What’s the Best Financial Advice You Ever Received?
Joseph A. Scarpo, PWA Wealth Management
At the age of 26, I was traveling to a conference in Chicago. The gentleman seated in the window seat informed me that most Americans never achieve financial security. He told me the story of his brother who had worked hard and spent hard. At age 65, his brother retired thanks to a regular Social Security deposit into his checking account. My flying companion suggested that investing at an early age in American companies—being a stockholder and participating in the growth of the American economy over several decades—provides a high likelihood of wealth creation and financial freedom. I am happy to say I started early and adhered to his advice.
Linda Duessel, Federated Hermes
The short answer is, dollar cost average. That’s just it. Reinvest your dividends. Average in a set amount regularly. And start doing this yesterday. Don’t be cute. Don’t think about what to do day to day, or week to week, or month to month. Just dollar cost average. And one more thing: Know yourself. You have to be able to sleep at night, so know your ability to take on risk. Then whatever happens, you can say, “Yes. I’m positioned for me and I’m sleeping like a baby.”
Kevin Miller, Northwestern Mutual
The best piece of financial advice that I ever received was from my mentor and predecessor Charlie Ferrara. During one of my early training classes on building a wealth management practice, he said two things that I have never forgotten: 1. “The money that you earn and save in your 20s is the most important money you earn and save in your life,” and 2. “You will never miss the money that you save.”
Those two statements have provided great financial security not only personally for my family, but for our clients and their families as well.
Thomas L. Wentling Jr., Wentling Tarquinio Loughney Wealth Consulting Group, Morgan Stanley
Be very careful to protect your principal. Live within your income. Never speculate with your principal. Any speculations you make should be out of excess income. Never lend money to anybody—you will lose the friend and the money. Banks are in the business of lending money. If the bank won’t lend money, the borrower has no credit, and he’ll never pay you back. Never sign a joint note with anyone else. You are liable for the whole amount. You have a little capital. It is very hard to keep. Ninety-five percent of the people who have money lose it.
Alison F. Wertz, Bill Few Associates
In early 2009, I attended an event hosted by JP Morgan Executive Mary Erdoes. As she recounted the uncertainty of the early days of the financial crisis, she stated the humble truth, “As investment professionals, we have no control over the markets, so we better damn well be sure to get what we do have control over right!” That simple directive empowered me and has shaped how I manage all aspects of my business. Whether I am striving to live this truth, communicating this expectation to my staff or counseling clients to similarly focus on what they can control, this principle has served me well.
Michael R. Foster, J.P. Morgan Private Bank
Be intentional and specific about your finances and investments. Write it down and do the math. Start with your needs, assets and intent over the short and long term, then create a plan that identifies lifestyle, wealth transfer and/or philanthropic goals. Lastly, build specific portfolios that enable achievement of these goals and can weather inevitable market volatility. The key is to be able to withstand the ups and downs of the market without drastic reaction to short-term market fluctuations. If done correctly, one can understand the role each investment plays in the overall plan and be confident that the portfolio is designed properly to achieve the desired outcomes, regardless of short-term market volatility.
Win Smathers, Shorebridge Wealth Management
My mentor, Dave Hunter, was a great stock investor. He taught me that stock investors never want to be without cash so they can make moves when great opportunities present. As Keynes said, “The market can remain irrational longer than you can remain solvent.” I’ve always taken this to heart and have kept a liquidity bucket to draw and invest from in times of need. A corollary to this is to avoid leverage when investing. Leverage can enhance returns but I’ve seen the ugly side in bad markets. You never want to be in the position where someone is forcing you to buy or sell.
John Augustine, Huntington Bank
To build future wealth, live below your means and invest the rest. To really build future wealth, live well below your means and invest the rest.
Greg Weimer, Confluence Financial Partners
It has been a privilege to work with many wonderful investment professionals. Here are some of the lessons I have learned along the way.
“When you are on a boat and the water is choppy, focus on the horizon.” Stay focused on your long term goals, not the short term waves.
“The biggest obstacle to a good investment is the expectation of a perfect one.” If it sounds too good to be true, you are probably getting poor counsel.
