Financial Feminist - 186. Study Hall: The Best Investing Advice

Episode Date: September 16, 2024

Hey Financial Feminists, welcome back to the show! Today’s episode is going to be a little different. We’ve put together some of our best answers to your most asked questions. Study Hall is now in session, and of course we’re starting with the number one topic on this show — investing. I’ve pulled together some of the best advice from our past 170-ish episodes to create a one-stop-shop for everything you need to know to start building your wealth. Whether you’re an investing newbie or looking for advanced tips, this episode covers it all – from busting common investing myths to tips on how to get started, setting up your kids for financial success, and even what it really looks like when it’s time to retire. If you’ve been putting off investing or feeling overwhelmed, this episode is your permission to dive in and get started today! Did you love this episode? Want more tailored education on investing? Our signature Investing Community, Stock Market School, is increasing in price THIS FRIDAY. Grab your spot to the community that invested over $72 million together: www.herfrist100k.com/invest Read transcripts, learn more about our guests and sponsors, and get more resources at https://herfirst100k.com/financial-feminist-show-notes/186-study-hall-best-investing-advice/ Not sure where to start on your financial journey? Take our FREE money personality quiz! https://herfirst100k.com/quiz. Resources mentioned in this episode: The Financial Game Plan Financial Foundations #5: How to Start Investing Debunking the Worst Worst Money Advice We’ve Ever Heard Setting Financial Goals for your Best Life with Jamila Souffrant How to Financially Prepare Your Kids for the Future with Andy Hill  Are you registered to vote? https://vote.org/ Special thanks to our sponsors: Thrive Causemetics Get an exclusive 20% off your first order at thrivecausemetics.com/FFPOD Squarespace Go to www.squarespace.com/FFPOD to save 10% off your first website or domain purchase. ADT Count on ADT, America's most trusted name in home security. Visit ADT.com today. Masterclass Get an additional 15% off any annual membership at masterclass.com/FFPOD. Indeed Visit indeed.com/FFPOD to get a seventy-five dollar sponsored job credit to get your jobs more visibility. Medik8 Visit medik8.us to save 20% off your first purchase using code FFPOD at checkout.

Music Hi, financial feminists. Welcome to the show. I'm so excited you're here. Thanks as always. My name is Tori. I am a money expert. I'm a New York Times bestselling author. I fight the patriarchy by making you rich and I've helped over 5 million women save money, pay off debt, start investing, start businesses and feel financially confident. So if you're an oldie, but a goodie,

you knew that already. If you're new, welcome to the show. We're doing a fun new thing on Financial Feminist, which we're calling Study Hall. Study Hall is a new format we're testing on the show where we're putting together our best ever advice on some of the biggest topics that you always ask about. So today we're starting with our number one

topic, which is investing. So we've taken the past 170-ish episodes of the show and we're putting them together in one big bad episode for you. So if you like this episode, let us know. We would love to know if you want more of these study halls. This is the best way to consume our advice without you having to parse through our entire back catalog. So without further ado, let's go ahead and get into it. Grab your pens and paper.

Let's go to study hall. But first, a word from our sponsors. This episode of Financial Feminist is sponsored in part by Medicaid, Masterclass, ADT, Thrive Cosmetics, and Squarespace. For radiant, youthful skin backed by science, choose Medicaid. Visit medic with a K, 8, the number, dot US, and use code FFPOD at checkout for 20% off your first purchase. Get 15% off any annual membership at masterclass.com slash FFPOD. ADT spends all of their seconds helping protect all of yours.

Count on ADT, America's most trusted name in home security. Visit ADT.com today. Find quality candidates fast with Indeed. Get a $75 job credit for more visibility at Indeed.com slash FF pod. Thrive Cosmetics lets you refresh your everyday look with foolproof vegan products made with clean, skin loving ingredients. Get an exclusive 10% off your first order at ThriveCosmetics.com slash FF pod. Build a beautiful website to get your message

out in the world with Squarespace. Go to Squarespace.com slash FF pod to save 10% off your first website or domain purchase. Before we jump into some of the advice and the info from your favorite guests, I thought it would be best to tackle some of the myths and misconceptions surrounding investing. So let's listen back to the segment from a solo episode I did about investing. Let's listen back to the segment from a solo episode I did about investing. We are going to talk very briefly about some investing misconceptions. We have an entire free workshop that breaks these down and breaks down how to get started

investing and we'll link it down below in the show notes. Whenever you're listening to this, you can get access. Just click the link down below. A couple of misconceptions about investing. One, it's gambling. Some investing is gambling. The kind of like pick the hot stock, pick the like hot new thing.

Anything that basically seems sexy or that the Wolf of Wall Street would approve of, that is not investing, it is gambling. I talk about this in my book as well, but the thing about investing is that it should be over the long term. It should be over years, if not decades.

And so if you are playing the investing game thinking like, okay, I'm just going to pick the hot thing for a day or a week or a month, and then I'm going to pick the other hot thing, that is not investing, it's gambling. And frankly, it's extremely anxiety inducing, too much time and effort, and also it does not perform well. We know statistically that thinking about investing for the long term and choosing well diversified investments is the thing that performs well rather than chasing the hot commodity. rather than chasing the hot commodity. So is investing gambling? Not how it's strictly and like financial experts define it.

Again, investing should be consistent and stable over a long period of time. One of the other misconceptions is that you have to watch stocks like a hawk and make it like your full-time job. No, the answer is no, you don't have to do this. For me personally, what I've realized is that a hawk and make it like your full-time job? No. The answer is no. You don't have to do this. For me personally, what I've realized is that I don't want to play the individual stock game like I was saying before.

