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Struggling with finances?
Discover 20 insights to empower millennials.
Hey Millennials!
We're thrilled to have you join us for the first edition of Millennial Financial Times. This newsletter is designed specifically for you, providing practical financial insights, tips, and strategies to help you navigate your financial journey. Our mission is to empower you with the knowledge and tools you need to achieve financial independence and a balanced, fulfilling life.
As you can see from the Top Stories this Week, we address your pain points when it comes to saving for retirement:
Financial Uncertainty: Do you struggle with understanding how much you need to save and which retirement plans to choose?
High Debt Levels: Are you burdened with student loans and credit card debt, making it difficult to prioritize retirement savings?
Lack of Financial Literacy: Is there a gap in knowledge regarding investment options, tax advantages, and effective saving strategies?
Economic Instability: Do you have concerns about job security and economic fluctuations that makes long-term financial planning seem daunting?
Dive in and start transforming your financial future today!
Best,
The Gen Y Financial Times Team
Top Stories This Week
Generational divide over work ethic
Freddie Smith's reaction to Whoopi Goldberg’s comments highlights misunderstandings between generations.
Millennials face unique financial challenges.
Importance of choosing the right investment based on long-term goals
Rule of 72 to assess investment potential
Diversification and tax planning are crucial.
Millennials face higher debt, housing costs, stagnant wages.
Job market volatility and mental health struggles are significant issues.
Traditional and modern methods for saving
Popular robo-advisors like Betterment and Wealthfront.
Visualize lifestyle, identify income, calculate portfolio, develop a savings plan, understand financial freedom number.
Practical financial independence tips: vote, create an emergency fund, invest early.
Millennials leading in solo home purchases.
Many millennials lack retirement savings due to debt, stagnant wages, high living costs.
Need $120,000/year to afford a home.
Home prices and cost of living have increased significantly.
Outdated advice may not be relevant to millennials due to technological and societal changes.
Wealthy millennials are investing in rare collectibles.
"The Simple Path to Wealth" by JL Collins is recommended for investment fundamentals.
Millennials face unique financial challenges compared to previous generations, including high student debt, volatile job markets, and higher living costs. Adopting strategic financial planning, including higher savings rates, diversified investments, and continuous learning, is crucial for achieving financial independence and stability.
TikTok
Freddie Smith lashes out at Whoopi Goldberg for telling millennials they need to work harder.
Our Take: The generational divide often leads to misunderstandings about work ethic and opportunities. Freddie Smith's reaction to Whoopi Goldberg's comment highlights a common frustration among Millennials and Gen Z, who feel that their hard work is frequently overlooked. These younger generations face unique challenges, including student debt, housing costs, and an evolving job market that weren't as prevalent for Boomers. Acknowledging these differences is crucial for fostering understanding and finding common ground across generations.
Ease into investing
Ease being the key word. With automated tool like portfolio rebalancing and dividend reinvestment, Betterment makes investing easy for you, and a total grind for your money.
Choosing the right investment option depends on your long-term goals. (Base Wealth Management)
“Choosing the right investment option depends on your long-term goals. Whether it's rolling over to a new 401(k) for loan flexibility or moving to an IRA for more investment opportunities, understanding your options is crucial.”
Our take:
- Use the Rule of 72 to Quickly Assess Investment Potential: For example, at an 8% interest rate, your investment will double approximately every 9 years (72 / 8 = 9).
- Diversify Growth Strategies: Mix fixed, variable, and indexed growth investments to balance risk and return according to your financial goals.
- Plan for Taxes: Optimize your investment portfolio by considering the tax implications. Utilize tax-advantaged accounts to maximize your after-tax returns.
Additional Insights
- Risk Management: Diversification across different types of growth strategies helps mitigate risk.
- Long-Term Planning: Understanding compound interest and tax implications is crucial for long-term financial planning and retirement preparation.
