Broke Millennial Takes on Investing
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Financial Samurai: Sam Dogen is a former Wall Street guy who spent thirteen years in the financial services world, including time at Goldman Sachs. He is incredibly analytical and shares insights on everything from how to better engineer your career to building a healthy net worth.
Girl$ on the Money: Mabel Nuñez is a self-proclaimed “first generation investor” because no one in her family or immediate circle of friends had ever invested before. She became fascinated by investing in college and started investing herself right as the market was crashing in 2008. She is passionate about helping others, especially women, learn about and feel confident investing.
Jlcollinsnh.com/stock-series: J. L. Collins, the author of the aforementioned The Simple Path to Wealth, started it all on his blog. His “Stock Series” is one of the most highly regarded among money blogger nerds.
Nerd’s Eye View: A self-described financial planning nerd, Michael Kitces writes for advisors, but there’s a lot you can learn from him. Some writing may feel a bit high level when you’re starting out, but just give it a chance.
Oblivious Investor: Mike Piper is a CPA who does an excellent job of presenting the pros and cons when evaluating investing strategies. His insights about how to minimize your taxes as an investor are incredibly valuable.
Tela Holcomb: Interested in getting into some of the nitty-gritty of individual stock picking? Holcomb reviews her strategies and digs into her monthly returns in videos on her website, TelaHolcomb.com.
Reddit
I love lurking on Reddit’s money-related threads sometimes because there is a gem of an insight and other times because it’s interesting to watch people get into such intense conversations over money. But mostly I enjoy it because it’s fodder for potential articles. There are story ideas aplenty on Reddit.
“If you’re on an investing thread on Reddit, the advice you’re getting there is worth exactly what you paid for it,” says Sallie Krawcheck, CEO of Ellevest. Krawcheck is right. Reddit can be interesting, but be wary of free, crowdsourced advice you find on blogs and online platforms. Always check it against other credible sources.
COURSES
There are plenty of online and in-person courses out there in the world, but always be really discerning. Consider how a course is marketed. Remember that if it seems too good to be true, then it probably is. People should not be promising you specific returns on your investments after you’ve completed a course. If the course is free, then oftentimes there’s going to be a bid for an upsell at some point—content creators need to get paid.
You can always search for investing courses at your local community college or by using online platforms like Coursera, Udemy, or Khan Academy.
FIND THE THING THAT SUITS YOU BEST
We all learn in different ways. Just because your best friend swears by a certain book or gushes about a particular podcast doesn’t mean it’ll be what speaks to you. Don’t be discouraged if it takes some searching to find the right fit, but it’s out there. There’s a Cinderella and a glass slipper reference here just waiting to be made!
Conclusion
Now It’s Time to Level Up!
WELL, HELLO AGAIN!
Congrats on finishing this book (or skipping to the end). You’ve now got the tools and hopefully the gumption to go out and start investing. Well, as long as you’ve got your financial oxygen mask firmly affixed to your face, you’re allowed to start investing.
While I was doing research for this book and interviewing experts, Jill Schlesinger’s words stuck with me most: “Know that if you can’t do it, it’s not the worst thing in the world, it’s just that you’ve got to save a lot more money. Your money, when you invest it, is doing some of the lifting for you. When you’re completely risk averse, it just means you’re going to have to save a lot more money to reach your goals.”
It’s strange to end an entire book about investing by saying, “Hey, you don’t have to invest if you don’t want to.” But I respect the way Schlesinger positioned that sentiment.
There is a risk to investing, and there’s definitely work to do in order to start and continue investing. You must do your research. You need to rebalance and modify investments as your goals change. There’s no “set it and forget it” here. Being an investor means being proactive and really taking control of your financial future. It’s what I want for you. It’s what I wish for everyone.
But I’m reasonable. I understand that some people, no matter how much you explain the mechanics behind and importance of investing, are going to resist the idea. Taking even the smallest amount of risk is nauseating to them. So, in Schlesinger’s words, “it just means you’re going to have to save a lot more money to reach your goals.” Just keep that in mind if this book hasn’t put your anxiety at ease.
