“It’s a good question,” is ’s response when I ask him about his first investment. Delano is PWC Luxembourg’s asset & wealth management leader, and was featured in the very (released in February 2011). We thought it would be fitting to include him in the 101st edition as well.
“My first real investment--coming out of school, getting my first job--it was investing into a 401K.” In the US, a 401K is a retirement savings plan where employees’ tax-exempt contributions come directly out of their paycheques. “You know, it’s a typical, American answer,” he adds. “It’s probably most people’s first investment.”
“I didn’t do any investing in school, even though I was a major in finance and accounting.” But as soon as he started making money, his parents encouraged him to start saving. “The 401K in the US makes it pretty easy to start doing that.”
That being said, Michael Delano has been in Luxembourg for 17 years now, and the 401K isn’t something that exists here in Europe. What else has he invested in?
“My first investment outside of 401K was Apple,” Delano replies. “I don’t want to make an Apple commercial, but I bought Apple stock. I like the products, I like the messaging from the company.”
“Understand the risks of investments”
Michael Delano mentions that as he prepared for our interview, he thought about who would be reading this, and, in particular, about the younger generation who would be looking to save. “One thing that struck me when I was thinking about this is, one of my sons told me the other day: ‘I want to save up enough money to buy bitcoin.’ And I was like, ‘Huh. Okay. That’s interesting.’ And he’s 13,” he laughs. “So I thought, why do you want to buy bitcoin?”
“I’m sure he’s influenced by social media, seeing the crypto guys getting rich and buying all kinds of crazy things. Maybe not so much anymore,” he adds.
“But I think my advice to some of the younger generation looking to invest would be to really understand the risks of the investments that you’re getting into. And to know the difference between what I can save for the long term and what I can really take risks on--like crypto, for example, if that’s something that you really want to do.” Understanding risk and reward is important.
“Put money into something like that that you’re willing to lose, that is not going to hurt. People putting their life savings into crypto, I think, is not necessarily a good idea.”
Emphasise the importance of saving early on
Michael Delano and his wife are both American, and he adds that they’ve started savings accounts for their kids and invested money into low-cost mutual funds. “We’re trying to drill into them the importance of saving.”
I think it’s better to be a little bit more independent, to be self-sufficient
“I think kids nowadays are used to looking to mom and dad to bail them out,” he says. “I think it’s better to be a little bit more independent, to be self-sufficient, and to understand that you need to have a little bit of money set aside in a relatively safe, stable investment.”
Investing habits in Europe vs the US
“In the US, it is very typical for people to keep money away in their 401K. It comes directly out of your paycheque, it goes into [the 401K], it’s an employer-directed scheme,” he says, talking about differences in investing and saving in the US compared to Europe. “You check the box, money goes to your 401K and it just kind of builds up over time.”
“Here, it has to be much more active,” he says. “I’m not super old, but I’m old enough to know better, and I think the younger generation--especially when they first start working--it’s probably much easier to take your paycheque and figure out, what can I do? ‘Do I go out and have a nice dinner? Do we go on a trip? Do we buy this? Do we buy that?’ versus thinking, ‘Oh. I need to take a third of this--or whatever percentage--and save it. I just don’t think that is as ingrained in Europe as I see in the US.”
“Think about investing sensibly”
For people looking at their first investment, it’s really about “understanding the risks of what it is you’re getting into.”
“I know that there’s also a big push around managers--particularly alternative managers--looking at retail investors for Part II funds, for Eltifs [European long-term investment funds], etc. I think those definitely do have a place in your investment portfolio. But they shouldn’t be 100% of your portfolio. And the younger you are, the more risks you can take because you’ll make money over a longer period of time, so you can do that,” he concludes. “But again--just think about investing sensibly.”