Hi everyone!
Welcome back to Lavendaire.
I'm Aileen, and today we're going to talk about money,
specifically investing.
Before I go into anything, I just want to say that my goal
for making this video is to just have you be aware of investing: what it is and how
you can
be smart with your money, because we all want to be smart with our money, right?
I also want to let you know: I'm not an expert.
I'm not a financial advisor.
I'm just here to share the basics of what I know and just kind of guide you in the right
direction,
just in case you had no idea of any of this before.
A little background about myself: I did go to business school and I took a finance class,
which means I did have a general knowledge of basic finance concepts and stuff.
But back then, it was all conceptual.
I didn't really think about applying it to my real life
until very recently.
I always knew investing was there, I knew it was good.
You can make money from it, and it was the smart thing to do.
But I just never got into it because I was intimidated, I was scared.
First of all, I felt like I didn't have 'enough money' to start investing because you know,
I'm doing this whole creative DIY lifestyle.
And even though I knew it was the smart thing to do
I just had no idea where to start, where to even begin.
And I felt like that was so much effort
on my part to even start that research and I wasn't into it.
I was like,
"You know, I don't care about finance too much.
I want to do creative stuff."
But recently, I did a podcast interview with this woman called Canna Campbell
AKA SugarMamma on YouTube.
She's a financial advisor and she was just laying down
the knowledge, the finance and investing knowledge in this episode.
By the way,
I'll link it below so you can listen to it yourself.
While I was talking to Canna,
I realized that a lot of the stuff she was saying, I kind of already knew because I learned
it in class,
but I never applied it in life.
And I told Canna, "I feel like I don't have enough money
to start investing," and she was like, "No, you can invest with even a small amount.
The best time to start is now."
Talking to Canna really pushed me to, you know,
look at investing and start putting my time to research it a little bit
just to see how I can invest my money and be smart with my money.
Today I want to share some things that I've learned and kind of direct you in the right
direction.
Again, I'm not going to get too technical or too detailed because I just want to guide
you
in the general direction.
I'm going to post a bunch of links down below,
of articles for millennials and beginner investors, so feel free to look that up after this video.
How do you know you have 'enough' money to start investing?
First off,
you gotta have enough cash to support yourself.
So if you have any high interest debts,
like credit card debt that's 8% or higher, don't start investing.
Your priority
is to pay off those debts ASAP, because debts, especially high interest debts,
can really hold you back, and it costs a lot to pay those high interests.
If you have those debts, focus on paying those off now.
Secondly, you want to make sure you have enough cash savings for three to six months worth
of expenses.
You want to calculate your monthly expense, you know,
the money you spend on your internet bill, your rent, your groceries, entertainment,
etc.
Then times that by six months, ideally, and see if you have that chunk of money,
because that is what a lot of people call your "emergency fund", your "emergency savings",
because life happens.
You want to make sure you have some cushion to protect yourself,
just in case.
So if you fit that criteria, and you have extra cash on top of that
six months-worth of expenses, then that's when you know you have extra cash to start
investing.
And I want to say that even if you're not there yet, you know maybe you don't have
that much saved up, you can still start implementing ways to save now,
so that you can have some extra cash to start investing.
There's something called micro-investing, and I'll recommend a couple platforms later
on
in the video, but micro-investing is where you invest like pennies or a few dollars at
a time.
So it's very manageable, it's very doable for anyone.
So why start investing in the first place?
The goal of investing is to grow your money faster
than it would have grown if it were just sitting in a bank.
Actually, putting your money in a bank
doesn't really grow it that much.
The interest rate is basically zero, so it just stays the same.
But, for example, if you invest in stocks or bonds, they have a higher interest rate,
a higher rate of return where your money will grow faster.
You might have heard of the saying, "Time is money," and it's so true, because with
more time,
your money can grow faster and it can grow more.
It's really magical
and it's all because of something called compounding.
Compounding just means
when you earn interest on interest on interest on interest, I know that doesn't make sense
to a lot of people, but just imagine you invest $100 and it gives you a return of 6% a year.
So in one year, you'll have $106.
What you do is you reinvest the earnings that you made.
So you have $106, you invest that at 6% a year, and then after another year you have
$112.36,
which is a bigger number to start with.
And then you invest that at 6% and 6% again,
and on and on and on, until your money grows exponentially like this.
It really is math.
Basically, you make your money work without you putting in any physical work.
That is called passive income, and passive income is awesome.
You're making money
while you're sleeping and you're living your daily life.
Your money is just growing itself
because of what you've invested in.
So if you're young, if you're in your twenties, the best time to start investing is now,
because you have decades ahead of your life to live, decades for your money to grow.
And look at this graph, the longer-in the beginning, it grows slowly and then it gets
faster
and faster, faster, faster, so you want to start earlier so that your money
could start to accumulate faster.
So even if you start with like $100 a month,
putting that into investments, that can grow a lot.
For example, I took this off an article on Betterment and it says that if you're 25
and you invest $100 a month, that equals $1200 a year and you just invest that same amount,
you know for forty years until you're 65, you will have-let me look at the number.
You will have $185,700, assuming a 6% return.
