Off the Wall Street: Financial Planning for My Fellow Millennials

Page 1 of 2

Welcome back to Off the Wall Street, where we bounce more than a few outlandish ideas off the traditional bricks and mortar of finance as we know it.  

Did you know we’re in the midst of Financial Planning Week? It didn’t register high on my radar either. Was this national campaign lost in the buzz around government shutdown? Or maybe some accountants and financial advisors were simply too subtle in their attempt to drum up business.

Regardless, the concept of financial planning always brings a smirk to my face. Understanding my personal finances, monitoring bank accounts and thinking about retirement was a semi-regular, albeit not overbearing, theme in my household growing up. The funny thing is, as boring as those discussions with my parents were, the messages took hold.

Every January I create an annual budget for myself. No joke – I copy the spreadsheet from the previous year and take a stab at estimating my income and expenses for the next twelve months. I’m sure my predictions are entirely inaccurate, especially when it comes to my ‘miscellaneous spending‘ column, but that’s not the point.

At least I start the year off thinking about my finances, and I have a general idea of what I can and can’t afford. Which for 20-somethings like me, can be a frustrating concept to wrap our heads around.

Financial planning can be a daunting task at any age, even if you do have a head for number crunching. For a lot of young people, even something as simple as a savings account can seem like a scary harbinger of adulthood. And they don’t need to be reminded that when you trade securities you’re all of a sudden competing with hedge fund managers and day traders.

Complex trading mechanisms (created by us, remember), have spawned what I can only describe as investing robots. Quartz explains it better: “In a new paper called Abrupt rise of new machine ecology beyond human response time, researchers found a new trading ecosystem that humans don’t even notice.

That’s right. Artificially intelligent, algorithmically advanced nanobots living in an unseen financial ‘ecosystem’ are moving at warp speed, buying and selling faster than you.

I’ll let you process this for a microsecond.

Now back to reality, at least at eye level. While you’re busy making financial plans, there is a wide swathe of companies just waiting to get their hands on your wallet. In your wallet. Excuse me, I mean help you expand your wallet. Explore your wallet? Something like that.

Banks like JPMorgan Chase & Co. (NYSE:JPM)Bank of America Corp (NYSE:BAC)Wells Fargo & Co (NYSE:WFC) and so on offer such a variety of accounts, cards, loans, and more, often with fees attached, so much so that you may be tempted to just hide money in your mattress. Or maybe you’re a bit more creative.

And that’s just how we handle our income. While we may not always have the energy to scrutinze our personal expenses (necessary or otherwise), it doesn’t always have to be about austerity and self-control.

Sometimes you’ll find you’re coming out ahead, at which point your favorite retailers from across the shopping spectrum – like Williams-Sonoma, Inc. (NYSE:WSM)Macy’s, Inc. (NYSE:M) and Urban Outfitters, Inc. (NASDAQ:URBN) – can become investment prospects as opposed to temptations.

– Think about restaurant and retail stocks, like Chipotle Mexican Grill, Inc. (NYSE:CMG) and eBay Inc (NASDAQ:EBAY).
– Or maybe an exchange traded fund like the SPDR S&P Retail (ETF) (NYSEARCA:XRT).
– Their quarterly earnings can ultimately be traced back to your latest credit card statement.

Or how about those big banks? The financial services industry is up over 20% in the year to date, and as an investor, your portfolio could potentially enjoy a similar bump.

All of a sudden, the profits these companies reap from your purchases, your interest rates – along with everyone else’s – goes towards (hopefully) boosting their stock. They make money, you make money. Nice.

Or you could take investing inspiration from my grandfather. It’s simple. Gold. Lot’s of gold. I’m fairly certain he has stockpiles of the stuff buried all over the family farm. No idea where exactly, and by now he’s probably forgotten too. But I like to think it’s out there.

Eventually I’ll buy metal detectors for future nieces and nephews, send them scavenging over one rolling hill after another, then wave goodbye to budget spreadsheets from aboard my yacht.

Now that strategy won’t actually pan out well for basically everyone, including me. But if you’re interested in making money off the companies that make money off you, take a look at stocks like those in the list below.

Click on the interactive chart below to see data over time. Sourced from Zacks Investment Research.

1. JPMorgan Chase & Co. (JPMEarningsAnalystsFinancials): Provides various financial services worldwide. Market cap at $196.46B, most recent closing price at $51.94.
2. Bank of America Corp (BACEarningsAnalystsFinancials): Provides banking and financial services to individuals, small- and middle-market businesses, corporations, and governments primarily in the United States and internationally. Market cap at $150.86B, most recent closing price at $14.0.


Page 1 of 2