What will this blog accomplish? The goal of my blog is to encourage Generation Y investors to invest both early and often. Most readers are embarking on brand new careers and are now in control of true discretionary income for the first time. My goal is to help you understand the best ways to invest that money while avoiding the Wall Street hype machine's tentacles and staying disciplined in the process. While I will not recommend any specific investments, I will offer comments and opinion on how the current news of the day in the financial world and beyond may relate to Generation Y investors and their finances. Also, I will occasionally post and comment on articles that may interest Gen Y readers and highlight certain strategies that have worked for Gen Y's. Please don't get the impression that this blog is purely about investing! Instead, I will also talk about Gen Y careers and professional life, money management and anything else I think the Gen Y reader will enjoy.
Why should you listen to me? As a fellow member of Generation Y, I know exactly what you are going through. I have been investing for more than half of my life and had an investment guide for teenagers published in 2003 by McGraw-Hill. I have interned at a hedge fund for 5 years where I focused on the research of transportation equities and am a finance major at LSU in Baton Rouge, Louisiana. After I receive my degree, I'm looking forward to pursuing graduate study while working in the investment management business. Most importantly, however, I practice what I preach! I invest the same way I recommend that you invest and have done well, even throughout the financial crisis of 2007 into the present. Please note that nothing on here is part of a "get rich quick" scheme and I certainly am not telling you how to invest. Instead, I talk about the strategies that have made countless investors wealthy such as indexing, dollar cost averaging and taking advantage of the tax benefits of Roth IRAs (among many other things)!
What is Generation Y? Interestingly, many people don't understand what Generation Y is, let alone even know if they are a part of it! Most people are familiar with the terms Generation X and Baby Boomer used to described different generations. Generation Y is a demographic that encompasses those people born between the mid-1970s and early 2000s and it remains a demographic that has long been underserved when it comes to financial advice. Worse still, that ignorance on the part of Wall Street and the financial community is stunning because of the sheer amount of assets and spending power Gen Y's control. A Harris Interactive poll in 2007 found that Gen Y's between the ages of 13-21 spent $120 billion that year - and that number is growing! My goal is to help the novice Generation Y investor navigate the financial markets so that they can be a part of what I like to call "Generation WI$E" - the informed investors who make up our demographic!
What is Generation WI$E? I like to use the term "Generation WI$E" to described those investors in Generation Y who have become enlightened to the following facts: 1). Index funds are the most efficient and cost-effective way to build wealth 2). Slow and steady wins the race in investing 3). The Wall Street hype machine including the media and many financial commentators typically do more harm than good 4). Controlling your emotions is a key step in becoming a successful investing 5). Any individual stock purchases should only be included in a broader diversified basket of dividend-paying equities and should make up less than 40% of your overall asset allocation
Do you recommend individual stocks? No. I don't recommend individual stocks for a few reasons but namely because I think that index funds offer a more cost-effective and efficient way to wealth than picking individual stocks. Secondly, I know very little about the personal financial situation of each reader so that it would be pointless for me to recommend individual equities. Lastly, each investor will invest for different reasons and most of the time stock picking is a loser's game given the high costs associated with it but also because any individual stock that is owned should be a part of a broader, diversified asset allocation which uses index funds as an "anchor" - 60% of your overall asset allocation or greater.