May 6, 2021 • 20 mins
Hello! and welcome to Everyday Finance and Economics with the Siglers! The podcast where we discuss what you need to know about personal finance and economics and give you practical advice on how to get started and be smart with your money.
This episode is the final part to our introductory investing series. We're covering good places to start investing and things you should look out for when investing in this episode as well as debunking the myths that investing is an exclusive financial tool. We also have some specific listener questions to answer. Even though our investing series is over, you can still ask us questions! And be sure to join us next time for a discussion about credit.
Come engage with us!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:10):
Hello, and welcome to everyday finance and economics
with the Sigler's the podcastwhere we discuss what you need
to know about personal financeand economics, and give you
practical advice on how to getstarted and be smart with your
money where your host Glen andChristina.
Speaker 2 (00:27):
So Christina, what's going on in the economy this
week,
Speaker 1 (00:30):
What matters this week is GDP numbers.
The gross domestic product forthe United States during quarter
one of 2021 was released thispast week and it increased by
6.4%, which is the largestincrease the country has had
since the third quarter of 2003.
So that's, that's a big numberfor us.
Uh, this number is a reflectionof increased faith in the
(00:53):
economy.
As more people get vaccinatedand ready to open up for the
summertime, and many economistsare optimistic about how well
the economic recovery is goingbased on this number.
Our economic term of the week isGDP, which stands for gross
domestic product.
As I mentioned before, we talkedabout it briefly a couple
episodes ago as an indicator ofeconomic growth, which it is,
(01:14):
but let me tell you where thatnumber comes from.
The formula that I learned, um,in my intro to economics class
and most economics students willtell you is C plus I plus G plus
N X, which stands for consumerspending plus investments.
Plus government spending plusnet exports and net exports is
(01:35):
calculated by doing the totalamount of exports.
A country has minus the totalnumber of imports.
A country has.
So everything that a countrysends out minus everything that
a country brings in from othercountries, um, and that's for
the whole country.
All those numbers are for thewhole country.
The GDP number for this quarterwas mainly driven by increased
(01:56):
consumer and governmentspending.
And with that, let's round outour series on investing.
What are some good places tostart investing?
If I'm a beginner?
I know nothing about it.
Just starting out, no priorknowledge.
Speaker 2 (02:13):
So places there, if you're beginning, if you're
working, does your company havea 401k start with that?
And when a reason say, I say,start with that is if they have
an, a company match and you putyour money and they match your
money with some of their money,well guess what, that's free
(02:35):
money.
And so that's an, that's almostan instant return for the money
that you've put in.
Uh, other other options are, youknow, robo-advisors, you know,
you can, you can get to thosethrough, um, through investment
companies or even some of the,uh, apps that will, you know,
you put your money in and theywill put the money in various
(03:00):
investments based on somequestions to you, uh, target
date mutual funds.
This, this is an older productand says, okay, how old are you?
When do you think you want toretire?
All right, based on how, how oldyou are.
Um, this is what recommend, andthey're going to change the mix
(03:24):
of those investments based onyour age.
So you don't have to doanything.
They, they changed the mix of,uh, bond stocks, whatever,
whatever else they've got inthere through time.
So that as you, as you get olderand your risk profile changes,
then uh, then it adjustaccordingly.
(03:48):
That's convenient.
That's why, yes, it is, uh,index funds.
So this is another way to investon autopilot.
So instead of picking onecompany or a few companies, uh,
stocks that you like, you'regoing to buy an index.
And the reason people likebuying index is that
(04:08):
historically indexes have, haveshown to you, maybe not be the
best investment, but they'regoing to be 80% of all of all
the other investments in thatspace.
So an index mutual fund can, orcan be 70, 80% of actively
(04:32):
managed funds.
And what do I mean by that?
So in, in other mutual funds, in, in traditional mutual funds,
you have an, a management teamthat says, Hey, we know better.
We're going to pick the stocksthat you should invest in.
