I’ve made it no secret that I like talking finance at work and my co-workers know that. I try hard to not be a pest about it and pay attention to the conversation dynamic, so that when co-workers get the 1000 yard stare, I reel it back in. This constant talk of finance has finally started to get some good results. For instance, I’ve had a co-worker ask me to figure out whether or not paying PMI was worth it. We worked it up in ~10 minutes on my whiteboard and figured out that she’d be paying ~$13k over 4 yrs to PMI versus putting that same amount aside towards a down payment. She’s still saving for the 20% mortgage down payment instead of pulling the trigger on buying a home a year ago.
Other wins have been handing out 5 copies of the millionaire next door to younger colleagues, and getting good feedback on it after they’ve finished reading it. I’ve also been compiling an ever growing word document (for download below) with links to different blogs, investing sources, investing definitions, savings art links, etc… I keep the master and delete and add links as needed to cater to whatever question I get at the time. I’ve sent it out to my team, one of my supervisors, and more. It’s gotten positive feedback each time, so I just keep growing and editing it.
Yesterday came the biggest win of all so far! I mentor a younger person at work, and while we do talk a lot about work related things, one of the other things I keep talking about is investing now to give yourself choices later in life. I hadn’t felt too much success at any of this talk making any impression on my mentee, so I’d backed off on it and only offered advice when asked. I was super excited when I was recently asked about 401k elections and starting a taxable account outside of their 401k.
What Should I do With my 401k?
It started with a conversation about where my mentee, let’s call him/her Pat, asked about the taxable accounts and how to get them set up. Pat had been looking at their 401k and wondering whether it was diversified enough, or if they needed to reallocate balances, change distribution into upcoming contributions, and whether they should up their 401k contribution. Imagine the kid in class that excitedly puts his/her hand up when the teacher asks a question, “Oh, me, me! Pick me! I know this one!!” That was me, but don’t worry I kept a poker face so I wouldn’t scare them off.
I started with explaining how to figure out the percentage to contribute so they would max out their 2018 401k contribution. Then I went on to explain that since the company contribution doesn’t count towards the overall max, they could max the account and get the 7% match from the company. So the first order of business was upping the current 401k contribution from ~7% to ~15% to be able to max out the 2018 limits. We also did a double check to make sure this wouldn’t put them in a crunch “losing” the extra pay each check, but I was impressed when Pat’s reply was, “Whatever, I’ll figure out how to make it work with my new bring home pay.” Nice!
Am I Diversified Enough?
After doing that, we started looking at the different elections their account had been going into. It was all going towards a conservative balanced fund with about 50% stocks, 33% bonds and remainder in cash and other diversified equities. Not a bad fund, but not what a 20 something should be using if they want more growth in their account. This led to a 30 minute discussion about growth, time in the market, and the strategy of being more aggressive when you’re younger because you’ve got about 35+ years before you can touch this money.
We reviewed some historical charts showing the different dips and crashes and rebounds from the 80’s 90’s, 2002, 2008, and how it would have played out if you had been in equities the whole time. I also pointed out how to read the investment profile sheet for each fund. We looked at most of them and went over the fees, returns, volatility, main companies/sectors that fund is invested in, etc… I pointed out why you should pay attention to lower expense ratio and mutual fund trading fees, and it seemed to click pretty easily. By the end of that exercise, Pat had picked out 2-3 funds that they were comfortable with investing in.
Don’t worry, all of this data was quickly followed up with my take on investing.
It doesn’t matter what the charts and graphs say is the “right” strategy, because the best investment strategy for you is the one that will let you sleep at night.
If this means you want all of your money in bonds because you’re terrified of the stock market, it won’t be the most profitable investment style, but it beats not investing at all. If you want 100% equities, that works too. Whatever other split of any of those leaves you comfortable at night is the best investment strategy for you.
After those talks we decided that we would leave the previous chunk of money in the diversified portfolio because that’s what Pat wanted to do. We changed the future allocations to various other equities that Pat was comfortable with investing in that had more growth opportunity, especially since the original chunk was left in place with the “safer” diversified fund. We sold off all of Pat’s company stock and used that to build a good chunk into some other higher growth, lower fee funds, mainly because the company stock is the worst performer of all of our choices.
After getting all of Pat’s internal investments set up how they wanted, I also spent time showing Pat how to navigate around our investment site until they were comfortable with being able to do anything they wanted on their own.
Then we started looking setting up a taxable account. I mentioned Charles Schwab as the best bet, because I read a post by Physician on Fire that explained Schwab would let you put in any amount and you don’t need to save up to $5k or whatever threshold Vanguard and other brokerage houses have. We also found the right stock symbols for the funds Pat liked so when they got it set up, they knew what to contribute to. I walked Pat through the basics of how to set that account up when they have the appropriate info needed and I am confident it will happen soon.
Personal finance win!
Even though being a finance geek around the office sometimes shuts down conversations, I’ve tried my best to avoid those situations. After a few years of talking about things like investments, expense ratios, saving to have freedom of choice later in life, and more it has finally started paying out. I feel like it was a real win for me getting Pat set up on a better investment track and feeling way more confident in their own abilities to DIY investments.
Have you had any personal finance wins with any friends, peers, or colleagues lately? Any other advice on how to talk finance with people that may not be interested? Does persistence pay off or should I keep on my “less but better” approach when talking finance and just speak when spoken to?
Below is the Word document that I’ve compiled over the years. It doesn’t get sent out to my colleagues in this form, but here is the “Master” containing everything if you’re interested in reviewing it. It’s pretty basic, but let me know what you think. I haven’t included every blog I read on the blog list, mainly ones that I thought a specific person(s) at work may be interested in from the gaggle I try to read each week. Apologies if yours wasn’t listed specifically. 🙂