June, 2014
By Michael Kalscheur, CFP®
Senior Financial Consultant, Castle Wealth Advisors, LLC

Last Saturday I attended the graduation ceremony for my two oldest children and 91 others who have completed their high school education. As you would expect, there was the pomp and circumstance, the caps & gowns, the tearful exchange of hugs and the celebratory shouts.

Also was the commencement speaker. If you have attended many graduation ceremonies, you have probably heard some very good commencement speakers, some not-so-good speakers and some that you can’t remember anything that they said.

That made me think – if I was given the opportunity, what would I pass along to a group of graduates, heading out into the big new world of college, military service or employment? Would it be inspirational & uplifting? Of course, but if you know me, it would have a heavy dose of practicality as well.

So, for the graduating class of 2014, here are 14 things to do/think about/live by:

  • Be confident in your beliefs, but be open and willing to learn. Never stop learning.
  • 80% of the battle is won just by showing up. Go to class, get to work on time and focus at the job at hand.
  • Hard work is necessary, but perseverance is the key to success. “You, me, or nobody is gonna hit as hard as life. But it ain’t about how hard you hit. It’s about how hard you can get hit and keep moving forward. How much you can take and keep moving forward. That’s how winning is done!” – Sylvester Stallone as Rocky Balboa

    Sidebar - Do 2014 graduates know who Rocky Balboa is? Rocky came out in 1976; high school grads were born in 1996; college grads in 1992.

  • Past success doesn’t always equal future success, but it sure helps. A Harvard study showed that successful entrepreneurs had a 34% chance of being successful with their next firm, vs. 22% of first timers.
  • Past failure doesn’t always equal future failure. The same study showed that of entrepreneurs who failed at their last venture, 23% succeeded on their next venture. Some people just need a second chance.
  • Learn from your mistakes. Better yet, learn from other people’s mistakes.
  • Chase your dream, but give yourself the best chance of success. I recently flew home from a conference and sat next to a 40 year old black belt in Jiu-Jitsu, who is a talent scout for the UFC. He always wanted to start his own dojo and teach children self-defense. I told him to do it while he is still young (insert laugh from 18 - 22 year olds here), but to create a business plan to make sure he had things such as insurance, financing, rent and marketing ready before opening his doors.
  • It’s not how much you make, it’s how much you save. Don’t get a new job and then go out and spend your entire annual income on a new car, house, bike, boat and/or clothing. Remember, it takes a whole year to earn that paycheck and it only takes a short amount of time to spend it all (and then some).
  • Shop around for the best price. This is especially useful for services such as home remodeling, landscaping and tree trimming, and is 1,000 times easier in the age of the internet. If you can spend 2 hours on research and save $300 on a big job, you just “earned” $150 per hour (tax free!).
  • Invest with better returns than Warren Buffett. Your first “real” job will probably offer a 401k plan with matching contributions: you put in 1 – 3% of your pay, the company will match it, dollar for dollar. That means you are guaranteed a 100% return on your investment just by participating (see #2).
  • Invest based on your time horizon, not fear/feelings. The following chart shows what you would have if you needed money in 12 months, but invested $10,000 in the worst possible year. Then, if your parents would have invested the same amount when you were born, and held on for 20 years. Here is how much you would have today:

      After 1 Year After 20 years
    Bank Account $ 10,001 (2013) $ 15,600
    Bonds $ 9,798 (2013) $ 27,790
    Stocks $ 6,300 (2008) $ 38,470
    Apple stock $ 4,309 (2008) $ 888,900

    What is the lesson? If you have a long time horizon, stocks should be the majority of your investment portfolio. If you have a short time horizon (i.e. you need to pay tuition next semester, or rent next month), bonds or just a simple bank account is the way to go.

  • Get financial advice from people who are smart, wealthy and have your best interest at heart. A good place to start would be your parents! Be wary of advice from strangers (i.e. the internet), those just starting out (your college roommate) and those who work on commission (used car dealers, life insurance salesmen and investment brokers). Seek out a fee-only, independent advisor who has fiduciary responsibility to you.
  • Cut your taxes to boost your income, now and in the future. Many graduates can find themselves paying upwards of 25% - 30% on their last dollar of earnings. Taking advantage of 401k plans at work (see #10) cuts taxes now, while a ROTH IRA can cut your taxes in the future. Ideally you can take advantage of both.
  • Love life. The best advice I’ve ever heard was in the refrain of a great song:

    So love your neighbor as yourself,
    Don’t use money to measure wealth,
    Trust in God, but lock your door,
    Buy low, sell high, and slow dance more. - “Slow Dance” by Kenny Rogers

Michael Kalscheur, CFP®, is a Senior Financial Consultant at Castle Wealth Advisors, LLC. Castle specializes in helping families and closely-held business owners with strategies to protect and transition family assets from one generation to the next. Castle’s senior partners also work with clients throughout the country in making logical decisions to help them fulfill their personal and business financial goals. For more information visit www.Castle3.com, call 1-888-849-9559 or contact Michael directly at .