As I approach my senior year at the University of Illinois (Fighting Illini!), this summer was my internship opportunity to gain knowledge in real-life financial planning. Reflecting over the past two months interning at Inspired Financial, it has been worth every single commute (a whopping 37 miles one-way) to have the chance to learn from this exceptional firm. I have been given the opportunity to share with you a couple of my personal favorite “pearls of wisdom” from Inspired Financial that I believe to be essential to all ages:
1 Leave Emotions Out of Investing
There are two main philosophies of investing: short-term and long-term. I have learned to leave the emotions out of investing. It requires a lot of discipline to be able to set aside the “white noise” instituted by the media. Take the most recent example: Brexit. As the media began to cover the story of the United Kingdom planning to leave the European Union, it stirred emotions around the world. People began to imagine the negative impacts on the economy and started a stock market panic. The results of the panic resulted in the Dow being down nearly 900 points to 17,140 in just two days! The Dow ended up fully recovering within a week, and it is now well over 18,000. Although these emotional market panics can be stomach churning for a client, having the strength to remain calm with a trusted advisor during these situations protects client from attempting to time the market where they would most likely miss the post-crisis recovery. From evidence-based market research, the long-term approach is about the big picture with a plan on their goals rather than the short-term attempt at beating the market.
“I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for ten years.” — Warren Buffett
2 Be Financially Aware
You’d think someone pursuing a financial planning career would be as financially savvy. Of course I’ve covered the basics of tracking my cash flow on a monthly and annual basis, but that’s about it. Little did I know; financial planning means more than money management. It also incorporates tax, estate planning, insurance, investments, and more. My time at Inspired Financial taught me to look beyond my short 3-4 years of college and into 30-40 years down the road. I have worked on projects with the Inspired Financial team and witnessed both the struggles of those who planned a bit late and the celebrations of those that planned early. As I review the Retirement Income Analysis for dozens of clients, each one reminds me of the importance of planning decades in advance to assure a secure and meaningful retirement for themselves and the ability to assist future generations.
“Suffer now and live the rest of your life as a champion.” — Muhammad Ali
3 Time is Money
In regards to money management and investments, it is never too late to start saving/investing. My past excuses of “I’ll start saving after I buy (…)” have long disappeared as I understand that it is more rewarding to save at an early stage to accumulate financial security over a longer period of time, than the short term pleasure of spending today. Time is a limited resource, hence the importance of using it to your advantage by leveraging the power of compounding interest. This lesson from Inspired Financial has enlightened me to open my Roth IRA account as I prepare to utilize the long-term investment philosophy and accumulate exponential wealth.
“Remember that time is money.” — Benjamin Franklin
It has been an absolute pleasure and blessed opportunity to work with a team that is the best at what they do. They have given me both “pearls of wisdom” as I prepare for my career and practical life lessons. And an appreciation for my parents’ investment in me for my 21 years of life. As I move forward in the financial planning profession, I will remember my time at Inspired Financial as a personal milestone to my future success.
Guest Post by Rex Wang
“My own life-changing transition inspired me to start Inspired Financial so that I could help other women and their families navigate their difficult life transitions and emerge confident, financially secure and empowered to deal with future life events.”