They do not perform well. They are too much work and effort. And also I just have other shit to do. It's not necessarily a smart investment to again be chasing the stock. We also want to think about investing again for the long term. So it's performance on a random Tuesday or even in a month or even in a year doesn't matter that much in the grand scheme of things in the years if not decades that you're investing. So even me as a financial expert, I check my investments about once a month. And yes,

I'm checking their performance, but I'm really just checking to see like, is everything going okay? And also, can I start investing more? We talk more about this in our stock market school, which we'll also link down below. But there's a way to start checking your investments that doesn't feel, again, anxiety inducing or stressful. It's just like a simple like, okay, everything's good, cool, moving on. It's kind of like a doctor's appointment. It's just like, it's like an annual checkup. It's just like, okay, everything's good. Cool. Moving on. It's kind of like a doctor's appointment.

It's just like, it's like an annual checkup. It's just like, cool, everything's fine. We're going to keep moving. I mentioned this already in this episode. Another common misconception is it's like Wolf of Wall Street and Leo DiCaprio yelling on the phone. It's not that. My not so conspiracy conspiracy theory is that men and specifically finance bros named

Chad have literally told you that investing is difficult or complicated in order for you to A, not do it, and B, pay them to do it for you. The vast majority of people who are literally investing like stock brokers, they work in the financial services industry, they do not perform, like they're not good at their job. We know this from statistics. I found all of these like stats when

I was researching for my book, but literally the very people that are trusted to manage your money and pick stocks very rarely are actually good at their job and don't end up performing well. So the not so conspiracy conspiracy theory is that they tell you it's complicated so that they keep their jobs and so that you are gate kept out of investing. When really you can manage this yourself, you just need somebody to teach you whether that's me or somebody else. And finally, one of the other misconceptions is, oh my God, we're in a recession, so it's a bad time to invest. Or like, investments aren't performing great,

so now is not a good time to get in. Couple things. One, if we're thinking about this in terms of years, if not decades, again, it does not matter what happens in a random period of time. We know from statistics that over every 20 year period, every 20 year period, even a

20 year period that included 2008 or the dot com boom and bust or the great recession and depression, we know that over every 20 year period, you have been 100% likely to make money on the stock market. So what is the key to making money on the stock market? Patience, right? So again, what happens on a random day doesn't really matter. In addition, stocks are on sale. I have said this before on our social media platforms. Millionaires will be made right now. Millionaires will be made when stocks are on

sale. Now is actually a great time to start investing because if a coat is $100 normally and suddenly it's $50, well, it's a great time to buy that coat. So if you are that person who is hesitant to get started investing because you're like, oh, it's not performing great, well, cool, think about it as a long-term thing. Think about it as 10, 20, 30, 40 years and realize now is actually a great time to get started investing because your investments are going to be cheaper. So is now a bad time? There's no such thing as a good time or bad time to invest. You just need to get started.

We'll explain what dollar cost averaging is in a little bit. You just need to get in and you need to ride whatever waves are coming. Okay, so now that we have the myths and the misconceptions out of the way, you're probably wondering, okay, Tori, but how do I actually get started? How do I know when I'm ready? In this next clip, I'm walking you through the checklist to go through before you start investing, as well as answering the but how question, including one of the biggest mistakes I see new investors make.

Let's talk about when you're ready to start investing. You are ready to start investing when you have paid off any debt over 7% interest. This is all your credit cards and this is some student loans. We've talked about before why 7% is the magic number on whether we pay off debt or start investing or do other things, please see previous episodes of Financial Foundations for why 7% is that number. We are also ready to start investing when we have an emergency fund of three to six months of living expenses in a high yield savings account. And we are ready to start investing ready to start investing if your company offers a 401k match. Now a 401k match means that your company basically doubles your money for no additional effort. So if your company

offers a 3% match, that means if you contribute 3% of your salary to your 401k, your company will match it at 3%. So now you've just contributed 6% of your salary to your 401k, your company will match it at 3%. So now you've just contributed 6% of your salary to your 401k, but only done half the work. If you get a 401k match through work, take advantage of it. It is free money. There are very few places in this world that just give you free money. And if you don't know if you have a 401k match, or if you don't even know if you have a 401k available, ask. Ask your benefits person, ask your HR person at work, or just ask your boss if you're at a smaller company. You have three options when it comes to investing, when it comes to how to actually start and where to start. Your first option is DIY investing. This is exactly what it sounds like. You are doing it yourself.

You are navigating the stock market. You are choosing your investments for yourself. You are contributing to your retirement accounts on your own. DIY is not as complicated as people make it seem, but I will say that for the average beginner, this is not a good option for you. This is going to complicate you and freak you out and cause you to hit the bail button way too early. Some DIY companies include Fidelity, Charles Schwab, Vanguard. The pro to these companies and the do-it-yourself approach is that you're saving money. You're not

paying somebody else to do it for you. You're not paying a service to do it for you. You're saving money in fees. The con though is you kind of have to know what the hell you're not paying a service to do it for you, you're saving money in fees. The con though is you kind of have to know what the hell you're doing. I feel confident completely managing my own investments on my own. The average person doesn't and I understand that. So that's option number one and probably not the best option for you listening. Option number two is what's called a robo advisor.bo-advisor is a company that for a fee will invest for you. These are companies like Ellevest, Betterment, Acorns, Wealthfront, Wealthsimple. There's a bunch of them out there. So what's happening is that you sign up with them, they ask you

some questions like your gender identity and your age and your goals and your risk tolerance. And then based on your answers to those questions, they set you up with investments and they do it for you. The pro to these kinds of platforms is that they're doing it for you. You don't have to worry about it. You don't have to come in with prior knowledge. They will do it all for you. The cons are twofold.

One is that you're paying somebody a fee to do this. And typically this fee is a percentage of your investments. Now, a half a percent in fees doesn't sound like a lot, but we all hope we're millionaires someday. And a half a percent of a million dollars is a lot of money. My biggest issue though with brokerage accounts is that they are fishing for you rather than teaching you to fish. The amount of community members that we have had come to me, come to HFK and say,

I've been with this robo-advisor and I still don't know any of the terms. I don't know why they're choosing the things they're choosing for me. I'm still just as confused as I was when I started three or five or 10 years ago. So we built what I lovingly call the Hannah Montana of investing platforms because it is the best of both worlds. Get it? Did you get it? Did you get it? Okay. So I didn't like that DIY was too passive. It wasn't helpful. It wasn't step-by-step and guidance. And I didn't like that DIY was too passive. It wasn't helpful. It wasn't step by step in guidance. And I didn't like that robo-advisors just kind of threw you in off the deep end without giving you any sort of information.

