Food Groups of Investments
Liz is interested I just wasn't sure what you're about to address it can you say something about why someone would choose an a t f over an index fund? How you going to choose hot from your aggressive or concerned that your right? Okay, so let me first to find what an index fund is and then we can talk about why you would choose that over and so the way index funds work is let's go back about forty, fifty years and I give vanguard created index funds so I'm using them a lot. So john bogle who's actually the creator thie founder vanguard mutual funds are relatively new in the history of investing in mutual funds were really created about thirty, forty years ago. You've had stock since the early nineteen hundreds and people didn't know they were just by individual stocks so a they weren't diversified they didn't spread their risk, but then secondly, they didn't know how to track how the stocks were performing you might have own g and you're like, ok, I guess it's doing good but really how...
can I measure performance so they created justin index fund is a way to measure performance, so essentially they just said let's put together five hundred of the biggest stocks in the new york stock exchange and that's a new index that's the s and p five hundred standard and poor's five hundred and then they had the blue chip, which is called the d j I ate the dow jones industrial average, which is fifteen or twenty five of the blue chips the companies that have really been around and it's funny because you always see the deejay iii is a measure in the news and such I never like using it because it's only fifteen or twenty stocks the guy'd rather used the s and p five hundred, which is five hundred stocks I'd rather use something that has a little more meat to it a little more upto, so vanguard tom vogel said, you know why are we trying to beat the index? Why don't we try and just do what the index is doing let's just copy the five hundred stocks and since we're not making active decisions, we don't how to charge our customers a lot it's called index investing so they're just copying a group of investments that have been used to really track performance. So the first one was the s and p five hundred it's the most popular it's been around, but since then they came up with a small caps so they said let's create just you know the two hundred most actively traded small companies on the stock exchange is and that's the small cap index and that's became the russell two thousand I think it's like a thousand stocks or two thousand stocks and so a lot of companies that aren't index funds seo we beat the index or we didn't beat the index where vanguard is like we destroyed the index I think there's some statistics out there that seventy five or eighty percent of mutual funds do not beat their index and so when he when john bogle saw that he's like well why don't we just do what the index is doing then charge a lot less so they are very, very cheap funds that just copy and independent way to track how the market's doing so that's what an index mutual fund is and I think if you really understand it it could be a little bit of a cult in a good way and just saying well I get it like why try and beat the market went alright just tried to with the market's doing so vanguard is the premier index company mutual fund but pretty much every mutual fund company now offers index funds because they got it so how they charge is they have every mutual fund has a fi they've to fees the first is the load which is an up front fee that you pay if you buy or sell the fund so you have no load so a lot of the big mutual fund companies that I mentioned such a cz vanguard fidelity to europe priced rob thes air mostly no load future mutual fund companies so load is just to feed that you charge upfront so think about it this way if you're paying a load which is about five and a half percent so let's just say this year you make ten percent on your fund what do you really make minus five and a half you're really making four and a half percent right? But if it was a no load fund you keep the ten percent right and what do you paying a load for? You're paying a load for somebody to tell you to buy the fund or to solve the fun well I'm telling you that I'm not taking five and a half percent I just saved you five percent no see I keep finding money left and right so that's the difference between a load and no load so that means you have to earn that first year five and a half percent mohr that an index fund just to break even just to get to the same place so the load isn't a bad thing I mean what you're paying with the load is you're paying somebody that fine we're all in business I'm not a nonprofit right? Either you or you guys are gone profits no there's nothing wrong with that, but most people who are sold load funds don't realize that it's not like they tell them that so that's my big problem with that is that people don't realize that and when I go through this exercise and I look at people's investments and like, do you realize you have a load fund? Like why didn't know that nobody told me that so that's, really my biggest beef is that people aren't told that they're paying this feat. So index funds it goes without saying or what's called no load and that's become its own catchphrase. Then you have the expense ratio so that's probably the biggest criticism of mutual funds, the expense ratio is an annual fee and the mutual fund that you're always gonna pay, you can't get around