Red Hat CFO Frank Calderoni has some simple but effective advice for first-time investors.
Prior to his recently announced role at Red Hat, the finance veteran was the CFO of Cisco.
During his 10-year tenure at Cisco, the company increased its annual revenue from $US22 billion to $US47 billion in 2014, and grew annual profits from $US0.62 per share to $US1.49 per share.
We recently asked Calderoni for his best piece of financial advice, and he focused on those just starting out.
“If you are investing for the first time, diversify, diversify, diversify,” Calderoni said. “Putting all your eggs in one basket is never a good thing. Be prepared for market fluctuations with some value stock and some high-risk stock as the payoffs could benefit you in the long run.”
“The other thing I recommend,” he added, “is invest for the long-term — at least 10 years or more — as long-term valuations generally increase with the overall portfolio market value.”
Calderoni was taught to value money at an early age. “My dad used to say the old adage: A penny saved is a penny earned,” he said. “For me, it was always about investing in yourself first. Make sure you have a savings account that has at least six months worth of income to subsidise any unexpected event that could happen in your life.”
“Prioritise savings in general, such as your children’s college funds, 401Ks, etc., and pay your bills. Then, invest your spending money in long-term stocks or pay off a little more of that mortgage.”
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