You graduate from an Ivy League design school with honors and a shit ton of debt. You gift yourself a brand new BMW to celebrate getting a 6 figure job from a Fortune 500 company. You move downtown and rent an expensive designer loft to keep the creative juices flowing.
You go to the mall and buy name-brand shit from Gucci, Diesel, Prada. You smile at the envy from onlookers as they stare at your shopping bags. You buy expensive booze and invite strangers to celebrate your balling lifestyle. You pass out from the crazy partying.
You wake up after what feels like an eternity. You looking in the mirror and scream at the top of your lungs. You have turned 60. Your hair is all grey. You find your phone and open your bank account. You realize that you are broke. You wonder how it went all wrong. If only you had started investing early as a designer.
Start Investing Early
In 2014, I was regularly attending social events in Dallas and meeting new folks. One night, I ran into Fynance Johnson (let's call him that). I thought he was a cool party guy. At one point during the night, Fynance dropped his business card. I bent down to pick it up and noticed the CEO title on it. I stared at the business card for a few seconds. Handing Fynance the card, I said, "Nice trick to impress the chicks bro." He replied, "It's not a trick. I'm the CEO."
I couldn't believe it. So I googled the guy once I got home. He was indeed a CEO and a multimillionaire! I learned the lesson of not judging a book by its cover. I asked him out for lunch, hoping to get advice on how to be rich and how to invest money. We met up at an Indian restaurant. Nothing about Fynance screamed money. He didn't wear name brand clothes. He drove a used car.
"Where do you spend all your money?", Fynance asked, grabbing the naan.
"I dunno. Probably Amazon and online shopping. I guess I love getting boxes at my doorstep", I nervously replied.
"So you can't even fucking save half your paycheck?"
I didn't reply and felt ashamed.
Fynance looked at me and replied:
Start investing early and get a head start. Don't get caught up in the YOLO lifestyle. Don't buy a sports car. Keep your expenses low. Invest half your paycheck. Don't try to beat the market. And you will be fine!
This advice changed the financial trajectory of my life!
You Won't Become Rich Day Trading Stocks on Robinhood
Fynance's advice was a much-needed wake-up call for me. For the next six months, I visited the top wealth management firms in Dallas. During a meeting with one of those firms, I told an associate, "No offense, but I don't want you to manage my money. I want the CEO, whose picture is on the wall, to manage my money." The associate politely showed me the door. Nobody would take me as a client as I didn't have millions of dollars in my bank account. But I got great book recommendations - Rich Dad Poor Dad, The Millionaire Next Door, The Total Money Makeover, A Random Walk Down Wall Street. (I recommend reading these books in that exact order to start your investment journey.)
After day trading stocks for a year on Robinhood, I made just $64 in profit. I realized that I would never get rich by day trading stocks on Robinhood. I needed to buy and hold stocks of good companies for at least ten years. I needed an advisor who could guide me through this complicated financial world. Someone who would talk me out of panic buying/selling stocks.
Benefits of Working With a Financial Advisor
If I'm going to hire a financial advisor to manage my money, I want that person to be obsessed with investing. I want them to own their own business because I'm trying to escape the 9-5 rat race. I ended up hiring a fiduciary financial advisor who had cold emailed Jack Bogle, the legendary founder of Vanguard. The word 'fiduciary' is significant because it means the financial advisor is legally bound to prioritize your benefits over his. He can't keep trading stocks in your portfolio to rack up trading fees and get a nice commission. Or recommend financial products just because he gets a commission from selling them.
Hiring a financial advisor has been a complete game-changer for me despite the expensive fees! Under his guidance, I created my will (you never know when your time will be up, so get your affairs sorted out), bought a term life insurance, built a nest egg, and improved my financial habits. I cut all my credit cards with a scissor. Fuck the free airline points! I have been using my debit card to pay for everything for the past three years, and my credit score is excellent. If you are worried about your credit score dropping because you are not using a credit card, think again!
