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Beginner's Guide to Investing

Lesson 3 of 12

Time

 

Beginner's Guide to Investing

Lesson 3 of 12

Time

 

Lesson Info

Time

So let's talk about why time matters so much in the context of investing one. You need it in order to truly maximize the effects of compound interest. The longer time you have, the better it's going to work out for you. The other thing is, as I mentioned already, the market's going to go up and it's going to go down. It doesn't stay consistent. So time also gives you the advantages of weathering those ups and downs of the market so that during the down times it's okay it's gonna come back around and you're going to be able to weather that storm. Let's give you a really life example of this combination powerhouse of time and compound interest. So first we're gonna meet Leslie. Leslie started investing at 25 with her 401 K tell. A lot of us get into the game in the beginning is with her retirement account, and she started putting $400 per month, and also in the case of this example, I'm not even including an employer contribution to a 41 K We're just talking her contributions. So this is...

her boyfriend, future husband Ben, and he started off by investing when he was 35. Leslie starts at 25. Ben's got some stuff to take care of. He's procrastinating. Maybe. Is working on paying off student loans, saving up for other life goals because, like, you know what? My wife's pretty far ahead of me. I'm gonna double down every single month. I'm gonna put in $800. She's only putting in $400. They both plan to retired around 65 and they both receive a average 7% return on their investment over the course of their lives as investors. So let's look at how this pans out reminder that Leslie is investing $400 per month for 40 years. 7% return. She comes in at just shy of a $1,000,000 so $958,248. Her husband, Ben, over here doubles down $800 per month, but only for 30 years. Same return and you can't catch up. So he's at just over 900,000. Not shabby in either case, but the point is, he waited 10 years, tried to double down his contributions and play catch up, and he still wasn't able to catch up to her because that 10 years made a really big difference. So also starting early means that you could be putting away less to achieve the same results, which also gives us much more comfort, especially if we're starting it, let's say 25 feel like, Oh, I can't put a lot of way It really does that up. That snowball effect really works in our favor. Now what if they had just saved this money? They decided I'm too risk averse. I don't want to mess around with the market. I'm just putting this money into a plane savings account. Leslie doesn't even break 1/4 of a $1,000,000 with that same amount over 40 years. Ben actually does win in this scenario with just over 1/4 of a 1,000,000. So they're really in about 25% or less capacity compared to putting their money in the stock market and allowing it to do some of the work for them. I'm gonna keep harping on that point, guys,

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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