it and that's how the mutual fund company makes money so vanguard their expense ratio goes to pay the portfolio managers apiece for the building. The website, you know, just had letting them research the companies, so the annual expense ratio average for the entire industries about one and a half percent a year. So that means if you're earning ten percent, they take off one and a half percent and you really get eight and a half percent so that's, what the expense ratio is it? Imagine if it was a load your four and a half percent is now really three percent because they took away the expense ratio, so the average in the whole industry is one and a half percent vanguards is point two, five percent the reason why is because it's index investing, they're not making active decision. They're saying here's, the five hundred stocks on this s and p five hundred let's just copy it. We don't have to make active decisions, so you do the math you have to mutual funds that both to ten percent this was a load, so right away I'm at four and a half percent this one, I'm still a ten because there was no load, this one was one and a half percent. This was point two five. So right now and of your one, I've earned nine point seven, five percent driver and three percent like when you look at these numbers you're like, of course I'm going to go for the nine point seven, five percent and that's what vanguard said exactly. I keep saying vanguard, I'm not promoting them. I'm just a fee person I miss cheap as they come. You can do this a finality you could do to schwab this's vanguards philosophy though they've one hundred mutual funds plus ninety percent of them are index funds no load, really low fuse like that. Fidelity's air about one percent point seven. Five percent, so they're still cheap, they're a little bit more. But again you khun doom or so just to show this example, you've got to mutual funds one and a half percent expense ratio the other's point two five they both have the same returns in ten years just by putting two funds in the same exact to putting money in the same exact funds but just different fees you're gonna have fifteen hundred dollars mohr just by putting it in the lower expense ratio so that's part of your homework look at what you own and then look at the fees and the fees are the loads and the expense ratios so if you have an investment look it up any questions people excited or nervous or that I think it's going really exciting thing that you know, everybody has leveled out on the retirement thing and just gone uh, retirement but we're getting it and this is this is so positive I love this murder the most stuff on is okay, that totally makes sense. This is good it's so there's a lot of that it's not a particular question. Yeah, yeah it's just a happiness and you'd be mystified. You know, we hear these terms and sometimes you just sort of turned off because it feels like right too much is going to be required to be and so it's really great tio tio see that this is manageable information is so there have two questions one is related to a business investing money and thie other is the expenses that do come along with that are those a write off no okay so expense ratio and load is not a write off okay all right that's a great question and actually it's not like you get a bill and you've to pay the expense ratio it's just really that say you two thousand dollars in your account and the account did zero over the year but they took out the expense ratio they can't would now be worth nine hundred seventy five dollars okay what's your second oh that well the second one is can a business itself be an investor or does it have to be a person? Yeah but the gosh that's a good question I don't know I mean I don't know I don't know the answer to that very question I know that a lot of pension funds invest I mean that's that's a huge industry when I worked on wall street we sold bonds pension funds into life insurance company so absolutely organizations can invest cause they're investing the pensions one for their employees I mean that's really what wall street is it's not really for the individuals more for the institution I was thinking more from like a bond standpoint like if it was like a five year fixed and you had some long term goals for the business right I don't know I I don't see why not, but I don't know. Okay, okay, thank you. I just wonder if you could just go over that line of about less turnover less capital gains absolutely in taxable fund because that would be my next question is okay, this makes a lot more sense. It seems so much more approachable now and then, you know, always has freelancers are biggest question that's always what we're about my tax no that's such a great question that's why put on there? You know, I'm quickly going to answer I think it was gidget or somebody had the question about shay doing index founder and e t f and I first wanted to explain what the index fund is, you know, realistically, you can't go wrong with the way it's going if it's an e t f based on an index it's going to do exactly the same, probably another reason I don't like the index thie f excuse me is that I don't think we're gonna have time today, but tomorrow we're really going to go through the mutual fund checklist are kind of like, dissect this even more and we're going to go on morningstar dot com and I've given you about four different kinds of mutual fund, so we're just gonna really look through it so much fun, I love it uh, I dio don't I love it I