Mutual Funds, Investments, ETFs
We have three budgets were trending pretty different so this is good let's start with camera dude all right camera do income four thousand five hundred is that before tax or after seeing how I see you got us? Yes. Those questions okay with um uh fixed costs of twenty, three hundred credit card debt five thousand seven hundred cash savings two thousand finally alright and white this a tried securities thirteen thousand eight hundred nice visited and ira uh, wait you don't think so no on that and the goal is to be debt free and buy a property in five years. Oh, you know, it sounded pretty rational here. Yeah, you'll get there so he's got twenty two hundred left so again we'll assume so forty five hundred times twelve is fifty four thousand you know I'm still going to just take twenty percent out so times point eight thirty, six hundred minus thirty six hundred we take out nine hundred for taxes out big bite but that's what? It is hundred minus nine hundred so here's you know, here we can...
all do this backwards so he's got fifty, seven hundred and dead so let's just say he wants to paid off in two years so that's two hundred and forty that's two paid off in two years he already has cash, which is great kudos, kudos but he needs to save mohr you know that's what I say um whatever my clients but aren't I doing great? I'm like absolutely but you're showing up because you want to do more we'll do another two hundred and then a hundred towards his ira so what is that to forty plus three hundred is five forty so that's thirteen hundred minus five forty is seven sixty divided by four so he has one hundred and ninety dollars a week so this is det savings ira so hopefully this khun goes towards his emergency savings this goes towards his debt and then in two years he can really start putting it toward saving for retirement property or a property excuse me this goes towards cash but then again you know he can use that towards a and so is that enough? I don't know if it's enough to him for a retirement property but it's what we've got so it's an incentive to earn mohr really path the debt faster and maybe he doesn't live in one ninety week maybe lives on last okay somebody else hi galya it's liza from new york I have to go live with you I know like she's an old old wonderful not old she's younger than me but she's an old client one she says I'm forty three and here are my numbers okay investments and money vanguard till you know what this is she just did e mail me this I think we're gonna have to do this tomorrow this is not a budget this is the retirement numbers which I don't have that calculated with me now way of allies we have a box of tricks I will do that tomorrow lies I promise I won't be here tomorrow all right box of tricks income before attacks about four thousand a month fixed expenses one thousand six hundred eighty four dollars twenty eight cents I'll leave it at one a little question here online cb greeters if we could just pop a little labels next to what the figures are some people that are watching our getting it so income expenses will take out taxes okay. Okay. So there's more there's business expenses fifty three dollars a month debt four thousand seven hundred twenty nine four thousand seven twenty nine okay goals are a trip to europe to be a groomsman in may and setting up a studio for september. Okay, so those are some short term goals so I might put you on a really tight budget so you could do your goals um twenty three sixteen times went to eight hundred fifteen sixteen fifty three okay, so we have fourteen hundred and sixty three toe work on um well I want to say for europe in the studio I also want to create the savings account and you've got a lot of debt to pay off so I understand that you want to say for europe but this is where maybe you might have to make a priority so let's turn the flip so if we really say okay you got six hundred fourteen sixty three so that's one fifty a week is eight sixty three so really just you know dividing it between the debt the europe, the studio, the savings so you probably ought to do four hundred towards debt two fifty you know one hundred one hundred so kind of like one hundred one hundred two hundred to four hundred and then four fifty so four fifty to pay off your debt two hundred towards europe one hundred towards a studio one hundred towards savings I didn't put the ira here but hopefully when you come back from europe you consider for the I r a that now we have one more digit can ghalia placed in my budget she's forty nine years old her income off to text is two thousand five seventy five a month thank you for saying that you took taxes out thank you idiot expenses nine hundred seven dollars I know seven student loan payments in a month five sixty three total loan is seventy nine, three hundred but you just want the month in comic, right? Yes. So what is the sixth century is a monthly payment on student loan okay credit card debt is a title of twelve thousand six hundred so income expenses student loan and now credit card six hundred twelve thousand six hundred intern exercise class about um yeah seriously has no line from family is sixteen hundred I'm not upset sure what that means sixteen hundred total yeah beliefs I is not paying them back right now, okay? And then she has less than one thousand in a four oh one k she really wants to go on a big trip for fiftieth birthday