So I built a platform with technology called Stock Market School. We will put the link in the description. You can literally learn step by step how to invest from me and other finance experts and actually invest within the app. We do monthly coaching, we do quarterly workshops about investing. It is a year of investing education taught by me and the HFK team. And I built it because I didn't like the other options that were out there. I wanted a way to teach you how to manage your investments for yourself, but with a safety net, with guidance from someone you can trust and with a lot of the emotional support that comes with a lot of new information. So if you're interested in that, you can check it out below.

All right. One of the things that I really need to highlight, I've said it on the show before, I say it in my book, but we see thousands of people end up losing millions of dollars from a very simple mistake. And that is not understanding that investing is a two-step process. What I mean by that, if you open a savings account, you put money in and you're done. You take $1,000, you put it in a high-yield savings account, you're done. With investing, the

investing account itself is not the investment. The 401k, the Roth IRA, the actual investing account is the thing that holds your investments. You have to not only put money into the account, but you have to go purchase investments. I liken it to a gift card. It's like you put $50 on a TJ Maxx gift card, now you need to go buy your plants and your candles and throw pillows. This right here is the number one mistake I see people make. They put money in that Roth IRA or in that 401k or in that general investing account and they're like, cool I'm done. And then they wipe their hands and then they move on. You are not actually invested though.

Your money is in what I call financial purgatory because it's just sitting there waiting for you to invest it. You have to do step two. If you do not do step two, you are losing out on thousands, hundreds of thousands, even millions of dollars. I tell this story in my book about Rose, a cute little 65 year old teacher who put her money diligently in a 401k with every single paycheck for her entire career, for her entire life. And then she got to retirement and realized that she had never done step two because nobody had taught her. And if there's one thing I'm trying to do in this world, it's trying to prevent more situations like Rose. So, please do step two.

Please do step two. First, we're going to choose our basket, right? We're going to choose our account. Like a Roth IRA, a 401k, a general brokerage account. We have previous episodes that talk about what your investing account options are, so please go listen to those. And then second, we're going to choose what goes in our basket. If you've been following us for a while, you know that I am an index fund girly. Index funds are my personal favorite investment. Those are what I choose to invest in.

And again, in stock market school, I give more detail about what these are, about how to make the decisions in what to choose and how to choose them. But index funds are a great diversified investment where I can invest in a bunch of different companies at once. So that's why I personally love them. Now how do I know what money should go where? How do I know if I should save this certain money or invest this other money? Savings are for your short-term goals. You 100% need to save, not invest your emergency fund

because you need your emergency fund readily available for, you guessed it, an emergency. Under no circumstances should you be investing your emergency fund. Some other things that I would save for rather than invest for are more short-term goals. Things like a vacation, a down payment on a house fund, a wedding fund, a I want to start a business in three years fund. Things that are longer term that we want to invest for. 100% we want to invest

for retirement. That is the primary goal that people invest for. Keeping that in a savings account while better than doing nothing is still not enough to be able to afford retirement someday. And for a lot of people, retirement accounts are also great for children's education costs, right? Things like college, things like, you know, a 529 is the perfect example of this. The general rule of thumb is that any goals seven to ten-ish years out, those need to be invested. Goals under that seven-year mark are better off having been saved for rather than investing for. Another question we get a ton is, what do I do if the market is quote unquote bad right now? Or is it safe to invest when things are economically sketchy?

So we sat down with my friend and fellow co-creator of Treasury, which is the investing platform that we created for the Herfershunderkate community that talks about what to do when the market seems a little topsy turvy. And we also go over a very common term you'll hear around investing, which is called dollar cost averaging,

which is when exactly to get into the market. Can you talk a bit about that, especially during times of potential economic volatility? Yeah. When I think about investing, it's like 10 or 20%. What? Like, how do I do this? What do I invest in? And then the remaining 80, 90% is how do I manage my emotions? And how do I build a system where I'm going to invest for a really long time so that my investments have time to actually come to fruition? I haven't yet figured out how to predict the future. And here's the thing, financial experts, including myself and any other financial expert,

they don't know either. We do not know. And anybody who's telling you they know what the stock market's going to do is lying to you or trying to sell you something. Quick tangent, but I have to be clear about that. It's not from lack of experience. None of us know because you can't really predict it. And so when people are like, Oh, you know, either the stock market is really turbulent. Like, is this a good time for me to like, this seems scary. I don't want to invest or well, the stock market is down a bunch. That seems good, right? Because it means I'm going to invest at a cheaper price. And the answer is, is some combination of like both and we don't know,

but the thing to do, or at least the thing that I do, is just try to invest really consistently, whether the stock market's doing amazingly well, or doing really poorly. There's this thing called dollar cost averaging, which is kind of a jargony term. Elias, we actually have a question from one of our listeners about that. So let's go ahead and listen to that question. Hey, Tori. I just wanted to say thank you for all you do. I'm actually in my 20s and bought a house when I was 25. And everything that you've been giving me so far is so great. I was wondering though, where you always talk about time is on your side.

If the market being low right now, would it be a good time though to be buying stocks or indexes as well as starting an IRA? So Elias, if I imagine this person, I know this person isn't alone in feeling like, okay, if it's volatile is now a good time to invest, should I keep doing what I'm doing? If I haven't gotten started is now a bad time to start. Can we talk about that?

Totally. So it's a tricky thing because let's say you decide now's a great time to get started and you put your money in the market and then the volatility continues and in the short run the stock market goes down more. Well then it's going to feel really bad because you'll have your invested dollars will be less valuable than they were when you originally invested. But the alternate can also happen meaning you're like, oh, it seems like things are pretty scary.