Every quarter, my financial advisor schedules a meeting to track expenses and monitor how much money I'm investing. All this stuff seems like a chore in the present. But the Jayneil at 60 will thank me because compound interest is indeed the 8th wonder of the world.
If you can't or don't want to hire a financial advisor, I highly recommend using a robo advisor such as Wealthfront.
The Missed $212,333 Investment Opportunity
In Sept. 2013, I had $20,000 lying around in cash. I thought of investing it in the Amazon stock at $300. But instead, I decided to spend the money on stupid shit. I would have made $212,333 today if I had made the wise decision of buying and holding the Amazon stock. That's the power of compound interest!! It works for you even when you sleep.
Disadvantages of Renting a Luxury Apartment
In 2016, when my neighbor got shot ten times in a drug deal gone wrong, I decided to move out of my ghetto ass apartment. Part of me wanted to rent a luxurious apartment in Uptown for $1800/mo and live that YOLO lifestyle. But the conventional Indian wisdom saved me! People in India don't rent apartments. They save up and buy their home. So you don't have to worry about having a roof over your head during dark times. I realized this when I purchased my first home in 2016. Every mortgage payment increased my equity in the home instead of filling the coffers of the apartment landlord. If I decided to move and sell the house, I would make a nice profit. Not to mention the $72,000+ saved in rent payments! Remember that the return on rent is always zero.
Disadvantages of Buying a Brand New Car
I am ashamed to admit that I caught the sports car bug in 2017. I booked the Mazda Miata MX5 limited edition by putting down a $500 deposit. The dealer called me during work on Monday to pick up the delivery. I told him the earliest I could come was Saturday. That led to an argument, swearing, and I hung up the phone. When I called on Saturday, the dealer had sold the car. Thank God for saving me from a $35,000 liability! Brand new cars are depreciating assets. A brand new car loses 10% of its retail value the moment you drive it from the lot. It baffles me when I see new grads lease new beamers and Audis on their graduation days. For the record, I still drive a used 2011 Toyota Camry.
As a designer, you will spend a majority of your time designing the interfaces of Fortune 500 companies with enough cash on hand to outlast your next few generations. One day, you will be too weak to work or deemed too old to be hired. If you plan to retire at 60 and hope to live till 80 years, do you have enough cash saved up to support you for 20 years of retirement?
Take advantage of your company's retirement plans such as 401k. Contribute a percentage (equal to or more than the company match) of each paycheck you receive to your 401k. Don't be afraid or ashamed to reach out to a finance/HR person within your company for clarification on these terms. This is the kitty bank that will have your back once you retire. So, start designing your retirement today!
Defense Wins Titles
"Defense wins titles" is a common saying in the soccer world. The saying holds especially in the USA, where citizens worship hyper-consumerism. It's easy to have a good offense (salary) in this country but very hard to maintain a defense (savings). The government lets you borrow 5x your income. No wonder folks who aren't financially sound are leasing Audis. Then posting those pics on Insta and motivating other insecure blokes to go into debt. Pay down your debt, invest, and find avenues to generate passive income.
Investing in Yourself is the Best Investment
If you don't have spare cash to invest in stocks, read books. If you can't afford to buy books, borrow from your local library. There's always a way! Build good habits that will pay you dividends down the road. Keep updating the operating system inside your brain! Don't hesitate to hire trainers, coaches who can help you improve. If budget is tight, skip the night out or buying that fancy leather jacket. Getting rich is the physical manifestation of the investments you have made in yourself.
Start a Creative Side Hustle
When I interviewed Caleb Kingston, I was surprised to learn that he makes $7,000/mo selling Figma and Adobe XD courses on Udemy:
Now is the golden age of starting a side hustle as a creative! The internet is creating a future where its digital citizens can sell creativity to earn passive income digitally.
If you have a stable day job, leverage it to start a side hustle. Take on a freelance project to work on the weekends. Fuck the night outs and parties on the weekends. Remember, if you desire to own your time, you must set aside time to explore side hustles.
Where are you in the investment journey? What are the struggles you face? What are your preferred strategies for investing? Email me and tell me. I read every email :)