gala plus by heine okay personal loan is sixteen thousand alright, so gidget has got to find a way to earn more money right? There is no question about that. I mean we can work with what she's got sixteen, sixty eight I mean, given her age, savings for retirement is not an option it's a priority so she's a thousand dollars left and if you don't spend consciously that's you'll spend that you'll spend two fifty, three hundred a month a week excuse me easily it's not hard to do that it's actually not living on a lot. So gidget first of all thank you for sharing your numbers that cannot be easy to share these numbers but gidget has to earn more money because she has a lot of debt she's a lot of family loan so even if she only lives on one hundred fifty a week it has an extra five hundred dollars that's not necessarily enough to pay off the debt and save for retirement so this is a case where she has to charge more to take care of herself she's got to find a job that will pay more than the thirty thousand year thirty five thousand year that she's learning so she can definitely start you know she has essentially six hundred dollars extra but she's got to start dealing with the credit cards so even if she does three hundred a month towards credit cards and three hundred it's not going to really make a huge dent in the credit card debt so she really has to start taking care of herself so the trip you know she can't afford it I want her to do it I would love her to do it maybe if she earns more shaken focus on the trip it's interesting actually there's been a fair bit of chat in the rooms on ways to you know, because this has been a current fame, a common fame that people have simply not eating enough and they need more and there's been quite a bit of stuff online about how in fact, if you're freelancing and you do have that all the time to move around, you can sell things on ebay you could resell on there are a whole lot of it's quite interesting to get that that income up tio they're a little different little it's so it's so interesting sally because I have worked with freelancers and artists for a long time and this definitely comes up that I don't earn enough again when you go through the numbers don't think well this is just what it is and I can earn more no start getting creative be like how can I pay myself and I see artists and freelancers earned money and I see them earn more than this absolutely so you can do it and if nothing else the lesson in here that we had talked about earlier is how do you charge more and how much should you charge because how much do you need to earn so for you to take care of yourself and really save for retirement and maybe live the life you want to live maybe you need to earn seventy five, two hundred thousand dollars a year and so if you want to save less or live on less and not have dead and again why did you get into debt because you're probably living more than you should so unless you were really financing something that didn't work out but a lot of times we crew the debt because we lived a life larger so if you're like I don't need a lot I can live on a lot then you shouldn't be crowing the debt we all make the mistakes but let that be the incentive then to really start earning more money gijs says thank you I know I'm in a whole hugely appreciated thank you you get your showing up awesome thank you thank you gidget don't want to make you feel bad because I actually give you so much courage for showing up so thank you for doing that and I think you know what you need to do okay so what we had really fucked and by the way liza thank you for sharing your retirement numbers we will cover that so just email me that or put that on the chat room and we'll do that first thing tomorrow morning I just do need my computer for that box of tricks also thanks you for the budget oh, this camera guy oh my god my happening my pleasure my pleasure you know these are the numbers and again what were sort of knitting them grout but you know the twenty, five hundred to four thousand forty five hundred you can move up you guys could definitely do it I wouldn't say it if I didn't think you could have seen it so we talked a lot today about the retirement plan that we need we talked about where to buy it it's heavy stuff heavy heavy stuff to really complete this picture we need to think about the mutual funds that go in there and if you have mutual funds ah lot of you don't understand them I see this all the time in fact you know, during the break since I've been here, people have been pulling me aside and said I've got this fund here, I've got this fun and so I will turn around and say, well, what is it? I don't know this is a great time to start pulling out your statements if you have a statement at home if you have any sort of investment, chances are you don't know about it that's absolutely normal I don't know about the industry that you're in and if nobody's taught us that or for working with someone that doesn't take the time and sit down with us, we don't understand it so this is the time that you really start looking at what you own if you have an investment if you have no investments and you want to get started oh awesome you're a blank slate I love that, but if you have investments, pull out your statements and this is where we can really help you tomorrow in the sense of looking up a statement sent us the name of the mutual fund or the