by Erin Lowry
MARIA BRUNO, CFP®, SENIOR INVESTMENT ANALYST AT VANGUARD INVESTMENT STRATEGY GROUP
Bruno is part of the team responsible for establishing and overseeing the investment philosophy, methodology, and portfolio construction strategies supporting Vanguard’s advisory services, products, and strategies. She’s worked in the financial services industry for more than twenty years.
So, the one thing that comes into my mind would be income taxes. So, the wealthy are high-income earners, and they may be more engaged in how to think about taxes and how income taxes or even estate taxes come into play in their decision making.
With Millennials or young investors, really, the key is to save and, really, it’s resource allocation. And the wealthy may not have that decision making because they, fortunately, may not have constraints in terms of resource allocation. But for young investors, it’s really about how do I decide in terms of how to maximize my savings while also paying down debt? It’s that balancing act.
JENNIFER BARRETT, CHIEF EDUCATION OFFICER FOR ACORNS
Barrett is an award-winning financial journalist with more than fifteen years’ experience. Before Acorns, she worked for CNBC and DailyWorth.
I think they just build wealth. That is part of the strategy from the get-go. It’s this idea of “getting by” versus “building wealth.” It’s not just in the mind-set, but there is a lot of it inherent in the mind-set. If you feel like you’re getting by paycheck to paycheck, it’s a struggle, then you’re not building toward something. You’re stuck in one place treading water. For the wealthy, from the beginning, the idea is “How do I take what I have and build more from that? How do I put this money to work for me?”
It’s interesting because I’ve been in this space for so long, and I read Tony Robbins’s money book, and there was one part that resonated so strongly with me. The way he talks about doing this calculation: “What is the point at which your basic expenses will be covered from the returns you’re making on your investments? And what would you be willing to live on at that point?” So, it is kind of a retirement question, but for me, I didn’t know what my number is. I’m just putting money aside. I think everyone is kind of like that, and thinking, “I’m just going to sock a lot of money away, and I hope I get this right and don’t outlive my frickin’ money.”
So, I started working on it, and I thought, “What are the minimum expenses we have and what would I need to get to so that I could hypothetically quit my job and just do whatever it is I want to do and be okay?” And that was a real number. Now, for the first time, I have a real number and an idea in my head of what age that could be and what it would take to hit that number at earlier ages. That’s a very different way of looking at how you’re building your wealth.
It doesn’t have to be that specifically, but that’s what clicked for me. I don’t want to wait until I’m sixty-five or seventy to retire. I want to be slowly moving toward a place where I have more flexibility and can do a wide range of things that interest me, and I don’t want that to be on hold until I’m sixty-five or seventy. So how do I make that happen? By constantly looking at how you can continue to build on your wealth. And you don’t have to start wealthy to get into that mind-set. You have to stop thinking about your situation as being paycheck-to-paycheck survival mode and really sit down and figure out how can you start getting ahead today.
A CHECKLIST FOR WHAT THE WEALTHY ARE DOING
I know, I know, those are a lot of long stories, and we’re Millennials who are used to reading tweet-size descriptions of things. So, here’s a checklist of what the wealthy are doing (not necessarily all that differently).
☐ The wealthy think in terms of longevity instead of temporary survival, even before they were wealthy and were in survival mode. They focus on building companies and assets that will last for generations.
☐ It’s a mind-set shift. Even if they didn’t come from money, their mind-set is always about how to better themselves and their situation, all the way down to what they read, how they spend their time, and with whom they associate.
☐ They save early and consistently.
☐ They’re strategic about careers by picking companies, industries, and even countries with growth potential.
☐ They’re patient.
☐ They consider how to minimize the impact of taxes on their income, investments, and legacy.
☐ They have a number in mind for financial independence (when they can live off the returns on their investments) that’s not a guesstimate.
Chapter 15
Where Can I Get More Investing Advice (Because I’ve Been on Reddit . . .)?
ANY QUESTION WE HAVE these days can usually be answered in seconds. That’s a low-risk proposition when you’re in a debate with a friend at the bar or if you’re trying to find out which restaurants are still serving at 2:00 a.m. It’s a high-risk proposition when it comes to your money. Finding the correct, credible, helpful, easy-to-understand answer isn’t always as simple as typing your question into a search bar and hitting Enter. Figuring out where to learn more about investing can feel just as overwhelming as actually understanding the stock market. There are so many gurus, coaches, and self-proclaimed experts making big promises about your results that it’s easy to get hoodwinked.
