missing out on the high probability of investment success because you’re worried something could go wrong.
Jeff Bezos once asked Warren Buffet, “If your investment thesis is so simple…you’re the second richest guy in the world, and it’s so simple. Why doesn’t everyone just copy you?” Buffett responded, “Because nobody wants to get rich slow.”
I hate waiting as much as the next guy, but as a millennial time is truly on your side. Compound interest is also on your side, and each day you delay you could be costing yourself vast sums of money later in life. Remember that college admissions bribery thing from the news? If that lady from Full House (you guys watched that show, right?) had put $500k into an S&P 500 fund when her child was 18, and she got the historical stock market return of 9% on it, by the time her daughter was 45 she would’ve had $5.1 million in the bank. Hmmm, pay a lot to party at USC for a few years or have a large chunk of money waiting for me when we all need it most? I know what I’d prefer (and $5 million could’ve helped buy my kid a lot of Fortnite skins).
If It’s So Easy, Why Do You Need Us?
Getting rich slowly isn’t the only thing we can help you with here at Baird. Our Financial Advisors aren’t here to sell you global variable life insurance annuities or even looking to take a chunk of your money every time you trade a stock. They’re here to create durable financial plans designed to get you into the life you want while helping you overcome the emotional and behavioral biases that can trip investors up along the way. Let one of them be your financial mentor on a lifelong journey to contentment. Also, if you want to explore Socially Responsible investing or are gung-ho on the FIRE trend, we can help with that.
Don’t waste any more precious time; the clock is ticking. The home, the family, the financial means to live a meaningful life are all within your grasp. If you crave memorable experiences like I do, find your way off the endless treadmill to acquire “things.” I gave it up a long time ago and can’t recommend it highly enough. You focus on what truly matters in life and let us work together so you can live yours your way (with chunky avocado on your toast, because no one wants to eat green pasty goo).
With a little planning, your HSA can do a lot more than fund short-term healthcare expenses.
In the latest installment of our Women Talking Wealth series, Associate Branch Manager Ana Geller discusses her own financial journey and her advice for aspiring leaders.