On the virtue of being consistent.
A friend recently did a very informal survey with a bunch of Millennials he knew. He asked them to answer on the spot a question: “What would be the first three things you would do if tomorrow you received a $3mm tax-free, legal transfer in your bank account?”
The results were (all figures in % of respondents per type of answer):
- Real estate purchase 100%
- Invest 82%
- Cash in the bank 55%
- Charity 27%
- Own business 27%
- Car purchase 9%
My first mentor in the investment world, Ed Blake Jr. – a very clairvoyant man, judging from the above – shared a realistic and profound piece of financial advice with me early in our relationship: “The first chance you have to own a roof over your head, you should do it. The home you purchase can be modest at best; you are not trying to impress. This is not meant to be your forever home.”
Everyone is fighting a battle you can’t see; it’s one of the core reasons I treat everyone I meet with the utmost respect. There’s an old saying: “Anyone can hit the fastball; it’s how you deal with life’s curveballs that will determine your success and happiness.” Possessing financial security enables you to focus on your essential mental health and well-being when the curveball arrives.
I often find myself sharing Ed’s advice with my younger clients, most of whom have yet to experience that curveball and are focused on the wealth accumulation phase of their lives. Many live in New York City, where the rent-to-own ratio is out of whack (it’s less expensive to rent than own). If you live in this kind of environment, don’t feel guilty or obligated to own a home. You should, however, feel compelled to invest a set amount of money into the equity markets every paycheck, as if you were servicing your imaginary mortgage. This disciplined investment plan, regardless of how well (or not) the stock market and economy are performing, allows you to compound your money and grow substantial wealth over time.
Ultimately, when that inevitable curveball arrives, you’ll have the self-created financial security to focus on what’s most important to you at that moment. Unless, of course, you are one of the lucky few who never experiences any level of adversity; in which case, congratulations, you won the lottery. For everybody else, possessing the power to create one’s own financial security is immensely valuable.
Tilt the odds in your favor, create your own financial security through home ownership and/or a disciplined investment plan. May we all fight through difficult times and come out on the other side better for it.
Thanks for the advice Ed. It has served me well. You are missed.
Michael Tanney, March 8, 2019
Cover Photo: Michael Tanney, 2014