- Continuous Learning: Stay updated on changes in tax laws and financial products to ensure your strategies remain effective.
By grasping these foundational concepts, you can better navigate the complexities of personal finance and investment planning.
YouTube
Our take: Scott Galloway's assessment that millennials are doing worse than their parents is supported by several key points:
- Economic Hardships: Millennials face higher student loan debt, elevated housing costs, and stagnant wages.
- Job Market Volatility: The rise of gig economy jobs offers less stability and fewer benefits compared to traditional employment.
- Wealth Disparities: There is a widening wealth gap between millennials and older generations, marked by lower homeownership and savings rates.
- Mental Health Struggles: Increased economic pressures contribute to higher stress and mental health issues among millennials.
These points suggest that Galloway's observations align with current economic and social trends affecting millennials.
“Learn about the traditional and modern methods millennials utilize for retirement savings, including 401(k)s, IRAs, robo-advisors, and investment apps.”
Popular ones:
Betterment: Known for its user-friendly interface and comprehensive financial planning tools.
Wealthfront: Offers a range of services including financial planning, investment management, and tax optimization.
Vanguard Personal Advisor Services: Combines robo-advisor technology with access to human financial advisors for a hybrid approach.
Our take: What is a robo-advisor? Answer: Robo-advisors are digital platforms that provide automated, algorithm-driven financial planning services with little to no human supervision. They typically collect information from clients about their financial situation and future goals through an online survey, and then use this data to offer advice and/or automatically invest client assets. Robo-advisors have generally performed well, especially in managing diversified portfolios and maintaining discipline through market fluctuations. However, their effectiveness depends on the quality of the algorithms and the underlying investment products used.
A 5-step Process to Retirement Planning for High-Saving Millennials (Guillaume Girard)
Step 1: Visualize your retirement lifestyle. Step 2: Identify your income sources. Step 3: Calculate your target portfolio at retirement using a 3.5% safe withdrawal rate; the target portfolio is $1.7M in today’s dollars. Step 4: Develop a savings plan. Step 5: Know your financial freedom number; after 30 years, you can expect to have built a $3.8M portfolio, equivalent to $1.7M in today’s dollars.
Our take: This plan is well-structured and follows a comprehensive approach to retirement planning. By visualizing your retirement lifestyle, identifying income sources, calculating a target portfolio, developing a savings plan, and understanding your financial freedom number, you are setting yourself up for a secure and comfortable retirement. Regular reviews and adjustments will ensure that you stay on track to meet your goals.
Instagram
“If we want to be independent—this is what we have to do! (1) “Vote, (2) Get that emergency fund in place—3-6 months of your emergency expenses in a HYSA, (3) Invest for your future—Listen, the only way you're ever going to be able to build wealth and stop working…[is] to start investing NOW for your future. 📈 And I promise, it's not as difficult as it seems. Whether you have $100 to start or $500—it's time. 💵
Our take: The advice presented is practical and actionable for those seeking financial independence. Here's an evaluation of the key points:
- Voting: Participating in elections is crucial as it empowers individuals to influence policies that impact their financial future.
- Emergency Fund: Establishing an emergency fund of 3-6 months of expenses in a high-yield savings account (HYSA) is essential for financial security and unexpected events.
- Investing for the Future: Starting to invest early, regardless of the amount, is vital for wealth building and achieving long-term financial independence. The emphasis on starting now, even with small amounts, highlights the importance of time in growing investments through compound interest.
Overall, these steps form a strong foundation for achieving financial independence and long-term security.
TV
Millennials and Retirement: Already Falling Short
“66 percent of working millennials have nothing saved for retirement…”
Our Take: The fact that 66 percent of working millennials have nothing saved for retirement can be attributed to several factors:
- High Student Loan Debt: Many millennials are burdened with significant student loan debt, which hampers their ability to save.
- Stagnant Wages: Wage growth has not kept pace with inflation and the rising cost of living, making it difficult to allocate funds for retirement.