I'm gonna hold off for a little bit. And maybe in the short run, that's smart, but then all of a sudden the market starts doing okay, and you're still holding off, and it keeps doing okay, and you're still holding off. And now the money that you didn't invest is not growing. And so it's so, because it's impossible to predict, at least in the short run, like what the market is going to do.

There is this jargony method called dollar cost averaging. And what dollar cost averaging means is just taking the same amount of money and putting it into the same investments with some frequency, let's say every two weeks or every month or every week, you just buy, let's say $500 of the same investments again and again and again over a very long period of time. And what's cool about that is it takes all of that kind of like psychological challenge out of your investing decision. It allows you to say, oh, the market's down a little bit.

Well, that means my $500 is going to go further or hey, the market's up a little bit. That means the money I've invested previously is benefiting from the market being up. And so if you just do that, you end up getting basically the average price that the market is at over that long time period. And all the while, you are investing, which means you overcome the most important, hardest step about investing, which is getting started. Right. And for whatever reason, if you've been like, kind of tuning us out, or you're like, not listening, come back, please. Because if there's one thing I have to tell you, there is never a perfect time to invest, right? In that way, every time is a perfect time.

It is never a bad time to invest, as long as you've gotten started. Literally every day is a good time to start investing, especially because we're thinking about investing not just for a week, not just for even a year. We're thinking about multiple years, if not decades. What happens on a random Thursday, what happens even in a random year, doesn't matter if we're thinking about investing for the long term. When Elias talks about this concept, dollar cost averaging, it's just the idea that we need to put more time in the market than trying to time the market. They say this in the financial industry all the time, like time in the market is

more important than timing the market because none of us can, even us financial professionals can't time the market. So it's just important to start investing and to invest at a consistent rate over a long period of time. I will also say too that there's a lot of talk about like, oh, my investments are down right or I've lost money and I put lost money in quotes, because the truth is you actually haven't lost or gained money on your investments unless you choose to sell your investments. So you have not actually lost money on the stock market

unless you choose to liquidate, right? Unless you choose to sell your investments just in the same way that you actually haven't gained any money on the stock market unless you choose to sell your investments or liquidate your investments. So all of this talk about like, I've lost money on the stock market. You've only lost if you sell. And if again, we're thinking about this in the terms of years, if not decades, we're strapping into the roller coaster and we're riding the roller coaster for a while. So part of it is curbing that anxiety.

And again, the shameless plug of Treasury is it's like, you want a place to be able to get a pep talk from people you trust and, you know, be able to ask questions and figure out, like, how to navigate something you haven't navigated before in, again, a way that's not gonna be judgmental or shaming. -♪ MUSIC PLAYING -♪ So, you might not know this about me, but skincare is a huge priority, especially because skin cancer runs in my family. So I'm really focused not only, of course, on SPF, but on making

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ready to launch, go to squarespace.com slash FFPOD to save 10% off your first purchase of a website or domain. Personal finance is personal. And as we know, investing is no exception. And you might be familiar with something called FIRE, Financial Independence Retire Early. We recently had Jamila Souffron on to talk more about FIRE and all of its forms. So I start with the technical definition of financial independence, which is the ability to live off of your investments. So the investments that you accumulate over time, pay for your living expenses, where you have the option of never actively having to work again,

you get that income from your investment and your portfolio. And so that concept for a lot of people feels very audacious, it feels almost impossible, which I understand. There's some people who won't even touch the concept of fire, financial independence retire early, because the thought of it just doesn't seem to make sense from where they're starting. And so with that, I knew and understood

to help people along their journey and to bring more people on the path with me, because I am on the journey to reach financial independence, I'd have to break it out into more manageable steps. Because I also agree, if you're just coming to understanding that concept, it's just like, really, you know, I have all this debt, I'm at the starting point, I feel, you know, that I can't do it. And so for me, I had to understand and break down the difference between financial

freedom and financial independence. I believe you can achieve financial freedom on your way to financial independence. Financial freedom is not linked to the amount of money you have. You can still be in debt and have achieved some level of financial freedom. It's the ability to make choices, to have security, to feel good about where you are, even if you have some insecurities about your money. And so you can achieve financial freedom on your way to financial independence. And that concept, I think, like you said, so many people say it differently.

Even the word financial independence, if you're not in the fire movement, it means something different because you could be financially independent from, you know, your parents, a partner, a job. But when I say it, I mean financially independent from everyone and everything. Like you can literally walk away and be in control. And I don't know who doesn't want to have that feeling. And so I encourage people to start the journey to financial independence because on your way, you'll achieve more freedom or options,

more autonomy over your time on that path. Well, and you've been in this game for a while. And I sure you recall the early fire days where it was like, you know, Silicon Valley straight white tech bro who had no kids and, you know, could retire at 33 because he sold his multi-million dollar, you know, software company and rode his bike everywhere. And that was the advice of like, ride your bike everywhere and start this huge tech company and that's how you can retire early. And like a lot has changed

since then. Oh my gosh. So here's the thing. I discovered financial independence and the fire movement when I was in my early 30s. So this is now after I failed at my audacious goal of not working for anyone past 30. And so I was now pregnant with my first son. And I have three kids now, by the way. So I was pregnant with my first child in my early 30s. And I had this horrible commute. It was an hour and a half each way.

And I remember a really particular day. The commute was hours, a couple hours long. And I realized, and I was heavily pregnant. And I said, no, wait a second. What is happening? This cannot be my life. I knew I wanted more kids. And I broke down in the car said, no, wait a second. What is happening? This cannot be my life. I knew I wanted more kids and I broke down in the car and broke down to my husband. So my boyfriend then became my fiance and then husband and said, I cannot do this.

And that's what prompted me to search for solutions. I asked questions to myself, like, how do I quit this job? And I Googled it and I found all these podcasts and blogs and this thing called the fire movement. And I was just like, what is this thing? And because I had such a long commute, I was able to immerse myself in that world and start to listen to all the podcasts at work, read all the blogs. And yes, most of them were by white men, but I was able to pull out information that related to me, right?

