Raise your hand if you’ve experienced analysis paralysis when it comes to investing? Definitely been there, done that.....for years!
Open an account? Sure, easy peasy.
Transfer money from bank account? Done.
Choose investments? BAIL, BAIL, BAIL! hahah Just Kidding.
I get it, the actual act of selecting what to put your money in can be intimidating but it doesn’t have to be!
Since I’m not a financial advisor and I don’t know your specific situation, I can’t tell you what you should invest in but here’s what you can look for when beginning:
1. Low cost index funds will save you money and allow you to diversify your funds all in one spot. They are an easy, hands-off way to invest in the stock market. This is what took the scary out of investing for me.
Index funds track various indexes and are made up of stocks that mirror the companies performance - like the S&P500.
Open an account? Sure, easy peasy.
Transfer money from bank account? Done.
Choose investments? BAIL, BAIL, BAIL! hahah Just Kidding.
I get it, the actual act of selecting what to put your money in can be intimidating but it doesn’t have to be!
Since I’m not a financial advisor and I don’t know your specific situation, I can’t tell you what you should invest in but here’s what you can look for when beginning:
1. Low cost index funds will save you money and allow you to diversify your funds all in one spot. They are an easy, hands-off way to invest in the stock market. This is what took the scary out of investing for me.
Index funds track various indexes and are made up of stocks that mirror the companies performance - like the S&P500.
Low cost index funds are inexpensive because they are automated and designed to follow the shifts in value of an index. Because these funds are not actively managed by a well paid team of analysts, they don't cost the investor as much. Winning!
For example, the average annual expense ratio for stock index funds in 2016 was .09% while the average annual expense ratio for actively managed stock funds was .86%. Now you might be thinking "that's not a huge difference", but over time this adds up and will take away from what you're able to earn on your investments.
The S&P although wildly popular, isn't the only index fund in town. You can select various index funds based on the categories of stocks the house. There are index funds based on size of companies, funds based on geographical area, the type of businesses they include, domestic versus foreign, and even by market opportunity.
Remember, not every index fund is low cost.
2. Look for funds that have low investment minimums or zero minimums. Sometimes the minimum required to invest can be a few thousand dollars to start.
For example, the average annual expense ratio for stock index funds in 2016 was .09% while the average annual expense ratio for actively managed stock funds was .86%. Now you might be thinking "that's not a huge difference", but over time this adds up and will take away from what you're able to earn on your investments.
The S&P although wildly popular, isn't the only index fund in town. You can select various index funds based on the categories of stocks the house. There are index funds based on size of companies, funds based on geographical area, the type of businesses they include, domestic versus foreign, and even by market opportunity.
Remember, not every index fund is low cost.
2. Look for funds that have low investment minimums or zero minimums. Sometimes the minimum required to invest can be a few thousand dollars to start.
3. Don’t pay someone to do this for you just because you’re a newbie. You can totally learn how to invest! And the great thing is, you can learn as you go and adjust accordingly.
4. Average return rates over time. For example, the VTSAX has returned an average of 8% since it’s inception. The VFIAX, 7.93%. But these are just examples and you can easily pull these statistics up on any investing platform or even by throwing it into a Google search.
5. Consider how much time you have. The younger you are, the more risk you can potentially take (but don’t have to). With that being said, this is even more of a reason just to start now. The earlier the better and the more time your investments have to grow, the more compounding interest works for you.
And remember, investing is a long game. There may be dips over time but historically you can track funds to see their overall growth. Don't get scared if you see a decrease in earnings, as long as you're not very close to retirement, you have time to ride it out. It will come back up.
Most importantly, pick one and start! You can learn more as you go and adjust as needed. You’ve got this and I believe in you.
For more details, grab my free guide “Investing for Beginners”
xoxo,
Gwen
Gwen
I don't know about you, but that money in my savings account feels pretty precious. Especially if you've ever worried about being able to pay the bills or if you've been stressed about money before, that savings account feels like bumpers at the bowling alley.
It's hard to part with that money!
But, if you've accumulated some debt, your money in your savings could be working for you.