name of the stock and we'll go over what it iss and we'll go over how would fit into your portfolio we won't say keep it buy it, sell it that's not what we do, but we'll teach yu about it what I found is when you start learning about your investments you actually can really figure out quickly if you should keep your not so why do I need investments? I love this picture I need investments because they are the vehicle and the fuel that make our retirement plan work so as we saw it was really focused on you got to say five hundred dollars you have to save the thousand dollars you've got to save seven hundred dollars well investments maybe in a positive sort of optimistic way will let us maybe not save as much because the investments help us get there or more importantly, our money will take us to the next level so just before I get into it like, what are your views on investments? Do you understand them? Do you not air you scared of them? Are you excited about? Hm? Have you dabbled with them? I'd love to just hear your experience I've dabbled with them and that part was actually scary at first because in choosing stocks and then figuring things out and then also feeling glad about some choices and then not about some choices and then also being confused about why I was making the decision it's an emotional decision to pick something sometimes so um yeah, I felt like in control and I have and I do feel in control sometimes, but then I'm also like there's so much I don't know, okay so have you doubled, doubled with mutual fines? Or is it mostly been individual stocks or has mostly been stocks? So, um, and then, you know, I I had have more of a balanced approach, I think where I'm like super conservative in one way and then I'm kind of risky and another so moderate, maybe okay, great, what you have here, I've done some socially responsible investments, um but, you know, it was through an ira, and the reality of it is that I didn't really understand what I was doing, and I had absolutely no idea in the person who was trying to explain it to me. I don't think that's such a good job or maybe I just it just really went over my head, so I think pretty much up until taking this course with you, I really had an even thought that this was going to be a part of my life at all. And so it's, I'm actually really interested in learning all these different things that would always just be, you know, might as well be another language to me. I love that you just thought that have year because I hear that from artists and freelancers all the time that we'll investments aren't part of my life, I'm an artist, I'm a writer, I'm a lawyer I'm a teacher I'm anything but working in finance wash it but especially when you're in a creative industry you're like why should I deal with investments? Bottom line is we need to save money for a future and investments is the car that we drive that gets us there so what I was suggesting to you is just really stop learned this stuff over today tomorrow continue learning but at the end of the day you really need to do a check up on it once or twice a year I have studied investments for seven years and I worked in it for nearly twenty and I look at my investments to three times a year that's it and so tomorrow we're really in a sum it all up and how you really deal with this but the idea is now we were rolling up our sleeves we're kind of like cleaning up we're getting our system said but after that you really only need to look at it once or twice a year I promise my understanding was always that you need a lot of money to invest I think that's a comment I know and love it I love it I mean really I have had my own individual practice working with individual clients for eleven years in new york city and I've worked with clients all over the world literally clients in shanghai in brussels I trust a man from in africa recently I'd say seventy percent of the people I work with him zero in the bank or maybe under ten thousand dollars saved so I love that zen what was exactly? Yeah, I love hit that that they share that because it's such a misconception you do not need a lot of money to start investing you can start with zero you can start putting in the rainy day account you can start with the mutual fund for five hundred dollars absolutely you can do it so investments are the vehicle that drives our goals to reality. Bottom line is the money will not grow in a checking encounter savings account. And one of the things that I didn't put on here is that we do have this concept of inflation that essentially our money gets eroded. And just if you really try and that's a really, really difficult economic um topic to comprehend but if you think about it on average not in today's not today but really overtime inflation is three percent a year which means that inflation essentially is taking away return. So if you were getting how much you getting in the bank? Two percent one percent so really if you just left it there in the bank and you took away the three percent of inflation in actuality, if you left it in the bank, your money would lose two percent a year so that's inflation now it's it's the same with the money market account as well as the money market account that's why? But the money market account is not for your long term. So over long term, your money's earning six percent seven percent a percent so if inflation is three percent, you're really earning