“Bank of Dad” is a weekly column which seeks to answer questions about how to manage money when you have a family. Want to ask about college savings accounts, reverse mortgages, or how to save for a family vacation? Submit a question to Bankofdad@ . Want advice on what stocks are safe bets? Ask your broker. And then tell us. We’d love to know.
My job is fine at the moment, but I sense the ceiling is lowering. I don’t want to be selfish and throw our current routines out of whack with all the new changes a job would bring, but I also want to make the right decision for my family (wife, two kids). When do you know you need a new job, and when looking, besides more money, what things about a new company do I need to really think about? — Charles L., Albany NY
It sounds like you conceive of a more satisfying career and what’s best for your family as two different things. Most of the time, though, those two things go hand in hand.
When your career is stuck in third gear, you’re, quite simply, not as happy. And that’s bound to carry over into your home life. It’s hard to be fully present for your spouse or your kids when this other huge part of your world isn’t bringing you much fulfillment. Chances are, you’re not maximizing your earning potential, either.
We all know when the lights are blinking red in our current job. Perhaps you’re killing it in your current role, but nobody thinks you’re capable of doing anything else. You’re not given opportunities to take on new projects or add to your skill set. You’re stuck in the carousel.
In other cases, the job was never a great fit in the first place, and your performance shows it. You’re being passed up for promotions that once looked like a sure thing and your performance reviews have all the unbridled enthusiasm of a Michael Buble concert.
Most of the time, we know when our office has become a cage – we just don’t face up to it. Change is hard. Change is risky. But change also allows you to grow. When you don’t just off the precipice every once in a while, you forget how to spread your wings.
It sounds like, deep down, you already know it’s time to look for something new. The question is how to avoid falling into the same stifling situation with a new job. So how do you avoid that?
The trick is finding that sweet spot where you feel like you can make a difference from the outset, but you also have room to learn new things and expand your responsibilities over time. It’s like buying shoes that are a size too big. They work pretty well right now, but you know they’ll be even better when you hit your growth spurt.
It certainly helps when you move into an environment where you can flourish. Is the organization one that you’re excited about being part of? Is your new boss a strong communicator and someone who can help you develop in your role? If not, you probably want to keep looking.
Money is certainly important, too. More times than not, you’ll be making more of it by switching jobs. According to the HR software company ADP, people who switched jobs in the first quarter of 2019 saw their salaries increase 5.6 percent over last year. Those who stayed in place only experienced a 4.8 percent increase.
That said, it’s not just about what you’ll be making now, but what you can potentially earn down the road. If you choose an opportunity with growth potential, your real reward could be a few years away.
I’ll add this footnote: Timing can be absolutely critical when leaving your current place of employment. Make sure you don’t have 401(k) money or stock options that are about to vest. If you do, leaving too soon can actually make your financial situation worse. If you haven’t paid much attention to those things, it’s worth taking a look at where you stand before making any big moves. In any case, best of luck.
Is it worth it to use investing apps like Robinhood, or am I better off using, you know, a human? Or even parking my money in other places? — Jason L, the Internet
It’s important to realize that no two investing platforms are the same. So I’ll focus my response on Robinhood, an app that lets you trade ETFs, but also more speculative products like individual stocks, options and cryptocurrencies.
The big draw is that trades on Robinhood are commission-free, unlike the more traditional brokerages with which it competes. As it turns out, people like “free.” In fact, the company has amassed more than six million users since its inception in 2012.
Its popularity notwithstanding, are apps like this good for investors? That’s open to debate. It certainly makes trading more convenient and affordable. But it also exposes users to the inherent risks of timing the stock market or getting in over their heads with options trading.
“For someone insistent on using one of these companies, I probably would try to steer him to one like Acorns or Betterment that doesn’t emphasize active trading and relatively complex strategies,” says Kevin Mahoney, who heads the fee-based advisory Illumint in Washington, DC.
While there are certainly exceptions, most families don’t have a lot of room for error when investing their money. They’re building a retirement nest egg, saving for their kids’ college tuition and scraping together down payments for a house.
“In a best-case scenario, trading on Robinhood could help with these goals,” says Mahoney. “The much more prudent move, however, would be the less thrilling choice to open an account at an institution like Vanguard, where you can access low-cost, diversified index funds and hold them until the goal is in sight.”
Look, everyone thinks they can beat the market. But even the pros fall short of that goal most of the time. Consider, for instance, that over the past 15 years, more than 92 percent of large-cap stock fund managers lagged behind the S&P 500 index. These are smart folks who spend their days pouring over every news story and financial statement they can get their hands on. Unless you’re a savant, the odds are that you won’t do much better.
The appeal of apps like this are completely understandable. They can make the financial system suddenly seem more accessible, even to non-experts. But it can also introduce certainly perils.
“New technology isn’t necessarily benevolent, even if it brings some improvement to the market, like free trading,” says Mahoney. “The bells, whistles, and omitted information that these platforms contain can make an already opaque industry even more confusing.”
It may not be the most thrilling path, but you may be better off investing directly with low-cost fund companies or seeking out an advisor who can set you on the right course.