Here's a few questions to ask yourself before you tap into your hard earned savings account:
1. How much money is in your savings account?
It used to be that $1000 would be a good solid base for an emergency savings. I'm not sure if you've had an "emergency" lately, but $1000 isn't going to cut it.
We had to replace the tires on my car and it came in close to that!
Now I recommend $3000 to my clients as a good base and there are a few reasons.
Number 1: $3000 will cover most typical emergencies. Not ALL, but you can't possibly plan for ALL emergencies.
Number 2: a savings account is not the only place you should have money to pull from.
First and foremost - if you haven't put your emergency savings money in a High Yield Savings account, do that now! You're missing out on extra moula. It's not much these days (returns of about 0.5%) but it's better than a typical savings account at 0.04% wouldn't you say?
2. How much debt do you have?
First and foremost - if you haven't put your emergency savings money in a High Yield Savings account, do that now! You're missing out on extra moula. It's not much these days (returns of about 0.5%) but it's better than a typical savings account at 0.04% wouldn't you say?
2. How much debt do you have?
If you have a small amount of debt, it's usually much easier to part with some savings knowing that you can probably replenish your account quickly. The faster you can make that debt go away, the more your money can work for you!
But if you have a mountain of debt - the kind of debt that just weighs on you and makes you feel like you can't get out from under it, there's a strategy for tapping into your savings.
I believe it's always worth putting some money towards your debt so that the interest doesn't keep growing. Have you ever looked at your mortgage or student loans? The amount you took out is never the amount you will have paid in full by the end of the term. Interest accrues quickly.
But if you have a mountain of debt - the kind of debt that just weighs on you and makes you feel like you can't get out from under it, there's a strategy for tapping into your savings.
I believe it's always worth putting some money towards your debt so that the interest doesn't keep growing. Have you ever looked at your mortgage or student loans? The amount you took out is never the amount you will have paid in full by the end of the term. Interest accrues quickly.
What worked for me and what has worked for my clients is a split of 45/45/10. After you have a $3000 base, take the rest and split it up. Forty-five percent can go towards paying a debt, forty-five percent to investments and ten percent to fun.
Because trust me, if you aren't allowed to have any fun while you're paying down debt, you won't stick with it!
Doing it this way, consistently every month creates new habits and quick wins so you'll want to keep going.
Now of course, everyone's situation is different - if your job is on the out or you know you're about to lose your health insurance, you have to evaluate what kind of cash you need access to in the next few months.
So before you go allocating those funds to debt, take a look at what you might be up against.
3. Don't wait to invest!
Most people I talk to believe they have to wait until they've paid down their debt to invest. But here's why investing while you pay down debt is important:
You can still access some of your investment contributions if you need extra money in an emergency.
Investment service M1 Financing actually allows you to borrow against any contributions you've made to your investments. They loan that money to you at 2% interest and BAM look at that extra money you have to pull from if you need more than $3000 for an emergency.
Now of course that 2% is costing you more than if you had say $15,000 sitting in a high yield savings account, but it's an emergency right? Something that doesn't typically happen, and in this case, you have access to money if you need it. Then you're really just paying yourself back with a little bit of interest.
You may also be able to borrow your contributions you've made to your taxable brokerage (read, not your retirement account) without penalty so this can serve as a type of emergency fund as well if you've been investing at all. *Pay attention to capital gain rules in your state and per your specific account type.
So you might as well put your money to work!
Have you caught my drift yet? No matter where you are, if you haven't started investing, START! It's the best thing you'll ever do.
At the end of the day, what I want for you is for you to feel like you know exactly what's going on with your finances. This is about decreasing your stress and empowering you to take the reigns on your money because no one else is going to care as much as you do about your finances. No matter where you are now, you have the opportunity to change that and for your finances to look completely different in the next 365 days.
If you're not sure where to start, grab my free Beginner's Guide to Investing download and join our free community where women are slaying debt, making finances fun & sexy and designing a life they truly love.
xoxo,
Gwen
It is easy for people to get defensive or feel ashamed when they are struggling with their finances. But here's the thing, where you are is just where you are, not WHO you are. Starting with this mindset will set you up for success!