three, four, five percent, so you're not losing so that's. Why your retirement money your long term money you don't want to keep in the bank because over time you're gonna lose inflation is also what makes things cost more it's it's why things appreciate so inflation is a concept of why you cannot leave your money for long term in the checking account or savings account on we are going to talk tomorrow about asset allocation, which really means matching your goals to your investments. So my emergency money, my rainy day money is in the bank, but that's really money that I hope to need in a year or two, and so anything I have over certain amount saved I do put in investments in my ira or mutual funds, so really understanding that concept is that if you leave your money in the bank, it is the difference between potentially retiring and not retiring, so all I'm asking you to do is taken interest and I say this over and over ninety nine point nine nine nine nine nine nine percent of the people I work with and I have worked with thousands of people are not in finance do not work in the financial industry it is not their first language they've never been taught almost everybody gets it if they don't get it it's because they didn't show up so I know that you can do it so there's no excuse that I didn't learn it in school there's no excuse my parents didn't teach it to me there's no excuse that I'm an artist there's no excuse that I'm a freelancer no taken interest because you need to learn it and I actually think it's fun I love it I love it so you can learn about vesting brooklyn bridge you know, being the new yorker I have to put that in there and love the brooklyn bridge actually got married at city hall when we walked over the brooklyn bridge. So I was kind of my own little romantic story my husband's watching out um so you can learn about investing and I just say that from the opportunities that it supports you so before we get started in something about mutual funds and stocks and bonds mutual let's think about our goals what is your timeframe and what is your risk level? So think about when do you want this money again, if you want this money in short term yes hold inflation might erode it, but this is your security blanket if you really start saving a lot of money, you're not leaving it here it's going to be here, but with that being said say you were saving for a house and you put it in the market in the market dropped thirty eight percent you wanted to buy an apartment next year, how would you feel you'd freak out your stomach right? Or on the flip side, say you left your retirement money on short term and it went down to three percent every year because you didn't do anything with it. So matching your goals with your timeframe is probably one of the most important things you can do with investing. So for the person who said I'm fifty nine and I want to retire it, you know, when I'm sixty seventy that's the five to ten year range, so they're going to be probably a little more conservative, they're not going to be as aggressive yet the twenty five year olds whose opening the roth ira they've got ten, twenty, thirty god, fifty years practically they can be a little more aggressive and then separately, what is your risk level? We talked about that before and think about who you are are you just a really conservative person? Nothing wrong with that, then you're going to take a more conservative approach, your money, where's if you can handle being more aggressive than you could probably take on a little more risk. This is not a question that your financial advisor answers. This is not a question that your partner answers. This is just who are you as a person? And I love that because I love that, you know, very often when I start teaching about investments when I'm teaching about this, I'm like, hey, guys, it's not about the terms, it's, not about the financial terms these this is english, and I know there's some international people home mccall are watching that this is really non financial terms lehman's turns english terms. So think about that. What kind of person am I? How much risk and I handle, I think, you know, especially as a freelancer is an artist is a business owner think about yourself, how much risk do I take that I just threw everything to the wind and rent out the studio couldn't afford, but knew that I was going to be able to get the clients for it? Or did I think, you know, or get the production company or you know was I able to take on a rest so maybe I can take a little more risk in my company in my investing or my thinking no, I'm gonna live from home right now I'm gonna keep my part time job and just be a little more conservative and safer that I'll invest that way so really think about the person that you are that translates to investing and then more importantly when do you want your money that's another question that comes up a lot of people say to me well I've got five thousand the bank what should I do with it? How should I invested? I don't know if that was a question that came up but I hear that a lot and so I say well when do you want it? What do you want it forward? So again the five thousand like if you had five thousand dollars and you don't know what to do with it, I might say you know what? Let's keep three thousand and emergency account let's take a thousand towards an I r a so that we can go a little more aggressive this week and