Don’t Lose Your Shirt in Your 20’s
When you are early in your professional career you typically have not accumulated a significant amount of investable assets. At least not to most investment professionals.
Those financial people that are actively pursuing a relationship with you are likely to have a hidden agenda. It is a sales quota. And an incentive to sell you a more expensive product than you need.
This puts more money in their pocket now and in better standing with their sales manager. These people are often associated with an insurance company, bank, or wirehouse.
Their persuasiveness can cause you to make decisions in your 20’s that will compound over time and have a significant impact on your wealth. It is a bit like losing your shirt in your 60’s and 70’s with a decision you made 40 years ago.
Here are a few products that can often have hidden costs or generally misunderstood tax principles:
- Variable Annuities
- Life Insurance Products
- Cash-value life insurance
- Variable life insurance
- Universal life insurance
- Indexed universal life insurance
- High-Load Mutual Funds with high annual expenses
Each of these products has complexities and costs that are important to understand before you commit your hard-earned wages toward these products.
Some firms, like BCR®, are glad to help first time investors avoid these types of expensive products to ensure they get off to a good start. My pro bono work helping young professionals invest wisely is personally very gratifying.
The best decisions you can make in your early career is to invest regularly, ignore market fluctuations, and most importantly, control your spending. The long-term impact of a high-cost strategy versus a low-cost strategy can cost you hundreds of thousands of dollars.