The first step to creating healthy finances is to get clear on what your financial goals are. Start by writing down where you want to be in 1, 5 and 10 years time. Having clear goals will help you create even clearer action steps.
Most people don't like this next step, but in order to go where you want to go, you have to know where you've been. Take a look at your monthly spending: how much money do you have leftover each month after expenses? Is there leftover? Make it a game to see how much you can increase that leftover by removing any unnecessary spending, canceling subscriptions, and cutting out useless expenses.
Here's the best part - you get to give that money a plan! Tell your money where to go. The 3 areas your leftover money will go towards are: debt, investments and fun. Using the snowball effect, start by paying down your smallest debts. Once you've paid off a debt, take that money and add it onto the minimum payment of the next debt.
The key here is consistency. Make it fun, celebrate your progress and create your new belief about money.
If you aren't sure exactly where to start, let's set up a time to chat! e-mail me Guinevere@roilhighness.com with subject line CHAT ME and let's see how we can help you change your money mindset today.
xoxo,
Gwen
Raise your hand if you have student loans! Raise both hands if they're killing you LOL.
Last month I was able to reduce my student loans from $675 a month to $5 a month. Yes you read that right, $5 a month.
How? I sat through a presentation from one of the leading experts on student loans and learned SO much.
You already know how passionate I am about getting out of debt and helping other's do the same. It's the reason I wrote the Ditch Your Debt in 30 Days course!
Here's the thing, any kind of debt sucks but student loans suck a heck of a lot more.
Here's the thing, any kind of debt sucks but student loans suck a heck of a lot more.
I'm a part of many debt payoff focused groups as well as financial independence groups and I've seen so many arguments around student loans.
There's the argument that states we should have known the costs when we took out the loans so we're not allowed to complain about what they're costing us now.
Let's talk about that one for a minute. I don't know about you but at 18 years old I didn't even know what I wanted to do for the rest of my life. I had never taken out a loan before then.
Checking account - yup.
Savings account - yup.
Loans - nope.
Savings account - yup.
Loans - nope.
Deciding on a major, a school and taking out loans feels like a whirlwind. I actually don't remember much of that process at all!
The lack of education in our schools around real life finances is a disgrace. But that's a conversation for another day. I honestly believe that student loan companies know what they're doing when it comes to "helping" students take out their first loans for school.
If they were really concerned with us knowing everything about the student loan process, they would make it easily accessible. And of course, we could have asked the questions, but I'm willing to bet most of us didn't even know the questions TO ask. At least I didn't.
So anyway, yes I take full responsibility for the amount of loans that I took out, but also student loans is a business and businesses make money when students take loans out. The longer the loans and the more money is taken out, the more money the student loan companies make.
So, do I believe these companies have our best interests at heart? Absolutely not. I've learned a lot since then.
Let's look at some facts (that blew my mind!):
1. 1.7 trillion dollars are owed in student loans by about 45 million Americans. That's about 1 in 4 working adults between 25 and 65 years old. And this number is set to double by the year 2028.
2. Student loan debt is the second biggest debt to mortgage loan debt. And the #1 reasons people are denied mortgages is directly related to student loan debt.
3. Tuition is growing about 8% every year while wages have remained pretty stagnant since the early 2000's
4. For every $1 you owe in student loans, thats a loss of $10 in retirement assets or savings. With the average student loan debt around $40,000, that's a loss of $400,000 in retirement.
People are afraid to start families, they're waiting longer to purchase homes, they're losing sleep over their monthly payments and feel that there's no way out.
That's why I'm here, to help you reduce your monthly payment and work with you to save a ton of money on your loans so you can put it towards retirement and assets.
Trust me, I thought I had explored all avenues when it came to lowering my payments. I was happily surprised to learn that I had missed this one. I'd be happy to hop on a call and see if we can save you some money with your student loans as well. Click through to schedule a 15 minute Zoom call and answer a few questions with me.
xoxo,
Gwen
It's the last 100 days of the year, what are you going to do with them? How about setting some financial resolutions? This gives us the opportunity to close out the year by really going hard to achieve the financial goals we set for the year initially or achieve new financial goals we set along the way. Fall allows us to reflect upon the last 265 days of the year and evaluate whether or not we like what we saw. If we didn't, now is the time to pivot and change it.