So it's like, maybe we don't necessarily look alike. We don't have the same background, but, okay, you just interviewed a teacher that was able to do this, and my husband is a teacher, so what can we learn from that? Jamila, I don't mean to interrupt you. Can I stop you for a second? What you just said was so powerful, and I just want to make sure people hear it.

Let's go, let's go, yeah. It's just so incredibly important that, like, nobody's story is going to be the same as yours. And I can speak to my own experience, like, my 100K at 25, that's kind of what I was known for for a really long time, right? Her first 100k was saving that 100k at 25. And I would see people comment on, you know, the Good Morning America story about me or like the podcast episode and be like, well, you didn't have student loans and I have student loans. So like, I'm not going to listen to you. And there was so much privilege

in my story and I'm the first to acknowledge that. But there's also things that you can take away from my story, even if the story is different. And I love that what you did was like, yeah, probably not a lot of representation, especially at that time for women, for black folks. But you were able to say, you know what, yep, I'm not able to start that multi-billion dollar software company and sell it, but I can do this thing that they advise me to do. And I just, I wish more people had that mindset when they approached personal finance, as opposed to seeing those sexy, you know, like, yeah, 100k at 25 titles or like millionaire by 30. And then just being like, well, that's not even possible for me.

Well, listen, ultimately, I think also mentioned in my book, I say this is that there are going to be people who have more privileges than you, but you also have probably more privileges than someone else. And the idea is not to pinpoint and see the differences, which obviously there are going to be a lot, but it's the pull what works for you or what you can relate to. And so from my story, you it's the pull what works for you or what you can relate to. And so from my story, I took what I needed. I took the information and the inspiration that I needed.

And if something didn't relate to me, I'm like, okay, that's fine. And I moved on. And so with that, I was able to craft my own idea and process of what my financial independence journey would look like. And to your point, when I first started, because I was listening to a lot of people who were into frugality and aggressively saving, that was my path that I took. And that path did allow me to save and invest $169,000 in two years and then eventually quit my job.

But as I started to go on my journey, I realized that the frugality as my lever into reaching financial independence was not going to be it. I needed to create a sustainable pathway as a wife, a mom of three living in New York City, that my path was going to be a little bit different. And so I adjusted what my journey looked like. I became more okay with spending on the experiences and not investing and saving as much. But I'm still on my journey to financial independence. And I knew that there were so many people who would be more into this concept if they realized how amazing and diverse it could be in that you

don't, it's not one size fits all, right? But the attempt and pursuit of financial independence puts you in such a better position and there's no way you can fail because the goal is so audacious that, let's just say you say, okay, I need to reach $2 million to reach financial independence. And then in 15 years or however many years you start, you say, dang, I only made it to 300,000.

That is better than probably not doing anything at all if you had not started. So that's my whole thing. I literally had phone call, I can remember this, a phone call with my dad because at this time I had gone public with my 100k goal and he was like, so like what happens if you don't hit it? And I'm like, then I have 80k and like 80k at 25 is still an incredible accomplishment and pretty significant, you know, but he was doing like you've announced this publicly what if you can't stick to it? And I'm like, I am still, I get 80% of the way they are cool. Like even setting the goal and progressing towards it, even if you don't manage to hit

it still puts you in a better spot than you were before. Right. I call it moonshot goals. You know, you aim for the moon and if you fail, you're among the stars anyway. It's better than not launching. So let's just do it. Let's go. Right. Well, and I think for women especially, we do feel like, like we set goals that we can 100% achieve because we're so scared of failure. We're so scared of like not being perfect.

Like I feel like a true goal, you should have a feeling of going, I don't know if I can do this. Like you should have this little like inkling of like, this might not happen. And like that means it's an actual goal because it's something to like aspire towards. Right, and I think it's important to think of the questions you're asking yourself if you are facing an audacious goal

or thing you're trying to accomplish. Because black and white questions like, can I do this? And the answer is yes or no. It's hard to make if you don't have all the necessary information. And so many people when they're starting their journey, they don't know, you don't know all the things. There's some things I don't even know now that I know along the way I'll still pick up. And so it's more important to ask things like, what do I need to learn to make this goal accomplishable? How can I put myself

in a better position? And so I think the quality of our questions on our journey far better impacts what happens versus can I do this? You don't know enough yet if you're listening to this, can I do this? Unless you're gonna say maybe or, you know, it's something positive, but saying no from this position of not understanding that there's so much,

and I feel like I'm a testament to that because, you know, I'm still, there's five stages to reach financial independence that I talk about in the book. The ultimate stage five is the captain stage. You never have to work again. I'm a stage below that stage for the commander stage work flexibility. So I was able to quit my job. I am work flexible, meaning I can take time off of Journey to Launch, pause what I want

to do, not have to actively work, but I can't do that forever. And I believe this is a stage that everyone can actually get to. But I would not have gotten to this stage without starting my journey to financial independence because I would not have pushed myself or realized the opportunities in front of me without starting the journey. Another question we get a lot is how to start investing for your children. And since I don't have any of those, we brought in one of our favorite dads and personal finance, Andy Hill,

to talk about some investing options for kids and other accounts you might want to consider. So let's talk about these accounts. Let's talk about 529s first. What is it? How does it work? How do we contribute to one? Talk to me about it. Yeah, absolutely. I think the first one, when we talk about investing for generational wealth, even though there's so many problems with student loans right now, I still think that a college future, a college degree gives you a leg up in this world more than not having one. There are some studies out there that say a person with a college degree has an opportunity to make $1 million more in their lifetime than somebody without one. Obviously, you know, you could you could hit it big and not go

to college and start a great business and do well. There are a lot of anomalies there. But on the average average person who's able to graduate from college without a lot of burdensome debt, they can make a lot more money. And with that money, you can build wealth, you can have more time freedom, you can be happier. So I guess money's not the entire thing but I still believe that a college future can help out with that. So what can we do to invest for our college future? A 529 college savings account is a great way to go. This is an opportunity for tax advantaged investing for educational purposes. So you can potentially get state tax deductions. Now a lot of people