know you are looking at me like I've got two heads on and my tongue to swim too, right? Um, but what I found with morning star or just in general when you're looking at mutual funds but it's really easy once you learn just a few of these key terms like you've already learned about expensive issues and things like that, but it's really easy to see how my doing and to do a check up with an e t f it's a much harder to do that because it's a new product and it doesn't have as much information again, I'm just, you know, I want to keep my money simple, and I think I'm a pretty seasoned investor I've done about six to eight percent over the last twenty years per year have been a great saver, so it's, I just want to keep it really simple, and so I just find it's a lot harder to get the information on the f's, and I'm also I'm just going to jump ahead a little bit. I'm looking at the four food groups you gotta have the four food groups before you get into the other stuff, so you gotta have the large cap small cap, the international, the bonds will go over in a few minutes, and while there are others categories you really have to focus on these four and so when I just go to the source like, why go with the new and sexy product? So that's that's sort of my philosophy so let's talk a little bit about turnover, so the way mutual funds work is a c five times, so say you have ten thousand dollars in a mutual fund and they've got five hundred stocks in there and they were and they were able to sell some of the stocks and make some money that means those stocks had capital gains, so the stock was, say, bought it twenty dollars, and sold it fifty, and so that difference is a capital gain. So while you didn't necessarily sell the mutual fund, you just kept it they actually made some money in there, so unfortunately, we're gonna have to pay taxes on that money even though you didn't sell anything. So I don't know if that's ever happened to anyone where they got a statement from their mutual fund company, and they said, you actually have some capital gains. You've gotta pay taxes on an investment and you're like, but I didn't sell anything so that's because the mutual funds sold some investments in there, so that means that they were buying and selling a lot of stocks within that mutual fund and that's called turnover, so an index fund just isn't making a lot of changes because they're just copying the index so their turnover is usually one to two percent a year they're only buying or selling like one or two stocks and so there's not a lot of capital gains so there's not a lot of taxes to have to pay so that's another benefit of of index funds is there's less turnover now a huge caveat if an index fund or mutual fund is in an ira you don't have to worry about it because you don't pay taxes on investments while they're in the ira so this is just in investments that aaron non iras or non retirement we're going to talk a lot tomorrow about asset allocation but this is just like say you've got your five to seven year goal like maybe you're you know you could buy an index fund that's not an I r a like you could buy an investment just for three years five years but that means you have to pay taxes on it that's okay you're making money back taxes means you've made money you've earned money like everyone says taxes or terrible I get it I don't want to pay taxes I look att taxes I've made money I've earned money I wanted his little's possible granted but also look at his eye made money so this is just if you held a fund in a non retirement account also called a taxable or individual account and that's part of like your big short your big strategy you've got your emergency money, you've got your retirement you've got in between so you know, a lot of people have called in that didn't necessarily have that set up, but there are a lot of you that are watching that are in that they're like, I've got my emergency money I'm getting there, I've got some retirement money maybe I want to invest to safer down payment maybe I wanna invest to safer that car that we were talking about you know, maybe I want invested take a great vacation in three years and so maybe you'll buy a fun for that, you know, that's this chart here again like maybe you're investing some money for the mid term it's not retirement it's not your short term but it's really more in a midterm level and so a mutual fund can be a great great tool for that, so if it if you make money, you've got it, pay taxes and index fund is going to have less turnover in that time. So that's a great question kind of a hard concept but it's a really great question the ira us not being talks on capital gains and that's that was that chart that I had before is the ira's a big empty box? You don't pay any taxes while it's in there so the sep ira, you don't pay taxes initially and then you don't pay taxes well, it's in there, so if it grows it six or eight percent it's tax free and you pay taxes when it comes out the roth ira, you pay taxes up front, you don't pay taxes. It's called tax deferred the new pay taxes that your tax bracket when you take it out. So think about that eight percent you're not paying taxes on where's a percent. If you're in a twenty year, thirty per cent tax bracket, you pay texts on that, then it's also the realized for son realized. So if you hold an investment and you don't sell it, you don't pay taxes until you sell it. If it's in a non retirement account, does that make sense? Okay, well, why don't we talk about the