keep in the savings account and then maybe the other thousand we can put towards our business like first studio or something like that we're safer down payment and that's like the midterm three um ten year goal so let's get started with some terms so a mutual fund is a group of investments so it's a group of stocks or group of bonds and the reason that I like mutual funds is because they allow you what's called diversification which just means spreading your risk spreading it out and somebody else's managing those stocks and bonds within the mutual fund of professional money manager and you're essentially paying them to do it that's his wife you have mutual funds that you feel comfortable about your promise you were going to get much more into you really only need to look at them once or twice a year most of my money I'd say ninety five percent of my money's in mutual funds the biggest biggest criticism of mutual funds is the fees that they charge and trust me we're going to get into that I this's where I'm still cheap I don't like to spend a lot of money and mutual funds and there's so many great funds that are in a lot of money vanguard again it's the cheapest mutual fund company in the country the biggest one so you have a stock mutual fund which is essentially a mutual fund made up of just stocks you have a bond mutual fund which is a mutual fund made up of just bonds you've treasury mutual funds the treasury is a government bond that's short term and that's what a money market is a money market is a treasury mutual fund so just a glorified savings account, and then you have what's called balanced funds, which is a mutual fund that stocks and bonds together, don't we're going to keep saying this over and over the terms gotta settle in? You don't know what I'm talking about sudden, you know, get asked a question, a stock, and by the way, what I do here really quick is I do it simplified. I'm just sort of giving you like the first explanation, and then I go a stock is means you own something. It means you own a part of a company, so if I own shares in g e, I own a percentage of g corporation really, really, really small amount, but that's what it means. So if you bought shares of twitter or if you bought shares of facebook or jetblue or like another publicly traded me publicly traded stock, you actually own a small percentage of that company, and in a mutual fund is a group of those stocks so it's a hundred stocks five hundred stocks, a thousand stocks, two hundred stocks a bond on the flip side is alone, so when you own a bond, you've essentially loaned somebody money, so if you bought a government bond, you have loaned the government money, so if you bought a ten year government bond that means you gave the government money you lent it to them and in ten years we'll pay it back and over the ten years you get interest a corporation, you've lent the money so bonds are also called fixed income because on the whole you know you're going to get that money back in the term so you know that if it's a ten year bond you'll get that money back in ten years from the corporation from the government if it's a municipality called him unibond but again a bond and what you should really walk away with his on the whole bonds are much, much safer investment they happen to be going through kind of a weird time right now so that's a really bad time to say it and I actually one of the things I did as I was a bond research analyst so that was when I worked on wall street that was the area that I worked in um so I understand that the bond is alone, so you're loaning a government money you're learning a corporation money, a stock is you're actually owning part of that and in a mutual fund is just a group of bonds or group of stocks or you can have the mutual fund it's bonds and stocks together so those that's really the core of understanding the core of investments stocks, bonds, mutual fund and so really, the downside of buying an individual stock is you're just not diversified, you'll have one or two stocks, but if that one stock goes down kind of in trouble, where's, if you buy a mutual fund now, once that goes up, one stock goes down, but you've got two hundred or five hundred or a thousand or a hundred in there. Does this make sense? Yeah, do you know exactly in the inside of the mutual fund? What exactly? The stocks are question such a great question, so you have different categories, and I'll go into the terms you have different categories within investments, so you have a large cap stock, which is an individual stock that's worth more than ten billion dollars, and there's, erlich, g e johnson and johnson, apple, microsoft like the names that, you know, mutual funds of categories, you'll have a large cap mutual fund, and so what you'll see is you'll literally see the names of the socks that are in there, and I don't know if they list all five hundred, but they'll list like the top twenty percent, fifty percent seventy percent the blue chip well, blue chip is on ly like fifteen to twenty five names, and those air really like the old stocks, but you have large cap, which is usually five hundred so you ve the s and p five hundred, which is the five hundred largest most actively traded stocks in the u s stock exchange and then you have small cap which is on the flip side small companies worth less than a billion so like group on twitter, I look at the small caps and I don't know