One thing to consider is that anyone offering a free service ultimately needs to get paid. It’s rare that people provide value without anything in return. That “in return” could be as simple as collecting your email address for a mailing list that can later be used to try to convert you into a paying client. I’m not condemning this. I don’t think people should give away all their services for free. I’m simply pointing out that free courses and services are rarely truly “free.”
Here is a long list of options for you to consider, broken down by type of resource.
HIGHLY TECHNICAL SITES
These sites may be a bit heavy-handed when it comes to the technical jargon, but they’re completely worth a visit.
FINRA.org: Visit this site, or just go directly to FINRA.org/investors to find articles, tools, and calculators. There is even a section dedicated to general financial well-being, like building your emergency fund and paying off debt.
Investopedia.com: I hesitate to put this under “Highly Technical” because I worry you’ll think it’s inaccessible. It’s not. Investopedia is a treasure trove of information about pretty much any investing-related question you could think up. While there is some jargon, the text is written in a way that’s meant to be easily digestible. It’s hard to write about investing without bringing in the jargon (trust me, I know at this point!).
Investor.gov: This is the SEC’s educational website, and probably more applicable than SEC.gov itself. Its compound interest calculator is one of my favorite online tools. The website introduces investing and how to research and protect your investments.
Morningstar: Morningstar has all the market news, plus it analyzes and rates mutual funds and ETFs on a one-to-five-star scale. That’s a gold mine for rookie investors who need some reassurance (and even for seasoned investors).
SEC.gov: Perfect if you really want to nerd out over the regulatory side of investing.
SIFMA.org: The Securities Industry and Financial Markets Association (SIFMA) is really geared toward industry professionals. Similar to SEC.gov, it’s for anyone looking to do a deep dive into investing industry issues. The really technical side of things, like “international trade and investment,” “capital formation,” and “equity market structure.”
MEDIA OUTLETS
There is a wealth of information at your fingertips thanks to the internet. Granted, some of these outlets live behind a paywall . . . but here is a variety of top media outlets for investing and financial news.
Bloomberg
CNBC
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CNNMoney
Financial Times
Kiplinger
MarketWatch
The Motley Fool (fool.com)
The New York Times
DealBook is the New York Times business and policy newsletter
Reuters
TheStreet
The Wall Street Journal
Yahoo! Finance
PODCASTS
Podcasts are one of my favorite ways to consume media. You can learn something new while walking the dog, going to work, on a flight—you get it. Here are some of the great podcasts out there to help you shore up your investing or just general money knowledge.
Afford Anything: Paula Pant covers all sorts of topics on her podcast Afford Anything, which focuses on the notion that you can afford anything, just not everything. She switches it up between long-form interviews with guests and Q&As from her listeners. Paula herself is something of a real estate mogul, so her home ownership episodes are always worth a listen if you’re interested in getting into the real estate investing game.
Better Off: Jill Schlesinger’s podcast digs into all kinds of money questions. She provides short episodes in which she answers questions and longer-form episodes with guest interviews.
The Investors Podcast: You want hard-core investing information? This podcast offers insights from billionaires and other high-net-worth individuals. Their tagline is “We Study Billionaires,” so you know it’ll have some interesting investing insights.
Marketplace and Marketplace Morning Report: Both podcasts bring you the latest in financial news, the markets, and business world.
Planet Money: It’s not specifically an investing podcast, but Planet Money is one of my all-time favorite money podcasts. It does a great job of doing interesting deep dives (not always easy) into different money-related issues.
Unchained: For those interested in cryptocurrency (which I know some of you certainly are), Unchained by Laura Shin can deepen your knowledge of the cryptocurrency Blockchain to a point where you can be an educated investor.
BOOKS
The book you’ve just read is a primer on investing. There is plenty more to learn! Here are some books to check out as you continue on your journey.
The Classics
The Intelligent Investor, Benjamin Graham: Benjamin Graham is often cited as the father of value investing. He taught Warren Buffett, who practices value investing himself. Even though Graham’s book was first published in 1949, it lives on (and has been updated along the way) as a defining text on investing.
The Little Book of Common Sense Investing, John C. Bogle: Bogle is the godfather of index funds and the founder of Vanguard. Naturally, this book focuses on the strategy behind index fund investing and why investing really comes down to common sense.
A Random Walk Down Wall Street, Burton G. Malkiel: This is one of the most recommended investing books out there. It’s a hefty book with a lot of information but an excellent pick if you’re looking to level up even more.
Still Finding Your Footing
The Pocket Idiot’s Guide to Investing in Stocks: This is one of the first investing books I read. It’s focused specifically on stocks, and while there’s a lot more to investing than just understanding stocks, it’s a simple overview and worth a read.
