The spring of 2018 marked my 20th year working in the financial services industry.  During this time I’ve witnessed the creation of the Roth IRA, the tech boom and subsequent bubble, multiple revamps to the income and estate tax laws, the Great Recession, the housing bubble, and what is currently the second longest bull market of all time.  More importantly, I’ve had the privilege to work with a wide variety of clients, partnering with them on their financial plans and investment management.  One of the great facets of my profession is that no two clients are exactly the same, so the job is ever changing and new challenges always await.  That said, I’ve put together what I feel are 20 valuable things I’ve learned or observed over the past 20 years.

Focus on what you can control.  I’ve found that the majority of successful and happy clients put most of their attention on the things that they have some control over.  By hitting benchmarks for saving amounts or spending within pre-defined limits they worry little about things that are out of their control like day-to-day market movements.

Good behavior early on leads to a lifetime of good habits.  Living within your means, avoiding consumer debt, regular savings, etc. are all behaviors that if clients began when they were young, tend to carry over to long-term financial success.  Unfortunately the opposite is often true as bad habits are often hard to break.

Avoid lifestyle creep.  It is exciting to get a new job with higher pay or a raise, however, that doesn’t mean you should start living the high life.  Additional income can often be put to better use such as paying down debt or increased savings.  Keeping your expenses in check will also make a successful retirement easier to attain.

Finding the job you love isn’t always the best option.  While you don’t want to be miserable at work, finding a career that is in demand and pays well can make work rewarding.  While it may sound wonderful just to roll around and play with puppies all day, finding someone to pay you to do it is another story.

Keep learning and advancing.  While working, continue to build your education and experience.  Human capital is something that is often underappreciated.  While it may to take some sacrifice in the beginning, always be looking for ways to advance in your career.

Have a WRITTEN financial plan. I truly believe this is one of the most important financial decisions one can make, and study after study backs me up.  Recent research by Charles Schwab shows that having a written financial plan leads to better financial habits and investing.  “Planners” are more likely to have higher wealth, feel financially stable, and be regular savers.   They also are more likely to have a more diversified portfolio, be aware of their fees and investment costs, and feel “very confident” about reaching financial goals.  Who can argue with that?

Investing prowess is over rated.  While many professional and individual investors think they are the next Warren Buffet or Peter Lynch, they likely are not nor do they need to be.  Individual security selection, valuations, etc. are not really all that important in the long run.  Those who focus on controlling emotions, remaining disciplined, and keeping an eye on costs will likely have better long-term performance than most.

I’m no good at picking stocks and either are you.  We have a natural tendency to remember the winners and forget or down play the losers.  If you think you can beat the market through individual stock selection you should write down every trade you make and why you made it.  After a couple years look back at how you did.  You will likely be surprised. 

Concentration in a single stock is dangerous.  I’ve seen far too often where someone’s financial situation is significantly altered due to their portfolio being heavily weighted in a single stock, and then that stock losing most of its value.  A stock can go to zero, markets do not. 

Diversification is key, not the optimal asset allocation.  Many investors, both professional and individual, spend too much time worrying about the perfect blend and strategy for their portfolio.  Instead, find an approach that is appropriate, and one you can stick with through both good times and bad and you’ll likely be just fine.

Taxes matter.  Taking advantage of opportunities such as backdoor Roth IRAs, tax loss harvesting, and tax-efficient investing can have a huge impact in the long run.  It’s not what you make, but what you keep!

Real estate isn’t all it’s cracked up to be.  After all the taxes, repairs, improvements, bills, and your time that comes along with owning a property are factored in, the return on real estate is usually quite a bit less than originally thought.

Cars, boats, etc. are not an investment.  This is bit of a personal quirk and I hear this way too often.  Even if you got the deal of a lifetime, buying a depreciating asset is not “a good investment”.

Bubbles are easy to identify – in hindsight.  The tech bubble, the real estate bubble, the credit bubble, etc. seem so obvious after the fact.  Unfortunately identifying them beforehand and acting accordingly is next to impossible. 

Turn down the news.  Bold predictions make headlines.  Stories rooted in fear draw in viewers.  Paying too much attention to the talking heads on financial shows just ends up creating unnecessary anxiety and an urge to veer from a long-term strategy.

Turn off your neighbors.  All too often we hear from friends, co-workers, etc. about a great investment they made or a “can’t miss” opportunity.  Human nature makes us want to join the herd and not be the only one missing out.  The truth is nobody ever is excited to share the stories of the poor investments they made (see I’m no good at picking stocks above).

Practice what you preach.  If you’re in the advice business, you bring a lot more creditability if you are doing what you tell others to do.  Having an almost identical portfolio to clients who are in a similar financial situation helps me relate to how they are feeling and I believe helps them feel more confident in my guidance.

Transitioning from working to retirement is not easy.  Moving from a regular paycheck to living off of your investments and social security can be daunting.  It is a big change requiring good financial decisions and can be emotionally difficult if a well-thought-out plan isn’t in place.

Retirement is busy.  The comment I hear most often from newly retired clients is how they can’t believe how they worked and still got everything done.  Hopefully this is a sign that they did a good job planning for retirement and are now able to enjoy all that this time has to offer.

Enjoy the experience.  People are seldom excited for very long about a big purchase they made.  As research has shown, money spent on experiences tends to bring much more satisfaction than money spent on material things.  Time and adventures spent with friends and/or family are often worth well more than the price tag, while material goods are not.

I’ve learned a lot from the experiences and people I have encountered over the past 20 years.  However, I am sure that I haven’t touched on them all so if you feel I’ve missed an important one, please let me know.  I’m looking forward to what the next 20 years will teach me as well!