Green by the Generation

People who have saved and invested all their lives often find that retirement presents a new challenge, says Andy Nelson, a senior financial consultant at the Oklahoma City branch of Charles Schwab.

 “All they know is how to put money away; they don’t know how to take money out,” he says, mentioning that many of his clients are from the baby boomer generation (born between 1946 and 1964). 

Nelson says he helps them plan “how to strategically withdraw those funds. And they need to continue to manage their investment portfolios. You don’t want to outlive your funds. For a lot of retirees, it’s all about taxes.”

Nelson says that he looks forward to helping his older clients map out their retirement incomes.

“How do I help them enjoy the second half of their lives?” he asks. “I have some who have been in retirement longer than they actually worked.”

Adam Ingram, a branch leader of the Tulsa Investor Center at Fidelity Investments, says a recent Fidelity survey showed that millennials – those born between 1981 and 1996 – are generally doing a good job of managing their money and planning for retirement, despite debt from higher education, credit cards and other stressors.

“59% of millennials have a plan in place for their financial goals,” says Ingram. “And 24% say they are prepared to retire by age 60.”

Members of Generation Z – born in the late ’90s until around 2010 – are often having to return to their parents’ homes after college due to low starting wages and job losses caused by the COVID-19 pandemic.

Tulsan David Karimian, who owns a private wealth advisory practice of Amerprise Financial Services, encourages younger people to start strategizing now. 

“While they may not be in their peak earning years, this is the best time to invest,” he says. “They have the biggest asset in their favor, and that is time. And if they are still living at home and not paying rent, they have some discretionary cash.” 

But he also cautioned parents about making things too easy for their grown offspring.

“My personal opinion is that teaching kids, and even grown kids, financial discipline, is very important,” he says. “Financial discipline gives you financial freedom.”

Pandemic Penny Pinching 

Financial self-discipline is always a good idea, a point that’s been driven home during the duration of COVID-19’s prevalance in the U.S.

“Right now, times are very, very hard for a lot of people,” said Jerry Hensley, executive vice president and chief financial officer of the Oklahoma-based Regent Bank. “Just a few short months ago things were good. Unemployment was at record lows. If you wanted a job, you could get a job. A lot of people had multiple jobs.”

People who decide now to make major life changes can be prepared to survive the next financial downturn and maybe even help others, says Hensley.

“If you learn to live on about 80% of your income, you will always be able to save something,” he says. “A lot of people live off 110% off their income by getting a credit card and accumulating debt.”

Pandemic penny pinchers can give up gourmet coffee-to-go and $10 work lunches, Hensley says, and then continue to brown bag it for savings that will total thousands of dollars a year. 

Hensley says that while he enjoys spending money, “I like to spend money that I’ve got after I’ve taken care of the necessities. If you are not taking care of the necessities, then when you stumble and fall, it hurts. I’ve been in banking for 41 years now, and I’ve seen several cycles, up and down.”

Some people who are working in essential industries during the pandemic are bringing home extra money, and Hensley says this is a great time to bolster savings accounts. He used his own bank as an example, as Regent Bank processed more than 1,500 Paycheck Protection Program loans.

“We had people working here around the clock, getting those loans processed. We paid $70,000 in overtime for those people to do that, and in addition, we paid them a bonus.”

 Hensley, he says, encouraged his employees to save a large chunk of that money for a rainy day. 

Andy Nelson with Charles Schwab says the most important aspect of investing is having a financial plan in place before you start. 
Photo by Doug Menuez courtesy Charles Schwab

The Ins and Outs of Investment 

Generally speaking, it’s never too early to start investing. But people should do a couple of things before they start buying stocks and bonds.

“When we first meet with a client, we ask them what their debt situation looks like,” says Ingram. “High-interest debt is a great thing to pay off before you start investing money.”

Potential investors should also have an emergency fund, says Hensley.

“Once you get about 6 months of living expenses saved up, you can go on to certain websites and set up small accounts and start buying,” he says.  “But before I did that, I would encourage people to look at your employer and start investing in your 401K. Put in the maximum they will match.”

Beyond that, “there are brokers who can give you advice on how to start investing money,” he says.

Karimian says that app-based investing, which people can do on their cell phones, has become very popular.

“I think it’s great to give investing abilities to more people,” he says. “Even my nephew – who is 17 – wants to buy stocks.”

Another way to enter the market, especially for those just starting out, is to invest in ‘slices.’

“For a company whose share price is large, over $1,000, the company allows you to invest in a fraction of it,” says Karimian.

Nelson says the most important principle of investing is to have a financial plan. The second most important principle, he says, is “the time that you spend in the market. The earlier you start to save and invest, the more time your investments have to grow, thanks to that power of compounding.”

Perks of a Financial Advisor

The stock market changes brought on by the pandemic have been a source of stress for many investors, says Karimian.

“A lot of people were wanting to sell,” he says. “A lot of people probably did, if they were working on their own, and are probably regretting it right now.”

Nelson espouses that one of the seven principles of investing is to ‘ignore the noise.’

 “Right now, it is hard to do,” he says. “Markets are always going to fluctuate. If you are truly a long-term investor, it shouldn’t offset your progress toward your goals. I’m trying to have my clients turn off the outside noise and focus on the long term.”

The primary reason for using the services of a financial advisor or planner, says Karimian, who is a certified financial planner, “is to establish an objective of what you are trying to accomplish, and make sure you are making decisions that are aligned with those goals. Working with an advisor on a specific plan can help you accomplish your financial goals.”

Karimian says he helps his clients decide what stocks to invest in by looking at factors such as price to earnings ratio, price to sales, price to book ratio and revenue growth.

“Looking at the price of a stock by itself does not tell you whether that company is successful or not,” he says. 

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Kimberly Burk
Author: Kimberly Burk