Investing is, in some regard, a wealth equalizer. Are you going to become a multibillionaire-level wealthy person just through tried-and-true saving and investing techniques? Meh, probably not, but you can achieve financial independence and at least a million, if not several million, dollars in your lifetime if you start young (or now), set goals, rebalance in accordance with how your life and goals change, and, perhaps most important, stay consistent.
Don’t let another day, week, month, or year go by with you thinking that you can’t invest because it’s too complicated or you aren’t rich enough or whatever other excuse you might’ve allowed to creep into your brain thus far. In fact, set down one investing goal right here for what you want to achieve within one year of today’s date. Go on, write it down.
One year from today, ___/ ___/ ______, my goal is to:
Now look at that goal and see what small step you can take each month to make it happen. Break it down into small, achievable, consistent actions.
You can take control. It’s time for you to Level Up Your Money! #LUYM.
Share your investing journey experiences, thoughts, and questions with me and others on Twitter and Instagram using #LUYM and tagging @BrokeMillennial on Twitter and @BrokeMillennialBlog on Instagram.
Best of luck,
Erin
Acknowledgments
To my dad, who provided much of my foundational knowledge of investing, allowed me to write about his journey, and always was at the other end of the line when I need guidance in my financial (and regular) life.
This book was written and edited while I was also planning my wedding, so a huge thank-you goes to my mom, who stepped in and took over so much of the wedding planning in order to allow me to focus on my career. Plus, she helped raise me to be a strong woman who understands the importance of investing and building wealth.
Cailin, for always being excited, supportive, and loving. But more so for being an amazing example of what you can achieve when you invest in yourself.
Peach, my husband,* who handles so much of our day-to-day lives when I’m in writing or promotion mode and who provides untold amounts of emotional support.
All my friends, who tolerate (whether in person or via text/FaceTime) the volatile author cycle of excited, hermit-like, stressed out, back to excited, exhausted, terrified, and jumping for joy.
Eric Myers, for always being in my corner and offering sage counsel.
Thank you to my editor, Lauren Appleton, for all the guidance, tweaking, and answering many, many emails.
To Stephanie Bowen for still toasting to next books in the series and for helping to continue building the strength of the Broke Millennial brand.
Allyssa and Emily, for working tirelessly to help this book make a splash.
A huge thank-you to my interviewees, who made this book possible: Jennifer Barrett, Alex Benke, Douglas Boneparth, Maria Bruno, Dave Fanger, Ashley Fox, Tela Holcomb, Colleen Jaconetti, Sallie Krawcheck, Brandon Krieg, Kelly Lannan, Avi Lele, Dave Nugent, Mabel Nuñez, Jill Schlesinger, Carrie Schwab-Pomerantz, and Julie Virta.
And to the people who helped coordinate those interviews, including Adrianna Abreu, MeeJin Annan-Brady, Stephanie Corns, Katie Davis, Rachael Factor, Allyson Federbush, Meghan Gardler, Lindsay Goldwert, Natalie Rix, Danielle Shechtman, Mike Shamrell, Elyse Steinhaus, Carolyn Wegemann, and Joe Ziemer.
A special shout-out to Tanja Hester, Stefanie O’Connell, Paulette Perhach, Liz Thames, and Kristin Wong for the mastermind (let’s be honest, support) groups!
To the personal finance/money nerd community—for all the love and support.
Finally, to the Broke Millennial community and supporters. None of this would be possible without you all.
Notes
INTRODUCTION
1. CPI Inflation Calculator, online tool, Bureau of Labor Statistics, US Department of Labor, https://www.bls.gov/data/inflation_calculator.htm.
2. “CPI: All Urban Consumers,” graph, Bureau of Labor Statistics, US Department of Labor, August 28, 2018, https://data.bls.gov/timeseries/CUUR0000SA0L1E?output_view=pct_12mths.
