A 25-year banking pro says to be skeptical of social media tips and start investing ‘any amount’ you can
Racquel Oden, the US head of wealth and private banking at HSBC, brings over two decades of global banking experience to the table, offering valuable insights into personal finance and investment strategies. In a recent discussion, she emphasizes the importance of starting to save and invest as early as possible, especially for younger generations like Gen Z. Oden highlights that many young people may feel overwhelmed by the idea of investing, believing they need substantial funds to begin. However, she reassures them that even small amounts can be effectively utilized in money markets, which typically offer better returns than standard savings accounts. Oden stresses the necessity of establishing a solid financial foundation, including saving for retirement through a 401(k) and maintaining an emergency fund that covers six months of living expenses.
Oden also advocates for creating a comprehensive financial plan with the assistance of a financial advisor, which can often be obtained at no initial cost from banks. This plan should encompass various financial goals, or “buckets,” such as saving for a home or planning a wedding, each with specific time horizons. By organizing finances in this way, individuals can alleviate some of the anxiety associated with investing. Additionally, Oden advises prioritizing investments and savings over aggressively paying off student loans, as having cash on hand and making it work for you is a more strategic approach. While maintaining minimum payments on student loans is essential, she encourages individuals to focus on building their savings and investing in higher-yield options like Certificates of Deposit (CDs) rather than letting their money languish in low-interest checking accounts.
In summary, Racquel Oden’s financial wisdom underscores the significance of early financial planning and investment. By prioritizing retirement savings, maintaining a robust emergency fund, and seeking professional guidance, individuals can set themselves on a path toward achieving their financial goals. Her insights serve as a reminder that with the right strategies, even those just starting their financial journey can lay the groundwork for a secure and prosperous future.
Racquel Oden is the US head of wealth and private banking at HSBC.
Photo courtesy of Racquel Oden
Racquel Oden has worked in global banking for over two decades.
Some of the advice she gives family and friends is to focus on retirement as soon as possible.
She also says to prioritize investments over student loan debt and CDs over regular savings accounts.
This as-told-to essay is based on a conversation with
Racquel Oden
, US head of wealth and private banking at
HSBC
. It has been edited for length and clarity.
I’ve worked in global banking for HSBC, JPMorgan Chase & Co., Merril Lynch, and many more. Over the years, I’ve given my clients plenty of
advice on saving
, budgeting, investing, retirement, and financial planning.
When it comes to my family and friends, the most important financial advice I give them is to start putting away money as soon as possible.
You’re never too young to start saving or investing — and there are many things that even Generation Z could be doing now to help themselves
reach their financial goals
, whether that’s saving up for a down payment for a house, a dream trip abroad, a lavish wedding, or even an early retirement.
If you’re working, you should be focused on retirement and your personal savings
I know it sounds far away, but you should always be saving for retirement by paying into your 401(k).
Simultaneously, you should also be getting to the point where you have enough in your
personal savings account
to support your living expenses for the next six months in case you happen to lose your job for whatever reason. This money is what I call short-term cash on hand, what you can use to pay your basic needs — things like your apartment rent, car payments, grocery bills, etc.
You’re ready to invest once you have more than short-term cash on hand
I think for a lot of young investors, they’re unsure of when to start investing. We often think, “I need to have all this money to invest.”
I want to take that stigma away. Any amount of money will work better for you
in money markets
than in a savings account, which doesn’t provide much or any interest. Once you have more than short-term cash on hand, you can create another account in preparation for investing.
Create a financial plan with the help of a financial advisor
What’s great about sitting down with a financial advisor is that most banks do not initially charge for this service.
Making a plan is a point of entry into investing, and it’s a comfortable one because you get to sit down and ask yourself, “What do I want to achieve with my finances? Do I want to buy a home, plan a wedding, or take that next big trip?” With this plan, you can think beyond just retirement.
I encourage people to think of their lives in terms of different buckets — for example,
saving for a house
can be one bucket. Each of these buckets or larger financial goals has a different time horizon. Creating a larger financial plan can help you understand the timeframes for each goal better and remove some of the anxiety around investing.
Always seek out accurate financial resources and screen out the non-factual ones
We like watching TikTok and surfing Instagram, but do yourself a favor and ground yourself with the basics before you look through those places.
Reach out to traditional resources, like
financial advisors
at your bank. You can follow social influencers for some things, but not for something as crucial as your finances. Become comfortable with the traditional sources of this info, like banks — it doesn’t mean you ultimately have to pick them or choose their services.
You can shop around and find the right financial advisor for you.
Make your money work for you
Checking and savings accounts are the lowest interest-bearing accounts out there, right now. Short-term vehicles like CDs, or
Certificate of Deposit
, a type of savings account that earns a fixed interest rate, can be better options than a regular savings account.
CDs can be a great option, allowing you to make a short investment of, say, nine months or so and earn an interest of 4% in some cases. But you must remember these interest rates are always changing, so stay on top of them.
Prioritize investing and savings over paying off your student loan debt
I encourage clients to, of course, pay their minimum monthly payment that’s due. But the concept of paying off student loan debt should not be something you’re concerned about because having cash on hand — and making sure your
cash is working for you
— is the smarter way.
However, if your cash is just sitting in checking accounts, not collecting interest, then
pay off the student loan
because, in this case, your money is not working for you. You are not gaining any yield on your cash sitting in a checking account. However, lowering debt does bring up your credit score, so this is also something to think about.
Do you have a story to share about financial planning? If so, please reach out to the editor, Manseen Logan, at mlogan@businessinsider.com.
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