Well, there are some folks thatshowed over time that just
(04:55):
buying the index and what I meanby an index, the S and P 500
index, the Dal, which is reallyan index, the NASDAQ 100 index
just by all of them.
You, you, you, you know, inbuying that index fund, you get
everything in that index.
The S and P 500 index is beat,you know, 80% of them, 80% of
(05:17):
the managers that are investingin S and P um, um, companies, so
shows that they know and right.
And so when they typically do itat a lower cost, yeah, that
makes sense.
Okay.
And we've, we've talked aboutexchange traded funds before
very similar to mutual funds orindex.
(05:41):
Then you can have an ETF, uh,index fund as well.
Um, and again, that can tradethroughout the day.
That's the bigger, the biggestdifference there.
And then the investment apps,um, there are several for
beginners, acorns, betterment,um, um,
Speaker 1 (06:01):
They're all over now.
Robin Robinhood is out there,but also there's like, there's
stuff on like cash app that youcan invest on.
And most people, but everybody,my age, I think has cash up.
If you don't Ray-Ban.
Speaker 2 (06:16):
Yeah.
I, I, I tend to like, um, acorna little bit, You know, and look
now I'm not, I'm not on a corntop, I'm going through more
traditional investment firms.
Speaker 1 (06:32):
Uh, but there's also like Charles swab, right?
Speaker 2 (06:35):
Vanguard, fidelity, and hundreds more,
Speaker 1 (06:39):
So many.
Yeah.
Literally all of them go onGoogle for one time.
You'll have like a hundredpages.
Yes.
All right.
What, what are some things thatI should consider a lookout for
when I'm investing?
Speaker 2 (06:53):
All right.
So I'm going to run through thistimeline.
What's the timeline for thisinvestment?
What, when will you need thatmoney?
Are, is this an investment for,or are you putting this money
away for something that you needin the next three to six months,
the next three to six years or10 years plus, because where you
(07:18):
put your money will change basedon when you think you're going
to need that.
If you, if you need money inthree to six months, put, put
that in a savings account orsomething that's really more,
that's really easy to get reallyeasy to access with no risk,
right?
If you're looking at three tosix years, then you might, you,
you know, you, you know, you cando it either way.
(07:41):
You could put some money in, in,in an investment vehicle.
You could, uh, put some money in, uh, in a savings vehicle or,
uh, or higher interest bearing,uh, uh, vehicle.
If the, if the horizons 10 yearsout or more, that's a different
story.
Um, and, uh, you know, thenyou've got, uh, there are other
(08:05):
things that will come into playand we'll get to those later.
The next one is, what's yourrisk tolerance?
Can you, can you accept higherrisk?
One of the axioms and investingis there is a relationship
between risk and reward.
And in most cases, um, thehigher, the risk, the higher the
(08:30):
reward, the potential reward.
Yes.
Now that's not always true.
And so, you know, uh, goodinvestors are always looking
for, can I get nearly all of thereward with half the risk?
That's what you're looking for,but that, that takes homework
(08:50):
and, and some understanding, butin general, you got to
understand what, what yourtolerance for risk is, you know,
can you, can you handle, uh,swings up and down, uh, year to
year, day to day, right?
And the value of that asset, howmuch money do you have?
(09:11):
There's going to be certaininvestments that you can't start
unless you have a certain amountof money.
And so that, that, that willrule out some things for you.
But the one thing I can say, uh,over the years, those minimum
investment values have come downquite a bit
Speaker 1 (09:34):
Because investing has become a lot more, there's
Speaker 2 (09:36):
Been more democratization of investment,
um, now to get access to, youknow, advisors, you know, and
things of that nature that youmight need to have a little bit
more money.
Right.
But, you know, we're talkingabout things for big, for
beginners, how much help do youneed?
That's a good question, too.
Right.
