This week, I talked to Joseph Disciullo, who is an investment advisor at Vanguard Group, Inc. I decided to do this interview so that I could get a professional perspective on finance specifically for young people.
How did you get into finance?
I have a technical background, [an] engineering background. I was working at a climbing gym and a guy kinda saw something in me. He’s like “ you know, you have this ability to relate to people, you’re really good at that. You’re an engineer, you have technical knowledge. I think you’d be really good at this thing. He was in investing and he gave me…junior role on a senior team. That opened the door and I eventually got all my licenses and that stuff. I found that that guy was exactly right. What finance is for me, is a balance between something really technical and really relational.
Can you tell me more about what Vanguard does?
A guy named John C. Bogle started the company in the mid 70’s. Rather than build something that would make him wealthy, he wanted to create something that would make a whole bunch of people have a better shot at investment success. He was the pioneer in index funds. If you don’t know what index funds are, instead of picking individual stocks to try to beat the market, you can buy the whole market. What Vanguard does, and does really well, is keep the cost low and tax efficient for people looking to invest their money. We also do some management in a long-term way.
What is a major misconception people often have about finance?
One of the things that confuses people is that a lot of the information out there is about getting rich quick. It’s in a lot of companies’ best interest to make things seem really complex so that people feel unable to invest themselves. The single biggest factor in investing is time. The sooner you start, the better. There’s a hundred reasons why people don’t start but if you are young, and want to make a million dollars, the best thing to do is just start.
What’s one financial mistake young people commonly make?
Getting into trouble with debt. There can be good debt and bad debt, but when you get into college, someone will likely hand you a credit card. You’re not gonna understand what that is or how that works, and it’s pretty easy to get yourself behind. It’s so easy to start spending money you don’t have and so expensive to do. It’s a hole that is really difficult to get out of.
Assuming they don’t have to contribute to household expenses, what percentage of their come should teenagers be saving?
You can guarantee yourself to have a really big account if you start banking everything you can. The way I look at this, there are three big components. To make money you have to trade your personal time. Wealth is this point at which you don’t have to trade your time to make more money; your wealth will create money for you. That really requires sacrifice. There’s this balance of, what do I spend now to live my life and what do I save? I would set a minimum threshold, like there’s no reason someone that is young and has a little help cant save 10% of everything. I would aim for 25% or 50% if that person really has all the things they need. If there’s something you want, ask yourself if in 5 years you’ll still care about it or if you’d rather see that money double over those 5 years. The sooner you start getting that mentality, the better.
From your perspective, is taking out loans for undergraduate education a good investment?
You need to think long and hard about how long it takes to pay that back. There’s a little bit of a question about what type of person you are. There’s a lot of value in going to work for an established institution and then when you’re off the clock, you do your thing and that forms your lifestyle. There are other people, and this whole new economy, where you can do your own thing and create your own world. These people will work a million hours a week but still be glad they’re not working for someone else. I'd start with asking yourself which type of person you are. There’s a saying that’s like, “an entrepreneur will work 100 hours a week for themselves to avoid working a 40 hour week for someone else.” If you’re wired that way, I think you’d be better off not taking that education. Take out a loan and start a business. If you want a good work-life balance and a family without constantly worrying about business, then a formal education could be worth it.
What are the top three things you would advise a young person to do to plan for their financial future
One, start saving early. The sooner the better. Create savings discipline because there are people making 300k a year and are still living paycheck to paycheck. Start a savings habit now and build that into your structure. Even if it’s a really small amount that you’re putting into savings, if you create the habit it will get you there.
Two, have a set percentage of every single dollar you make that goes straight into investing.
Three, have a little interest in finance in general. Read things that are approachable and directed towards you doing it yourself. So many people start with thinking they need to hire someone else. I would say do whatever you have to do to self educate so you can take really intentional steps on your own.
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I was able to learn a lot during this interview. Joseph gave me a few tips each on spending, saving, and investing. He emphasized that starting early is so important in finance and that a little can go a long way in the long term. This is common advice, but it’s especially important for us teenagers. Starting now can put us one step ahead, and is something most adults wish they had done.
He also gave some great insight into deciding whether or not going to college and facing years of student debt is worth it, depending on the type of person you are. As teenagers, we’re all still trying to figure ourselves out, so these are tough decisions to make. Asking yourself what you might value in a future profession, whether it means working for yourself or someone else, can help.