If you find yourself struggling to keep the financial resolutions you made last year, take a good look at them again. Why did you choose those goals? Why are they important to you? Throughout the year our priorities can change and some goals take precedence over others, or we forget the goals we set. Don't be discouraged if upon revisiting your financial goals, you find you have broken them. A good mentor once told me, "Where you are is just where you are, not who you are." and this reminds me that you can choose to start fresh today no matter what the last 265 days have looked like.
Here are a few great financial resolutions you can adopt heading into Autumn:
1. Set up an emergency fund of at least $3000.
When we have an emergency fund, everything else in our finances feels easier. This emergency fund is the first step to getting your finances in order and a great resolution for the end of the year. And, you can do this even if you think you don't have money to spare after paying your monthly expenses.
Go through your home and find things you no longer use or haven't used in 6 months. This includes clothes, furniture, shoes, decorations, anything you can find, you can sell and earn cash for. I like to use Facebook marketplace and stick to local pickup so you don't have to worry about shipping.
The other way to increase your income and beef up your emergency fund is by cancelling subscriptions. This is where you can evaluate whether a subscription is a need or a want. For example, I had an Audible subscription at $15 a month. I found that I could cancel it, join my local library and listen to audiobooks for free! Check your tv subscriptions, gym or anything else you pay for monthly and really evaluate how much you use it and whether it is something that is necessary for you to live. I usually say anything that makes me money, puts food on my table, or gets me to my job is necessary, everything else might not be. Cancel unnecessary subscriptions and put that cash right into your emergency fund.
Last but not least I recommend taking on extra hours at work or using your skills to work a side job. Everyone has strengths, what is something you can do that can bring in extra income? With the holiday season approaching, lots of jobs are looking for extra help and hours to fill. Any extra money you bring in can go right into your emergency fund.
Go through your home and find things you no longer use or haven't used in 6 months. This includes clothes, furniture, shoes, decorations, anything you can find, you can sell and earn cash for. I like to use Facebook marketplace and stick to local pickup so you don't have to worry about shipping.
The other way to increase your income and beef up your emergency fund is by cancelling subscriptions. This is where you can evaluate whether a subscription is a need or a want. For example, I had an Audible subscription at $15 a month. I found that I could cancel it, join my local library and listen to audiobooks for free! Check your tv subscriptions, gym or anything else you pay for monthly and really evaluate how much you use it and whether it is something that is necessary for you to live. I usually say anything that makes me money, puts food on my table, or gets me to my job is necessary, everything else might not be. Cancel unnecessary subscriptions and put that cash right into your emergency fund.
Last but not least I recommend taking on extra hours at work or using your skills to work a side job. Everyone has strengths, what is something you can do that can bring in extra income? With the holiday season approaching, lots of jobs are looking for extra help and hours to fill. Any extra money you bring in can go right into your emergency fund.
2. Start investing!
This is something I wish I had done in my twenties. It's how you can make your money work for you and how you can set yourself up for retirement (and maybe even retire early!). The sooner you start, the easier it is. If you're not sure how, youtube is your friend.
My recommendation is to start with opening up an investment account if you don't already have one. My favorites are Vanguard or Fidelity or Charles Schwab. Each has different pros and cons depending on your lifestyle. If you have one with your employer and they match your investment, make sure you are maximizing that by putting in the percent they require to match. For example, if you start investing $200 every month for 10 years and you earn 6% yearly, at the end of 10 years you'll have $33,300. Of that though, only $24,200 is money you've put in. The other $9,100 is interest you have earned on your investments. The more that grows, the more your investments grow.