(09:56):
So, uh, is this something that,you know, is this an, is, are
you looking at investments thatrequire a lot of knowledge or
something that you can pick upon your own?
And, uh, and so if you need alot more help, then, uh, you're
going to need to go to somebodythat specializes in, or just
(10:18):
start small, or, or just startsmall.
Speaker 1 (10:20):
If you need a lot of help, you might, you're not
starting with ETFs or options,you know?
Speaker 2 (10:25):
Well, I, I, I'm just going to say, no, I don't think
any, anybody that's listening tothis should not start out with
options.
That that is not a, um, that'snot a beginners tool.
Um, and then I'm going to comeback to, to this.
Do you fundamentally understandthe investment?
There are many complexinvestments around, and you may
(10:48):
not be prepared for the full setof risks of the, those
investments.
But if you can understand the,the investment, the, the
business model or how they makemoney, that gives you a better
idea of whether you, uh, how,um, whether you can invest,
whether you should invest inthat.
Speaker 1 (11:09):
Yeah.
And what even you would be doingif you did invest.
Right.
So what I'm hearing is do yourresearch.
If it, if it's something thatyou can't understand, don't do
it because that's, that's a badidea to put your money into
something you don't understand.
Right.
Speaker 2 (11:23):
Oh, and one more item, how much does it cost for
the investment?
Are there transaction fees andthings of that nature?
And, and, and so you'll want tounderstand that as well.
Okay.
Speaker 1 (11:39):
Okay.
Is there a minimum amount that Icould invest
Speaker 2 (11:43):
With new tools and apps?
You can probably start with likefive,$10 out there.
Online brokers investing appscan, uh, can charge service and
maintenance fees.
You got to understand that, um,and the investment choices can,
can, um, very, uh, some allowyou to invest a pre in, into
(12:07):
predetermined portfolios ofexchange, rate of funds while
others offer individual stocks.
Um, and remember each individual, uh, investment can carry fees.
And one of the new things outthere now is fractional share
investment where you can, yes.
(12:28):
I share a Tesla costs threegrand.
Well, you, if I got$50, I canstill have a fractional share of
Tesla.
Speaker 1 (12:40):
Yeah.
That's what Robin hood cash upACOR.
And that's what they do.
They do.
Fractionals there's causethere's some stocks that like
Apple Berkshire Hathaway thatI'm never going to be well, not
never, but I cannot afford rightnow, but exactly.
I don't have$10,000.
Even if I did have$10,000, I'mnot putting no.
(13:02):
So I will, I would put 50,000 ornot 50,000,$50, or like$20.
Um, and to a fractional sharethat still aren't your money,
but you don't own like a fullshare of it.
That's what fractional stocks.
Right.
And that's something that youcan do.
Like we talked about in ourbudgeting episode, you just put
aside 10, 20,$30 a month andjust put it into like a
(13:23):
fractional stare of a stock.
Anyway, that's, that's myinvesting advice.
All right.
Why should I invest if I don'thave a lot of money,
Speaker 2 (13:32):
Even when you don't have a lot of money, you want to
establish investment behavior.
And the earlier start, thebetter you will be through the
power of compounding the 35 45,55 year old, you will be
(13:52):
thankful that the 20, 25, 30year old, you put away 10, 20,
50 bucks on a regular periodicbasis into something, that'll be
something that generates moremoney.
So somebody that starts with$50a month at age 25 will, will
(14:14):
have more money than someone whocan start 10 or 20 years later.
They can invest more.
These are facts.
Speaker 1 (14:23):
All right.
Is it a good idea to invest?
If I still have debt,
Speaker 2 (14:27):
This can get a little complicated in general financial
planners, ask for folks to paydown their debt as quickly as
you can, before you startinvesting, right.
Uh, you know, when you delaypaying debt, you can actually
end up costing yourself moremoney because of interest
charges.
However, there are situationswhere it may actually may be
(14:49):
beneficial to start investingwhile you're still paying down
debt.
