Millennial Wealth Management
Heather Clark is a Financial Advisor at Millennial Wealth Management, LLC, a different kind of financial advisory firm dedicated to serving the needs of Millennials. Heather's and MWM's comprehensive financial planning service is unique in the investment industry, as it is a true partnership between the firm and their clients. No two client relationships look the same when working with them, because let's face it, nobody is in the same financial position with the same goals and life circumstances. Heather's promise to their clients is to always put their interests first, which they committed to when they took the fiduciary oath.
Millennial Wealth Management, LLC was created from the understanding that the vast majority of financial firms were really only looking out for one person... themselves. Think about it, should you trust the financial firms that nearly brought down the global economy a few years ago (the largest crash since the great depression) with your hard earned money? No?! Me neither!
Financial representatives make a sizable commission when they sell you a product, sometimes as high as 8%... Can they really put your best interests first? I don't think so, either. With that being said, Heather committed to working for a firm designed to eliminate any and all conflicts of interest with the sole focus on helping his clients achieve financial success through prudent financial planning and low-cost, tax-efficient investment options. Heather is proud to hold herself to a higher standard at MWM.
The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, Millennial Wealth Management, LLC referred to as "MWM" disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement and suitability for a particular purpose. MWM does not warrant that the information will be free from error. None of the information provided on this website is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information is at your sole risk. Under no circumstances shall MWM be liable for any direct, indirect, special or consequential damages that result from the use of, or the inability to use, the materials in this site, even if MWM or a MWM authorized representative has been advised of the possibility of such damages. In no event shall Millennial Wealth Management, LLC have any liability to you for damages, losses and causes of action for accessing this site. Information on this website should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized. COPYRIGHT MILLENNIAL WEALTH MANAGEMENT, LLC 2016. ALL RIGHTS RESERVED.
When considering a financial plan for a client, I like to first focus on net worth and monthly cash flow. While you are doing a good job living below your income level and saving a significant portion per month, your net worth is still negative due to those student loans. Your first step is to look at the interest rates on your student loans and the return you may receive investing your money. If the interest rates on your loan are greater than 5% it may be worth aggressively trying to pay off the loan. Plus there’s the added bonus of the psychological relief you may feel knowing you have the debt paid off (plus imagine your monthly cash flows without that portion of your debt!)
Rental incomes are a good way to potentially create some steady income, but given your student loan debt and the portion of your income that you are saving per month, it will be a while before you can manage to purchase a home. One way to participate in our growing housing market is to invest in REITs. They are real estate investments that give you the opportunity to participate in the growth of the real estate market without taking on the additional work and liability that a house brings, in addition to being more affordable while you create your investment portfolio. In short, it is a good idea to start investing your additional income rather than keeping it in a savings account. Whether it’s paying off debt or growing in the market, it could be doing much more to serve you in the long term if it had a purpose.
One of the big things I talk about with my clients is the difference between retirement and financial independence. Millennials really are approaching what we have thought of as “retirement” completely differently than previous generations. This is something for you to put a little thought into. If your goal is to be “retired” by 40, what does your life look like after? Do you want to be managing rental properties? Do you want to be giving back to your community? There’s a difference between retirement and financial independence. Retirement implies you’re no longer working and contributing to your community in the same way that you once were. Financial independence means you are set up well enough that you could quit your job if you wanted to and go write that book, travel, etc. I like to talk with my clients about what their bigger goals are and how we can get them to a finial position to be able to achieve them, whether they involve working, traveling, being home with the family, etc. Having a clearer idea of what your plans are for the second half of your life will greatly help you navigate which forms of passive income you want to invest in.
I would encourage you to go with the ETF. This will require less work and management from you by keeping your investments relatively simple. It will also help you diversify your investments even if it’s just a little. The more diverse your investments the higher likelihood of success when the market drops. As the cannabis industry is highly volatile right now, the more diversification you can have the better. It’s also good to remember- even if you’ve done your research and have faith that these companies will succeed, there is always risk and unpredictability within the market that you can’t foresee. This gives you a very small taste of the best of both worlds- a (very slightly) more diversified portfolio and an investment in the companies you have the most faith in.
