This past Wednesday (11/8), while I was late to class, I bought my first share in a company. This past Monday (11/6), while trying to jump on the D Route to head to my car in the parking deck on the other side of campus, I opened a brokerage account with Charles Schwab. Turns out they don’t charge you to open one up and I’m still irritated that nobody bothered to mention that to me but that’s in the past now. “Excitement” is an understatement. For the past few weeks I had been reading everything I could get my hands on when it came to investing, an interest that appeared overnight. I moved to Georgia in August and the next few days following the move I remember not being interested in the field of investing or the stock market at large and then suddenly becoming hungry to read more about the wide world of P/E multiples and expense ratios and two-leg spreads, which made me want to keep reading but then proved to be so underwhelming. But the more I realized I didn’t know about this new world, the more I read on and it led to this moment of my being cold at the bus stop and opening a free (free, which should be affordable in everyone's budget) brokerage account with Charles Schwab. Once again, free.
For those that don’t know, Fedex Express opens a 401K with Vanguard on your first day of employment, for both part time workers and full time workers. I’ve been with them for what will be a year and a half next month and I credit (pun intended) this job with exposure to investing in any sense. My pre-tax money, the money I worked for despite my frustrations and exhaustion going to work morning and night, was going into an account which I had, and still have, very little idea as to how it worked, what exactly is in that account (stocks and bonds and odd mixtures of all of them), and why I should care about it at all. They match 100% up to 6% of your pre-tax contribution. Well isn’t that great, free money from a company that already pays me rather well (I’m almost at $15 an hour so honestly I can’t complain much for a person my age) but is it enough money to put away for retirement was what I had to ask. And the answer is no. Only 6 percent? Any financial advisor would laugh at me to my face if I said that it would be enough. Apparently you should be putting away 12%-15% of what you make a year (https://www.bloomberg.com/news/articles/2017-06-14/how-much-should-you-save-for-retirement) and even then it might not be enough when you consider that your retirement money has to last you a third of your life, through medical bills and vacations and car issues and natural disasters and plumbing issues and wanting to move away from your neighbors because you want to be the hermit you’ve always wanted to be after socializing with them for so long and all that money has to last you for ⅓ of your remaining life. So the amount you save is important as of yesterday. Because retirement, at the minimum, is projected to last at least 30 years (https://investor.vanguard.com/retirement/savings/how-much-to-save) which means that ball should’ve been rolling years ago for someone like me.
I started out reading A Random Walk Down Wall Street, Burton Malkiel’s work on economics, and it drives the point home that if you want money and lots of it then you better be patient because the best way to do it is with index funds, ETF (exchange trade funds), and mutual funds. Boring and about as exciting as a second coat of paint, the only thing more exciting would be listening to Ben Stein cover Don Moen’s early work in a cappella format. Doing the high risk stock game you see in movies is a surefire way to end up broke and disillusioned with a system that allows you to make money and lots of it if you’re patient, can control your urges for instant gratification, and are willing to not be distracted by seemingly immediate roads to riches like Bitcoin, Tesla, and Amazon. Patience, self-control, and discipline, being the things that most people my generation lack. Which means more money for me. Let me put it to you this way: There’s over $15 trillion in the stock market right now. Who said I can’t have some of that money? Who is going to stop me from trying? I work for a company valued at $61.8 billion dollars. Which means there’s more money out there than what my job makes in a year. So who said I can’t have some of that money?
I finished A Random Walk Down Wall Street and The Richest Man In Babylon by George Clason. Malkiel’s aforesaid work makes beginner concepts of the stock market easily understood and introduces you to some of the seemingly intimidating terms that involve your money and what it does. People my age, and what scares me is this next point, have zero clue about investing. Ask someone my age (23, too old) about the stock market now or about retirement. You’ll either come up with a nonsense answer, no answer at all, or something regarding “Retirement? I can barely cover my rent this month.” There’s some research showing that millennials are actually better when it comes to investing than our parents were (https://www.forbes.com/sites/shannarajohnson/2017/09/07/are-millennials-better-investors-than-boomers-and-gen-xers/#4b9ba6d85ec1). To be fair, we grew up in the wake of the 2008 crash. Anyone who hesitates to jump head first into buying stocks that promise no return, or at the very least a return that we’re not happy with, will think back to a time of severe economic stress for their families. “Why let fear stop you like that?” would be my question. Malkiel’s argument goes the way of slow, steady, progressive investments in the broader market (S&P 500 index funds, because he has a love affair with Vanguard and he isn’t afraid to show it) over a given period of time (translation: 20-30 years) will bring back the best results on your investment. The Richest Man In Babylon, though nothing extensive like Malkiel’s work, puts financial principles about individual savings and investing into easily read and easily understandable parables set in Babylon. You’ll notice the motif of ease here so run with it for a second.
Is it somewhat hazardous of me to want to invest what meager restitution I bring back home when I have to cover rent and utilities and put money away in case of emergencies? Yes. It’s a worry I do have and I can’t downplay it lest I be considered irresponsible. Is it somewhat worrisome to me to look at my friends that don’t think about this at all and when we blink our eyes we’ll have families and they’ll have children whose financial future will make them wonder why they didn’t start saving or investing sooner? Yes. I care about my friends and their futures and I don’t think you can love someone fully, me being a Christian, without caring about where they’re headed in the near and far future. I don’t want to work forever. This job and the various headaches, exhaustion based illnesses, injuries to my joints and tendons and ligaments and skin, hearing loss, bruises, latent hernias, and overall stress, has told me I don’t want to work forever, let alone want to continue waking up at 3:00am to get to work at 4:00am to clock in on time. I get to call the one share of Coca-Cola I bought (because all the reading I did leading up to the moment of stock told me that index funds and ETF and mutual funds should be the base of my portfolio, not the be all end all, so I bought a dividend stock/a stock that pays me to own it) my own. Suddenly every Coke I’ve had since then (all of two) tastes so good. I put what probably amounts to a fraction of a penny, and that’s being generous to myself, I get to put back into my pocket and it makes me get to say that I’m playing into a game that not a lot of people my age want to play.
I was born and raised for a time in Staten Island, NY. When I hear the name "Rockefeller" I think of the tree. And it's that time of year for the tree...and eggnog. Most importantly, eggnog.
So where does that leave me to go? I just started reading The Intelligent Investor so I’m going to be going through that for what will more than likely be a long time. I have a semester in grad school to finish up before I work peak season (holiday rush) non-stop as they hand out overtime in spades. I have so much learning to do when it comes to putting my money to work for me. There’s over $15 trillion in the stock market right now and I want some of that money. Why shouldn’t I have it? It has to go somewhere so it may as well go to someone like me who can use it to pay off his student loans or buy a house and tell the bank to go to do something to themselves that I probably shouldn’t go into detail on considering the prudish eyes that read this (sorry mom, dad, and the church leaders that I hold in admiration) because I’d like to pay off a house in cash and not live in one with a mortgage looming overhead. Arthur Guinness and John D. Rockefeller, both men of Christian faith in two wildly different traditions and different time periods, heard the same message, “Earn all you can. Save all you can. Give all you can.” Guinness heard it from John Wesley, the Anglican who founded the Methodist church, and Rockefeller heard it from a Baptist preacher. Guinness’ beer is world renown and Rockefeller is still the richest man to have ever lived (basing his renowned generosity on Luke 6:38- “Give, and it will be given to you…”). Earn all you can. Save all you can. Give all you can.
So game on. I’ll play this investing game.
No comments:
Post a Comment