You know, I'm sure people that,you know, um, had debt and
invested in, uh, Bitcoin are,are happy, right?
They're really happy right now.
Or people that had Tesla arehappy right now.
Uh, but those things don't comealong every day.
(15:11):
And for, for most of us, um,again, following the standard
rule standard, not they're notrules, the,
Speaker 1 (15:22):
The, the standard measures
Speaker 2 (15:25):
Are probably good ideas, but here's one where I
think it really absolutely paysoff to invest while you're
paying down debt.
And that's, you know, if you seeyou're working at a company and
it has a 401k match yep.
Again, at least the vest T getmax out the match.
(15:46):
You know, that, that, that mightnot be a lot that might be, you
know, just a couple of percent,you know, 50, a hundred bucks,
you'll get, you know, another5,000 bucks from the employer,
from, from the employer.
And then go ahead and, you know,put the rest toward paying down
your debt.
Okay.
Speaker 1 (16:04):
Now we have some more specific questions, uh, from,
from listeners.
If I am in my early thirties andmy only debt is a car payment, I
have a 401k, should I make otherinvestments?
Someone told me about somethingcalled a Roth IRA.
Should I consider this?
What else should I consider?
Speaker 2 (16:25):
So, yeah, there's a lot here.
I'm going to assume that youalready have an emergency fund
of some time, some kind toprotect you from life events,
life events.
They look tires, people get flattires, people get sick, people
get sick, uh, stuff in yourhouse breaks.
(16:47):
You gotta have some money tohelp you get through those
things.
After that, now we can starttalking about what else we want
to do.
Could you put more money in your401k?
Yes, she could.
But a Roth IRA is a great toolfor young investors.
Especially if your tax rates arelow.
Speaker 1 (17:08):
Yeah.
Cause that's the one where youput it in and
Speaker 2 (17:11):
You put it in after you paid the tax and then you
it'll grow tax-free for you.
Okay.
So now as your income rises,maybe the standard 401k becomes
more important to you, but youknow, for right now, no go,
that's an that's an option.
(17:34):
Okay.
Speaker 1 (17:37):
And what other, what other things should they look up
Speaker 2 (17:40):
ADA after that?
There's the whole range of otherthings that we've talked about,
right?
Investment apps, mutual funds,index funds, equities, um, and
the recommendation would dependon short-term goals, long-term
goals, risk tolerance, and howmuch cash, how much money we're
talking about for yourinvestment as well.
(18:01):
So that's where it starts to getcomplicated.
Speaker 1 (18:06):
All right.
What if after I pay all of mybills, I only have$50 left at
the end of the month.
Should I put it in savings?
Should I try to invest a portionof it?
What should I do?
Speaker 2 (18:17):
All right.
I'm going to go back to some ofthe answers I had for the last
question, right?
First step, build yourself anemergency fund emergency fund.
Yeah.
Use that 50,$50 a month tocreate a cushion for life's
emergencies.
And again, financial plannerstypically call for three to six
months of expenses saved up likebasic expenses, basic expense.
(18:43):
Now I don't go to, to thatlength, you know, Hey, once you
get to, to two months ofsavings, now you can start
splitting up that$50 into, Hey,I need to continue putting some
money away from, uh, foremergencies.
So I get to the number that Ireally need, but I've got a
(19:04):
little bit saved up for mercy.
Now, let me start putting thatthe rest of that$50 into an
investment pool.
Okay.
Now you can continue fundingboth until you've reached your
savings goal and then, um, puteverything else into your
(19:28):
investment.
Um, and then you can choose anyof the investments that we've
talked about before.
If you're starting at 50, thensome of the apps may be really
helpful for you, but again,start early.
Um, and, and the, and the moreyou get into this behavior, the
better off you will be.
(19:49):
You will start getting to, intobehaviors that will help you
build wealth and help you withyour financial security going
forward.
All right.
That's it for our show.
