Money Tips for Millennials From An Old Pro
Investment advisor John D. Spooner dishes out some practical advice
Boston native John D. Spooner, whom Barron’s included in its list of “100 Best Investment Advisors in America,” and whom The Boston Globe has called “a national treasure,” is both an investment advisor and a published novelist. He has a fondness for bow ties and suspenders, and his office decor includes everything from a Daruma doll to a telescope.
If you’re wondering what Daruma dolls are, they’re Japanese figurines that are traditionally sold with blank eyes. The owner fills in one eye after setting a major goal, then fills in the second eye after completing it. Notably, both eyes of Spooner’s doll have been filled in.
The telescope sits on a tripod at the window, as if Spooner is on the lookout for signs of changes in the market.
Related: What To Teach Your Kids About Money
His latest book, “No One Ever Told Us That: Money and Life Lessons for Young Adults,” is full of advice for “all of you new grown-ups, out in the world for long enough to have experienced some early bumps in the road, and long enough to know how challenging this new century is for you in all areas of your still-young lives.”
SafeBee interviewed Spooner for his best advice on issues ranging from how to choose a financial advisor to whether or not to own a credit card.
Q: In your book, you say you once heard a manager at Lehman Brothers say to his employees, “Boys, just remember, a customer is like a garbage bag... Fill ’em up. And toss’em out.” Should young people invest or avoid the market altogether? How can they know whom to trust?
A: This takes trial and error. But you can be helped by asking these three questions, which potential new clients young and old, never ask me, but they are key:
1. What is your philosophy of investing? (If they cannot answer this in plain English, keep looking.)
2. What have been your biggest triumphs in investing? And what did you learn from it? And what have been your biggest mistakes?
3. What do you invest in yourself? (I want advice from people who eat their own cooking.)
There are wonderful, smart, caring advisors in this country. People who can answer these questions should be among those. And never buy into promises of great returns. Those people should be avoided at all costs.
Q: What’s the worst financial advice you hear young people getting these days?
A: I think the worst financial advice has come from the last five years during and since the financial meltdown — the news coverage that has seemed to “turn off” the millennials from investing in markets, the fears that “the system is rigged against us” or “you can never win in the stock market."
Long-term investing in our stock markets [is] probably the best way for the average young person to build wealth for the future. Not short-term speculation, but long-term Buffett-like accumulating of shares in solid companies with fine prospects for the next twenty years, not the next two months.
Sooner or later, the younger people are going to want “real relationships, real personal advice with common sense,” not robo or virtual advice. All life is relationships; that’s the most important single thing that all young people should understand.
Q: Your father worked on Wall Street and lost everything when the market crashed at the start of the Great Depression. He later told you that “debt is a killer.” Is there any good reason to have a credit card?
A: Absolutely have a credit card; it’s a very useful product if used correctly. But never get into the habit of “instant gratification” — something that the younger generation will find difficult to do. Force yourself to sometimes defer the urge to “have it now.” It’s so much sweeter when you can actually afford the toys or the Manolos.
Q: You recommend never letting emotions get involved when making an investment decision. Does that rule also apply to other financial decisions — for instance, should emotions be involved when deciding whether to buy a house or start a business?
A: Well, yes, use your emotions in money decisions. But in stock markets, be counterintuitive with the emotional side of things. Buy when markets are fearful; sell when greed abounds.
[For] house buying and starting a business…set emotions aside. Think with your brain.
Q. Did you have any memorable financial mishaps in your youth? Or have you always been financially savvy?
A: No real missteps early in my career. But the lesson came from the big missteps of others. My first firm, in which I had an investment, went totally bust when I was 32 and all my money was gone. I learned then that I should always be a little wary of management… [and] not just assume that they would lead us down the primrose path to glory and riches. That early experience made me be skeptical in a business sense, and [has] forced me since then not to blindly accept the moves of leaders, be they in business or politics. Nothing teaches lessons better than personal bumps in the road.
Q: In your previous book, you warned young people against joining a family business. “My advice is to go make your own path in life, avoid the baggage, the politics, the infighting of family affairs.” How do you leave a family business behind without insulting or offending your family?
A: All families are dysfunctional in their own ways, and every family is a soap opera. In my experience, family businesses are much more nightmares than they are sweet dreams and have to be treated with caution. There are no easy answers to this question. But there are times where you have to risk family displeasure by opting out of joining the business.
The positive side of doing it is that it will toughen you up for all the other difficult things you’ll face in life. If you can survive being in a family business, there is probably nothing else that will build your character and prepare you for anything you’ll face.