worry about, well what if my kid you know decides to go to trade school or does an apprenticeship or something like that? You can still use the 529 for that. What if they go out of state? You can still use the 529 for that. There's a lot of additions and updates to the 529 for that. There's a lot of additions and updates to the 529 plan that have been great as of late too with the Secure Act 2.0 that just passed recently. They're even allowing for some rollovers of 529 if you have too much in there to roll over to a Roth IRA in the future for the kid as well. So they're coming up with new ways to make this a possibility. Obviously there's an investment in our country that people,

that the country essentially wants people to go to college so they can get that education so we can keep moving forward and having our capitalistic society. So this is an opportunity for you to look at 529 College Savings Account. You can look at your specific state plan and that can help you out a lot as a good starting place. I also want to highlight that these are investing accounts. So what you're doing right is just like any other investing account, you're putting money in, but that's not enough. You have to go choose your investments to live within that account. One of the common mistakes, Andy, that we see is with any investing account,

people put money in and they think, cool, I'm done. I don't have to do anything more. But it's not like a bank account. You have to actually choose your investments. You have to choose what the money is going into. The 529 or any other investing account is just the account that holds the investments. So this is an investing account on the stock market, not a savings account. Absolutely. Yeah. To your point, if it's just sitting there, that's potentially sitting in a money market, not a savings account. Absolutely. Yeah, to your point, if it's just sitting there, that's potentially sitting in a money market, that you're probably even learning less than a high yield savings account at this point. So making sure it's invested and diversified, a lot of these plans, which is a bonus, end up having these time-based strategies too,

because you go in there and you're like, well, I don't know what to invest in. They essentially give you these time-based strategies, which is essentially like a target date fund where you say, okay, my daughter's going to graduate in 2030. What index fund portfolio can I invest in to help me get there? So there are some easier ways to look at the investment process. Amazing. And just to clarify, if you have multiple kids, you can open up how many 529s? You can open up a 529 count for each kid. Now if you open up just one and you pile it up and that kid doesn't use all those funds,

the name can transfer from one count to the other kid. In fact, you could even change the name to your own account if you don't use all the money. My wife just did this recently actually. She went back to school to become an esthetician and we needed some funds to do that and we used the 529 that we'd built up. So it's very flexible and portable as opposed to what also is out there, which is a UTMA, which is essentially a kid's brokerage account. The name can't be switched on that, which is one of the downfalls, but it does

have the option to be used for anything else besides college. Let's talk about a UTMA. Tell me more about that. Tell me more about how it works. Yeah. Yeah. So that's another option. So when people are like, well, I'm not sure if my kid's going to go to college or I don't know if I want to just invest for college. Maybe I want to help them buy a home. Maybe I want to help them to start their business. UTMA could be a great route for that because with the 529, you're saying this is for educational purposes only. And that's okay. There's nothing wrong with that. But if you're saying for the, for, well, I'm not sure I want to do that. Then you

could look at a UTMA. And again, that is essentially, you know, Tori's talked about it on the show, a brokerage account, you know, it's, but this is a kid's version of a brokerage account. So you can invest in a UTMA kid's brokerage account that helps you to get towards those goals in the future. Some of the downfalls about it though, are the flexibility. It's great. You can use it for anything, but when they turn 18, they can use it for anything. So if they, you know, it could be a business in our brains, we're like, oh yeah,

they can start a business or they could, you know, buy a home or they could blow it all in Vegas or, you know, or whatever, you know, it's, it's in their name. It's not in your name. The five 29 would be in your name. So you're in more control of, of that account and the portability of it makes it difficult just in case if you wanted to switch it to your other kid's name, you can't do that. And when it comes to student loans, the 529 has about a 5% impact

when you're looking at the FAFSA as far as it being a parent asset. And then when you look at a UTMA, since it's a kid's asset, that hits things at about a 20% rate. So your ability to get as many loans or scholarship opportunities is decreased just by that amount. So those are things to look at. Neither one is like perfect, but you just have to analyze your specific situation, what your goals are and where you think.

I don't think doing either one would be horrible either way. And if you're feeling stuck, you know, you can just analyze those pros and cons and decide which way to go. That's super helpful. Yeah. And again, imperfect action is better than no action at all. Exactly. Yes, exactly. There's one thing you always take away from these episodes, like do something, even if it's not perfect. Like the worst decision you can make is making no decision at all. So yes, the inaction is the worst. Even some middle ground there would be a high yield savings account. I mean, just throwing it in a high yield savings account,

earning 4%, some 5% interest right now, gets the game rolling for this future college expense. I would love to talk about something that I, speaking of TikToks, I've seen a lot of TikToks on and I know you do this as well, which is opening up Roth IRAs for kids. With a Roth IRA, you have to earn income in order to contribute. But we're talking about children under the age of 18 who, you know, maybe when you're in high school, you're earning

income, but like if you're seven, are you making money? And you and a lot of folks on TikTok have a really smart workaround for this. So talk to me about how parents, especially parents who are entrepreneurs or business owners, can take advantage of Roth IRAs for their kids. Yes. Yeah. The main stipulation with Roth IRAs, whether it's kid or it's you and I, is that they have earned income. So I do see some videos on there just saying, hey, I started a Roth IRA for my kid when they were born. Well, they better be earning income in a legitimate business

in order for that to happen. Otherwise, that's not going to work out. So the workarounds that I do as a dad who owns a family finance education company is that I have co-hosts on my podcast that are my daughter and my son. And I've also taught them how to do social media marketing for my site. Now, they do this for an hour after school twice a week. It's not a ton of money. They're not millionaires or anything like that. But I do know-

