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Your Simple Guide to Investing

Interested in Investing? Great news! Investing is the single best way to have huge compounding benefits. While there is always a risk in investing, many a smart investor has made millions with good solid choices. Still confused as to what type of investment is best? Or even what they are? With so much talk about investing, and diversifying your portfolio, it might be a good time to go back to basics! Never fear, we break down the most commons types of investing in simple terms we all can understand.

Real Estate– My #1 investment choice is always gonna be real estate. Maybe cuz I’m a realtor? Well partly. Everyone needs somewhere to live. Does the market go up and down? Absolutely. Can we be hit hard by inflation, depressions, and everything in between? Yep. But people will always need somewhere to live. Real estate is a great investment for people looking for cash flow. Buying rental homes, or even multi-family units has proven time and time again to be the key to long term wealth. As units are paid down, monthly dividends go up. And let’s not forget about appreciation. If boughten smart, almost all homes will go up in value over time. Now, of course, there’s expensive maintenance and costs involved, but the overall gain and cash you can earn with rentals can be enormous. And let’s not forget leveraging thru appreciation. As you gain more equity, either with paying down your debt, or appreciate, you can leverage this money to buy more real estate. It’s the key to building wealth.
Stocks– A perennial favorite is stocks. While I’ve never jumped into stocks, many have, and made millions. Stocks require much studying and analyzing, which maybe isn’t my strong suit. The simple gist is that you buy shares when they’re low and sell when they’re high. But while buying these tiny shares of businesses, there comes risk. And with any risk, can come great rewards. Ever meet somebody who’s dad bought Apple stock when it first became available and now he’s a wealthy multi-millionaire? Well, it does happen, you just have to be smart. Some of the proponents of stock say that investment gains, dividend income, ownership are some of the many great things about stocks. Be forewarned though, stock trading can be a risky business.
Bonds– Simply put bonds are put forth by the government or corporations when they want to raise money. Basically, you give them money, like a loan, and they agree to pay you back by a specific date, with interest payments along the way. While we don’t hear a lot about bonds these days, they were quite popular during early wars like World War II when the US was raising capital to go fight wars. Bonds would be considered a safer variety compared to something like stocks. They would be considered the equivalent of like an IOU.
Mutual Funds– Mutual funds are professionally managed funds where you pool your money with other investors to invest in a portfolio of stocks, bonds, and other securities. You earn your money from mutual funds thru stock dividends and interest on bonds, They are usually paid out once a year by the company that is managing the fund. While this could be considered a safer investment, since it’s unlikely that every stock and bond option that has been purchased would fail, we could have an economic failure that could wipe out a fund. Typically because they are investing in diverse options, this lessens the risk of losing our money.
401K– A 401k is a qualified retirement plan that allows companies and employees to save and invest for their own retirement on a tax-deferred basis. A traditional 401K deducts your contribution on a pre-tax basis, and you are charged tax at a later time when you withdrawal. The newer and more popular Roth IRA is contributed after taxes and is tax-free withdrawal after 59.5 years of age. Many employers will offer to match your contribution to your account, although often you won’t own that money until you’re vested after a set time limit. Most investors use a 8-10% rule on growth for 401K. This is a safer method of saving, with very little risk. Currently, you can contribute a max of $18,500 per year to your account.
IRA– IRA is short for Individual Retirement Account. An IRA is an account set up at a financial institution that allows an individual to save for retirement with tax-free growth or on a tax-deferred basis. You can set up one of these on your own at a bank, or even online these days. There are two different types of IRA, the traditional and the Roth. Traditional IRA contributions are tax-deductible on both state and federal tax returns for the year you make the contribution; withdrawals in retirement are taxed at ordinary income tax rates. Roth IRAs provide no tax break for contributions, but earnings and withdrawals are generally tax-free. Max contribution to traditional and Roth IRA are $5500/year, unless your 50 or older and it’s $6500. IRA’s differ on return rates, depending on the types of investments you decide on, but average around 8% return.
Cash(CD’s/Money Market)– Money market account and Certificate of Deposit (CD) accounts are both safe ways of earning interest and growing your balance over time. A money market account typically has a variable interest rate, whereas a CD usually does not vary over the term of the CD. A money market account allows you access your money at any time, within the regulations of withdrawals per month on your account. A CD usually requires you to keep your money in until maturity or risk paying an early withdrawal fee. A longer term goal would probably do better in a CD, while an emergency fund money, would probably be better accessed in a money market. Money market may only yield .08%, while a CD typically yields, 2-3% depending on the length of CD, usually in 3,5 or 10-year increments. As a comparison, your local savings account typically only accrues around .06%.

So there you have it, a mini-course in our most common investments. Look for future articles where we dive in deeper to specific topics and learn more in depth. Chances are if you’re reading up on investing then you’ve started thinking about saving money. Which is awesome! Don’t be afraid to do more research, ask questions, and learn as much as you can.

Only you can decide what is the best plan of attack, what you’re comfortable investing in, and how long you’ve got to put money aside. Good luck!

