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retirement/investing

Investing 101 For Millennials

April 5, 2017

When I first started learning about investing for millennials, it was overwhelming. All these different terms were thrown around like risk tolerance, bull market, mutual fund, and it was a lot to take in.

After reading through several blog posts, I headed to the nearest bookstore to learn more. There are a lot of beginner-friendly books on getting started with money management, investing for millennials, and getting yourself in good financial shape. The ones I read were great. They talked about budgeting, paying yourself first, automating your savings, and eliminating debt.

Reading up on the topics was great but it felt like something was missing. The books would usually devote a chapter or two talking about investing and the importance of it. Once I had gotten through several of the books and blog posts, the advice all centered on the same key things to remember when investing: pick low-fee index funds, consistently contribute to your brokerage accounts, and have a passive, hands-off approach to your investments (a.k.a don’t pull your money out when the media tells you the sky is falling).

The advice was good. Although I was never sure exactly who the advice was aimed at. It was for money management newbies for sure, but what age group? Millennials? Gen X-er’s who need to catch up on retirement contributions? I was never fully certain.

There are articles on the interwebz about investing for millennials, but the articles were short and would usually talk about one part of the investing equation: what to invest in, where to invest, setting up a brokerage account, and what the heck a “brokerage account” even was.

I didn’t find many resources putting all of the information together. A resource showing how investing doesn’t have to be scary and how to get started and set yourself up with a passive investment portfolio filled with low-fee index funds. The kind of portfolio many investors recommend, including billionaire Warren Buffet.

Talking with friends, acquaintances, and strangers, I noticed a common theme emerge. Millennials had a vague idea of the importance of investing but they were still reluctant and confused.

I know investing is important but I’m afraid of losing money and I don’t have a gigantic sum of money to get started.

Well, I created a resource to help fellow millennials out.

The Investing 101 For Millennials course is a free 7-day email course that walks people through all the investing basics.

investing myths
compound interest
developing a mindset to not be worried when the stock market has a downfall
and more

The course even has videos to talk more about investing topics. If you’ve been wanting to learn more about investing but have been stuck in confusing lingo or scared to get started, click the image below to learn more about the course.

See you on the inside!

Investing For Millennials FREE 7-day email course. Pin for later.

Are you confused about the world of investing and want to learn more? Enroll in my free 7-day Investing 101 For Millennials email course.

Wealthfront Review: Investing, Simplified

March 8, 2017

This Wealthfront review will help you show investing doesn’t have to feel overly complicated. You don’t have to know all the terminology and spend lots of time looking over your portfolio and adjusting. You just need to take the first step. This overview details the benefits of using the robo-advising service for your retirement planning.

Launched in 2011, Wealthfront is one of the big names in robo-advising and has over $3 billion in assets managed. They utilize the Modern Portfolio Theory (MPT) to create a diversified investment portfolio for a person based on their risk tolerance and investment goals.

Investing, especially investing in your 20’s, can feel intimidating. There are so many terms thrown around. Mutual funds. ETF’s. Index funds. Risk tolerance. It can be overwhelming and feel like information overload. Many people know investing is important but they put it off because of the time they think it takes to set up and manage investments.

Robo-advisors make investing less intimidating. With low minimums to open accounts and automated management, investing has become a lot more simplified. (which is pretty awesome! 🙂 ).

This Wealthfront review will help you get to know more about one of the most widely used robo-advisors and how the service can benefit you.

Getting Started with Wealthfront

1) Questionnaire

After clicking the ‘Invest Now’ button on the Wealthfront homepage, you are taken to a questionnaire where you answer questions asking what you look for in a financial advisor, your age, income, how you want to invest your money, and what you want to do when the stock market fluctuates.

2) Investment recommendations

After completing the questionnaire, Wealthfront will show you a recommended investment plan based on a risk tolerance score of 1-10. The risk tolerance score will be based around the answers you gave about your situation and goals.

You can enter your email address and get the investment plan emailed to you. The plans focus on low-cost ETF’s (exchange traded funds) to build and manage your portfolio. Different combinations of the following ETF’s go into your investment portfolio:

VTI – Vanguard Total Stock Market ETF
VEA – Vanguard Developed Markets ETF
VWO – Vanguard Emerging Markets ETF
VIG – Vanguard Dividend Appreciation ETF
LQD – iShares Investment Grade Corporate Bong Fund ETF
EMB – iShares Emerging Market Bond Fund ETF
MUB – iShares Municipal Bond ETF
SCHP – Schwab Treasury Inflation Protected Securities ETF
VNQ – Vanguard REIT Index Fund ETF
XLE – Energy Select Sector SPDR

Fees

With Wealthfront, you don’t have to pay high fees (like you would with a traditional financial advisor) for automated investment service that fits your goals and risk tolerance. The fees with a Wealthfront account are very appealing when compared to those of other robo-advisors.

