Investment Ideas We Can Learn from Generation X

September 13, 2010

“Don’t be fooled” seems to be the mantra for Generation X.  This is the generation sandwiched between the Baby Boomers and the Millennial Gen Y.  They are described as being born between 1965 and 1980 and they can work a deal.  These folks are good at getting the most of their dollar and unfortunately they will need to because their other mantra is “this is NOT turning out like I planned.”

Consider this; if the first Gen X investor started their first job at 25, and began investing, they essentially had 10 years of growth and 10 years of…well…nothing but disappointment.  The same holds true in real estate.  They came of age when everything seemed to be going well only to face the reality that they will probably have to work until at least 65 and won’t have their home paid off anytime soon.  Fortunately they have the skills to handle it.

These investors are savvy about fees.  I just spent a week’s vacation with a friend of mine who is Gen X and here is an example of her fee negotiation skills – her husband was paying $15 per month for a sports package on their cable TV which was being duplicated in another service they had (in other words – a waste of money).  She likes to watch the show Weeds which I understand is on ShowTime (which they don’t have).  So she called the cable company and very nicely explained their situation and asked what they could to do help since she didn’t want to switch to another company (their competitor).  Here is how the story ended – they got $30 off for 3 months, a $100 future credit and ShowTime free for 6 months.  I was stunned.  This lady is good.

She is not alone – she is Gen X.  They are also savvy about paying high investment fees and running cost comparisons and with a recent study released by Morningstar stating how low fees are likely to be the best predictor of a fund’s long term success (WSJ 8/9/10) – they are right on track.

The average mutual fund management fee is 1.4%.  To follow the lead of the Gen X investor, check with your mutual fund fees either by going to the investment company website and looking it up or by going to an independent third party such as Morningstar.com or Yahoo Finance.  Also shop around if you have ongoing management fees.  Some brokerage accounts have a $25 or $50 annual fee – if you are a good customer, you can do like my friend and ask to have it waived or if there is something they can do in its place.  If your funds are mainly with one fund family, consider having your shares held “at the fund” which is sometimes cheaper.  Either way, learn from your Gen X friends and keep an eye on the fees because in the short run as well as the long run, every little bit counts and remember, it doesn’t hurt to ask!

(Watch for upcoming blogs about what the Gen X investor can do so things do work out like they planned.)