💸The Most Superior Advantage And Guaranteed Return To Your Portfolio

This sounds like a scam.

Guaranteed return?

No such thing in the markets.

Hold on.

Before you call this title click-bait, I have a present for you.

Just wait until the end.

I promise it’s worth it.

As a 1 month 21-year-old personal finance advocate and mentor on campus, what baffles me the most is the immense reluctance college students have in opening a brokerage account. As if this was worse than the other sketchy dangerous things they do!

They treat investing as something foreign, embarassing, and ridiculous.

Last week I went over to NYU’s main hub, Washington Square Park. I had an hour to spare before my last day of class for the semester and as a financial literacy enthusiast who is always on the mission to break the gender, pay, racial, wealth inequality gap and money taboo, it is imperative for me to guage students’ interests and advise them to build their financial future. I want all NYU future alum to be successful, happy, feel secure, and proud. A major component of this starts with investing outside of the classroom.

I know students need money more than anyone else and desperately want and love it so I thought going up to students and giving them a quick ~20 second pitch on why they should start contributing to their financial future will leave them better off than any grade they could receive.

Long story short. Recommending anything in Washington Square Park, let alone in NYC isn’t a good idea. It was awkward, difficult, and disappointing. Something I’ve gotten used to at this point as an entrepreneur as it is part of the job but beyond the feelings of embarassement, the reactions towards investing were truly startling!

I got blank stares, questioning, no replies, laughs, everything you could possibly imagine as if I was advising something horrendous.

Although this investing experiment was a disappointment, it made me more eager and curious about the next generation’s expecations and skepticism around this activity of investing.

Break the Bank

Here are my predictions as to why students are hesitant on investing not realizing it is the most efficent way to earn more (their ultimate goal):

-Seems too complicated
-Need parents by their side
-Not enough time = worst excuse ever
-Don’t know how to do it or see importance
-Lump sum inheritance family fortune will keep them covered
-After college will start investing as a graduate priority
-Convinced need thousands/millions to start investing
-Believe that timing the market > time in the market (it’s the other way around)!
-Aren’t studying/majoring in fianncce/business/economics/stats/math so believe it is not for them and would rather earn W2 income all their life
-They go to school and that’s enough

Doesn’t this upset you? Maybe it’s just me but there is nothing more frustrating than hearing all their excuses which is preventing them from living a financially free and flexible life! As the cost of tution is rising above inflation, depending on a degree isn’t as reliable anymore. Investing is a must-have income source even at 18.

Instead of working minimum wage and having a job that consumes so much of their free time, they could be connecting with fellow students, trying extracurriculars, and focus better on academics. This can be done by investing their money and have it work passively for them on the side. They can then focus more on school and the experience of it rather than occupying their time with 3 minimum wage jobs.

The excuses listed above are pure myths about what investing really entails. I could get angry but know it has nothing to do with me. I cannot control their actions so I let it go. These students are only delaying their success because the only way to break free from being reliant on any income is by re-investing it.

“I Know But Don’t Know Right Now”

This was a response I got from a teen. Mmm. Either they must have a lofty estate-plan inheritance and believe they can survive off of it or don’t understand the market. 

Tough call.

Money is an awkward topic for all. I don’t love talking about it as well since it is highly personalized and once you spill out a number, people start attaching your self-worth to it and make assumptions which ultimately leads to comparison and judgement. 

If we all knew what we made, we would argue and be convinced we deserve more than someone who has the same role that doesn’t seem as proactive or gets handed the ‘easier’ tasks. Due to this case, I believe it is better sometimes that it’s not avaliable public information.

We are all aware of the gender and racial pay gap. In 2020 according to Pew Research Center, women earned 84% of what men did and that number was cut in half for Hispanic and Black women. This divide has been widened by the pandemic and is a disappointing reality that I hope gets fixed in my lifetime.

In this stealth wealth age, it’s harder to make predictions on how much one is worth. I’ve found this is especially true in big cities, most notably NYC where everyone attempts to look like they are worth less, not worthless. This reflects self-confidence, humility, and down-to-earthness in an individual as they aren’t focused on pleasing others and instead on what really matters such as their work to be able to afford living in the city! Silicon Valley is big on this trend. Mark Zuckerberg wears the same gray shirt and drives a Honda in order to reduce energy expentidure on things that are ‘useless’ to him such as impressing others or shopping. Musk has always preserved this lifestyle habit as well. He just drives a different car.

