10 Things I Now Know at 40 That I Wish I Knew at 20

Things I Wish I Knew at 20The best thing about being 40 is surviving your 20s and 30s. And at 40, I’m considered an old-timer in the personal finance blogging community. Reflecting back on the past twenty years, I realized that I’ve learned a thing or two that I wish (oh, how I wish) I knew when I was 20. Here they are, in no particular order:

  1. School loans are like a bad date, easy to get, but hard to get rid of: At 40, I still have more than $20,000 in school loans. Education is important, but I spent far more money during school than I needed to spend.
  2. Compounding, like the 1970s Big Red Machine, is pure magic: Assuming you retire at 65 and earn a 10% return on your investments, $1 invested when you’re twenty will be worth 2.5 times more than $1 invested when you’re thirty, 6.5 times more than $1 invested when you’re forty, and 18 times more than $1 invested when you’re fifty.
  3. New cars, once bought, aren’t: I wish I could have back all the money we’ve spent on cars, particularly new cars. The cost just isn’t worth the financial freedom you have to sacrifice.
  4. Great fortunes are made from small investments: It’s amazing to me how small monthly investments, given enough time, can grow into substantial wealth.
  5. Investing, like children, shouldn’t wait until you can afford it: If you can read this blog, than it’s not too early to start investing. This makes me wish I had started investing in high school. Fifty dollars invested per month in high school earning 10% would be worth about $212,000 at retirement.
  6. Financial shortcuts increase the time it takes to reach your goals: Ignore all the silly personal finance books that promise great wealth in a short time with no risk. Investing isn’t hard, but these promises are designed to sell books, not create lasting wealth.
  7. My wife is more frugal than I: If I had recognized this 20 years ago, I would have listened to her and not frittered away so much money on stupid stuff. Sorry, Mrs. Dough.
  8. Unlike everything else in life, with investing, you don’t get what you pay for: My first few mutual funds were load funds with high expense ratios. I was so keen on picking the best performing funds that I completely lost sight of one of the most important factors when picking a fund–cost.
  9. Consumer debt is like swimming with an anchor: We’ve now shunned consumer debt, but it took us far too long to learn this lesson.
  10. Too much stuff robs you of happiness and wealth: I look around our house at all the stuff we’ve accumulated in 20 years and all I see is lost investing opportunities and clutter.

I wonder what I’ll know at 60 that I’ll wish I knew at 40?

Topics: Personal Finance

17 Responses to “10 Things I Now Know at 40 That I Wish I Knew at 20”

  1. Things I know at 60 (+) that I Wish I’d Known at Forty

    1) My kids don’t know what I know about finances and weren’t learning it in school.
    2) Kids should work while in school – it helps them learn about the real world.
    3) Kids need to have a big ‘want’ in their lives – it helps drive them towards their goals.
    4) How to talk to my parents about their finances and capture their wisdom and stories for my grandchildren.
    5) No matter what contributions you make to work, society or community, other people care more about their own contributions than yours. So pick your own legacy and work towards it.
    6) Everything changes – taxes, investment choices, advisor theory and advice. Rely on your own judgment.
    7) I wasn’t old at 40 – there was plenty of time to build my life and my fortune.
    8) Money is a tool, not a status symbol.
    9) College is not a basic necessity – consider the cost vs. the benefit in what you want to do.
    10) Families can build wealth together – generations can help each other.

  2. thank you,

    its articles like this that reassure me that I am not “wasting my youth” in tackling the investing hurdle at such a young age.

    I started investing at about 20 years old, having a small nest egg that was only in forms of regular savings vehicles. (MMA’s etc). I started my own account and granted i have made some mistakes, but the endeavor is incredibly more enlightening than any other hobby i have had to date.

    I recently turned 23, i live a simplistic lifestyle, and currently finance/investing/economics are my primary interests (even so much as to say that these studies encompass my “entertainment costs”, as investing IS my entertainment.)

    Even at my currently young age, and with the mistakes i have made. I have already accumulated a fair enough nest worth (not even considering debt, or the lack of it) that rivals many of my considerably older peers.

    Its just nice to read and be reaffirmed that what I am doing is (most likely) going to be a good decision.


  3. At 60 you’ll begin to admit to yourself that you are going to die and it may be any day……..and any amount of money can’t stop it from happening.

    That’s something you should consider now at the age of 40. It will make all your worries about money and material wealth disappear real quick.

  4. Great article! Something that is really close to my heart.

    I wrote a book titled…”We wish we knew this 20 years ago” for my children.

    Gave it away to my nephews etc…. and some of my staff.

    Keep your good work going!

  5. Minimum Wage

    I started saving when I was ten, and had $4,000 (about $20,000 in today’s dollars) by the time I graduated high school. Then I blew it all on college and ended up with student loan debt.

  6. It’s so true about the idea of compounding; it is probably the most powerful tool for an investor. It is never against you, but never doubt that the earlier you invest, the better off you’ll ever be.

  7. Jennifer

    I’m right there with you! I’m 39 and made all the same mistakes. I’m forwarding your post to my two sisters who are in their 20’s in hopes they won’t make the same mistakes we did! Thanks!

  8. Truly enlightening post. I got my start early in the 20s, so I am one of the lucky few. These are all good advice, and for those new to investment…be wary of mutual funds with high expense ratio. Investing in them is like trying to fill a strainer.

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