“To catch a fish, you need to keep your worm in the water.” Market timing does not work!
“Focus on what you can control.” This will reduce your stress and increase your results.
Let’s all work together to make common sense more common.
Erik Kimbrough, PNC Financial Services
The best financial advice I have ever received was to “allow yourself the luxury of living below your means.” This is something that has a special meaning as we, as a nation, are going through such a difficult time financially and socially. The ability to live below your means allows for flexibility and provides you with options. In a time where financial security can mean a difference in your ability to provide for your family, living below your means allows for you to save and make critical decisions in the most precious moments.
Greg Curtis, Greycourt & Co.
Buy low, sell high; be patient; never invest or uninvest emotionally. Time—compounding—is on your side. Investment returns are very far from the most important thing in your life.
Peter F. Mathieson, Fairview Capital
In the early 1980s when I started my career of managing other people’s money (as well as their hopes and dreams), the best piece of advice that I could impart came from Albert Einstein: “Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” The longer an investor can compound interest (and dividends), the more capital that investor will have upon retirement. It is critical for those entering the workforce to understand the benefits of saving at a young age. Compounding income within a retirement plan—IRA, Keogh, 401(k)—is particularly valuable given the tax-deferred nature of the compounding. Understanding that simple concept has made many dreams come true!
Jack D. Kraus, Allegheny Financial
Sir John Templeton was my greatest source of investment advice. A few of his quotes are as follows: “Forgive yourself for your errors. Don’t become discouraged, and certainly don’t try to recoup your losses by taking bigger risks. Instead, turn each mistake into a learning experience. Determine exactly what went wrong and how you can avoid the same mistake in the future.” “The four most expensive words in the English language are ‘This time it’s different.’” The Sir John advice that I learned the most from was to develop your own personal investment strategy and have a consistent message regardless of the environment.
Tony Muhlenkamp, Muhlenkamp and Company
Ron Muhlenkamp (my father): “Think, son!” That’s the essence of what he’s taught me; he elaborates on that in the letters and essays we’ve collected in his book, “Ron’s Road to Wealth.”
Connie Muhlenkamp (my mother): “Listen to your father!”
Benjamin Graham/Warren Buffett: “Price always matters.”
John Templeton: “Save 50 cents out of every dollar you earn for the first 20 years out of college.”
John Bogle: “Understand the difference between the business of selling financial products and the profession of investing people’s money.”
Peter Lynch: “Ignore the news, focus on your companies.”
Thomas Sowell: “Reality is not optional.”
Bob Kopf, Smithfield Trust Company
The best investment advice I ever received came in two parts. The first part is to be highly skeptical of conventional wisdom. This does not mean that one should always defy the conventional wisdom; rather, one should avoid being swept away by a “herd” mentality.
The second part of the advice is a corollary of the first. Be unemotional in investing. Never fall in love with any investment and avoid highs and lows, staying dispassionate despite the human tendency to do otherwise.
Beth Genter, Schenley Capital
My father began his career as an investment counselor in New York and ended his career as the CFO of Gulf Oil, Co. He was my first and best mentor. A friend made a dark blue needlepoint pillow for him which says, “Risk Not Thy Whole Wad”. The concept of investing in many different asset classes such as investments in the United States, Europe, emerging markets, large and small companies, public and private investments is important. The philosophy of diversifying your funds into many different investment buckets is a guiding principle of Schenley Capital.
Henry S. Beukema III, Guyasuta Investment Services
Over the years, mentors have articulated key principles that I have followed: When analyzing an investment, understand the risks, opportunities and margin of safety. If you don’t understand an investment idea or it is too complex, don’t invest. Investors should not be complacent or overconfident with respect to risk management.
Scott Love, WesBanco Trust and Investment Services
“Everyone has a plan until they get punched in the mouth.” All the back-tested, mean variance optimized, efficient frontier portfolios look great until your equity investments drop 35 percent in a month, as they did in March. Average investors panic, change strategies and ultimately earn the results they would have by doing nothing and staying the course. In prize fighting and investing, those who can take a hit and counterpunch by sticking with the original plan will generally come out ahead.