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Beginner's Guide to Investing

Lesson 9 of 12

DIY Approach

 

Beginner's Guide to Investing

Lesson 9 of 12

DIY Approach

 

Lesson Info

DIY Approach

But how active even put money in the market in the first place. One of the big things you need to do is decide who you're gonna go with, what brokerage or broker or financial advisor you're going to use. And Kelly Lannon, whose directorate Fidelity, said to me that she likes to think about it like vetting a dating partner. This is somebody you could be working with through your entire life. You want this to be a really strong relationship, so you should date around a little bit. See who's the best feel before you make a decision about where you're gonna put your money. So I explained earlier, some the things I like to do is test customer service. I like to read reviews. I like to ask people what their experiences have been and also make sure that you're looking at cost and fees. That's a really important part of it, so there's a few different approaches. One is the do it yourself approach. You can use what gets referred to as a discount brokerage. I absolutely hate this term because it...

sounds super sketchy, but it's a perfectly legitimate option, and this is what most do it yourself people use. It's a very much a lower barrier to entry in order to get into the market because of using one of those full service firms a lot of times. That's the more classic example of working with investing experts in the sense of maybe you need half a $1,000,000. Maybe you need a $1,000,000 in order to get them to pay attention to you at some of the bigger full service firms. Discount brokers do it yourself. You don't need that kind of money to get in the game. However, Sometimes the funds do have what's known as a minimum initial investment. So going back to the question that was asked earlier, how much money do we need to get started? Well, if you go to a discount brokerage and your do it yourself, sometimes it'll say All right. If you want to invest in the S and P 500 you need $3000 in orderto open this fund. We don't always have $3000 at our disposal to put into the market, so maybe that particular fund is not right now. The best fit for you, which also can come into play about where you do your business, At least in the beginning. There are some brokerages that have no minimum funds, so you don't need anything. It's $0 in order to open an account. I also know that those minimum initial investments are just in the beginning. Afterwards, you can put $10 a month 100 whatever you want to do into it. It's just in orderto open the account in the first place. Examples again, not endorsements. Just giving you names because I think that that's helpful. Vanguard, Fidelity, Charles Schwab, TD Ameritrade, T. Rowe Price and Ally Investor all places that you can be a do it yourself investor. Also not all of them. Those are just some of the examples. Another one is a robo advisor, So I actually interviewed somebody from betterment for the book, and he doesn't like the term robo advisor. He thinks it's a little misleading for a couple of reasons. One. Sometimes people think there's a magical algorithm that's doing all the work and that can beat the market, not what's happening with a robo advisor. There is an algorithm involved, but people are all involved throughout the process. He likes the idea of online financial advisor. He thinks it makes a little bit more sense for the service that they're providing they really are strongly marketed towards. Millennials is a digital solution for getting into the investing game. The other thing, too, is that it helps walk you through this process of asset allocation, time horizon, risk, tolerance. And they do this usually in the beginning. But having you answer a questionnaire and your answers, then help determine how you are going to be investing in what kind of investment you're going to be putting your money. Whether the different asset classes, you're gonna answer questions about what your goals are, and that's gonna help determine time horizon. It can be really helpful for a young investor. There's a little bit more hand holding when you have a robo advisor, but in exchange for that, you're gonna pay a higher fee. So it's just really important again, this idea of value. There's no issue with paying a higher feet. You just want to make sure that you're really getting value for it. So some of the things that they also offer their usually doing that re balancing four years. The question that we answered earlier about Well, how do you know if your portfolio is gone out of whack? Will they help handle that for you? They also do something called tax loss harvesting, which again, I'm not going to try to get into it and explain what that means. But basically, let's just say there helping make sure you pay the least amount in taxes that you legally have Teoh on your investments. Some examples of robo advisers include betterment, swell personal capital, Wealthfront, wealth, Simple and L. A vest. Is there an app for that? It's usually a question we like to ask ourselves. And when it comes to investing, Yes, of course there is. They get referred to as micro investing APs because usually this is the lowest barrier to entry. When it comes to investing, you can usually get started with just a couple of dollars, and they charge you often a dollar $2.3 dollars a month, not about you guys. I live in New York City. I cannot even do a load of laundry for a dollar, so that sounds like a really good deal. Just paying a dollar to get into the investing game. Problem is, a dollar as a monthly fee will actually eat up a lot of your returns. If you're not careful because of your Onley investing a handful of dollars a month $12 over the course of the year might eat up all of your returns. So the rule of thumb that I really do like to use is if you're going to start investing using a micro investing app, put at least 25 probably even $50 a month into these APS. To really make sure you're getting value for the see that you're paying again, not saying the fee is bad. These companies do also need to make money. I am saying that it sounds so low that it almost sounds like, Yeah, I can just put five bucks a month in there and I'll be making some money. You have to do the math on those two examples of micro investing. APS include Acorn Stash and Robin Hood. There are certainly others, but those are three of the biggies