The amount you invest monthly will depend on your age and when you aim to retire. The younger you are, the less money you'll have to start investing monthly to reach your goals. Use Google to find a retirement calculator and calculate how much you should be investing. If you can't meet that minimum, that's ok! You can work your way up. Any amount of money you can invest is better than not investing at all. My suggestion, automate your investments so you can set it and forget it. Just be sure that you're money is being put to work inside your investment accounts and not just sitting in your investment company waiting to be applied to a specific investment.
My recommendation is to start with opening up an investment account if you don't already have one. My favorites are Vanguard or Fidelity or Charles Schwab. Each has different pros and cons depending on your lifestyle. If you have one with your employer and they match your investment, make sure you are maximizing that by putting in the percent they require to match. For example, if you start investing $200 every month for 10 years and you earn 6% yearly, at the end of 10 years you'll have $33,300. Of that though, only $24,200 is money you've put in. The other $9,100 is interest you have earned on your investments. The more that grows, the more your investments grow.
The amount you invest monthly will depend on your age and when you aim to retire. The younger you are, the less money you'll have to start investing monthly to reach your goals. Use Google to find a retirement calculator and calculate how much you should be investing. If you can't meet that minimum, that's ok! You can work your way up. Any amount of money you can invest is better than not investing at all. My suggestion, automate your investments so you can set it and forget it. Just be sure that you're money is being put to work inside your investment accounts and not just sitting in your investment company waiting to be applied to a specific investment.
3. Pay off debt.
Do you know how much debt you have? Write down all of the debt that you owe from credit cards to car loans to student loans and even borrowed money from friends or family. Once you can see it, you can create a plan of attack to pay it off.
Now list your debts from smallest to largest. Let's be honest, paying down debt isn't exactly the most fun but if you can give yourself quick wins you're much more likely to stick with it. That's why we start with the smallest debt you have. I recommend calculating your monthly expenses and monthly income to arrive at your "green gap" amount. This is the money you have leftover after paying all of your bills. Once you have that amount, you can delegate 45% of it to paying off debt, 45% to investments and then take 10% and put it into a fun account.
The key here is to continue paying the minimum payments on all of your debts and take that 45% extra to put on your smallest debt. Watch how fast that debt disappears and see how good you feel about your accomplishments. Now keep going!
Now list your debts from smallest to largest. Let's be honest, paying down debt isn't exactly the most fun but if you can give yourself quick wins you're much more likely to stick with it. That's why we start with the smallest debt you have. I recommend calculating your monthly expenses and monthly income to arrive at your "green gap" amount. This is the money you have leftover after paying all of your bills. Once you have that amount, you can delegate 45% of it to paying off debt, 45% to investments and then take 10% and put it into a fun account.
The key here is to continue paying the minimum payments on all of your debts and take that 45% extra to put on your smallest debt. Watch how fast that debt disappears and see how good you feel about your accomplishments. Now keep going!
4. Pay for the holidays with cash.
This is a great financial resolution to set now that you are on your way to becoming debt free! The holidays are a time of year when marketing is turned way up and we are made to believe that gifts = love. It's so easy to get sucked into the belief that more gifts equal more love, right? If you're a parent you have probably felt the pressure to "keep up with the joneses" when friends are posting on social media pictures of how many presents are under the Christmas tree. Here's where you can start to free your mind from these beliefs because you are clear on your financial resolutions.
Set a holiday budget for yourself and stick to it. One way I like to do this is to set up a "holiday fund" at my bank. This is just an extra account where I can put money for the holidays. If you have to lessen the amount you pay towards investments these next three months, you can choose to do that so that you don't go into additional debt just for the holidays. Know how good this will feel going into 2022 with less debt.
Set a holiday budget for yourself and stick to it. One way I like to do this is to set up a "holiday fund" at my bank. This is just an extra account where I can put money for the holidays. If you have to lessen the amount you pay towards investments these next three months, you can choose to do that so that you don't go into additional debt just for the holidays. Know how good this will feel going into 2022 with less debt.
Let me know what financial resolutions you are setting for the year, and of course if you need help, reach out!
If you haven't grabbed the Ditch Your Debt Freebie yet, get started on simple solutions to get out and stay out of debt right here.
xox
Gwen