four food groups? And then I think we'll wrap up for today, see if we've got any last questions and really just talk about her homework for tonight, we'll spend a little bit of time on this. So again, what I would ask for you to get the most out of this if you've got some questions, if you have some specific investments. We can go over them tomorrow so if you've got some specific mutual funds you too if you want to bring him in, send us on the chat room or email us kind of like do it first thing in the morning so we could do it over break and look at it um I can definitely give you some suggestions on just really teaching you about it like what kind of investment isn't so in terms of your retirement what you want to think about very often you know and I know just even like going teaching this class around here I've had some people say I've got this investment and I'm like what kind is it well I don't know which is I mean completely normal because maybe somebody bought her for us for maybe we did it through work or we don't know we just haven't taken an interest or haven't really stopped or no one's taught us about it when you think about I'm thinking more of a long term is you really want to have what I call the four food groups of investments so you wanna have large cab these are large companies user g e this's apple johnson and johnson and tomorrow we're going to look at some mutual funds we're gonna look at a large cap you know the names it's the value investing there in your cabinet there in the newspaper there cos you might have worked for their companies that you've seen on the street if maybe you're an artist and you've never worked for a company or you've never worked freelance for a company that you've worked for them, you know them and these are companies that are each individual company is worth more than ten billion dollars it's really not a lot of money. Sadly, smallcap are small companies, and then you also have what's called value and growth, so the value of company means that they're not really growing, they just they they are making money, but they're really sort of paying it out to the investors where's growth, they're making money, but they were putting it right back in the company, they're putting it in research and development, or they're just really, um, taking that money and trying to find a new product or trying to find a new industry or just really trying to find a new area. Ah, smallcap tends to be a growth company, which means if they have extra, they're not paying it out to the investors. They're really putting it back in the company to grow, and then you have an international. So this is all in us dollars, but their companies that are based not in the u s so the mutual fund is actually buying were there buying stocks of like sam song or nokia or um, nestle is based in in, uh, in switzerland, so I mean, it's, it's companies and again, when we look at the international cos you'll recognize a lot of their names, and then you have a bond mutual fund. So just to kind of understand, you want these four food groups, and so before you get into the other categories such as real estate or emerging markets or energy or commodities were just the more speculative you just want to make sure you've got this foundation so very often people say, well, should I keep this fun shy? Not, I'm like, well, where does it fit in here? And what I see when I really look at people's mutual funds is they're not diversified, they've got, like, four large cap, but they've got two small cap or they don't have any bonds, and the reason why you want a little bit of everything is that on the whole, when the market goes down, so I know that I've lived through two thousand one and then two thousand eight in terms of like a real real down mark it on the market stock market is really timed tank the bond market does well, it's, usually in verse, and so in this case, you want have bonds to protect you when the market goes down. And so that's, why when you're younger, you've got a little more time to bounce back, but when you're older, you don't. So when you're older, you want to have more bonds, it's a true anomaly that right now we're in a down market with bonds that never happens, but this talk more if it's doing amazing so it's a little bit of a flip side. Nice that when the market is down and if you have the money it's actually a great time to buy holy so it's it's such a cliche but buy low, sell high I mean really like that's why I love dollar cost averaging because if you're buying every month, how do you know when the market's going to go down? You don't, but when the market goes down, you buy absolutely think about the four food groups could you buy an e t f of each of these four absolutely there's, just not as many, whereas you could buy an index fund, you could buy a large captain next fund, a small cap and international a bond one or you could just buy for mutual funds that maybe aren't index funds, but that are no load and have low expense ratios, so that's a great place to start is to putting to get the your retirement portfolio. We'll talk a lot about say you only have enough money for one fund like we'll talk about that as well but the idea is that you want to make sure your retirement portfolio has thes four food groups and that's why again when we talk about the consolidating think about if you have different funds here different funds there how are you going to pick these for but if you have all your money and one or two places you can really say