- High Cost of Living: Increased housing and living costs reduce disposable income available for savings.
- Lack of Financial Literacy: Many millennials lack comprehensive financial education, making it challenging to understand and prioritize retirement savings.
- Job Market Instability: The gig economy and job market volatility contribute to inconsistent income, making regular saving difficult.
These factors collectively contribute to the concerning trend of inadequate retirement savings among millennials.
Our Take: This information appears to be generally accurate. Here's a breakdown of the key points:
- According to a real estate expert, Americans now need to make around $120,000 a year to afford a typical middle-class life and qualify to purchase a home.
- The average home price in 2024 is ranging between $400,000 and $420,000.
- This salary requirement represents a significant increase from just a few years ago when an income of $60,000 to $70,000 annually was considered adequate to qualify for a home loan.
- The housing market has become increasingly challenging for Millennials and Gen Z, with housing multiples (the ratio of home prices to annual income) increasing significantly since 1970.
- Many young adults are finding it difficult to save for a down payment.
- Factors contributing to this situation include student loan debt, high rental prices, and overall increased cost of living.
It's important to note that these figures can vary depending on location, specific market conditions, and individual financial situations. However, the general trend indicates that a six-figure salary is increasingly becoming necessary to afford home ownership for Millennials and Gen Z in many parts of the United States in 2024.
Our take: The article "21 Pieces of Advice Millennials Ignore from Their Grandparents" highlights generational differences in perspectives on various topics. Key points include outdated advice like avoiding video games, relying on pay phones, having a single lifelong employer, and saving physical change for gas. It emphasizes how modern technology and changing societal norms have rendered some traditional advice less relevant, such as the necessity of a landline for job interviews, always dressing modestly, and using Yellow Pages for directions. Overall, it underscores the evolving nature of practical advice across generations.
TV
“Millennials with money are getting into a new hobby: collecting rare and valuable items. From old comic books to vintage video games, these young adults are spending big on things that might seem odd to their parents. According to a 2024 Bank of America study of wealthy Americans, 94% of Gen Z and millennials are interested in collectibles.”
Book Review
by JL Collins is a must read. Learn the fundamentals of investing and building wealth.
Our take: Implementable Takeaways for Millennials
- Open a Low-Cost Index Fund Account: Start by setting up an account with a low-cost provider like Vanguard and begin investing in index funds such as VTSAX.
- Automate Savings: Set up automatic transfers to your savings and investment accounts to ensure consistent contributions without having to think about it each month.
- Pay Off High-Interest Debt: Focus on eliminating high-interest debts like credit cards as quickly as possible to free up more money for savings and investments.
- Build an Emergency Fund: Aim to save three to six months' worth of living expenses in a high-yield savings account to cover unexpected financial emergencies.
- Educate Yourself: Continuously improve your financial literacy by reading more about investing, personal finance, and financial independence. Utilize resources such as personal finance blogs, podcasts, and books.
Quote for the Week
"The best way to predict your future is to create it." Abraham Lincoln
Retirement Savings Quiz for Millennials
What is a commonly recommended percentage of income to save for retirement?
Use this quiz to check your knowledge on retirement savings and ensure you're on the right track to securing your financial future! The answers will be in next week’s issue of the newsletter.
Thank you for reading this edition of Millennial Financial Times. We are thrilled to have you as part of our growing community dedicated to achieving financial success. Whether you’re just starting your financial journey or looking to refine your strategies, our newsletter offers valuable insights tailored specifically for you.
Your journey to financial freedom doesn’t have to be a solo endeavor. Let’s learn, grow, and succeed together. Stay tuned for our upcoming issues, packed with even more valuable content and opportunities to engage with our community.
Remember, your feedback and participation are what make this newsletter truly special. Feel free to reach out with questions, suggestions, or to share your own financial success stories.
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Best Regards,
The Millennial Financial Times Team 💖
July 7, 2024
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