From preschool programs to graduate school ceremonies, it’s officially cap-and-gown season. Many of these milestones are significant enough that we mark them with monetary gifts.
Back in 2005 – two years before the iPhone was invented – a high school graduate could have invested $1,000 of their graduation cash in Apple stock. But let’s be honest, it’s more likely they spent it on something instantly gratifying. (The first Air Jordan 14 Retro released in 2005 comes to mind.)
Someone’s actually selling their vintage 2005 Air Jordans on eBay today for $175 – just $25 more than they originally cost. That $1,000 in Apple stock, though? It would be worth over $150,000 today, not including thousands more in dividends.
Feel free to share that comparison with a graduate you know. It might make them think twice before rushing to spend their cash.
Modern society has an acronym to describe the decision anxiety graduates – and the rest of us – struggle with: FOMO (Fear of Missing Out). On the flip side, we’ve also embraced YOLO (You Only Live Once) to justify the splurges. The challenge is that we can’t predict the future. If you graduated in 2005, you already know that your most valuable lessons came from life, not lectures.
Even seasoned investors battle FOMO. One of the best ways to manage it is by reflecting on the sum of your past decisions. Sure, some people focus on the cost of their investment mistakes. But ideally, the wins outpace the losses. Just like college, life charges its own kind of tuition – a “fee for instruction.” It’s not a new concept. Stock and bond traders call it “trading tuition.” Dave Ramsey uses the phrase “stupid tax” to describe costly financial mistakes.
I’ve paid a lot of stupid tax and trading tuition since I left college. But I’ve also learned a great deal and made smart decisions because of it. And that post-college, real-life education I earned from my own “tuition” bills has paid off – financially and otherwise.
So, here’s my advice to new graduates: Congratulations on making it this far – but you’re not done learning, and you’re not done paying tuition. Costly decisions are part of life. But so are profitable ones. The key is to keep your mindset focused on keeping the scales balanced.
