Shelton author talks investment mistakes and saving for retirement in new book

Shelton author Michael Lynch recently published his book
Shelton author Michael Lynch recently published his book "Keep it Simple, Make it Big."Michael Lynch / Contributed photo

After working in the financial industry for nearly 20 years, Shelton resident and certified financial planner Michael Lynch has decided to share his expertise in his recent book “Keep it Simple, Make it Big.”

In his book, Lynch advises readers on saving for retirement, making investments and how to recognize common financial mistakes.

Lynch recently chatted with reporter TinaMarie Craven about his book and some of his financial advice.

TinaMarie Craven: How would you describe your new book, “Keep it Simple, Make it Big?”

Michael Lynch: It’s an engaging read that empowers readers to take more control of their personal finances. It will enable them to understand and deploy the financial products and strategies that will move them toward their goals and avoid the many that will set them back.

TC: In your book you ask readers to consider what money means to them, what does money mean to you?

ML: That’s a great question. It’s a combination of factors, of course, but it’s really freedom, independence which in turn allows me to spend money in ways that impacts the people I love and the organizations that I feel make an impact. I’ve always been a hard worker and I earned money from my early years mowing lawns and then working from high school on. Because I had a savings cushion, I was always able to make my avocation my vocation and not worry about maximizing a paycheck. This is my third and last career. Each change I made less money initially but was also happier. I really see money as a tool. In my life it’s secured a lot of help and therapy for my special needs daughter and it is now paying for a good education for my son. This in turn provides them with independence and freedom.

TC: What are some of the biggest mistakes people make when it comes to managing their personal finances?

ML: There are many and of course many things people do right. Most of the mistakes stem from one of three categories. First, lack of time perspective. By this I mean when we are young not understanding how even a little investing will pay off bit later and when we approach retirement underestimating how long we still have to go. The second is not understanding that real risk is usually not having the principal amount decline temporarily but not having it grow at a rate greater than inflation. All risk is relative and for most instances of personal finance, what people see as safe is risky and what they see as risky is in fact far safer. Finally, I see money wasted on expensive and inappropriately applied financial products. For example, a twenty-something with no dependents should in almost all cases fully fund a Roth IRA before purchasing any cash value life insurance.

TC: What steps can people take to protect their investments?

ML: The first step is acceptance that there is no way to “protect” them fully. Every investment has expected benefits and possible risks. The only solution to life’s risks, including investing, is to diversify and arrange a portfolio of investments and products that give you the greatest chance to get you where you want to go.

TC: When should an individual begin saving for retirement?

ML: Yesterday. Since that is not possible, today. I started working with 20 and 30-year-olds and I still love to work with 20 and 30-year-olds. Retirement investments really do compound at amazing rates over time. I say invest 10 percent of your pre-tax income and you’ll never be poor, get it to 20 percent and you’ll always be wealthy. If you do this starting with your first job in your 20s, you’ll be amazed at how much you’ll have in your 50s and 60s. That said, if your early decades have come and gone, don’t fret. I’ve seen people create retirement security who didn’t start until their sixth decade on this planet. They just have to invest a lot more to get the job done.

TC: What mindset should people take when considering an investment opportunity?

ML: Cautious optimism, patience and understanding. People of course need to read the prospectus or other offering material and understand where their actual money is going, what fees they will be paying to get it and keep it there and what restrictions it may have.

Most investing is an optimistic activity, a belief that the future will be better than today, that they will be around to experience it and they want to own some of it. That is equity or stock investing. Every day, month, or year is not necessarily better so they must be patient...It’s important to understand what each investment’s job is and judge them accordingly.

tinamarie.craven@hearstmediact.com