okay I have ten thousand dollars let me put twenty five percent in large cap twenty five and small cap twenty five and international twenty five and bonds ok I can buy the bond fund that large cap small cap the international fund because I've got it in one place whereas if I've got two thousand here a thousand there four thousand here it's a lot harder to be diversified and more importantly what I seek is when I look at people who've got lots of different statements is very often they have the same fund they have the same kind of fun they've got you know, large cap so this is one of the reasons why I don't necessarily suggest individual stocks because for you to really be diversified you'd have to have probably a hundred large cap stocks maybe fifty or hundred small cap stocks fifty or hundred international bonds excuse me an international stock than another twenty five or fifty bonds do you know four hundred five hundred different securities like that? Yeah, I don't I mean, for me to research it, I'd have to quit my day job and find that I did that when I worked on wall street number one number two two really manage that I need to be on calls every week I need to be looking at p e ratios things were not learning about today but you'd really need to consistently be on top of that who's got the time for that nor inclination I have an mba in finance I did that when I studied I did know I no desire to do that now do I want to have one or two stocks just to hold to have fun with you? Totally totes says my nine year old says absolutely for fun so I'm since I'm really learning more about mutual funds now is it like one? Have you bought one mutual fund? I have about seven mutual, so so you have seven like in terms of number when you have individual stocks, you have shares, but when you have a need for a mutual fund, what you have and that's a great question, we're definitely gonna delve into this tomorrow that's kind of a longer thing is that you have a share of a mutual fund which is owning essentially the average of all the underlying stock's in there okay, so you can buy mutual fund for one hundred dollars and you're owning a very small portion of five hundred stocks or two hundred stocks it's literally called the navy net asset value yeah, and so in order to get these four food groups, how would you go when you buy a mutual fund? You would say I want this this this and this literally can call vanguard up you've got to start with your cash so if you already have some money saved whether it's through rollover ira or roth ira or something else like that so again let's start with how much money you've got if you only have five thousand if you went to vanguard their minimum is either a thousand or three thousand, so maybe you can only buy two funds, so they actually and we'll talk a lot about that later is that they have funds that have all of these and one fund, so if you don't have a lot saved, that could be a great option, so they actually have what's called target date retirement funds so that's a mutual fund that is based on the date you want to retire it doesn't mean that if you invest in there you'll be good, but the idea is that you would pick a retirement account retirement date say like a two thousand forty or two thousand thirty or two thousand fifty or whatever and you could do is little's a thousand or two or three thousand, and they'll pick this asset allocation for you, and as you get closer to that age or to that date, they will consistently make it more and more conservative so they'll just do it for you. They'll change the allocation, so I'd say the only reason I don't love them is that I think they're a little too aggressive. So what? They might only have, like ten or fifteen percent in bonds where I might have, like, twenty or thirty or forty percent for my older clients. That's probably my only complaint, but I love him and you love them. So when the market went down in two thousand eight, they didn't do as well as maybe my portfolio that had thirty percent in bonds or forty percent of bonds. So if you're a little bit older, it, you know, you just want to keep track of that that's all he said bonds with age, right? Yeah. Your agent bonds? Yeah. So you're thirty two, so you probably need about twenty five percent in bonds. So just understand that these are the two rescues categories international small cabin thing, I mean, again, this is where we have to think about finances, his terms. Doesn't make sense that small cap would be risky it's a small company it's a new company it's, a technology company it's a biotech it's a force growth whatever but your attorney could potentially absolutely risk and return inverse relationship so yeah, a mayan smallcap totally, but maybe I fifteen percent or twenty percent and I have more in large cap dr international you bet and I'm a big fan of international and I'm a big fan of emerging markets, which is primarily the bric countries brazil, russia, india, china but again, is all of my money there now like twenty percent, fifteen percent so it's all about moderation. So even though I'm conservative on main international, I'm in small cap and I've got large cap absolutely and I also have a real estate fund. I've got a real estate mutual fund, which is a reet it's, a real estate investment trust. So it's a mutual fund that's buying stocks of real state companies like hotels and apartments and um and that's you know that's a really risky category. Another way to look at is if you have individual stocks, what