Thank you so much for listeningand be sure to join us again
next time when we discusscredit.
Speaker 1 (20:06):
Yes.
And if you have any questionsfor us, you can email
us@efespodcastatgmail.com andfollow our Instagram at E F E S
podcast.
Thank you so much for listening.
Take care, everyone.
Hello, and welcome to everyday finance and economics
with the Sigler's the podcastwhere we discuss what you need
to know about personal financeand economics, and give you
practical advice on how to getstarted and be smart with your
money where your host Glen andChristina.
Speaker 2 (00:27):
So Christina, what's going on in the economy this
week,
Speaker 1 (00:30):
What matters this week is GDP numbers.
The gross domestic product forthe United States during quarter
one of 2021 was released thispast week and it increased by
6.4%, which is the largestincrease the country has had
since the third quarter of 2003.
So that's, that's a big numberfor us.
Uh, this number is a reflectionof increased faith in the
(00:53):
economy.
As more people get vaccinatedand ready to open up for the
summertime, and many economistsare optimistic about how well
the economic recovery is goingbased on this number.
Our economic term of the week isGDP, which stands for gross
domestic product.
As I mentioned before, we talkedabout it briefly a couple
episodes ago as an indicator ofeconomic growth, which it is,
(01:14):
but let me tell you where thatnumber comes from.
The formula that I learned, um,in my intro to economics class
and most economics students willtell you is C plus I plus G plus
N X, which stands for consumerspending plus investments.
Plus government spending plusnet exports and net exports is
(01:35):
calculated by doing the totalamount of exports.
A country has minus the totalnumber of imports.
A country has.
So everything that a countrysends out minus everything that
a country brings in from othercountries, um, and that's for
the whole country.
All those numbers are for thewhole country.
The GDP number for this quarterwas mainly driven by increased
(01:56):
consumer and governmentspending.
And with that, let's round outour series on investing.
What are some good places tostart investing?
If I'm a beginner?
I know nothing about it.
Just starting out, no priorknowledge.
Speaker 2 (02:13):
So places there, if you're beginning, if you're
working, does your company havea 401k start with that?
And when a reason say, I say,start with that is if they have
an, a company match and you putyour money and they match your
money with some of their money,well guess what, that's free
(02:35):
money.
And so that's an, that's almostan instant return for the money
that you've put in.
Uh, other other options are, youknow, robo-advisors, you know,
you can, you can get to thosethrough, um, through investment
companies or even some of the,uh, apps that will, you know,
you put your money in and theywill put the money in various
(03:00):
investments based on somequestions to you, uh, target
date mutual funds.
This, this is an older productand says, okay, how old are you?
When do you think you want toretire?
All right, based on how, how oldyou are.
Um, this is what recommend, andthey're going to change the mix
(03:24):
of those investments based onyour age.
So you don't have to doanything.
They, they changed the mix of,uh, bond stocks, whatever,
whatever else they've got inthere through time.
So that as you, as you get olderand your risk profile changes,
then uh, then it adjustaccordingly.
(03:48):
That's convenient.
That's why, yes, it is, uh,index funds.
So this is another way to investon autopilot.
So instead of picking onecompany or a few companies, uh,
stocks that you like, you'regoing to buy an index.
And the reason people likebuying index is that
(04:08):
historically indexes have, haveshown to you, maybe not be the
best investment, but they'regoing to be 80% of all of all
the other investments in thatspace.
So an index mutual fund can, orcan be 70, 80% of actively
(04:32):
managed funds.
And what do I mean by that?
So in, in other mutual funds, in, in traditional mutual funds,
you have an, a management teamthat says, Hey, we know better.
We're going to pick the stocksthat you should invest in.
Well, there are some folks thatshowed over time that just
(04:55):
buying the index and what I meanby an index, the S and P 500
index, the Dal, which is reallyan index, the NASDAQ 100 index
just by all of them.
You, you, you, you know, inbuying that index fund, you get
everything in that index.
