3 Big money moves to make before you turn 45
The "old" way of investing is, well, old.
Your parents handled money in a different way than you do:
• For one thing, they did not require loans to attend college, whereas Millenials and Gen Z collectively owe $616 BILLION in student loan debt
• They lacked the same resources that you do. Or, to be more specific, they did not have the information overload that you do.
• And they didn't have cool new things coming out every other day that could change the way we invest... Alternatively, it could be a passing fad that costs you every penny you've saved.
You need a modern, 21st-century roadmap that fits your hectic lifestyle now that you're making a lot of money.
Do you have the time to sort through everything to determine the best course of action? Creating a workable strategy appears to be yet another task to add to your already lengthy to-do list. And you feel a sense of urgency because time is ticking away.
Money management may appear to be quite complicated, and you may be concerned about all of the financial information you never learned in school. You're looking for a straightforward approach. A roadmap that covers everything you need to know while not overwhelming you with information or complexity.
And one that combines the best aspects of the past with opportunities that your parents did not have.
The good news is that you can develop a 21st-century strategy that is tailored to your specific circumstances. You are not required to go down the Internet rabbit hole or give up control if you do not wish to.
This straightforward guide is intended for high-earners under the age of 45 who recognize the need for a strategy and want a straightforward approach to building wealth that does not overlook today's best opportunities.
You may have found yourself wondering things like:
What's the best way to balance debt repayment and saving for my goals?
How can I plan for my financial future without sacrificing my current lifestyle?
What can I learn from previous generations' strategies for building nest eggs?
How can I make the most of technology when it comes to money?
Is it worthwhile to invest in the new trends I'm hearing about (such as decentralized finance), and how can I tell?
Is there anyone with experience who could help me with my planning without taking over?
Continue reading if any of these apply to you...
Modern Money Key #1:
What’s most important at your life stage
As your income grows and your life progresses, you'll discover that new challenges necessitate a shift in your financial planning. The stages are not the same for everyone, and they occur at different ages for different people. You must, however, be prepared for whatever life throws at you.
Perhaps you've recently purchased or are considering purchasing a home. On the other hand, you may have decided against owning real estate. It is critical to strike a balance between paying off debt, living your life, and saving for your financial future.
Even though retirement seems so far away, you know you need to save. But you don't know how much Social Security will provide for you. And you're unlikely to have a pension to rely on. But what does retirement look like in the twenty-first century? Are you considering FIRE (Financial Independence, Retire Early)? You're pretty certain you won't be sitting in a rocking chair at 65, as previous generations did, and you may be planning to work until you're 70 or older.
But what if your health prevents you from doing so? A little more than one-third of retirees are forced to retire earlier than planned, often due to illness or health issues. 2 Your strategy must be flexible enough to allow for detours when necessary while still keeping you on track to reach your financial goals.
Your financial goals are within reach, but you won't get there by chance: you'll need a plan. And, instead of using your parents' old atlas, you can use 21st century tools that are right at your fingertips.
Important questions to ask include:
What are my financial objectives, and how am I going to achieve them?
Do I understand the next steps I need to take to achieve the financial future I want for myself and my family?
How do I make a flexible map that will allow me to adapt when life gets in the way?
Is there a financial professional who has both the experience in mapping out strategies for financial goals and the technical flexibility that I need to guide me down this path?
Modern Money Key #2
Is the latest “Cool New Thing” a fad or an opportunity?
It's difficult to predict whether a particular trend or new idea will last, which is why so many people get it wrong! Quotes from the previous generation claiming that the Internet was a passing fad in the 1990s can be found. Or that e-commerce (known as "dot-coms" back then) would fade away.
On the other hand, there have always been people who look at what is going on objectively.
They recognized that investors needed to be cautious about where they put their money. The underlying technology fueled a new way of interacting with others, but that didn't mean that everything built on top of it was perfect.
Because novelty is important to human brains, it's easy to get caught up in the latest fad or bubble. However, having industry experience can be just as important as being open to new ideas. Knowledge of what has previously come and gone, as well as what has remained, provides investors with the objectivity they require when the next Cool New Thing arrives.
You can't afford to waste time (and money) on things that are new and interesting but ultimately not worth much if you're a busy person with a lot on your plate. Simultaneously, if you invest wisely, you can potentially amass significant wealth to supplement your modern nest egg.
Critical questions to ask include:
How can I figure out whether the Cool New Thing is here to stay?
Am I only responding to the novelty of it, or is there another factor that makes it more likely to stick around?
Is the Cool New Thing worth my time, energy, and money?
Do I know a financial professional who has some experience with fads in finance, but is open to investigating new ideas as well, that I can bounce my ideas off of?
Modern Money Key #3
Your impact AND your wealth working together
You consider the consequences of investing significantly more than previous generations: on the planet as a whole, on the climate, and on underserved populations. You'd rather pursue your financial goals without destroying the planet or having other negative consequences.
While you understand the importance of retirement planning and saving, you hope to be able to do so while also making a positive impact on the world. Perhaps you don't want to invest in companies that contribute to climate change and global warming. Perhaps you'd prefer to invest in companies that value their employees and recognize the value of diversity and inclusion not only in their workforce but also in their leadership.
Fortunately, this is entirely feasible. According to research, investments that prioritize sustainability, good governance, and/or the environment perform no worse than those that are traditionally managed. 3 Some of them may even outperform. You can choose from a number of ESG (environmental, social, and governance) or SRI (socially responsible investing) funds and money managers.
You can have a low-fee portfolio with good performance that allows your money to do good somewhere in the world. While the good news is that there are many options, the bad news is that there are many options. It can be overwhelming for investors to sort through all of the options to find the ones that are just right for them, but it is possible.
Critical questions to ask include:
What companies am I currently investing in, and would I prefer to avoid the bad actors?
Do I dread opening up social media to find that my investments are having a negative impact on the world?
Am I investigating my investments to ensure that I’m not contributing to the planet’s problems through my retirement or other financial accounts?
Is there a financial professional who understands the ESG/SRI universe and can help me narrow down my options?