Invest in Yourself and in Your Future


Patrick Cozza, MBA’82 (Flor), a lecturer and executive-in-residence of wealth management in the Silberman College of Business, wants everyone’s future to be financially sound. Here’s how to invest wisely and think long-term.


Business woman watering money tree. Female employee investing and saving cash. Money deposit. Girl save or hoard currency. Concept of investment, finance management and banking. Vector illustration

Pay yourself first — save, save, save. The best way to build wealth is not to spend wealth. Once you start working full-time, try to put 10 percent of your net pay into savings, if possible. Over time move to 20 percent. With the power of compounding, you’d be surprised how quickly you can build wealth. Try to keep six months of take-home pay in savings.

Invest in your company’s 401k. Only 50 percent of employees put money into their company’s 401k plan, their main retirement savings vehicle, even though most companies will match a percentage of what you deposit. You can decide if it also makes sense to select a traditional 401k or a Roth 401k. Saving for retirement should always be your first priority, even before saving for a home. At some point, hopefully, you will be living solely off your retirement savings. And, if you lose your job, you can borrow against your 401k for emergencies.

Be careful with accumulating debt. Use it wisely to build credit. It’s fine to take out a credit card or two to help build good credit, which is important when you are looking for a mortgage, a car or to rent, but only if you feel comfortable paying off the full amount every month, and you are a disciplined spender. If you have a student loan, pay it off as soon as possible. But pay the higher-interest rate loans first!

Maintain a monthly budget when building funds to invest. It’s admittedly difficult for someone living on a limited income to invest. To get started investing on a limited basis, take a close look at your spending. Maintain a monthly budget. If you can get to the point where you have some excess money to invest, and you don’t need to pay off high-interest debt, the first step is to invest in your company’s 401k, at least to the point of company matching.

Understand individual risk tolerance. If the stock market were to lose significant value, could you tolerate that financially as well as psychologically? A good financial adviser should always ask you how much risk you can handle. Once you determine your risk tolerance, then you are in a better position to invest.

Be an educated investor. There is a tremendous amount of public information available today — so become educated on any investments you’re interested in.

Diversify, diversify, diversify. If you want to invest 100 percent in equities, select a diversified group, e.g., large, medium and small cap stocks, international stocks, exchange traded funds, etc. Avoid any concentration of an individual asset that comprises more than 20 percent of your total invested assets.

Avoid speculation in risky assets. That is, unless you can tolerate volatility and fully understand the asset. Cryptocurrency is a great example. Most people don’t understand the dynamics. This is speculative investing, and while you can make money, you can lose even more. Your goal should always be steady wealth management.