3. “The Rise of the Young Buyer,” The Wall Street Journal, http://online.wsj.com/article/SB10001424127887324879504578601711248140752.html
CHAPTER 1
1. Dan Culloton, “A Brief History of Indexing,” Morningstar, August 9, 2011, http://news.morningstar.com/articlenet/article.aspx?id=390749.
CHAPTER 2
1. FINRA, “Funds and Fees: Understanding Mutual Fund Fees,” FINRA, http://www.finra.org/investors/funds-and-fees.
2. Dr. Edward Yardeni, Joe Abbott, and Mali Quintana, “Market Briefing: S&P 500 Bull & Bear Markets & Corrections,” Yardeni Research Inc., August 24, 2018, https://www.yardeni.com/pub/sp500corrbear.pdf.
CHAPTER 4
1. IRS, “Individual Retirement Arrangements (IRAs),” https://www.irs.gov/retirement-plans/individual-retirement-arrangements-iras.
2. IRS, “Retirement Plans for Self-Employed People,” IRS.gov, https://www.irs.gov/retirement-plans/retirement-plans-for-self-employed-people.
3. Board of Governors of the Federal Reserve System, “2017 Federal Reserve Board Report on Economic Well-Being of US Households,” press release, May 19, 2017, https://www.federalreserve.gov/newsevents/pressreleases/other20170519a.htm.
4. Philip L. Cooley, Carl M. Hubbard, and Daniel T. Walz, “Sustainable Withdrawals Rates from Your Retirement Portfolio,” at http://afcpe.org/assets/pdf/vol1014.pdf.
CHAPTER 5
1. Real rate from 2015/16 school year.
2. Navient, Loan Repayment Calculator, https://navient.wealthmsi.com/loanrepay.php.
3. Nick Holeman, “Should You Invest, or Pay Off Debt?” Betterment, July 14, 2016, https://www.betterment.com/resources/invest-or-pay-off-debt/.
CHAPTER 6
1. US Securities and Exchange Commission, “Broker-Dealers: Why They Ask for Personal Information,” Fast Answers, US SEC, https://www.sec.gov/fast-answers/answersbd-persinfohtm.html.
2. FINRA, “What to Expect When You Open a Brokerage Account,” http://www.finra.org/investors/what-expect-when-you-open-brokerage-account.
3. Patricia Oey, “US Fund Fee Study: Average Fund Fees Paid by Investors Continued to Decline in 2016,” Morningstar, May 23, 2017, http://corporate1.morningstar.com/researchlibrary/article/810041/us-fund-fee-study--average-fund-fees-paid-by-investors-continued-to-decline-in-2016/.
CHAPTER 7
1. Mark King, “Investments: Orlando Is the Cat’s Whiskers of Stock Picking,” The Guardian, January 13, 2013, https://www.theguardian.com/money/2013/jan/13/investments-stock-picking.
CHAPTER 8
1. Robinhood, “How Robinhood Makes Money,” Robinhood.com, December 9, 2014, https://support.robinhood.com/hc/en-us/articles/202853769-How-Robinhood-Makes-Money.
CHAPTER 10
1. United Nations, “Sustainable Development Goals,” http://www.undp.org/content/undp/en/home/sustainable-development-goals.html.
CHAPTER 11
1. “Stock Market Crash of October 1929,” Social Welfare History Project, VCU Libraries, https://socialwelfare.library.vcu.edu/eras/great-depression/beginning-of-great-depression-stock-market-crash-of-october-1929/.
2. Gary Richardson and Federal Reserve Bank of Richmond, “Banking Panics of 1930–31: November 1930–August 1931,” Federal Reserve History, November 22, 2013, https://www.federalreservehistory.org/essays/banking_panics_1930_31.
3. Mark Hulbert, “25 Years to Bounce Back? Try 4½,” The New York Times, April 25, 2009, https://www.nytimes.com/2009/04/26/your-money/stocks-and-bonds/26stra.html.
4. Donald Bernhardt, Marshall Eckblad, and Federal Reserve Bank of Chicago, “Stock Market Crash of 1987,” Federal Reserve History, November 22, 2013, https://www.federalreservehistory.org/essays/stock_market_crash_of_1987.
