Retirement, money-saving tips from top-rated millennial wealth manager

Wealth manager Sara Rajo-Miller told Business Insider her approach for young people saving up: Start the right kind of investment account, and be vigilant about tracking their credit card spending and debts.

Rajo-Miller says she adds to her savings by “auditing” her credit card every month, a method that can uncover hidden charges and monthly expenses she's forgotten about — which companies will often reverse.

At only 28, Rajo-Miller manages $450 million in wealth and was just named one of the best US wealth managers under 40.

For a young wealth manager, advice that helps younger people gets a special emphasis.

Sara Rajo-Miller, 28, manages about $450 million in wealth for Miracle Mile Advisors, a $1.8 billion firm in Los Angeles. Forbes just named her one of the top next-generation wealth managers— a list of advisers under 40, most of whom have been in the industry for about a decade longer than she has.

While she works with clients of all ages, Rajo-Miller has a lot of thoughts on how other millennials can get ahead financially. There's one tool she always tells younger savers to employ for its ease of use and tax advantages.

“I tell people 'set up a Roth IRA, that's the best type of investment account that exists out there,'” she told Business Insider in an exclusive interview. “Your money grows tax-free and you can take it out tax-free.”

She highlights that option for younger people because contributions are limited based on income: In 2019, only individuals who make $137,000 or less and married couples who make less than $203,000 can contribute to a Roth IRA. Those contributions are capped at $6,000 a year for people under the age of 50.

“When you're starting out in your career and potentially not making as much money, it's a great opportunity to start putting money away,” Rajo-Miller said.

But even if you later make enough money that you can no longer contribute to that account, your money can keep growing in the years ahead. The withdrawals remain tax-free, which turns your earlier, lower-taxed contributions into an extra advantage.

And a younger person trying to build wealth needs every edge they can get, and Rajo-Miller draws on her own experience to help them get their finances in order. She says she's systematic about searching for them in a monthly audit of her own credit card bills.

“Make sure you know everything that's in there,” she said. “If you have an interest charge that you don't know what it is, call them ... ask if they can rebate it back to you if it's something you didn't know about,” she said.

Nobody enjoys getting on the phone with a credit card company or bank, least of all millennials who don't want to talk on the phone at all. But she argues that that time can be very lucrative: Banks are frequently willing to reverse charges to keep you a happy customer.

“Be proactive. No one else is looking out for you in this regard,” she said.

Convenient as they may be, she argues that the huge popularity of subscription services and “set it and forget it” bill paying can also be harmful. She often hears from friends who've signed up for a free trial of a service and discover much later they're being charged monthly after forgetting to cancel.

So she takes things off autopilot to catch those charges and try to undo them.

“If I'm being charged for it and I've never used it before, I should probably call them and ask them to refund me the last year of fees,” she said. “It's worth asking.”

Also worth asking is what your debts really look like. While many younger people are struggling with debt, Rajo-Miller says it's important to understand the difference between good debt, like mortgage payments that are worthwhile and can add to your credit rating, and bad debts with painfully high interest rates.

She recommends what is sometimes called the debt avalanche method: find the debt with the highest interest rate and pay that first. That can involves breaking down a student loan into components.

“Maybe you're making three different payments every month, and once you actually dig in you'll find that two of the loans are really are at a really low interest rate,” she said. “Maybe next time you got a bonus from work or you have a little bit of extra cash, you can put more towards the one that has the higher interest rate payment.”