their names you're not supposed to their small companies that have gone public their tech companies they're biotech, their growth there start ups on dh they've gone public in the stock market but absolutely when you look up a mutual fund it says what they own and then you have an international which is a company that's not domestic it's not the u s stephen international mutual fund that's investing in stocks in europe in australia and japan in the brick countries which is brazil, russia, india and china you've got bonds so it's a great, great question so when you look at a mutual fund, I'm going to go through the mutual fund checklist what you want to know is what kind of fun do I have to have a large cap door? We're going to go over the mutual fund checklist which by the way is a handout I believe um it's ah resource right okay, so we should probably talk about that before the end of today because it's a great great resource to have um when you look at a mutual fund that you own, the first thing you want to say is what away on what is it? Is it a large cap? Is it a small cap? It is an international or is it a bond fund? I'm just going to repeat this because I know and again, this is I've taught this so many times you got to digest it a little bit. So start by saying, do I understand what a stock is? Which means I own something of a company publicly traded to understand what a bond is which is alone it's a loan to a government to corporation that's what's called fixed income because you kind of know you're going to get it back like if the court, if the government goes out of business, we probably have more serious problems. Checklist is part ofthe the finest materials with free enrollment. Okay, you want to just break on through? Oh, yeah, this is great, absolutely great. So the mutual fund checklist. So this is if you own mutual funds and you really, really want to learn about your mutual friends. This is a great tool. So I give this to my clients. I work with us like over this in the seminars so I put this together so just starts with some tables that lets you list all the mutual funds and you might not know what they are, but at least it lets you bring out your statement and say let me write the mutual fund how much is in it is it in a retirement account or a non retirement account the firm where the mutual funds are is that a fidelity of van guarded you b s I mean and then again should I keep it or should I sell it and you're going to decide that after you go through this checklist, we're going to finish the checklist tomorrow we're not going to get through all that today, so you start by looking up the mutual fund and morningstar dot com we're going tow league over that tomorrow and then when you get to morningstar and you've looked up your fund, this tells you exactly what to look for, so it tells you how to find if it's a large cap or small cab tells you how to find the fees you've paid it tells you how to find the performance it tells you to find if it's doing well or if it's not tells you who's managing it what stocks or innit, what bonds aaron it it really goes through all the nitty gritty, so little and by the way it tells you where to find it on the morning star report and then it ends with that if you don't own anything go through it and then what I've done is I actually printed a mutual fund just an example the mutual find and I circled all the things to look for, so it gives you an idea so you can look up your own fund just like this and then figure out if she should buy it or sell it or just even understand it. So this is great if you've got funds and if you don't have funds, you want to get started, this is just amazing, amazing work just a reminder that that is a minus within roman material that means that little in roll green button on the side ofthe this video hit it and roll for free and you get a bunch of super useful worksheets and the mutual fund chesler checklist five don't forget to enroll so we've learned about a stock, which is something that you own a bond is alone on a corporate bond is say I used you because it's, one of the largest companies that issues stocks and bonds to seiji, is trying to raise some money so they don't necessarily want more owners, but they want people to lend them money so they'll sell a corporate bond, which says it's a five year tenure corporate bond so pays a little bit more than a government bond they'll raise, you know, say a million dollars in corporate bonds lots of people buy them and in five or send you know me you might get three percent a year four percent a year and then five or seven years you get your money back his gi paid it back so maybe they use that money for bonds to finance a new part of their company or growth in brazil or something like that that's stock from c b g artist who wants to know if you should invest in stocks if you don't have a game plan for howto exit from them since the profits aren't real until you sell the stuff yeah that's a great what kind of plan that's a really, really great point we are going to talk about asset allocation tomorrow like how much you should have in stocks and large cabin smoking but on the whole with stocks and this is my philosophy is really a conservative investors I'ma buy and hold investor so my idea is that I buy companies that I plan on holding for a long time. I'm not a speculative investor and I'm not a traitor and that's not the seminar at