Earlier this year our older son was accepted into a 7-month internship with a scuba diving company in Key Largo, FL. Upon completion of the program, graduates will have obtained multiple diving accreditations/licenses which will subsequently provide them an opportunity to teach anywhere in the world - I asked if they were accepting applications from 54-year-olds! In addition, graduates will have secured navigational licenses so they may also drive larger vessels in the waters. The learning program runs 6 days a week starting at 6:00 AM and many days into the late evenings. They receive minimal compensation yet obtain numerous skills which are immediately transferable into the workforce upon completion. He and our family reviewed the benefits and costs of the program, and his only real hesitation before accepting the position was that he wasn't entirely sure if this was the career path he wanted to pursue professionally as an adult. I reminded him that his father studied engineering in college, started his professional career with an IT consulting firm, and now is a business owner who leads a wealth advisory firm. I told him it was more important to start somewhere and gain experiential skills rather than trying to figure out what you think you may want to do in your professional life. My comments must have resonated with him because in mid-April he and I flew down to Florida so I could drop him off to meet his fellow interns and employer as he was starting his internship.
Investors may also feel hesitant as the recent economic data continues to reflect a slow-growth, higher-inflationary environment. In late April, the Commerce Department announced a first quarter GDP of 1.6% (the "go to" measure of economic growth - economists were forecasting 2.4%) along with a personal consumption expenditures index of 3.7% (this is after excluding volatile food and energy prices) [1]. So, while inflation is stubbornly sticking around longer than many had forecasted, fortunately we have a time-tested solution to combat this erosion of one's purchasing power. Analogous to a scuba diver needing an oxygen tank to dive below the surface, an investor needs the equity markets to outpace inflation. Since 1945 if you kept $1,000 in cash, your purchasing power would be reduced by over 90%. Compare that to $1,000 invested in the US stock market in 1945 with dividends reinvested: it would be worth about $3.5 million today, which is a number that has beaten inflation as measured by the Consumer Price Index by almost 26,000% [2].
Speaking of getting started, I recently reviewed some investment data, which inherently I already knew, articulating the benefits of investing over the long term. Based on its annualized total return of 9.62% since 1928, a single $10,000 investment in the S&P 500 at age 20 would leave you with over $600,000 at age 65. If you do not start until you turn 40, you'd have just $99,500 at age 65 [3]. While acknowledging there are no guarantees in life, these historical returns are super compelling, and a stark reminder for all of us that starting to invest earlier in one's life is where the "financial magic" happens.
Upon leaving the Keys that mid-April weekend to head back to Atlanta, I thought about my first job after graduating high school. It took me back to those initial feelings of both excitement and nervousness as I was beginning my professional life journey. Fast forward 34 years later and it dawned upon me how many invaluable experiences I have accumulated throughout my professional career. This mini life reflection reminded me of perhaps the best quote from the movie "Ferris Bueller's Day Off" which I will use to close out this version of Craig's Corner: “Life moves pretty fast. If you don't stop and look around once in a while you could miss it”.
[2] Reasons to Invest 2024, Bespoke Investment Group
[3] Ibid