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The Best Investment Advice Ever: Saying “No”

Posted by Larry Doyle on September 24, 2012 7:31 AM |

Large parts of the financial industry spend lots of time, effort, and money to develop plans and programs all under the guise of offering investment advice. Much of the investment “witchcraft” comes with a slew of hidden fees and expenses. That fact and those figures more often than not are conveniently avoided.

In the midst of many a discussion I have with young professionals launching their career, I work the conversation toward what I deem is the best investment advice ever. I firmly believe the specific insight I offer them is not only appropriate for a young professional but also for all investors. So what is “the best investment advice ever?” 

Just say “no”.

These three little words were widely promoted in the 1980s as the slogan for those promoting wholesome, healthy lifestyle and truly an anti-drug message. The same three little words resonate today. The Wall Street Journal puts a spin on this simple message today in writing, It’s Really OK To Say ‘I Can’t Afford That’,

Many people would rather struggle to pay off a large credit-card bill then utter the phrase “I can’t afford it.”

Feelings of shame, embarrassment or a desire to avoid conflict are just some of the reasons folks just won’t say no.

But being honest about what you can and can’t afford can reduce financial stress and boost your financial health.

Indeed it can. Learning to do without even what may be viewed as just little things can have a profound impact on all aspects of one’s  life. Penny saved is a penny earned may sound trite but when did America forget that simple lesson. Minimizing expenses and redirecting those funds — even if deemed small — toward a savings or investment account can have a profound impact over the course of one’s life. How so? The power of compounding.

To further make the case that I so believe in this approach of living below one’s means and minimizing expenses I point young professionals especially toward an article in the Career Planning section of my website, Advice to All You Graduates: Let’s Start with That Daily Latte . . .

There is an important reason you want to start early, even though it hurts. Say you withhold $375 a month for your 401(k). In 40 years, you’ll have $750,000. But those who waited a decade to get started would have only $377,000.

That is powerful.

Obviously this advice runs fully counter to much of what is directed at us everyday. We are told and “sold” that we can gain real happiness and so much more via the acquisition of a whole host of material items. I am not here to preach but I feel compelled to write that real happiness and true success in investing and in life is derived from relationships not products.

Just saying “no” provides the necessary discipline to achieving that prized possession known as happiness. Doing without is not only a great start but also sage advice as we navigate the economic landscape each and everyday.

Navigate accordingly.

Larry Doyle

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I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

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