The S and P 500 index is beat,you know, 80% of them, 80% of
(05:17):
the managers that are investingin S and P um, um, companies, so
shows that they know and right.
And so when they typically do itat a lower cost, yeah, that
makes sense.
Okay.
And we've, we've talked aboutexchange traded funds before
very similar to mutual funds orindex.
(05:41):
Then you can have an ETF, uh,index fund as well.
Um, and again, that can tradethroughout the day.
That's the bigger, the biggestdifference there.
And then the investment apps,um, there are several for
beginners, acorns, betterment,um, um,
Speaker 1 (06:01):
They're all over now.
Robin Robinhood is out there,but also there's like, there's
stuff on like cash app that youcan invest on.
And most people, but everybody,my age, I think has cash up.
If you don't Ray-Ban.
Speaker 2 (06:16):
Yeah.
I, I, I tend to like, um, acorna little bit, You know, and look
now I'm not, I'm not on a corntop, I'm going through more
traditional investment firms.
Speaker 1 (06:32):
Uh, but there's also like Charles swab, right?
Speaker 2 (06:35):
Vanguard, fidelity, and hundreds more,
Speaker 1 (06:39):
So many.
Yeah.
Literally all of them go onGoogle for one time.
You'll have like a hundredpages.
Yes.
All right.
What, what are some things thatI should consider a lookout for
when I'm investing?
Speaker 2 (06:53):
All right.
So I'm going to run through thistimeline.
What's the timeline for thisinvestment?
What, when will you need thatmoney?
Are, is this an investment for,or are you putting this money
away for something that you needin the next three to six months,
the next three to six years or10 years plus, because where you
(07:18):
put your money will change basedon when you think you're going
to need that.
If you, if you need money inthree to six months, put, put
that in a savings account orsomething that's really more,
that's really easy to get reallyeasy to access with no risk,
right?
If you're looking at three tosix years, then you might, you,
you know, you, you know, you cando it either way.
(07:41):
You could put some money in, in,in an investment vehicle.
You could, uh, put some money in, uh, in a savings vehicle or,
uh, or higher interest bearing,uh, uh, vehicle.
If the, if the horizons 10 yearsout or more, that's a different
story.
Um, and, uh, you know, thenyou've got, uh, there are other
(08:05):
things that will come into playand we'll get to those later.
The next one is, what's yourrisk tolerance?
Can you, can you accept higherrisk?
One of the axioms and investingis there is a relationship
between risk and reward.
And in most cases, um, thehigher, the risk, the higher the
(08:30):
reward, the potential reward.
Yes.
Now that's not always true.
And so, you know, uh, goodinvestors are always looking
for, can I get nearly all of thereward with half the risk?
That's what you're looking for,but that, that takes homework
(08:50):
and, and some understanding, butin general, you got to
understand what, what yourtolerance for risk is, you know,
can you, can you handle, uh,swings up and down, uh, year to
year, day to day, right?
And the value of that asset, howmuch money do you have?
(09:11):
There's going to be certaininvestments that you can't start
unless you have a certain amountof money.
And so that, that, that willrule out some things for you.
But the one thing I can say, uh,over the years, those minimum
investment values have come downquite a bit
Speaker 1 (09:34):
Because investing has become a lot more, there's
Speaker 2 (09:36):
Been more democratization of investment,
um, now to get access to, youknow, advisors, you know, and
things of that nature that youmight need to have a little bit
more money.
Right.
But, you know, we're talkingabout things for big, for
beginners, how much help do youneed?
That's a good question, too.
Right.
(09:56):
So, uh, is this something that,you know, is this an, is, are
you looking at investments thatrequire a lot of knowledge or
something that you can pick upon your own?
And, uh, and so if you need alot more help, then, uh, you're
going to need to go to somebodythat specializes in, or just
(10:18):
start small, or, or just startsmall.