is the stock? Is it a small stock or large stock? So is the stock worth more than ten billion or small caps? So say you do have some stocks does that make up your smallcap portion? Or large cap so the reason why I suggest mutual funds versus stocks again it's the inclination of just like a cab gotta manage it what I also see is a lot of people come to me with a stock portfolio and it's not diversified they've got thirty large caps that's it because that's you by what you know which is great and I love that philosophy of investing but it's not diversified so that's why I don't think on ly investing in stocks and truthfully you have to monitor their stocks that's why I'm paying someone else to do it so I can focus on making more money focusing on investments for retirement but actually one of my relatives was a day trader never really understood like how you actually make money I don't know even teo you get it how does it taxed on you know well what they did is they probably focused I would say ninety percent on this area and so they just bought a company that they heard came up the new product and said let me bite it five dollars I hope it goes to seven and then I watched it and watch it and listen to reports and troll the internet and then what it goes to seven I'll sell it and I and then I have to pay a difference on that too and I have to pay taxes on that two dollar gain and if I sold it within a year, I have to pay short term capital gains, which is thirty, forty percent. But if I kept it longer than a year than it's, only fifteen percent or twenty percent long term capital gains you have some questions. And the chapped hq alligator is asking, how often should we track performance of our mutual funds? And is their point when we should pull out of one? Absolutely. So we're actually gonna go through the mutual fund checklist tomorrow. Extensively. It's. Kind of like the first one. It takes real explain the concept. I absolutely so the idea with mutual funds. And I think it's such a great point. Is that again? You're showing up to this course. We've done the budget. We've done the retirement check up again. Let's, do the mutual fund check up. So if you have mutual funds let's, go through this, eh? See what you got and then be will go through the checklist. Looking at performance, I guarantee you, if you could go through the checklist, it'll be really clear to you. Should you buy it or sell it? Andy sadie's. Still viable. Short term five to ten year investment's in the current financial glue, I wish cds are not a great viable investment because right now one to two to three year cd is paying gosh the same as a money market maybe one percent to two percent so if you're getting a five year cd, maybe you're getting too too five percent but you're locking up your money for five years, which means that you're locking it in a two per cent so at this stage I would do maybe a the money market or a one year cd and then just hope that interest rates rise. Laura is asking if the fees that you talked about earlier are obvious when you're researching the different funds when we go on morningstar tomorrow or go home tonight going morningstar do it over the break you have a mutual fund looking upon morning star right at the top it says expense ratio and the load hey goombah wonders why people do go with companies that have high fever life is like why would you choose a they don't know they don't know I mean it's just it's like would you has anybody here bought a car? Did you know what you spent on the car like to the patty right? You bought a fridge, we agonize over buying these but yet think about the money we've spent on investments and we have no idea you don't know I don't know why it's not part of our lingo where they're not, you know it's because they're making so much money they tell you they don't know number one number two if you're sold on a load fund the ideas you're usually sold by one person you're working with and you speak getting phenomenal service and I will say there's some advisers that I've seen for my clients that have done a really good job of giving them amazing customer service and maybe you have a lot of money and you really want someone to manage it for you but yeah on the whole I don't think you should pay fees there was a really, really great emmett study many many years ago that's probably the most important thing you couldn't do to increase your performance is reduce your fees I mean you saw the numbers nine point seven five verses three a load fund versus no load versus high expense ratio versus low expensive I've gotta share goobers comment because it's exactly the same for may I love girlies voice so calming for a potentially no record is everybody into then you know someone such may have you ever done a voice overs I was like now but thank you stephen q t is asking for your thoughts on dividend stocks so again I'm a big fan of dividend stocks or dividends are essentially like an interest rate that the stock pays so it's essentially like a large value company that has extra money because like johnson and johnson or colgate palmolive there are large consumer products company they're not necessarily coming out with a new toothpaste or you know, so they've got extra cash flow they pay that as an interest rate to the so if you own a stock or mutual fund of defend so you can actually buy a mutual fund of just dividend stocks big fan of them again where's that fit into your diversified portfolio it's like you know, does everybody remember