5. NASDAQ Composite Index, graph, “Economic Research,” Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/NASDAQCOM/.
6. S&P 500 Composite Index, “Economic Research,” Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/SP500.
7. Fred Imbert, “Dow Pops 224 Points, Stocks Notch Record Close on Strong Earnings,” January 26, 2018, CNBC, https://www.cnbc.com/2018/01/26/us-stocks-gdp-economy-trump.html.
ABCDEFGHIJKLMNOPQRSTUVWXYZ
Index
The page numbers in this index refer to the printed version of this book. The link provided will take you to the beginning of that print page. You may need to scroll forward from that location to find the corresponding reference on your e-reader.
account service fees, 107–8
Acorns, 19, 86, 102, 127–29, 134, 181, 206, 214
active management
investment terminology and, 38–40
scams and, 185–86
and starting to invest in market, 100, 103, 105
Afford Anything, 211–12
aggressive portfolios, 36, 58, 64, 73, 129
all-in-one (target-date) funds, 60–61, 64
Amazon, 35, 111
American Home Mortgage Investment Corporation, 171
annual percentage rates (APRs), 80–81
annual percentage yields (APYs), 9, 71
annuities, 186
Apple, 132, 164
apps, see micro-investing apps
art, 199–200
Ascent of Money, The (Ferguson), 214
Ask Jeeves, 169
asset allocation, 61, 113, 154, 175, 215
assessment of, 51–52
investment terminology and, 31, 34–35, 42, 50
risk and, 50–52, 56
asset classes, 32, 34–35, 50–51, 185
assets under management (AUM) fees, 100, 107–8, 143, 184
back-end loads, 42, 108, 194
banks, banking, 18, 41, 122, 145, 179, 181, 195, 197, 214
and case for investing, 8–9, 14–15
market crashes and, 166–67, 171
micro-investing apps and, 127, 131
risk and, 47–49, 53
and starting to invest in market, 93–94, 96, 101, 107–10
Barnes & Noble, 128
Barrett, Jennifer, 19, 86
on Acorns, 128, 134
on scams, 181–82
on tactics of wealthy people, 206–7
Beanie Babies, 44, 55, 163
Bear Stearns, 171
beneficiaries, 65–66, 97
Benke, Alex, 45, 86
robo-advisors and, 140–41, 145–46, 149–51, 154
and starting to invest in market, 102, 105, 109
Betterment, 45, 65, 86, 102, 105, 140–43, 149–50, 192, 215
overview of, 142–43
BetterOff, 204, 212
Bitcoin, 55, 118–19, 129, 179, 185
Black Monday (October 19, 1987), 167–68
BlackRock, 129, 142, 144–45, 180–81
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br /> Black Tuesday (October 29, 1929), 11, 55, 166–67
blockchain, 119, 212
blogs, 14, 30, 94, 214–17, 221
Bogle, John C., 213
bonds, 15, 164, 174, 192–93, 203
investment terminology and, 32–36, 39, 42–43
micro-investing apps and, 131, 134
retirement investing and, 60–62, 64, 75
risk and, 48, 50, 52, 75, 103
Bone Fide Wealth, 20, 148, 180
Boneparth, Douglas A.
financial advisors and, 148, 153
and investing while paying off student loans, 84–85
nonretirement account investing and, 71–74
and readiness to start investing, 20–24, 26
scams and, 180–81
and tactics of wealthy people, 204–5
Boneparth, Heather, 72, 84–85
Boneparth’s rule, 20
BP Deepwater Horizon oil spill, 155–56
Brexit, 173
Broke Millennial: Stop Scraping By and Get Your Financial Life Together (Lowry), 1, 14, 25–26
brokers, brokerages, brokerage accounts, 1, 14, 19, 24, 27
customer service of, 99, 101
impact investing and, 159–60, 162
investing advice and, 213–14
investment terminology and, 36–38, 40–42
micro-investing apps and, 125–26, 131–32, 136
minimum initial investments of, 98–99, 101, 106
risk and, 52, 54