Speaker 1 (10:20):
If you need a lot of help, you might, you're not
starting with ETFs or options,you know?
Speaker 2 (10:25):
Well, I, I, I'm just going to say, no, I don't think
any, anybody that's listening tothis should not start out with
options.
That that is not a, um, that'snot a beginners tool.
Um, and then I'm going to comeback to, to this.
Do you fundamentally understandthe investment?
There are many complexinvestments around, and you may
(10:48):
not be prepared for the full setof risks of the, those
investments.
But if you can understand the,the investment, the, the
business model or how they makemoney, that gives you a better
idea of whether you, uh, how,um, whether you can invest,
whether you should invest inthat.
Speaker 1 (11:09):
Yeah.
And what even you would be doingif you did invest.
Right.
So what I'm hearing is do yourresearch.
If it, if it's something thatyou can't understand, don't do
it because that's, that's a badidea to put your money into
something you don't understand.
Right.
Speaker 2 (11:23):
Oh, and one more item, how much does it cost for
the investment?
Are there transaction fees andthings of that nature?
And, and, and so you'll want tounderstand that as well.
Okay.
Speaker 1 (11:39):
Okay.
Is there a minimum amount that Icould invest
Speaker 2 (11:43):
With new tools and apps?
You can probably start with likefive,$10 out there.
Online brokers investing appscan, uh, can charge service and
maintenance fees.
You got to understand that, um,and the investment choices can,
can, um, very, uh, some allowyou to invest a pre in, into
(12:07):
predetermined portfolios ofexchange, rate of funds while
others offer individual stocks.
Um, and remember each individual, uh, investment can carry fees.
And one of the new things outthere now is fractional share
investment where you can, yes.
(12:28):
I share a Tesla costs threegrand.
Well, you, if I got$50, I canstill have a fractional share of
Tesla.
Speaker 1 (12:40):
Yeah.
That's what Robin hood cash upACOR.
And that's what they do.
They do.
Fractionals there's causethere's some stocks that like
Apple Berkshire Hathaway thatI'm never going to be well, not
never, but I cannot afford rightnow, but exactly.
I don't have$10,000.
Even if I did have$10,000, I'mnot putting no.
(13:02):
So I will, I would put 50,000 ornot 50,000,$50, or like$20.
Um, and to a fractional sharethat still aren't your money,
but you don't own like a fullshare of it.
That's what fractional stocks.
Right.
And that's something that youcan do.
Like we talked about in ourbudgeting episode, you just put
aside 10, 20,$30 a month andjust put it into like a
(13:23):
fractional stare of a stock.
Anyway, that's, that's myinvesting advice.
All right.
Why should I invest if I don'thave a lot of money,
Speaker 2 (13:32):
Even when you don't have a lot of money, you want to
establish investment behavior.
And the earlier start, thebetter you will be through the
power of compounding the 35 45,55 year old, you will be
(13:52):
thankful that the 20, 25, 30year old, you put away 10, 20,
50 bucks on a regular periodicbasis into something, that'll be
something that generates moremoney.
So somebody that starts with$50a month at age 25 will, will
(14:14):
have more money than someone whocan start 10 or 20 years later.
They can invest more.
These are facts.
Speaker 1 (14:23):
All right.
Is it a good idea to invest?
If I still have debt,
Speaker 2 (14:27):
This can get a little complicated in general financial
planners, ask for folks to paydown their debt as quickly as
you can, before you startinvesting, right.
Uh, you know, when you delaypaying debt, you can actually
end up costing yourself moremoney because of interest
charges.
However, there are situationswhere it may actually may be
(14:49):
beneficial to start investingwhile you're still paying down
debt.
You know, I'm sure people that,you know, um, had debt and
invested in, uh, Bitcoin are,are happy, right?
They're really happy right now.
Or people that had Tesla arehappy right now.
Uh, but those things don't comealong every day.