all or this workshop. So peter lynch who's a really famous investor he was like one of the gurus of fidelity in the seventies and he had what was called value investing on that was look in your driveway looking your cabinet look in your desk he was shoving your driveway by chevy stock do you have craft cereal by craft? Do you mean you name the products, right? I don't want to start a product placement, but the idea is that you own these companies, you know these companies? So these are companies that you'll invest with over the long term. So think about like, I I have bought a handful of stocks and these are companies that I truly believe it like whole foods I love the company, I just think it's a group great, great long term investment, I'm not supporting it. I have no idea if they're going to do well, but five, ten years ago, I thought, you know, they're kind of expanding. I see people only buying more and more organic food that's a stock that I plan on holding for fifteen, twenty years if I probably sold it tomorrow, I'd probably lose the money that I bought into it because it has gone up and down, but I think it's a long term strategy to buy and hold, I'm not going to get rich off of it and it's not gonna fund my retirement plan, but I have a handful of stocks that I believe in the company I know the company and I feel like there's no better way for me to practice what I preach them using my dollars we have a question from gidget and I guess it's an approach to what we're learning about now she's saying she's a conservative she's conservative on risk taking but she's forty nine without investments for retirement should we change waving her in aparna should we change to be more aggressive to help with retirement or stairs conservative and have less to clarify I'm afraid of my money taking a dump in an investment pot I know immediately I need to invest for retirement but I'm afraid right so you know and I'll talk about gidget tomorrow I'll talk more about asset allocation but you know realistically she's forty nine years old she's probably not going to retire within the next ten twenty years actual probably retired her sixties if she can really like change her income and start saving mohr so realistically she can't even touch this money that she's going to start saving for ten years so what I would suggest for is taking what's called a very moderate allocation approach and probably doing fifty percent bonds and fifty percent stocks and so she could do one mutual fund that's called moderate allocation which is fifty percent stocks fifty percent bonds so she's got the upside of the stocks in there but she's got the bonds to protect her when the market goes down there's a very, very rough rule of thumb that says your agent bond that's your age and bonds so if you're twenty years old twenty percent of your retirement portfolio julian bonds that yeah it's very rockets very general but it's a it's a good rule of thumb okay let's move on to some terms bring on those questions are great. So e t f how gosh that's the other new sexy product you know, I sort of have this theory that you know these these people are sitting in a room like boston or wall street and they're just like what kind of products can we drum up? People are buying let's saw something else so that that's my fear an e t f sony tf is essentially like a mutual fund but it trade like a stock so the way mutual funds work is a mutual fund again is a group of stocks group of bonds but they only trade once a day so if you're going to buy or sell a mutual fund you can only do it once a day in the sense that you only get one price at four o'clock when the market closes where's an e t f or the stock market moves throughout the day so you can essentially really buy or sell and you get a different price throughout the whole day so in e t f trades like a stocks you can constantly buy and sell it throughout the day and the price will fluctuate but the underlying stock that you're buying and selling is actually a basket of stocks so essentially is a mutual fund, so what they did is they took a mutual fund, and they essentially structured it legally different that it trade like a stock throughout the day. So from my standpoint, I I'll just stop and just share a quick story have a lot of clients who have come to me and say, oh, well, my advisor told me about this fund that I don't understand it, and I'm like, whoa, you don't understand it and you've gone through the course and I've explained it to you and you still don't understand it don't buy it and then when they explain it to me and I'm like, I really understand it and I worked in a bank for ten years don't buy it, so the thing with the f is I feel like they have taken a product and meet it a little more complicated, and I don't fully understand it, so I totally understand it. I just don't really get what's the benefit of it over a specific mutual fund. The thing about the that I do like is if you want to get very specific, maybe you want to buy stocks specifically from japan or if you want to buy stocks from australia or if you want to buy a very specific sector, you really want to focus on health care or gold or commodities and just a nice way to maybe round out your portfolio on a sector you feel comfortable with, but on the whole start with the basics, start with the fundamentals it's like jumping to investing when you haven't done the budget it's like saying, you