You're not running a child labor scheme on the side of marriage kids and- Exactly. Dad's sitting right next to them. I'm helping them. But legitimately, they have learned over the past couple of years to do some very helpful thing. Not just yesterday, I said, Zoe, can you get up those Facebook posts for our Facebook group so that they are recurring each week? So they pop in there and ask about people's family financial wins. And two years later, after doing it with her for a while, I didn't even have to show her how to do anything. She just did it. So she had her cereal after school and she started posting the Facebook posts. I'm like, oh, this is working. And she's learning some really good skills about how to run an online business. So it's not only a great thing to start investing

for your kids early, but you can have some great, as we talked about earlier, some great conversations with them about how this stuff works, man. And then with their earnings, you can take a portion of it, you can take all of it and invest it as earned income in a Roth IRA that can build up over time. And as you've seen with some of these compound interest charts, man, that can build up to millions and millions of dollars. This is a great way to make your kid a millionaire. We had a previous guest on the show. Her name is Shazi Vishram and she has, she has multiple

companies that she's founded that are like family focused or baby focused. And on the back of them, she has these really like beautiful like pencil drawings of her kids. And she's like, there are spokespeople, like this is how I. This is how I'm able to contribute to their Roth IRAs. Because on the back of every single product they sell, there are their faces. That's the spokespeople for the company. Absolutely. And if you don't have your own helpful family business like I do, it doesn't matter. The kid can start their own business and that is earned income. The kid could eventually work for a company when they're in their teens

and then that could be earned income. Now, it can't be like, hey, they babysat the kids around the house and they watched them when we went to the store and I'm going to pay them $100 an hour and then we got a Roth IRA. There are stipulations in there and you want to make sure that you consult with your CPA or accountant before you do anything like that. But if they have their own business or if they're working with the family business, these are great routes to consider. Or again, if they're in their teens and they start to work like you and I did in our teen years, these are great ways to earn some money and then invest.

Andy, any other accounts that you can think of or that people have common questions about? I think when we talk about investing, I like to think about it in three different areas. When we talk about wealth building and for generational wealth, I think we talk about college as a big thing to invest for in the future. I think we talk about retirement. So we've talked about two of those. And then there's home ownership. Home ownership is becoming one of those things that is, it's gonna be difficult for a lot of people, man. I know you're hearing it a lot right now that it is high interest rates, high prices.

And unfortunately, I only think that the prices are gonna continue to go up. So if you feel passionate about your kids owning a home in the future and knowing it's one of the major wealth builders in our country, you could start investing with a UTMA, a kid's brokerage account, so that they could get that elusive 20% down payment or 10% down payment or whatever it ends up needing to be in the future, because time and compound interest can help you make that happen. If you do that from an early age up until they're maybe 30 years old, you could help them get like a 20% down payment on a million dollar house. And that's

probably where houses are going to be in 20, 25 years, a regular old house. So starting- In Seattle, I- I know you're in Seattle, so it's like, that is a regular old house buddy. Nothing costs less than a million. Yeah. Like through two bedrooms, two baths, three bedroom, two bath, you're looking at a cool one, 1.1, 1.2. Like easy. So can you only imagine?

And then a bidding war. Yeah. Yeah. Sight unseen, right? Yeah. Exactly. Right. So yeah. Can you only imagine in 10, 15, 20 years where things are going to be, I just don't think it's gonna go down. We can look at other countries like Canada and we can look at other countries like Australia and just say how it's just become so difficult for people to buy a home. So if you're passionate about that and your family,

you could start early and just start compounding that wealth to help your kids have that choice. And again, if you use something like a UTMA or kids brokerage account and they decide they don't wanna be a homeowner, then they can use it for something else. They can use it to start that business. They can use it for a killer wedding.

I don't know, whatever you wanna use your money for when you're older on. Okay, so you know how to invest. You know how to invest for your kids and you even know how to invest to retire early, but what do you actually do when it's time to retire? We got this question from a listener recently and we dove into what to do when it's time to take your money out of the market and fully retire. This is from our podcast community in a voicemail from Emily. Hi, Tori.

Thank you guys so much for all you're doing. I have a really possibly dumb question. What does retirement actually look like logistically when you're trying to take the money when you're at the stage of taking the money out of your IRA accounts? And are you having to sell all those stocks kind of all at once and then you get that money, then you get it in distributions, or you're doing it a little bit at a time? And if that is the case, what if the market is really bad at the time that you're retiring? Let's say if somebody was trying to retire

like tomorrow and the market is super low and you have to sell all these stocks in there. So if you could provide a little bit more clarification on what the logistics look like post retirement and how you would actually pull your money out of those funds once they've grown and sat in those accounts for a while, that would be super awesome and helpful. Thank you so much. I appreciate it with Emily's voicemail, but I think we heard some wind chimes in the back and it was very ASMR soothing. And I just, I don't know, I just really appreciated that. Okay. Emily, this is a question we get a lot, a question that we have answered in a

full workshop in stock market school. So I'll give you the TLDR. If you are anticipating retiring soon, this is not the time to start planning for how you're actually going to use this money. What I mean is if you're 64 and expecting to retire at 65 with some money in your retirement accounts, that's not the time to start thinking about, oh, I'm going to need this money tomorrow. We're going to backtrack a little bit. And if you can, we're going to start thinking about you needing this money

five to 10 years before you actually need it. I'll give you the example of my parents. My parents are in their early sixties. And for the past couple of years, what they've been doing is slowly taking out money from their retirement accounts and from their general brokerage account, which as a reminder is not a retirement focused account, but is an investing account. And they've been putting it in what's called a CD ladder. What is a CD ladder? It is various CDs with various terms, like year amounts. So for instance, they might have one CD that matures, for instance, 10 years from now, and then they'll have another CD that matures eight years from now, and then five, and then four,

and then two, and then one, so that they're slowly getting that money as they will need it. You are not taking all of your money out of your investing accounts for retirement at once. One, that's going gonna be a tax nightmare. And two, the point is you want to allow your money to continue to grow, the money you don't need yet, right? So if you spend, let's say $50,000 a year, if your expenses every year are $50,000, maybe the time you're thinking about retirement, right?

And those maybe five years before, you're slowly starting to pull out that money. So, you know, you might take out, if we're retiring at 65, at 58, you might take out 50k. And then when you're 59, you might take out another 50k and then another 50k, right? You're not taking out this whole lump sum of money at one time, but you're moving it instead to places where your money is safe and at a less high of a risk, right? You mentioned in your voicemail, like, oh my God, what if I am taking out my money for retirement but the stock market isn't performing well during that time?