(15:11):
And for, for most of us, um,again, following the standard
rule standard, not they're notrules, the,
Speaker 1 (15:22):
The, the standard measures
Speaker 2 (15:25):
Are probably good ideas, but here's one where I
think it really absolutely paysoff to invest while you're
paying down debt.
And that's, you know, if you seeyou're working at a company and
it has a 401k match yep.
Again, at least the vest T getmax out the match.
(15:46):
You know, that, that, that mightnot be a lot that might be, you
know, just a couple of percent,you know, 50, a hundred bucks,
you'll get, you know, another5,000 bucks from the employer,
from, from the employer.
And then go ahead and, you know,put the rest toward paying down
your debt.
Okay.
Speaker 1 (16:04):
Now we have some more specific questions, uh, from,
from listeners.
If I am in my early thirties andmy only debt is a car payment, I
have a 401k, should I make otherinvestments?
Someone told me about somethingcalled a Roth IRA.
Should I consider this?
What else should I consider?
Speaker 2 (16:25):
So, yeah, there's a lot here.
I'm going to assume that youalready have an emergency fund
of some time, some kind toprotect you from life events,
life events.
They look tires, people get flattires, people get sick, people
get sick, uh, stuff in yourhouse breaks.
(16:47):
You gotta have some money tohelp you get through those
things.
After that, now we can starttalking about what else we want
to do.
Could you put more money in your401k?
Yes, she could.
But a Roth IRA is a great toolfor young investors.
Especially if your tax rates arelow.
Speaker 1 (17:08):
Yeah.
Cause that's the one where youput it in and
Speaker 2 (17:11):
You put it in after you paid the tax and then you
it'll grow tax-free for you.
Okay.
So now as your income rises,maybe the standard 401k becomes
more important to you, but youknow, for right now, no go,
that's an that's an option.
(17:34):
Okay.
Speaker 1 (17:37):
And what other, what other things should they look up
Speaker 2 (17:40):
ADA after that?
There's the whole range of otherthings that we've talked about,
right?
Investment apps, mutual funds,index funds, equities, um, and
the recommendation would dependon short-term goals, long-term
goals, risk tolerance, and howmuch cash, how much money we're
talking about for yourinvestment as well.
(18:01):
So that's where it starts to getcomplicated.
Speaker 1 (18:06):
All right.
What if after I pay all of mybills, I only have$50 left at
the end of the month.
Should I put it in savings?
Should I try to invest a portionof it?
What should I do?
Speaker 2 (18:17):
All right.
I'm going to go back to some ofthe answers I had for the last
question, right?
First step, build yourself anemergency fund emergency fund.
Yeah.
Use that 50,$50 a month tocreate a cushion for life's
emergencies.
And again, financial plannerstypically call for three to six
months of expenses saved up likebasic expenses, basic expense.
(18:43):
Now I don't go to, to thatlength, you know, Hey, once you
get to, to two months ofsavings, now you can start
splitting up that$50 into, Hey,I need to continue putting some
money away from, uh, foremergencies.
So I get to the number that Ireally need, but I've got a
(19:04):
little bit saved up for mercy.
Now, let me start putting thatthe rest of that$50 into an
investment pool.
Okay.
Now you can continue fundingboth until you've reached your
savings goal and then, um, puteverything else into your
(19:28):
investment.
Um, and then you can choose anyof the investments that we've
talked about before.
If you're starting at 50, thensome of the apps may be really
helpful for you, but again,start early.
Um, and, and the, and the moreyou get into this behavior, the
better off you will be.
(19:49):
You will start getting to, intobehaviors that will help you
build wealth and help you withyour financial security going
forward.
All right.
That's it for our show.
Thank you so much for listeningand be sure to join us again
next time when we discusscredit.
Speaker 1 (20:06):
Yes.
And if you have any questionsfor us, you can email
us@efespodcastatgmail.com andfollow our Instagram at E F E S
podcast.
Thank you so much for listening.
Take care, everyone.
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