what happened with enron a few years ago? The reason and ron went down the stock was doing so amazing that everyone who had the stock in there for one k put ninety percent of therefore one k in one stock and the company happened to be doing fraudulent activities obviously stock tank but be the four one k h r department said you can only change your fora week allocation twice a year so they couldn't go in and change it it's the I mean I learned this in my mba I learned this on wall street I learned this from my undergrad and finance do not put all your eggs in one basket I love dividend stocks I love dividend stocks, mutual funds they're definitely for people who don't want the growth as much and a little more incomes, so if you're a little bit older and just looking for income versus growth but again you still need smallcap international bonds that's gonna be my tag answer on andy and why, say, also has a question on the says anther ttf versions for most mutual funds, I thought one of the main advantages of e t s was it allowed you to buy or in bylaws so high in the middle of an exchange day without being affected by the closing day total where's his end, the standing of a standard mutual index fund in the middle of the trading day, your right is the fund's value at the and if it is it is that some no mutual funds trade once a day, we need to have trades throughout the day. So, salih again, I'm a long term investor my buying hold investor I'm not trying to make my money that day, so I'm looking to buy a few times a year and hold it for ten, twenty, thirty years, maybe five, ten years, so I'm not looking during the day. Can I be by my tf know I'm out there working of my clients making money so that's my philosophy if that's any it's important to you than yan e t f is a great tool for that and I agree most mutual funds and index funds have tfc vanguard offers an e t a for everyone of their funds now it's become a hot product so it's not a bad thing but I'm not chasing it that's my point but I don't think it's a bad thing at all I'm just I'm sort of I guess an old fashioned person in that sense and I've done pretty good that's not proper english my mother's probably listening saying that wasn't right english we don't want you around which I think might resonate with a few people so I'm gonna throw it out just that the end of the day here that's friends goombah the people who were not bringing in revenue but need cash so we've been talking about having all these savings and things in place and they shouldn't be touched is there a way to withdraw from a roth ira without penalty so with minimum penalties or anything about doing it before the end of the year or anything for people that are unemployed and I feel like I need to do it so the roth you know, seriously, I don't know the full answer to that. I know you can take money out for a first time her home purchase and I know that you can take it out if you've had the money for longer than five years, there is some flexibility I'm taking the money out I don't know the exact answer to that so I think if you really need the cash and you gotta cash it out and you take it out and you pay the if there is a tax do you take it out so what is your homework? We're going to continue talking about investing but in terms of investments your homework is if you have investments, go home and look him up and if you don't know what they are sanderson send them to us and we'll try and help you understand him tomorrow we're really going to go through the checklist we're going to go through some actual mutual funds but learn what you've got taken interest I mean what I have found overall and I again I see this when I teach the classes so this isn't new to me even though I love it just as much is that most people really excited and energized by learning about their investments it's a really positive thing and while I've probably oversimplified it, I don't think I've made it oversimplified in that sense I've really tried to give you the power to understand it so go home look it up you are home you are in your office over the break tonight look up your mutual funds, look him up on morningstar find out what kind they are, what kind of fees you've paid get your mutual fund checklist and then secondly just working a little bit backwards I understand that meaning may be a lot of you aren't necessarily making the money you'd like, but then let that be an incentive for, well, I really need to figure out how to charge more or how to make more money so I can pay myself and start putting that money into an ira or into a savings account and start investing and do something fun with it. This is fun. This is really exciting. We're going talk about socially responsible investing tomorrow as well. But take that step open the roth I r a rollover old investments really start cleaning up in organizing your financial life and continue those money conversations. That's what we started with today eleven money and friends and money and having those conversations and questions to ask have those conversations share with us? Those conversations go home and change into our homes, they go out, text your friends, call your friends say, well, I'm taking this amazing personal finance for artists and freelancers course it is blowing my mind what I've learned you have got to hear about it. Can I tell you about the roth ira? I'm going to open the hedge fund the what do you think about any tf versus index fund? I want to hear that in the in the lunchroom, ladies