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As a kid growing up in Texas, Brad Briner says he learned from his parents’ financial hardships. After his father lost his job, his mother picked up work at a school printing press to pay for private school for her youngest son. The experience motivated Briner to get into finance and eventually become North Carolina’s treasurer.
“I was the poor kid in the rich school, no doubt about it,” Briner said recently. “I felt that every day. I didn’t like that, but it certainly made me who I am.”
Since coming into office last year, Briner has made financial literacy a focus. So when I caught up with Briner recently, I asked for his best tips.
For those who want to start investing, already have some savings, and don’t have major debt, he recommends opening a Roth IRA retirement account so their investments grow tax-free.
Briner says a good starting point is an S&P index fund. He notes the U.S. stock market has proven historically resilient through times of economic turbulence. He sees the market in the eighth inning of the ballgame (meaning there’s still some room for it to run higher, but a pullback could be on the horizon). But how big the dip will be and when it will occur is anyone’s guess.
I also posed a series of hypotheticals to Briner. Below is a portion of that conversation:
You’re a college student. You graduate with thousands of dollars in debt. You want a home. You get your first job. How much of that income should go to clearing your debt and how much of it should go toward saving for a home?
It’s so circumstance specific, but with that caveat, the first thing you should do is build a reserve. If you get a flat tire, need to fly home, you [should try to] have hundreds and maybe $1,000 readily accessible in the event of an emergency.
Second, you want to begin prioritizing by expected return or cost. You have to think about interest rates as money that you could earn. If I had an extra $1,000 and I could put it in the stock market making 8% or 9%, my checking account or savings account earning 3%, or I could pay off student loans that cost me 3% or 4%, which one’s the best use? Well, the best use is the highest return.
Stack your assets and liabilities in that way. If you have credit card debt, pay that off first. That’s an 18% guaranteed rate of return. If you have a 401(k) match with your employer, that’s a 100% rate of return because that’s free money if you contribute to the 401(k).
Your parents pass away and you get some money, either their house or some inheritance. What should you do?
First thing: Honor your parents, whatever that looks like. Maybe that’s not monetary. Maybe that’s going on a vacation. It is important to live your life. It can’t just be a financial optimization exercise. That’s not a recipe for happiness.
Second, think about the long term. The temptation is always, “Man, I found money. What can I do tomorrow with it?” But what’s going to optimize your happiness over a long period of time is long-term investments, whether that’s in taking a vacation with your adult children or in buying a house for the first time, or whatever it may be.
And then, finally, build a responsible portfolio over time. You got all that money today. You don’t just need to go dump it all in the stock market this afternoon. That said, the more common mistake is taking forever to get there.
So that’s the order of things: Honor the source, make sure that you’re living the life you want to live, and then be deliberate about that long-term plan.
You find out you’re about to have a kid. You don’t have a savings reserve and weren’t planning for a child. What should be the game plan?
Well, savings reserve first. Things happen, and now you’re adding a third [person to your household]. The probability of things happening just went up by 50% mathematically. So start there. The peace of mind that that [reserve] is going to buy you is worth a lot.
Second, start a 529 [education savings plan]. The ability to have that money compound for 18 years for your child’s education is fantastic. To the extent that you’re privileged enough to be able to start a 529, the gift you can give your kid of being able to go to the college they want to go to is an amazing gift.
What are three promising stocks or investments you’d recommend everyday folks consider?
I’m a value investor. I’m reasonably skeptical. I like cash flow because you can’t fake that, though people have tried. So everything you’re going to get from me on this is going to be a little bit contrarian.
I wouldn’t ever bet against the U.S. It’s not that we’re not going to have moments. We will. But that’s the first thing.
Second, I don’t think people appreciate commercial real estate. It’s been in a long funk, mostly as a result of rising interest rates in 2022. You’re now to a point where a lot of commercial real estate is priced as if it’s never going to grow again. And when everyone hates something, that usually gets my antenna up. Software companies are another one. There’s critical software that is installed in a lot of companies. It’s not going anywhere. Even if AI can rewrite it, it’s the trust in that software vendor, not the software product itself, that can’t be disintermediated. And they’ve sold off dramatically.
Third, and to some degree, I’m always bullish on this because I’m from Texas, traditional energy. We all know that we need more going forward, and we all know that the U.S. just became probably the most preferred supplier globally of energy just because of what’s happening in the Middle East and the abundance of natural gas and oil here. There’s a lot of very inexpensive oil and gas stocks out there.