Financial Health and Women

So, I’ve been thinking about this topic a lot ladies. What are we doing? Do I mean literally this second, well kinda, but more figuratively. See I’m a 42-year-old, videographer, turned Realtor. I’ve started again, and it’s scary. Not terrifying, but scary.

I’m poor. I’m like really poor. I’m working non-stop trying to get my Real estate career off the ground. But I’m poor. Sure I do some video work here and there, to stay afloat, but times are tight. I keep in mind the bigger picture though. Where I’m trying to get to and how I’m gonna do it.

My question to most women is, what are we doing to better our lives? See, there’s this little unspoken thing that happens to lots and lots of women that nobody seems to want to talk about.

We give up our power. Now I’m not trying to get totally feminist and over the top, like, “screw men, we don’t need ‘em” I don’t mean that at all.

But what I do notice, is there’s plenty of women that accept a secondary role in their family. They’re cared for, they’re taken care of. It’s not that these women who choose to stay home and raise kids are less, they’re working their butts off. But many have inequality in their relationship when it comes to finances. Maybe they don’t handle the money? Maybe they don’t want to? But why?

My question to you is, where do you want for your life? Because you’re responsible to get yourself there ultimately.

Now I know there’s plenty of people reading this, who say, “whoa, whoa, whoa, are you saying that stay at home mom’s don’t have value, that we’re not equal?” Rest assured, that’s not what I’m saying at all.

What I do want most women to think about is, when we take a back seat to our financial lives, and let our husbands or spouses just take care of it, we lose power. When we’re un or undereducated about our own finances, we’re vulnerable. Very vulnerable.

Hear me out. You can have the greatest marriage and spouse around, but have you ever thought about what would happen if he/she wasn’t there? If he god forbid passed away from illness, or something even like he cheated and you got divorced? We often don’t want to think about these horrible instances but trust me, we aren’t doing ourselves any favors by sticking our heads in the sand.

I know great couples where the wife is a stay-at-home mom, and she has zero clue about their finances. She doesn’t know what they own, how much the electric bill is, how much money is in the bank. In my very humble opinion, that’s just financial suicide. You have to be involved. You have to work together, you have to be part of your financial life. It’s imperative and critical.

Let me give you a couple of examples.

I know a very well educated woman, nurse, that married a doctor. They don’t have children. She slowly started getting more stressed and depressed with work. Her husband, a seemingly decent guy, encouraged her to slow down and even stop working. He made enough to support them both. She slowly declined into a gripping depression and even a substance abuse situation. She was literally dying and didn’t seem to have any confidence in her role in the world. Time passes and it’s revealed that her husband is a serial cheater, along with some much worse character traits. She gets into rehab and proceeds with a divorce. Now she’s left starting over. Trying to get back into a workforce she hasn’t partaken in for the last 4 years. Honestly, it’s the best situation that could have happened to her, her situation was toxic. But she is starting over. Luckily she’s got a great family and is educated, but it’s still starting over. Had she kept her job in the first place, chances are she’d be starting off much stronger on her new journey and probably would have had the guts to leave much quicker. But she lost her power along the way.

Here’s another. Picture this. A mid 50’s women. No college education, never has worked. Married to a very wealthy, and wonderful man for years that took care of her. He paid the bills, he handled all finances. As the years go by, they’ve drifted apart. They divorce amicably after over 30 years together. He’s very generous in his settlement and they go the separate ways. Here she is at 53 years old, and she has no idea how to care for herself. No idea how to balance her checkbook, or even pay the bills. She’s lost.

Now I know these are some unfortunate situations and many feel that they could never be in that spot. But trust me it could happen to anyone.

A few years ago, I found myself in this spot. I was working part-time in my own video business, traveling for work. I was also spending half my time running my boyfriends business. His business made much more money and we were a great team. Then we ran into significant problems. His long-standing sobriety left and he struggled with his demons. After being sober for years, he suffered some debilitating family losses and fell off the wagon. Over a period of 2.5 years, he virtually destroyed his business. Lost his best customer and we almost separated.

All of a sudden, it occurred to me that we were stuck. We weren’t making enough money and my part-time salary wasn’t going to cut. Now I’ve always been a hard worker, but this was a stark realization. I was reliant on a partner for my well being, and if we split, I wasn’t making enough to support myself. It was terrifying. And a wake-up call.

We as women need to be self-reliant. Actually, everyone should be self-reliant. I know that it’s increasingly difficult to make a living if you’re at home taking care of kids, but it’s important to bring in and have skills to bring in as much money as possible.

What’s that saying, “hope for the best, and prepare for the worst.”

There are plenty of work at home jobs, part-time work, online work, blogging, becoming a VA for most women to bring in some extra cash. We need to become self-reliant because life you can throw many curve balls at us, whether we’re ready or not.

So I urge you, tonight sit down with your spouse or loved one, and have an honest talk about your finances. Even if you’re scared or just wanna stick your head in the sand, you need to know every part of them. Go over your investments, debt, and even a budget. Become an advocate for your family and their financial health, you never know when you’re going to need it.