Tips From Ex-Wall Street Trader

  • Most people see these crises as moments of fear rather than opportunities to invest.
  • Bonds or real estate are investments that can diversify your portfolio, says Vivian Tu.
  • You can also increase your monthly contributions to your 401(k), he added.

“The best of times, the worst of times, the age of wisdom, the age of folly,” says the famous opening line from Charles Dickens’ “A Tale of Two Cities.” .

The quote opens the book with a theme of the story, which shows the different experiences between the rich and the poor, and is embedded in the story of a class war. On one side, there is sadness and on the other side, there is joy and hope. It takes place against the backdrop of the French Revolution between the two cities of Paris and London.

“It’s a popular language that compares the two between two people or places or things that are going through something like that,” said Vivian Tu, CEO and founder of Your Rich BFF, a Financial education companies provide a newsletter and share advice on social media. status . He has amassed 2.1 million followers on TikTok, where he makes short videos about finance.

He uses the metaphor to describe the current economic environment. On the one hand, inflation is increasing everything but the fear of a recession is being suppressed. If you’re living paycheck-to-paycheck or dependent on a paycheck, these can seem like scary times.

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On the other hand, many tend to view the recession as an opportunity to build wealth. Some may invest in the private market or buy ventures, while others invest in real estate. For example, if someone had a little cash saved during the 2008 financial crisis, didn’t fear the real estate market, and bought real estate, they’ve seen that spending continues to improve in the over time, he said.

He started his career in 2015 as an intern at JPMorgan before becoming an equity trader. But he eventually parlayed his Wall Street career into helping others understand personal finance and investing.

One of the messages he’s spreading now is that falling is just part of the cycle of failure and it’s normal. In your adult life, especially in your working years, you may experience anywhere between three to five disabilities, he said. Normally, it happens every five years or more.

Many people see these declines as moments of fear, rather than opportunities to invest in equities when stock prices fall. And although no one can predict where the bottom will be, you can continue to invest on the way down and even on the way up. , he said. Over time, your average investment will decrease significantly.

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A few simple pivots

If you are more vulnerable, or close to retirement, a better option is to invest in Series I bonds, a type of American savings account that can protect you. from the weather, he said.

Another option is real estate sales. Real estate doesn’t measure up directly to the general stock market, so it may be a good way to diversify into an asset that can be passed on to you. the continued flow of cash, he added.

Tu does not recommend trying to be a stock picker or betting on ETFs or mutual funds that are heavily weighted in one sector. Every recession is different and we don’t know how this will happen or what companies will survive the chaos. Therefore, it is better to be classified, he said.

Once you have a complete emergency fund to set aside, it’s time to move to invest in social media marketing, both for the US and the world alike, he said.

“[If] you still have some extra money that you spent on debt or buying products that you may not need, now is a great time to replace that budget with something that will truly be a gift that keeps on giving and paying are you. in the future,” said Tu.

He continues to invest in the Vanguard 500 Index Fund ETF (VOO), which tracks the S&P 500. This gives him exposure to major U.S. companies without the need to pick and choose stocks. . He is using this time to increase his solo 401(k), a common plan for a business with no employees.

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He is also contributing to a Roth IRA later, which is a strategy that exceeds the income limit for a Roth IRA to contribute to a traditional IRA and then roll over the contributions to a Roth IRA account.

“Currently, we are in a time where businessmen have a lot of freedom because they don’t have to buy all the shares,” said Tu. “They can buy a small share. No matter how much money you have, you will be able to use it in public funds.”

However, if you don’t have a lot of extra cash to spare, what you contribute may not make the difference you’re looking for, he says. For that reason, this is a great time to think of a side or extra job for that extra income. These things will give you cash that can compound your investments into a more meaningful amount later down the line, he said.

And, if you have a 401(k), there is no better time than now to increase your monthly contribution, at least to match your company, he added.


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