This is why we're slowly taking out our money in anticipation of needing it to protect it in places that aren't the stock market, hence a CD. And again, as a reminder, a CD, we've talked about this before, is a certificate of deposit. It's like a souped up savings account. It is holding your money for a period of time and in exchange for you not being able to access your money, you're getting a higher percent interest rate. So that's one strategy that you can employ. My parents have done that. Again, a CD ladder and just being more strategic about when you're taking out your money and how

you're using it. So the biggest thing to think about to your question is one, no, you're not taking out all of the money at one time. That again would be a nightmare in terms of managing it, but two, you want your investments to continue to grow. As well as during retirement season, let's call it, you don't want to hypothetically start planning for your retirement, like six months before you're set to retire. This is something we want to think about in anticipation of retiring. And this

is the perfect time, just like any time, to sit down and make sure that you are setting yourself up for success, not just right now financially, but in the future. So this is why my parents have done something like slowly siphon their money out of retirement accounts in order to protect it in lower risk or really no risk savings accounts. And the thing that they've done, because if you know a bit about retirement accounts, you might be asking yourself, well, how did they do that without paying a penalty? How can you start withdrawing money out of a Roth IRA, for instance, without paying a penalty?

Fun fact, you can take your Roth IRA contributions out penalty free. So your $6,500 that you've contributed, right? Year over year, and it's been different depending on the year, right? But that contribution that you've made, you can take out penalty free. So that's part of what my parents have done

is take out their contributions, but not their earnings of their Roth IRA early so that they don't have to take a penalty. But it's only if you're under age 59 and a half that you have to pay a penalty for withdrawing your earnings. So if you're over that age, right, my parents are now over that age, they can start taking even more money out of their Roth IRA. That might be an option for you. This is all in the weeds, right? But if you are somebody who's trying to plan for early retirement, you are somebody who's trying to help an older family member,

or you maybe are an older listener to the show, then this is a just general piece of potential guidance. But you got to figure out what's right for you. You got to make sure that this works for you. And I'll also say too, we have had so many conversations in stock market school about like, how do I stop working as soon as possible? And these are those kinds of strategies that are more,

again, like slightly more complicated because they are more strategic. They're kind of in a positive way, gaming the system that exists so that you can say fuck off to your work life forever and retire. So yeah, that's that is my answer to that question. You're not taking all the money out at once, you're being more strategic about it. And if you can plan ahead, we're talking years, if not like a decade, that can be really, really helpful for you in strategizing your future retirement. Okay. As we wrap up this episode,

I want to hop back to one of our foundation episodes about investing and share this homework assignment, especially as you're figuring out what you want your retirement to look like. work assignment, especially as you're figuring out what you want your retirement to look like. I'm pulling this from my own book from our chapter on investing. But one of the things that I have loved doing is picturing 65 year old me and I call this like Nana you. Nana Tori, she is very infamous already. She is drinking saff blanc with lunch. She is flirting with her much younger Pilates instructor named Luca.

She is adopting dogs in the Tuscan countryside. She is somehow more badass than I am right now, which I don't know how that's possible. And I'm so excited to meet her someday. But the only way Nana Tori gets to have the best life possible and be able to be the badass Nana and grandma I know she is, is if I take care of her right now. And this is the final thought I'll leave you with, is that so many people, especially if you're younger, it's very hard to imagine 30 years from now or even 20 or 10 years from now. It's very hard to imagine 30 years from now, or even 20 or 10 years from now.

It's very difficult to get yourself to care when you're like, I have all of these other things to think about. I have all of these other things like debt and my current expenses to think about. And why would I save for retirement? You're saving for retirement for 65 year old you. You are saving for retirement so she can have the most kick-ass life possible. You are making sure you're having a great life right now and a great life in 10, 20, 30 years.

So I would like you to imagine the best version of your older self. She is retired, she is financially stable, she is happy, and she's got the cutest little wrinkles you've ever seen. Where do they live? What do they do? Do they work part-time for fun or do they enjoy their time on a beach somewhere? Use this future version of yourself to remind you why you're investing. Maybe even write a letter to future you.

Why are you taking care of her or them? Why are you making sure to take care of them? And when again, that goal seems really far away and you're not sure how to keep going, how to keep investing, remember the vision of Nana you or of grandparent you. Remember what that vision looks like and use that as motivation and as a reminder that you're really just taking care of yourself and you're taking care of the cutest but also sometimes the most fragile version of you and making sure that they have the best life possible. Team, thank you so much for joining us. This was so much fun. I feel like I'm doing a fun

little greatest hits compilation. So if you liked these Roundup style episodes, feel free to tell us. You can also leave a voicemail or comment with more questions about investing that we can answer in a future episode. Thank you as always for being here. You can share this episode with other people who are learning how to invest and are on their investment journeys. We thank you for being here. We thank you for being Financial Feminists and we'll talk to you soon. Thank you for listening to Financial Feminist, a Her First 100k podcast. Financial Feminist is hosted by me, Tori Dunlap, produced by Kristin Fields and Tamesha Grant. Research by Sarah Shortino, audio and video engineering by Alyssa Medcalf, marketing and operations

by Karina Patel and Amanda LaFue. Special thanks to our team at Her First 100K. Kaylyn Sprinkle, Masha Bakhmakeva, Taylor Cho, Sasha Bonar, Ray Wong, Elizabeth McCumber, Claire Karonen, Darrell Ann Ingman, and Megan Walker. Promotional graphics by Mary Stratton, photography by Sarah Wolf, and theme music by Jonah Cohen Sound.

A huge thanks to the entire Her First 100K community for supporting the show. For more information about Financial Feminist, Her First 100K, our guests and episode show notes, visit financialfeministpodcast.com. If you're confused about your personal finances and you're wondering where to start, go to herfirst100k.com slash quiz for a free personalized money plan. you