Lloyd Blankfein, the former Chief Executive Officer of Goldman Sachs, has advised young workers with savings to make a prudent purchase followed by a more enjoyable one. Blankfein, 69, offered his guidance during an episode of the "Financial Tea with Mrs. Dow Jones" podcast, specifically addressing a hypothetical 25-year-old with $5,000 in savings.
He stated that his first action with spare cash was to purchase an insurance policy, contrasting this with colleagues who bought cars. Blankfein framed life insurance as a "form of savings" because it builds value within the insurance company that can be accessed if needed. He emphasised that for those with young families, this protection is an obligation.
Balancing Prudence with Enjoyment
After securing insurance, Blankfein acknowledged the importance of enjoyment, suggesting a young saver "could buy that 14-year-old used car." He then turned to investment strategy, recommending stocks and other riskier assets for their potential for faster growth compared to safer options like bonds.
He specifically advised avoiding "high fees" by investing in "low-cost ETFs" (Exchange-Traded Funds), a type of investment fund traded on stock exchanges.
Personal Habits and Industry Context
Blankfein, who stepped down from his role at the investment bank in late 2018 and recently published a memoir titled "Streetwise: Getting To and Through Goldman Sachs", revealed he keeps his own spare cash in Goldman's Marcus savings account. He attributed this choice to the platform's low overheads, noting it lacks physical branches and the associated costs of staff and promotional items.
The former CEO also reflected on his enduring passion for finance, quipping, "When they bury me, they’d better put in a market screen and extra batteries." He stated he has tracked market prices consistently for over four decades.