Lydia Linna: What was your first investment?
: In a so-called “regular savings plan” (RSP) in investment funds. At the time, I made an initial investment of $1,000 and also instructed the investment company to directly debit money from my bank account to invest a small amount into an investment fund on a monthly basis.
There are several advantages to opening an RSP, including being able to invest small amounts of money each month (or quarter or whatever period you choose) into an investment product so your investment grows over time. Once the RSP is set up you don’t have to remember to make further investments as it happens automatically--unless you stop it--and it is very easy to increase the amount of regular investment when you get a salary increase, etc.
I was aware of RSPs that helped retail investors like me get a head start on investing
Why did you decide to invest in a regular savings plan? Was it recommended by people around you, by your school, due to your own research?
Working in the investment fund industry, first in the United States as an auditor of funds and then in Luxembourg working for Franklin Templeton Investments, I was aware of RSPs that helped retail investors like me get a head start on investing.
I also encouraged my daughter and my nieces to do the same and they started RSPs even earlier than I, so they will benefit even more from having their money grow over an even longer period of time that me.
Your investments since then have been in investment funds: why is this?
After working in the investment fund industry for nearly 30 years I truly believe that investment funds are the most efficient way to access professionally run investment products to help individuals meet their financial goals, such as buying a car or a house and saving for education and retirement.
You’re originally from the United States but you’ve been in Luxembourg for quite a while. Do you see a drastic difference (or any difference) in terms of how young people approach personal investments in the US versus in Europe?
Pensions paid by the US government are not intended to be as substantial as they are in most European countries, US companies have company pension plans (401K plans), and there are personal pension products that can be set up and invested in in the US. As such, young people in the US know that they have to actively save and invest for their retirement and they are often aware of investing and what financial products they can invest in.
When I came to Luxembourg over 33 years ago young Europeans did not have this mindset at all. But given changing demographics in Europe--fewer people working for more retirees--I believe that this mind set is changing in Europe, which is positive to ensure that today’s youth have sufficient financial means when they eventually retire.
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