Although there is immense wealth and income inequality in this city, the top 10% and above aren’t big on standing out which I appreciate and strive to adopt as well. The last thing I want someone to feel is envious of me. 

I want to blend in on the streets, not in my work. 

It’s harder to tell how much someone is worth these days but you can always get an estimate from a Google search or just from one’s position in their career. Although we should never trust anything online. One day they have x amount, the next day it is spent! It’s all relative, based on how much they really keep.

Money is as divisive as politics and religion but the truth of the matter is, money involves our lives whether we like it or not. It doesn’t involve calculus or derivates, unless you enjoy it and want to become a day trader. It involves patience, diversification, and taking advantage of your time today to build a better future for yourself tomorrow. Students need to capitalize on this since they have the most time!

Since there is no national fin-lit curriculum, students are made to believe they must work harder not smarter. Our physical output correlates to our time which equates to how much money we can make. That is another trap you want to avoid. Being paid for your knowledge will allow you to have freedom and more energy to actually make more and put it to work through investing in appreciable assets.

As Buffett pronounced, “If you don’t find a way to make money while you sleep, you will work until you die.”

There is countless research that has found those who’ve gone through higher education have higher lifetime earnings potential and more employment opportunities but relying on the institutionalized education system especially during this hybrid remote work entrepreneurial environment is unpredictable. Investing is your best friend and returns become more predictable the earlier you start.

How?

Steps To Break Free

I cannot force you to open a brokerage account but the government really should. Once children are born, they should have 4 accounts under their name. A 529 college savings, Roth IRA, a brokerage account, and a bank account. Geez I can’t even imagine how many students would be free from the burden of mounting student loan debt and actually be able to pursue their passion instead of what pays the bills with this in place.

Read here what I mean.

Student loan debt officially surpassed credit card debt in 2021 at $1.73 trillion compared to $804 Americans’ total overdue credit card balance according to the Motley Fool.

Excuse the pun. This is a bit foolish. Not only Americans borrow to buy things they don’t need with money they don’t have to impress people they don’t know, it is upsetting to see millions of Americans indebted years beyond graduation. I know a few retirees who just paid off their student loans! At age 78! At least they invested early on otherwise they wouldn’t have been able to pay off most of it!

Forget retirement for a second and focus on your short and long term goals today.

Retirement will come before you know it but students need to think to the near term. Our brains are developing at a rapid pace and there are constant distractions, activities, things to do at this age that investing tends to be the last thing on students’ minds.

Yet beyond the degree, they must ask themsleves how they picture their future. Whether it be to have kids one day or have a profession they don’t need to worry can pay the bills, money lays the groundwork for our lives. It shouldn’t control us but will if we don’t handle it.

A guaranteed way to trail or outperform the markets and beat a portfolio manager’s strategies they would advise in your 30s is to get started in your 20s. Nothing beats time even if you invest in the most foolproof low-cost guaranteed investment such as treasury securities or I-bonds with a guaranteed 7% return on their own!

Time is on your side. The younger you are, the more your returns compound and your losses can be recouped faster. This isn’t to say go out and day trade, price stock movements, chart momentum, and participate in short squeezes via Reddit. It entails funding and maximizing your tax advantageous retirement accounts, brokerage accounts, diversified index and ETFs with a few dollars today to stay metnally sane and flexible later.

Investing isn’t a job unless you want it to be and at that stage, it is recommeneded to have a fiduciary CFA manage your money to keep your ego in check. Too much rebalancing, adjusting, and maximization can actually further accelerate your losses.

Time is one of the few things you cannot buy. It is a true precious asset that beats any advise. The number one regret investors have is that they wished they started earlier.

Finding It Hard To Find

What I’ve noticed is that younger adults find it difficult to start anything they aren’t fully familiar or comfortable with. They don’t believe in themselves when in comes to investing. This may be becuase they treat it as a game as opposed to a lifestyle.

They are reluctant despite having all stars aligned for them. They are young, flexible, aren’t tied to adult responsibilities, and don’t have a family to support or large bills to pay. They are starting out their careers and are able to experiment, fail, embarrass themselves, and loose money, the best trading lesson. Just try not to loose money for the sake of learning.

Whether you are a student and have another excuse or reason I haven’t covered yet, realize there is nothing scary or bad about investing. Your assumptions are harming your potential. Yes, there is guaranteed volatility but the opportunities outweigh everything. To break free from the pay wall, taxes, and get your time back, the market is your first step.

