Baby Boomers love giving advice. Maybe it’s a feature of their age, or the perceived missteps they see younger folks making. “Boomer” has also come to mean anyone “old” which probably means 50+, which sadly now includes some Gen Xers. RIP.
This blog is not aimed at Baby Boomers. If you’re here, you’re more than welcome, genuinely. But I will use your generation as a strawman and a scapegoat sometimes, just like how it happened to millennials.
So let’s break down some baby boomer financial advice and see how good it is today.
“Time in the market beats timing the market.” AKA when you don’t try to time the market exactly, but just get in the door. Look up studies about timing vs just consistently putting in a little money over time and it consistently shows the consistent investor performs better.
They usually do this through dollar-cost averaging. This just means decide how much money you can put in each month and stick to it. When the market is down, $100 will buy more shares. When the market is up, $100 will buy fewer. The simplicity of this approach is that you resist the temptation to get excited and buy fast-rising stocks to then get crushed, and you also don’t get too scared to buy when everything is crashing around you. Over time, this pays off.
After the 2008 drop, it took the market 4 years to crawl back up to previous levels. If someone hadn’t been trying to time before and after 2008, they would have made so much money in the recovery. It’s not sexy because it’s slow and methodical.
Shoutout to Casually Explained for these two. I 100% stole them.
Bad Boomer Advice
Index funds. Boomers do the time in the market and dollar-cost averaging with index funds, but as this blog is not about living for retirement, I think index funds are weak sauce. However, if you were to do this with bitcoin, I would be all for it, since I believe it is simultaneously an aggressive choice due to its short-term volatility, and the safest investment vehicle there is due to its long-term scarcity.
Work hard, live below your means, and you’ll do fine. Yes—live below your means always. I’m sure plenty of people do that. But the attitude is most definitely that of an employee. I most definitely do not want to “do fine.” I want to live aggressively, even if it means I lose a lot at times.
As Rudyard Kipling said in his poem If:
…If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breathe a word about your loss…
…you’ll be a Man, my son!
Getting ahead ≠ safety. They will never, ever be synonymous. This blog is about getting ahead, not playing it safe, so I disregard this advice.
The Ugly, Ugly Boomer Advice
A firm handshake will get you in the door!
If you’re applying for top-tier jobs, like on Wall Street or Silicon Valley, you’ll probably be subjected to rigorous tests requiring weeks of preparation.
If you’re applying to your dad’s friend’s company, yeah a handshake will probably do it.
The reality of getting a job is that networking and brand will get you in the door. Networking itself is part of personal branding because who you associate with is likely who you are. There’s a reason you don’t see Tiffany stores next to Taco Bells.
You can get jobs and interviews even if you’re not the target market, but you have to work twice as hard to make yourself stand out. Maybe you have a strong accent that makes people think you won’t do as good of a job. Okay—while the other candidates are bringing in their best interview answers, you are going to bring in an entire project proposal for the company, one that they didn’t ask for. You are going to stand out as a serious and proactive player.
Not totally dump on the boomers—that’s what they meant by the “handshake” advice. It meant being proactive and serious about what you want. What a lot of boomer advice misses is how hard it is to get started for Gen Zs these days. When my dad was at college, all he had to do to get interviewed by a Fortune 50 company was put his name on a sheet in the guidance office and they scheduled a time with him (and he did not go to a prestigious school by any means). It was a different time.
Alright, last one.
Buy a house as soon as you can. Paying a mortgage is better than rent.
If you’re a young person and you can afford to buy a house, that’s great. It’s not a bad asset whatsoever. However, unless you have reason to believe you’re going to be in that house for at least 10 years, it’s very likely not worth it.
Yes, often mortgage is cheaper than rent. But then you need to also consider costs for insurance, property taxes, lawn care, house repairs—especially if you can’t do them yourself. Not to mention, you now have a ton of cash sunk into a very illiquid asset. If the market turns down right after you buy, you are “stuck” in that house for years. That’s why you should plan to be in it for 10 years so you can be sure the value will rise again.
This doesn’t mean don’t buy a house. Real estate is still the biggest source of wealth for most Americans. It means thinking for yourself before you buy, and think about your life objectives. Don’t do it because that’s the American script and you want people to respect you for owning property.
Boomers aren’t bad.
They have lots of good advice—but it needs to be updated. Handshakes, index funds, and houses aren’t bad. But don’t take any advice at face value. At the end of the day, the only person who can decide what the best advice is will be you, because you are the only one who will bear the consequences.
None of this is financial advice. Think for yourself.