As the saying goes, you don’t know what you don’t know.
That said, from time to time, we find that people don’t know what they think they do know.
But, it’s not their fault.
Google has a habit of making us feel like subject matter experts – especially when it comes to our health. Like that time the internet confirmed your symptoms were Zika, but it turned out to be a nasty mosquito bite and a hangover #coachella #closecall
We can usually spot what a client doesn’t know (but thinks they do) by the the things they say or the questions they ask. As a Millennial, especially a high earning one, we want to ensure you’re asking the right questions about your money.
Because personal finance is complex and when you ask the “wrong” question, the answer you get may or may not be relevant to your situation.
In our experience, most financial professionals won’t take the time to educate you. If you ask a question, they’ll simply answer it without mention of whether it’s the right question to be asking and if not, how to ask a better one.
What we want you to get out of this article is an awareness about the money questions you ask/statements you make. Questions that sound logical, might be loaded with bias thereby skewing the response you get and perpetuating further misconception about the topic itself.
Here’s our list of 5 money questions to stop asking and the #1 statement that you should never make:
1. What should I start investing in?
This is the one we hear the most and it’s the most dangerous because if you ask this of most financial professionals, they’ll give you an answer. We joke that Wall Street LOVES to tell you want to invest in, before knowing what you’re investing for, or even before addressing whether you’re ready to start investing in the first place. So a smarter question might be “How do I know if I’m ready to start investing?”.
2. Can you give me some low risk investment ideas?
Risk is a highly misunderstood concept. People who ask this question are usually confusing investing and gambling. A better question might be, “How much risk do I need to achieve my financial goal?”. If you’re not comfortable with the level of risk needed, you might need to re-think your financial goal.
3. Can I access my retirement savings before retirement?
The technical answer here is yes. With that said, if you see your retirement account as a place to go if you need money, it’s likely that your financial foundation isn’t very strong. Your retirement account should be your absolute last line of defense. Your emergency fund should be your first line of defense. If you have a proper emergency fund in place, you’ll likely never need to ask this question.
4. Isn’t investing risky?
Not necessarily. It’s likely you think this because of what you’ve seen on TV. The media portrays investing a lot like gambling (to drive up ratings). But proper investing takes time to work and when done right is meant to help you accomplish your mid and long-term financial goals. It isn’t mean to help you turn the 20,000 you have saved for your wedding into 40,000 by next year. If you’re looking for a quick-win or to double your money overnight, go to Vegas!
5. How much should I contribute to my 401(k)?
People ask us this question all the time. Including the journalists that write for major publications – the ones you likely read. But it’s really only half a question. The complete question looks more like this: “How much should I save for retirement if I’m 27, earning $86,0000, and want to be able to retire by the time I’m 60 with a lifestyle that closely resembles the one I have today.” Everyone’s retirement savings number is different because everyone has a different idea of what they want retirement to look like.
And the #1 statement that you should never make:
I want to start investing with a little money and “see how it does”…
Investing isn’t an overnight gimmick. Done right, it is slow and boring and involves a ton of patience. Anything else is gambling #bitcoin. And the sooner you start, the more successful you’ll be. So starting with a little money and “seeing how it does” teaches you nothing about investing and doesn’t make any sense since it takes a long time to work. You want to start as soon as possible. Additionally, we don’t believe in “investing for the sake of investing”. Until you lay out your financial goals, it’s impossible to know what you should be invested in.
So the first step is to think about what you’re investing for. Do you want to buy a home some day? Do you want to upgrade your lifestyle? Do you want to quit your day job and start a business? Do you want to retire early?
Investing is a tool to help your money grow so that you can accomplish your mid- and long-term financial goals. Until you lay out your financial goals, no one can or should tell you what to invest in.
What are you investing for? Let us know in the comments below.