We asked 5 successful people about the best financial advice they can give to others, and here are…

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============== Advice 1 ================

Spend less than you earn, invest the difference and be certain that No one will look after your money like you will.

In 2013 I had all of my money with a financial advisor.

The market went up 27% that year.

Mine went up 0%.

I asked my financial advisor how that happened.

He said “You told me you didn’t want to lose money so I put you in conservative investments.”

I started learning to manage my own money the next day.

Here’s how I applied this to build a substantial net worth:

  1. Focused on increasing my income by getting a better job and consulting on the side.
  2. I didn’t try to eliminate every single expense out of my budget.
  3. I invested the difference in a S&P 500 index funds with very low expense ratio. The low expense ratio is critical to long term wealth.
  4. I had my company automatically deposit 50% of my salary directly into my investment account.
  5. I learned to live on the other half.
  6. I focused on increasing my income. I became a top salesperson and added clients.
  7. I kept my last house as a rental when I moved to my current one. The cash flow from that one reduces my total housing expenses.
  8. I Plan to buy another couple rental units. This is strictly a cash flow strategy.

============== Advice 2 ================

Of course, there are all the standard ones that really don’t matter much.

Buy high, sell higher.

Sell low, buy back lower.

Do the opposite of your emotions. (Maybe this one is important.)

Max out on 401K/IRA/etc.

But the best financial advice I received was from my wife.

After graduating from college, I had worked hard as an engineer, gotten an MBA, and became a product line manager in the tech industry. Things were going well, and there were rumors that our division would spin off, and we would all receive stock options.

Then, a job opportunity presented itself. It was something I really wanted to try. I consulted my wife, and she said that I should do what my heart says. It was a tough decision, but I decided to take on the new opportunity.

I gave notice. Several days later, the Division President called me into his office. He told me about the plans for the spin-off and the stock options. And then, he offered a cash retainer that I would receive if I remained 12 more months. The amount of the cash retainer was significant enough that I thought I needed to present that to my wife.

So, I told her about the counter offer, including the large cash retainer.

She just said one thing:

If you start chasing money now, you will end up chasing money your entire life.”

今、お金を追いかけたら、一生、お金を追いかける事になるよ。

That was over 20 years ago, and I have never forgotten those words.

Based on how the stock price jumped after the spin-off, I probably would have been better off financially had I stayed.

But, being well-off is not just about your finances. I feel blessed to have received such a wise advice, and that those words of wisdom came from my wife. It allowed me to pursue my passion, which I think, leads to better long term financial stability. Pursue what you’re passionate about, and the rest will take care of itself.

Now, the above wisdom aside, a practical advice I learned with stocks is to fight your emotions.

  1. Bought Amazon when people were making fun of them that they should stop selling, because with every sale they were losing money.
  2. Bought Netflix when they tanked after they raised monthly rates.
  3. Bought Roku when they were going up against AANG (Apple, Amazon, Netflix, Google) without their own content.
  4. Bought Tesla when they were struggling.
  5. Bought Boeing after they tanked due to COVID.
  6. FAIL: Selling Apple when Steve Jobs passed away. Emotions/fear got the best of me.

For 1 through 5, I did the opposite of my emotions. For #6, I went with my emotions, and that was a bad decision.

============== Advice 3 ================

Sometimes individual doesn’t have to be super smart and doing everything right to be successful . One good consistent quality can make one successful within their bubble .

I met someone in his early 40’s. He was not very educated worked for minimum wage . Probably retired now . His success was that when he was 20 years old . He was told never pay rent and invest in real estate . So he did . By the time I met him . He owned several properties working minimum wage. He saves some money . Look for property . Ask his family members to lend him some . And buy the property . Next year he works hard to pay off debt he borrowed . And start over again. Every 2–4 years he acquired small properties with rental income . His investment exceeded his monthly earning .

============== Advice 4 ================

The best financial advice that has actually worked for me is to start saving in the stock market young. I graduated high school in 2006 and took my first full time job in college in 2008.

The market was in free fall, the economy was imploding and the Dow Jones was on the brink of heading to zero for all time.

Then I remembered that I was told to buy when stocks go down. I opened my 401k at work, which was an overnight job driving a forklift in a distribution warehouse while I went to classes during the day. I did not get much sleep for over two years. What I did get was out of college with only two years of loans and a sizable chunk of money stashed in my 401k at the bottom of the market crash. I was contributing 10% of my income and the company was matching 7%. I was making a higher than average income for a college student as the job was incentive based and I busted my but 10 hours per night to hit 180% incentive. (Meaning I received an extra 80% in pay and did 80% more work than the average employee.)

After college I transitioned into a day job in a career I didn’t want but again paid well on commission. I continued to contribute to my 401k and have at every job since. I also contribute to a Roth IRA. We have seen an incredible run in the stock market recently and I feel I’m doing significantly better than my peers in savings. I’ll be completely financially independent on a middle class income in about a decade conservatively.

It’s not because I’m a financial wizard or because I can pick stocks or bought into bitcoin. I just listened to some advice to start saving early and let compound interest do its thing. I also went against the grain and bought when the world was yelling sell.

============== Advice 5 ================

3 things have been good for me. I am 44 and am closing on my goal of making more income passively than actively. This took time and patience and 2008 did set me back a half dozen years. (original goal was 40). But I started with a job making 28k a year in 2002 and now am doing better than 200k per year.

Passive income is better than active income. Active income is work = money. Passive income is time/do nothing = money. The reason being if you are a surgeon making 300k a year and your hands get damaged you make $0 per year. But if you own dividend stocks, rental property, etc and do nothing you still get paid. The main difference is YOU are not the center of the money-making endeavor. So you can choose to do something besides work if you want.

Invest in companies with high moats (Warren Buffet Advice). What this means is companies where the barriers to entry are so high it is near impossible to compete with them and there are no cheap or easy alternatives. Just look through Warren Buffets’ investing history to find a list of companies.

Make investing/savings automatic. People suck at doing things consistently so automate savings like you automate bill pays. When you don’t actively think about it you will be amazed at how easy it gets. Look the tax advantages of 401k for most people are financially hard to beat, plus with matching it makes it near impossible to beat. For those who are at the higher end, ROTH 401ks and IRAs make more sense. But I would do my research and talk to experts because each situation is unique.

Bonus advice: Live below your means. If you can afford a house of 600k, try to buy a house considerably less fix it up and turn it into a rental property or flip it. If you can afford a 100k car, buy a used one for 50k. Then take the additional income and invest. By the time you want the 100k car that extra 50k should have grown to the point, the dividends or income from a business should make the car payments for you. The point is it’s not about being cheap it’s about using the excess funds to build passive income to afford the better things without work later.

Followup advice:

  1. Understand taxes and follow tax changes. I have done this for years and for the past 2 years I paid near 0 taxes due to LEGAL changes in the law.
  2. Learn about trusts. If you are 58 you should be moving everything into a trust. The reason being you will be crushed by healthcare costs later in life and the rules of what the government can take can go back up to 7 YEARS to get their money. So I make sure all relatives have all their stuff moved out of their name by 65 minus to 7 years. Also, this is important to avoid probate. Also if you are really looking find out about South Dakota trusts. Interesting fact there are more trusts in South Dakota than people with nearly 650 billion in assets… funny huh?