Whether you believe retirement is an old person’s game or that investing isn’t cool, yes, I’ve sadly heard this, you are missing out big time. Although this is a stretch, I hope within my lifetime, and I’m only 21 as a reminder, that the institutionalized education system restructures the curriculum and focuses on financail literacy. Some states have adopted budgeting and basic economics in middle school and with higher ed there are accounting, business analytics, and financial modeling courses offered but when it comes to managing a portfolio, only around 5% of what’s learned here applies to your personal investment journey and it may not even help! Algebra is the highest math you will have to do when managing your finances. You can use the digital calculator if it helps.

Portfolio management (asset and wealth management) is about understanding your risk tolerance, asset allocation (conservative, moderate, aggressive), life-span/time horizon, what you can afford to loose, beneficiaries, life wishes (will/trust), how diversification works, inheritance, taxes, why planning for the worst hoping for the best is vital, why cash is king, and how compounding works wonders. Mindset is everything. Once you stop equating emotions to decisions and enjoy the planning process, this can provide you a suprise return and allow your portfolio to perform better than any robo-advisor could.

Mess Up

As majority of day traders are Gen Zers and Millennials, digging for a ‘get rich quick scheme’ is a dangerous move. Not only do they not exist, active trading historically underperforms passive investing.

How could that be?

Foolproof diversified investing through index funds and ETFs that track broader indexes follow the market overtime.

And what does the market do overtime?

It goes up. Buying and holding is your best bet. It is tax advantageous, safe, and peaceful. Simpler the better. Stick with fundamentals and value stocks not high-flying penny or meme stocks.

Once you start working, the 401(k), a pre-tax employer sponsored retirement account has the highest contribution limit so you want to strive to contribute the max to your tax advantages retirement accounts such as a Roth IRA or a regular IRA. With a 10% compound annual return, by 40 you will have over $1 million.

In terms of a 529 plan and Roth IRA, these plans are designed for specific purposes. A 529 plan is made for college. College-related expenses that are post-tax meaning contributions are already taxed once contributed and are withdrawn tax-free similar to a Roth IRA.

With a 529 plan, withdrawals can be made anytime as long as they are for educational related purposes.

On the other hand, the Roth IRA after-tax funds cannot be withdrawn until 59 ½ unless you qualify for certain exemptions such as:

-Unreimbursed Medical Expenses
-Health Insurance Premiums While Unemployed
-A Permanent Disability
-Higher-Education Expenses
-You Inherit an IRA
-To Buy, Build, or Rebuild a Starter Home

Whether you are 12 or 30, continuously strive to passively invest through dollar-cost-averaging in the market and most importantly, in yourself. It pays dividends for a lifetime. This doesn’t only mean read “Rich Dad Poor Dad”. That doesn’t help unless you apply the knowledge and practice. In addition, pay attention to what you feed your mind and body as well as they are vital for boosting performance, concentration, mood, and attention. Taking a break requires serious work. Work smarter not harder, especially in the markets. Too much activity and rebalancing will do you no good.

Time is on your side. If and only if you use it right.

So what are you waiting for?

Open up that brokerage account. Choose a reputable brokerage and the more assets you have, the more places you should store them in. You never know when “Too Big Too Fail” can come about. Don’t rely on anyone to keep them. If a firm goes under, your assets go too.

Yes, it will take 15–30 mins and you have the time. I know it. I guarantee you will thank yourself in a few years. This is the best present you could possibly buy and recieve.

Treat yourself.

And as a bonus if you really want to get fancy and act as a king or queen, you could add crypto as a stocking stuffer. Not receommended but probably the best time to do so is when you are younger and can stomach dogecoin’s volatility.

You don’t need mom or dad on your side. Instead of storing your birthday money in a bank that earns more from reinvesting your money than the negative interest you earn during these high inflationary periods, let your money grow by taking advantage of these record highs before the market rebounds, gets out of control, becomes extra frothy, and overly expensive in a possible 2nd Dotcom bubble next year. ETFs just surpassed $1 trillion in inflows last week!

Lastly, I’ll leave you with this.

If you don’t want it, you will always find an excuse.

If you do, you will do anything to get it.

It’s in your power to grow your wealth to get your time back or else you can keep grinding to end up giving more of it away to Uncle Sam. Don’t become your own slave.

The markets are made for everyone starting with a few dollars today.

Start earlier than later to guarantee what cannot be purchased. This is a free hidden advantage youngsters are missing out on!

Free money right in-front of them.