Investing in yourself and your education is certainly one of the best investments you can make, if it’s a well-educated decision. First, make sure you’ve done your research and an additional degree is indeed critical for your upward momentum. There’s no point in investing the extra time and effort if you’re unable to make a significant change in your income at the end. Second, try and minimize costs as much as possible to reduce your total loan amount. Consider campus provided housing, roommates, etc. to decrease your monthly costs. I also strongly encourage you to work full time while going to school. Having an income is the best way to reduce the debt you’ll need (potentially to zero!) and continue to grow in your career. Consider this as well: when you leave a full time job to go to school, you not only give up the income, but you also give up the benefits. How much will you have to pay in health care costs, miss contributing to your retirement accounts, lose professional development opportunities, while you are going to school? I have helped clients run the numbers on this and those benefits that come with a full time job can add up to well above what you would lose in income during this time alone.
If you want to be really creative and going back to school is absolutely essential, consider how you may be able to get some tuition benefit to fund your education. For example, universities employ all kinds of staff members in all kinds of roles and often offer free or partially covered tuition for their employees. There are also a variety of companies that are now offering a tuition benefit to employees to encourage their professional development. Check out some of those options as a unique way to save yourself from having even more debt by the time you are solely working full time.
You are definitely off to a good start! Here’s a few things you could consider in addition to what you are doing:
1. Consider which retirement accounts you are contributing to. Given your low tax bracket, this is a good time to be investing into ROTH accounts You could consider either opening a ROTH IRA or switching your funds into a ROTH 401(k) if it’s an option at your employer. This will allow you to make the most out of your money while you’re in this low tax bracket early on in life.
2. Your 20’s is a wonderful time to be investing in retirement because you have so much time for your investments to grow. Make sure you aren’t shorting yourself on your retirement accounts because you are thinking you may want a house. It may be worth it to take a little longer to purchase a home in order to still meet your retirement goals.
3. I like to think of houses as a liability, not an asset. They often have many hidden costs and, unless you’re using them to make income, they, like all investments, may not give you the “rate of return” you’re hoping for when you’re actually living in them. However, I’m by no means saying you shouldn’t buy a house! You should just be strategic about it. Take your time and save up enough for a 20% down payment. Make sure you are well educated and know what you are looking for before you go into the market. And, consider this: many people, after they find a significant other, find themselves moving into a home better suited for the two of you (even if you purchase the house thinking someone else one day might move in). Which means you may sell the house a bit sooner than you, alone, had ever intended. One approach to this is to think of your first house as a great starter home that is very rentable. Then, as you move up and on with a significant other, you have a true asset to rent out and create additional income for the two of you. If you have no interest in managing a rental, this isn’t a great option. But, it’s one way to be thinking ahead and creating long term and passive income.
It’s definitely tough getting going when you have no credit score to start. However, there are a few cards that could be good options. The Journey Student Rewards Card from CapitalOne is designed for students with no credit history and has no international transaction fees or a yearly fee. Another option is the Citi ThankYou Preferred Card for College Students. This one has chip and pin technology, but does have international transaction fees, so it may be a good back-up card, but not the one you mainly use.
Something else to keep in mind is that different countries have different requirements and expectations regarding credit cards and payment. To this day I have still found that I needed a pin on my credit card for a number of random occasions (the Bank of America Travel Rewards Card is one of the few credit cards offered in the U.S. that has an option for a pin, though the Citi card mentioned above does as well) and even if I didn’t need it, I got a strange look from the Starbucks barista when her register printed that extra receipt for me to sign. You’ll have no problem in major cities, especially in Europe, paying with any kind of credit card, but as you travel to more remote or unique locations, not everywhere is so tech savvy. I have found that still (in 2018!) you can be asked to pay only in cash at a variety of places- even hotels.
In short, a credit card is essential. If you can get one with no international fees and that has a pin, even better. Be sure to also bring the currency of whatever country you are visiting as well as a debit card you can use to pull more money out. The international fees on credit cards and debt cards can really add up, so make sure you’re aware of the fees and you’re being strategic about how you are using each so you can minimize costs and leave yourself a little extra money for your travels!