know what? I want to build a house when I don't even have a rainy day fund. So e t s khun b a great tool for investments, but first, make sure you've got your core group of investments. So that's how I feel about e t f so it's not a bad thing, it's, just not my first change, and you do have to pay a trading fee, by the way. So if you buy or sell the mutual find are the ut f you do have to pay a fee. A hedge fund is a very, very aggressively manage portfolio, and it's really geared towards high net worth, so their minimum can be anywhere from twenty thousand to five hundred thousand, so you would have to give at least that period of money. But I just put that in there, because very often people are asking about a hedge fund. What is a hedge fund? The thing about a hedge fund is that they use sort of very advanced investment strategies they can generate very high returns. It's incredibly risky that can make a lot of money, but they can also lose a lot of money and it's really geared toward high net worth people because it lets them sort of take on more risk because they can lose more. So if you get this opportunity to invest in hedge fund, just know that that's money that you could lose, so can you afford to lose it. So here's thie investment term simplified mutual fund is a group of investments. A stock is equity or ownership. A bond is alone and each half is a group of investments that trades like one stock and a hedge fund is a very aggressive, risky investment. Is your clarity around? Yeah, it's like I love it it's like something. Are there any other terms that you're curious about? I'm curious about where the fees go, do they go to the bank? Do they get to the manager? Ok that's such a great question, they go to both. So if you work with someone individually who manages your money or sells you investments, they get fees. If you have a mutual fund there's a person who manages the mutual finds like in, however, in pennsylvania and do you see in new york and there's some great out great great ones out here in california, they get a percentage if it's an individual stock there's not necessarily a feat manages talk but there's a few if you buy it or sell it so if you buy today he traded cost like seven, ninety five or twenty dollars or whatever to buy or sell it if you buy it through an individual person, they're charging forty dollars a hundred dollars or percentage of your assets so that's a little bit the fees obviously if you work with an individual person, they get somebody at the bank at some if you buy it directly from a mutual fund company if it's a load the mutual fund company get some but they're also the manager katzen we'll talk more about fees when we talked really go through the mutual fund checklist to do the question about any don't give any terms that you're curious everything makes a lot more sense light bulb's beginning yeah okay, so let that sink and if you don't understand it, let us know because like I said, if you don't understand it, I know I'm going through it a little bit slowly but it's for most of you have never heard these terms and so it's really important to let it sink in no kind of hear it again again and and and give yourself a break in the sense that if if I were to learn about what you were doing I have you I know nothing about film production I couldn't even tell you how I have had a put a tape in to even use tapes and gosh, I just dated myself right exactly I figured they do go digital now but my point is I know nothing about your industry nor profess to nor want to in that sense I'd love to learn a little bit about it but I'm definitely not gonna learn and day I'm going to learn it over and over and I've learned a lot of new things in my life since school but give yourself a break that know that you're gonna have to continue learning about this and I will say that it's about investing is that hopefully you'll get enough from this course to really learn it but chances are a lot of you will have to continue learning about investing getting an investment book which we're going to talk about tomorrow I have some great great books and you know, sally you had talked about reading books before like some of these personal finance books are and I hear you like I'll read a business book and I'll read a like a motivational book and you know a chapter to him like I can't get into it so you know think about maybe picking up an investment book and just referring through and reading the chapter on investing or reading the chapter on stocks or equity one of the books I like is virginia robinson, um she's written a whole siri's and it's, like, gosh, the women's guide to investing the wall street journal guide to investing. And so they're eight and a half by love in half size, and they're lame. I mean, they're very visual that's. One of the reasons I like him, and actually they give them out and barnyard when we teach them, and I just keep they're a little old fashioned. But you can buy the money amazon for along for a while now, but they just have, like, a nice two pagers and really defining what a stock iss they have a really nice to pagers on really understanding capital markets and interest rates. Like, why not pick that up and just look through it like, isn't that worth an investment and learning about this because you need to know, learn about it. So treat yourself in that way and don't expect that you're gonna read it over and over.