The Simple Path to Wealth, J. L. Collins: Collins’s book hasn’t been around for decades like some of the classics, but it’s destined to be a classic in its own right. Inspired by letters to his daughter, Collins wrote the book to help people navigate investing. It’s also peppered with some other financial advice and gives some direct recommendations about products and brokerages.
Stock Market Investing: Mini-Lessons for Beginners: A Starter Guide for Beginner Investors, Mabel Nuñez: Nuñez really digs into all the mechanics behind investing in the stock market in this guide, which is a natural extension of this high-level overview you’ve just finished reading.
Interesting Reading
The Ascent of Money, Niall Ferguson: If you’re a history nerd, and especially if you enjoyed chapter 11, then you’re this book’s target audience. Ferguson takes readers on a journey through the creation of our modern financial system. I swear, it’s more interesting than it may sound to you right now.
The Thin Green Line, Paul Sullivan: This is an entire book dedicated to the question “What are the wealthy doing differently than you?” Sullivan, a New York Times reporter, pulls back the curtain and shows the financial behaviors of America’s wealthy.
RESOURCES FROM BROKERAGE FIRMS, ROBO-ADVISORS, AND APPS
Many brokerage firms, investment banks, and financial apps offer education portals or blogs. Obviously, all these resources are given with the hopes of converting you into a client, but they’re still free and available for you to use. Here are some of the places you can find tools, calculators, checklists, and articles.
Acorns: Acorns offers a website specifically geared toward financial education called Grow from Acorns (https://grow.acorns.com). You don’t need to be a customer to gain access; you can get the basics in its “Money 101” section, read more about financial news, and find how-to guides and interviews with financial gurus and even celebrities.
Fidelity: Fidelity.com offers a “Planning and Advice” section that’s available to non-clients. You can find budget calculators and tips, recommendations for how to build and protect your wealth, checklists for what to do after certain life stages (e.g., marriage), and more.
Vanguard: Vanguard.com’s personal investor portal is filled with calculators, worksheets, and tools for both clients and non-clients. You can answer some questions to determine your ideal asset allocation, compare investments, estimate the income you’d need in retirement, and set goals for the future.
Betterment: Betterment’s “Retirement Planning” center does a great job of being Millennial focused. There’s even an IRA calculator to help you answer the question “Roth or Traditional: which is better?” You can also find general personal finance advice as well as investing 101 and advanced investing.
Charles Schwab: Schwab.com’s “Retirement & Planning” section is filled with guides to help get you from where you are today to a comfortable retirement. It even includes advice on insurance basics, taxes, estate planning, and what to do during life events such as job loss, marriage, divorce, and having children.
Stash: StashLearn is a big part of the Stash website, which you can access without being a customer. Articles range from topics like “If cannabis is illegal under federal law, how is it legal to invest in it?” to “What is a portfolio?” to “What’s a trade gap and what can it mean for the economy?”
T. Rowe Price: The website’s “Planning & Research” section helps you along your journey. There is an “Investing 101” guide (but you do have this book for that), as well as calculators, research, analysis, and insights.
WealthFront: Robo-advisor WealthFront provides clients and non-clients access to the company’s blog. The blog tends to be on the more technical side, with articles such as “Investing Insights,” “Planning & Taxes,” “Retirement,” and “Stock Options & RSUs.”
Wealthsimple: Wealthsimple Magazine, the company’s online blog, is available to anyone. It spans from technical stories to how-to guides to the more emotional accounts in its “Money Diaries” series.
ONLINE RESOURCES
The internet is a magical land, but it’s also the Wild, Wild West of unchecked and unregulated financial advice. You can find some quality, actionable advice, but you can also be led disastrously astray if you’re not careful. You should always bear in mind that the writer doesn’t know you, your time horizon, you
r goals, or your risk tolerance when he or she dishes out advice geared for the masses. Just because a portfolio strategy is working for one blogger who claims to be a millionaire doesn’t mean it’ll work for you. Take all advice with a dash of salt and proceed with ample caution.
Now that I’ve issued a big warning, here are some places you can go to learn more.
Personal Finance Blogs
Building Bread: Kevin L. Matthews II is a licensed financial advisor who is hell-bent on ensuring you know how to build generational wealth. His website is full of useful resources and guides, and his Facebook Live videos are hilarious and engaging.
The Dumpster Dog Blog: It’s as irreverent as it sounds. Amanda Holden, aka the Dumpster Dog, worked in the investment industry in San Francisco for six years. Now she’s helping young women focus on investing through her writing, talks, and business “Invested Development.” She’s a deep thinker who writes about more than just investing, and there 100 percent should be a parental advisory label on many of her posts. She’s a great fit if you like quirky humor.