Class Description

AFTER THIS CLASS YOU’LL BE ABLE TO:

  • Create an investment plan that’s right for you and your budget
  • Build your net worth through stocks
  • Know the basics of investment terminology
  • Create short, medium, and long term financial goals
  • Understand your company’s investment options

ABOUT ERIN'S CLASS:

Exchange-traded funds. Brokerages. Asset allocation.

Most people want to start investing, but have no idea where to begin. How much do you need to start? How do you know if you’re taking the right first steps? In Beginner’s Guide to Investing, author and financial expert Erin Lowry breaks down the obtuse language and lays out your investment strategy options. Learn the common misunderstandings, set your financial goals, and take strategic steps no matter your starting amount, time frame or business context -- Erin has you covered.

Don’t let beginner’s paralysis get in your way; Erin provides you with the knowledge and tools for financial literacy. Learn the basics of investment terminology, the stock market, saving for retirement and everything you need to feel confident to start growing your wealth.

WHO THIS CLASS IS FOR:

  • Young professionals

ABOUT YOUR INSTRUCTOR:

Erin Lowry is the author of Broke Millennial: Stop Scraping By and Get Your Financial Life Together and Broke Millennial Takes On Investing: A Beginner’s Guide to Leveling-Up Your Money. Her first book was named by MarketWatch as one of the best money books of 2017 and her style is often described as refreshing and conversational. Erin has been featured by The New York Times, The Wall Street Journal and USA Today and on CBS Sunday Morning, CNBC and Fox & Friends. When she’s not thinking or talking about money, Erin is planning her next travel adventure or probably looking up pictures of dogs. Erin lives in New York City with her husband.

Lessons

  1. Class Introduction

    Meet Erin, self-titled “investing translator” and personal finance expert. In this lesson, Erin shares her background, addresses misunderstandings regarding investing, and lays out what you’ll learn in this course: how to know if you’re ready to start investing, must-know terminology, how to handle market ups and downs, retirement plans and more.

  2. Compound Interest in Action

    What is compound interest and how does it work to maximize your returns in any investment account? Erin shows you how compound interest works in your favor over two years, five years and beyond with clear examples.

  3. Time

    Why does time matter so much in terms of investing? Examine a case study with Erin to see how time functions with compound interest to yield higher returns.

  4. Inflation

    In this lesson, learn how investing just a little money can help you combat and even beat the inevitable effects of inflation.

  5. Setting Financial Goals

    What do you need to consider when preparing to invest? Erin shares a checklist to be sure you’re ready. Learn how to approach short-term and long-term goal setting, budgeting and setting up an emergency fund. Erin explains the difference between retirement accounts and taxable accounts.

  6. Must Know Terms

    Being a new investor can be intimidating -- as someone who approached the process without prior knowledge or a finance background, Erin lays out the must-know terminology in layperson’s terms. In this lesson, learn about how to diversify your investment portfolio, factors such as your time horizon and risk tolerance, and the difference between bond funds, ETFs, mutual funds, index funds and more.

  7. Fees

    Don’t let high management fees and fine print sneak up on you; learn how to vet brokerages when considering your investment options. Erin explains and advises on expense ratios, what to ask when considering contracting a financial advisor and where to find details on associated fees to ensure you’re getting value for your money.

  8. Quick History of Stock Market

    Financial downturns have been devastating, yet studying past market events can show us how to weather the storm. Erin gives a quick review of previous American stock market downturns and how to protect yourself when the market does go down.

  9. DIY Approach

    You’re ready to invest -- how do you start? What level of involvement do you prefer? Erin walks you through different options and factors to consider: investment advisors, discount brokerages, minimum deposits, roboadvisors and micro-investing apps.

  10. Investing with Debt

    Should you be investing with debt? Whether you have credit card debt or student loans, Erin advises on whether it makes sense to start investing or not.

  11. Retirement

    Why should your investment goals prioritize retirement and why should you start now? Erin walks you through questions to consider when opening a retirement account and explains the differences between the 401k, 403b, traditional IRA and Roth IRA.

  12. Picking Initial Investments

    In this final lesson, Erin advises on how to choose your investments and approach building your portfolio. She closes by sharing valuable online resources for further information such as calculating compound interest, opening a brokerage account and researching investment options.

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