If you calculate it, you've actually only contributed,
out of your own pocket, $48,000, and I got that number by doing $1200 times forty years
equals 48k.
And if you subtract from how much you have in the end,
basically you have $137,700 of passive income.
That's how much money you grow,
and that's only considering that you invest $100 a month which is really little
because I'm sure as you get older, you'll be able to make more money
and be able to invest even more into your accounts.
I hope that the numbers
didn't confuse you.
I hope it makes sense.
Passive income is real.
Investing is a great way to be smart with your money.
Now let me talk about my personal experience.
Personally, my style of investing is-
I'm not trying to be like super-duper investor.
I'm not trying to be like a daily trader.
I don't want to buy and sell individual stocks every day.
I don't want to put
that much mental energy on it because it's not my passion.
I know for some people
it's their passion.
They love to check the market and they want to make a career out of it.
I'm not that person.
I still love what I do creatively.
But I do want to be smart with my money.
So my style is: I just want to put my excess money into some investments
where I'll leave it there for like twenty or more years just to let it grow.
And it doesn't have to grow
super fast.
I just want it to grow more than it would have grown in a typical bank account.
So I did my research and Canna introduced something called Vanguard risk questionnaire
and I took that.
Basically, that's just a questionnaire that assesses your risk
because you know some people are willing to risk more, some want to play it safe.
So I'll put that link below if you're curious about how risky you are,
because there's so many different ways to invest.
Anyway, bottom line is: I did my research and I discovered a lot of new platforms,
not too new, but relatively newer platforms called robo-advisors.
Basically, what they are,
are computer automated, algorithmic ways to invest your money.
So you put your money in something and then they use a bunch of algorithms
to figure out your portfolio mix and where to invest your money.
I don't know if that makes sense to you but traditionally, either you do it yourself,
or you have a financial advisor, a human being to help you distribute your portfolio.
But now there's computer-done ones that are pretty trusted and reliable.
I know for people who have no idea what this is-because a month ago, I had no idea
what robo-advisors were-it might sound like, "Oh my god, you're putting your money
and letting a computer decide what to do with it?"
I mean, it might seem scary at first,
but a lot of people use it.
A lot of people trust it, and that's all I'm going to say.
It's all up to you.
Everything is up to your discretion.
But they're pretty big.
I did all my research comparing these different platforms and I was mostly comparing
between Betterment and Wealthfront which are top robo-advisors
where they'll give you investing advice.
And two that I wanted to mention are Acorns and Stash,
and those are the micro-investing platforms.
I think they're both an app.
I'll post the links below
so you could check out how they work.
Basically you invest pennies or dollars at a time.
And then there's Motif which is a new way to invest based on ideas.
So instead of picking companies, you pick an idea or a motif that you believe will grow
in the future, like renewable energy or something.
And once you pick a motif,
they'll bundle some investments that fit under that.
And there's one called Robinhood that's also millennial-friendly, but that one is just
for free trading,
because traditionally-there's traditional platforms like E-Trade and Charles Schwab.
They charge you a fee for trading stocks and those are more DIY, do it yourself trading,
which I'm not trying to get into.
Those are platforms for like my mom's generation.
My mom uses those websites.
I was focusing more on platforms
that were millennial-friendly, user-friendly, super simple, easy to use.
So again, I did a ton of research comparing all these different platforms
to see which one was right for me and I'll post all the links below
so you guys can check them all out yourself too.
In the end, I decided to go with Betterment because it was generally the top trusted
and top popular platform for robo-advising, and I'm the kind of girl that goes with the
#1.
I don't want to gamble with anyone else.
So I started investing with them.
The way it works is you just do a quick questionnaire, similar to the risk questionnaire,
and then they kind of assess your risk, who you are, and what your goals are.
Then they recommend a portfolio mix.
'Portfolio' means your mix of investments.
There are different types of investments like stocks and bonds, blah, blah, blah, doesn't
matter.
A mix of things, right?
Like I said, I don't want to get too detailed.
You can do that research
on your own.
I just want to be here to let you know that, "Hey, this stuff exists.
If you're interested, if you have extra money, you should probably consider
growing it in a way that can create passive income."
So that's it.
Bottom line for this video is: don't let investing scare you.
There are so many new platforms, so many resources out there for people like us,
people your age.
So don't be scared, don't feel like investing is something that only old people do,
or something people financially-savvy or people good at numbers do.
Investing is for everyone
and there are so many different ways you can do it.
It's very customizable.
So that's all I'm gonna say.
Leave it at that.
I hope you realize how powerful compounding is.
I hope that it inspires you like it inspired me,
because once I realized really what I could've done-I could've started investing when I was
18.
That's what I think when I'm researching this and you know, you are the youngest
that you will ever be right now, so the best time to start is now.
Don't regret anything in the past,
just do your best.
Have fun, be smart, and I'll see you next time.
Thanks so much for watching.
Please subscribe if you want more videos and feel free
to comment below with any questions.
Make sure to check out that podcast episode
with Canna Campbell, SugarMamma, because she's the expert.
I'm just the one that's like,
"Wow, so cool!" and I'm trying to share it with you guys.
But yeah, have a beautiful day.
I'll see you next time.
Bye!