June 11, 2024
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Staying Ahead of the Curve: Rethinking the Age of Financial Wisdom

When considering the myriad factors that determine life’s outcomes, timing stands as a paramount determinant. It holds the power to transform life’s trajectory, both personally and professionally. The importance of timing was even at the center of The New York Times bestseller, and one of my personal favorite books, “Outliers: The Story of Success” by Malcolm Gladwell.

While timing may usher in magnificent success, an offbeat moment could potentially derail years of effort. Consequently, the emphasis we place on timing, especially in the financial realm, is nothing short of crucial.

 

Financial Timing: Opportunities and Regrets

The financial world is perpetually entwined with the complexities of timing. Be it individuals ruminating over missed opportunities to invest in the next big startup or deliberating when to enter the housing market, the “right time” often becomes a focal point of conversation. However, these reflections are frequently veiled in the shroud of hindsight, revealing the innate human tendency to ruminate over the “what ifs.”

A recent Wall Street Journal article, “The Exact Age When You Make Your Best Financial Decisions,” threw an intriguing curveball into this mix. It highlighted a study suggesting that the zenith of our financial decision-making ability doesn’t manifest until the age of 54. To the uninitiated, this might appear as a revelation, indicating that late middle age is the opportune moment to make pivotal financial choices. This perception feeds the procrastination bug, letting it whisper, “Why rush? Wait for the perfect age.”

However, by waiting until we’ve lived almost 70% of our lives, we squander opportunities for early and consistent financial growth.

 

The Pitfall of Delayed Financial Literacy

However, herein lies the fallacy. The celebration of 54 as the golden age of financial decisions obscures the magnificent potential of compound interest and its timely harnessing. Additionally, it turns a blind eye toward the fact that we make significant financial decisions in our 20s, 30s and 40s.

Albert Einstein once dubbed compound interest the “eighth wonder of the world,” and for a good reason. The earlier you let compound interest weave its magic on your investments, the more exponential growth can you witness.

Let’s delve into some mathematics here. Assuming the traditional retirement age of 66, starting your financial planning at 54 provides a mere 12 years for your investments to compound. However, beginning at, say 33, not only grants an additional 21 years but, with a hypothetical average annual return of 7%, accumulates a whopping 833% return over time. Said another way, if you invested $100,000 at the age of 54, at a 7% return you would have $225,219 by the age of 66. Starting at 33, you would have $932,534. Or, more than four times more money!

Regrettably, many individuals awaken to this financial epiphany much too late.

This delayed realization often stems from a widespread trend: Financial literacy tends to blossom in the latter stages of life. A slew of studies confirm this trajectory, suggesting that a majority brush up on financial knowledge either to rectify past mistakes or as a belated proactive measure. Youth is often painted with the broad strokes of invincibility and audacity (a concept I discussed on a recent episode of my podcast “The Big Bo $how”). The younger we are, the more we seem to harbor unwavering confidence in all spheres of life, including finances. This can sometimes translate to a delayed initiation into serious financial planning.

The escalating wealth disparity in modern society accentuates the urgency to prioritize early financial education. Time, in the financial universe, isn’t just an ally; it’s akin to a benevolent friend, ever eager to propel you toward affluence. The conundrum arises when, due to lack of awareness or apprehension, we shun this friend.

 

Venturing Into the Financial Odyssey, Drawing Parallels To the World of Sports

The prevalent aversion to unfamiliar territory is a well-documented human trait. More often than not, avoidance amplifies the challenges, akin to the principles of compound interest. As students nationwide embark on a new academic year, perhaps it’s time for adults to embark on a journey into the realm of finance. This doesn’t necessarily entail formal classroom instruction; instead, seeking guidance from a seasoned fiduciary financial adviser can help unravel the intricacies of compound interest, and the myriad other financial principles we are unfortunately not taught in school.

In the world of sports, waiting until mid-life to kickstart a career would seem ludicrous. Imagine if football sensation Tom Brady had initiated his career at 35! Similarly, embarking on your financial voyage early, armed with the right mentor, can help to ensure you harness the powers of optimized financial decision-making sooner. We saw the value of compound interest earlier; now just think about how consistent, optimized financial decisions should compound.

As I’ve emphasized previously, it’s important to just start this journey. Financial success isn’t about pinpoint precision but about the span of time you allocate towards wealth accumulation,  while wrapping it with a disciplined collaborating structure that lets you build on your habits.

 

The Journey Begins Now

If you’re geared up to harness time and steer your financial destiny in the right direction, remember that assistance and the power of a team are often valuable. While I like to consider myself a better-than-average offensive lineman in my youth, I would have been nothing without the four other guys who blocked alongside me.

The journey to financial prowess can begin today, transcending the confines of age.  Contact Julius Wealth Advisors to seek to stay ahead of the curve!


Jason Blumstein, CFA® is the CEO and founder of Julius Wealth Advisors, LLC (www.juliuswealthadvisors.com) a registered investment adviser.  He is also the host of “The Big Bo $how” podcast available on Spotify and Apple Podcasts. Jason has been investing and educating himself on personal finance since the age of 10. His company’s mission is to empower people to live their best financial lives, while fostering an ecosystem of integrity, knowledge, and passion. Jason currently resides in Englewood with his wife and two kids. He can be reached at 201-289-9181 and/or [email protected].

This piece contains general information that is not suitable for everyone and was prepared for informational purposes only. Nothing contained herein should be construed as a solicitation to buy or sell any security or as an offer to provide investment advice. The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the information cannot be guaranteed. Past performance does not guarantee any future results. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. For additional information about Julius Wealth Advisors, including its services and fees, contact us or visit adviserinfo.sec.gov.

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