Money
Hindsight Is 20/20.
While it’s never too late to start investing, financial experts agree that the earlier you start, the better position you’ll be in the future. But with so many acronyms, unfamiliar words, and confusing “rules,” to say investing is intimidating is an understatement.
And while there's a learning curve, you can absolutely understand investing no matter where you are in your financial journey, Mindy Yu, director of investments at Stash, a personal finance app, tells Bustle. “The earlier you start, the more time your investments have to reach their growth potential, thanks to the power of compounding,” Yu says. “At a younger age, you’re in a position to take on greater risk — and potentially experience more growth — as opposed to when you are nearing retirement age, for example.”
Because hindsight is 20/20, we’ve rounded up the advice folks wish they had followed in their 20s. And even experts have regrets. “Coming from a family who struggled paycheck to paycheck, I wanted to hold onto cash as much as possible. …My greatest fear was that I’d lose it all.” Instead, she says maintaining a diverse portfolio could have caused her money to grow. “It’s important to understand that inflation will erode your purchasing power over time,” Yu says. “This means that your dollar today will be worth less in the future. Generating returns, and income, through investing is one way to potentially keep up with inflation.”
Below, find other advice people wish they had followed — and are happy to share now.
1
Don’t Cash Out Your 401(k)
"I had about $7,000 in a 401(k). Instead of rolling it over, I decided to cash it out to fund a month-long trip to Europe while I was between jobs. I thought I ‘needed’ the trip to refresh my perspective. I had a good time, but 10 years later, I think of how that money could have grown and wonder if I screwed over my retirement for a few crepes. I also had to pay a 20% tax penalty. It’s hard knowing that I really wasted the money for a month of fun. If I could have done it again, I would have left that money alone and only touched it if it were an absolute emergency.” — Laura, 39, Los Angeles
2
Don’t Jump on an Investment Just Because Everyone Else is Doing It
“My friends had been talking about cryptocurrency, like Bitcoin. I had a few friends who had told me how much money they had made on it, and I decided to try. I’d gotten a small inheritance from my aunt and took $2,000 of it and invested in different types of crypto. That was literally the day the market was the highest on crypto. It immediately dropped and now my $2,000 is worth $1,200. If I could do it again, I would have opened a standard brokerage account with that money. I would say, if it’s something new, don’t jump on the bandwagon unless you’re literally OK with throwing money away.” — Ruth, 37, Jersey City
3
Do Your Own Research
“When I became interested in investing, I joined a bunch of Facebook groups and invested in what was recommended. Often, these were companies that sounded cool, or were ones that I personally liked. While I think there’s some value in investing in the companies you love, overall, I think my money would have performed better if I’d invested that money in a diversified portfolio managed by a robo advisor rather than thinking I could do it myself. I also think the next time I do handpick stocks, I’m going to do my own research.” — Jenna, 34, New York
4
Always Take The Full Company Match
"This is like, Money 101, but take the company match if it’s offered on your 401(k). It is literally free money!" — Annabelle, 29, Keller, Texas
5
It’s OK To Learn As You Go
“I had a 401(k) through work but I didn’t open a brokerage account until I was 30. I geared up for opening it as though I was applying to grad school. I read so many books and articles. I wish I had just jumped in with a smaller amount of money and figured it out as I went along. I think the biggest mistake was thinking you had to have a certain amount of knowledge to invest instead of knowing it was OK to learn as you go, take baby steps, and assess based on how your money was doing and what your financial goals are. I began using a robo advisor to manage my portfolio, which was really helpful in terms of understanding risk, creating a goal, and seeing how much I needed to invest each month to reach that goal. (Almost made it to my ‘downpayment on a home goal!’)" — Ridley , 33, Eastham, Massachusetts
6
Never Leave Money On The Table
“I would recommend that you roll over your 401(k) as soon as you leave a job. Not doing so means you have multiple portfolios, multiple log-ins, and more chances of things getting misplaced. When you roll over a 401(k) into an IRA, you can also choose the financial institution. This gives you more flexibility than being dependent on the 401(k) provider of your former employer.” — Clarisse, 32, Bayonne, New Jersey
7
Go To An Expert
“At one point, I had three old 401(k) accounts, a beneficiary IRA I had inherited from my mom, an Acorns account on my phone with a few thousand dollars in it, as well as some student loan debt, two bank accounts, and a whole life insurance policy that had an investment component. I had no idea what I was doing and what I should do to streamline it. My advice: There is help out there. When things seem overwhelming, I would recommend looking for a fee-only financial advisor. This person will charge for their time, but won’t take a percentage of anything they recommend. This way, you can get some objective financial advice that can help you sort out next steps.” — Naomi, 39, Brookline, Massachusetts
8
Max Out Your Retirement Savings Through a Roth
“I knew about 401(k) accounts because they talked about them during my employee on-boarding at my company. So I maxed out my 401(k) but I didn’t really know where else I could save. I didn’t find out about Roth IRAs until later. A Roth IRA is an account you invest in with after-tax dollars, but the account can grow tax-free for retirement. What I like about the Roth account is that it offers a little more flexibility than a 401(k). While it’s meant for retirement, I’ve learned you can also use the money for college expenses. I like the Roth as a ‘just in case’ account for my future family.” — Amy, 30, Barrington, Rhode Island
9
Don’t Panic When the Market Dips
“When it comes to investing, I’ve learned that dips in the market are pretty normal — especially when you’re investing over the long-term. Because of that, I look at the way the market moves, but I don’t take action. I know some people buy when the market’s down and sell when it’s up as a way to make money. But that stresses me out. I want my money to grow over time and my portfolio is with a robo advisor. Over time, I’ve seen my portfolio grow way more than it would have if it were money under my bed. So I just leave it alone.” — Cam, 31, Eugene, Oregon
10
Pay Attention To Fees
“If you’re planning to buy, trade, or sell, fees can add up quickly. I definitely recommend people look at fees and see if there are limits on fee-free trading offers. Over time, $5 here and there can add up. There are also management fees even if you’re not trading regularly. This may be a percentage of your account, so pay attention to how much it may be. Remember, as your account grows, that same percentage will equal a lot more dollars than you may think!” — Risa, 36, Savannah, Georgia
11
Ask For Options
“My second job was at a small startup. My manager told me when the paperwork came through to ask HR to add options (Restricted Stock Options or RSAs) to my contract. I didn’t really know what she was talking about but I did. A few years later, after I had left the job, the company was acquired by a larger public business. I made $30,000 when the company was sold because I’d had stock options in my contract. That was the money I used for a downpayment on a house later that year. Smaller companies especially may offer options in lieu of a higher salary, and it’s always important to take them and push for more. Sometimes, nothing happens and you can’t depend on options making you money but it’s just leaving the opportunity on the table if you don’t ask.” — Jenna, 30, Orlando, Florida