You get your first $10,000 managed for free ($15,000 if you sign up through a referral). Any amount over the $10,000 threshold is managed at a flat rate of 0.25%. This is on top of the fees charged by the ETF’s in your portfolio, which average around 0.12%.

Features

Low Account Minimum: You can open an account with Wealthfront with as little as $500. This makes it a lot easier for a person to get started investing when they have little money. Many of the funds at online brokerages like Fidelity and Vanguard have $2,500-3,000 minimums.

Automated Rebalancing: When your investment portfolio fluctuates, you don’t have to worry about going in and rebalancing to get back to your desired allocation. Wealthfront does it for you.

Tax-Loss Harvesting: Wealthfront’s philosophy is all about maximizing returns on your investments and letting you keep more of the returns your portfolio makes.

All taxable, non-retirement accounts come with daily tax-loss harvesting which helps you potentially minimize the taxes you pay and maintain the risk and returns you get. Investment losses are “harvested” (sold off) to offset taxes from your other gains and income.

No Commission/Trading fees: The first $15,000 is advised for free (when signed up through a referral). The only fees with Wealthfront are the 0.25% advisory fee on accounts over $15,000 and the ETF expense ratios which average 0.12%.

Low fee service for the new/passive investor: Wealthfront’s fees are low and reasonable when you consider the piece of mind you get from having an automated investment portfolio.

Disadvantages

No customization: What you see is what you get. Wealthfront’s recommended portfolios included a diversified set of low-cost ETF’s but you can’t add any different ones you may want.

The Wealthfront set of ETF’s are good, research-based recommendations but if you’re the type of investor who likes to fine-tune their portfolio themselves, you’re out of luck. Wealthfront is not for the DIY, hands-on type of investor

No fractional share purchases: Wealthfront only purchases whole shares of stocks, so you will likely have a bit of cash sitting in your account until it’s able to buy whole shares again. This is different from Betterment, which buys fractional shares and invests all of your cash.

Types of Accounts Offered

Wealthfront supports several taxable and non-taxable investment accounts: personal and joint non-retirement taxable accounts, Traditional and Roth IRA’s, including 401(k) rollovers, and SEP-IRA’s. They also recently announced support for 529 college saving plans.

Verdict

Wealthfront isn’t as flashy and out there as its counterpart, Betterment. Wealthfront makes up for it by the way of its fee structure and world-class investment team. While Betterment offers no account minimum, it’s fees, for account balances below $100,000, are higher than Wealthfront.

Wealthfront is more accessible and easier to new investors with little money. The first $15,000 of an account is managed for free. Because of this, Wealthfront makes for a really attractive option to get started investing with little money. Use my referral link below to learn more and open your account.

Click here to learn more about Wealthfront and open an account!

Are you confused about the world of investing and want to learn more? Enroll in my free 7-day Investing 101 For Millennials email course.

Just two years ago, I knew nothing about investing and kept all my money in a savings account earning 0.05% interest. Once I learned more about investing and it’s power to build wealth, I got started with it. Investing doesn’t have to be overwhelming or scary!

The course will walk you through the basics of investing, why it’s important, why everyone should be doing it, and how to set up and get your first investing account ready to go.

Click the image below to learn more!

What do you think of robo advisor services? Do you think it makes investing less intimidating and more accessible?

How To Choose The Best Robo-Advisor For You

March 1, 2017

There’s a new kid on the block and it’s the kind of person you weren’t looking for but now totally want to know. (big statement to make, I know). Let’s talk about how to choose a robo-advisor.

Not exactly a person, more like an automated service. These automated services walk you through what you want to do with your money and create a portfolio plan around it.

If you’re any more than an occasional reader of personal finance blogs, you are probably aware of the importance of investing. You’ve seen the charts showing how magical compound interest is, stood awkwardly while baby boomers told you retirement horror stories, and even saw the fake quote from Albert Einstein about how compound interest was the 8th wonder of the world.

You know investing is important but you don’t want to have to research what funds to pick, how to rebalance your portfolio, and do a bunch of other things that leave you puzzled.

You want a passive option that allows you to be investing while not having to get too involved with managing your investment portfolio. Let’s talk about how to choose a robo-advisor.

How I (finally) got started investing

Set out to do good for myself, I got enrolled in a 401k plan at my first full-time job and it came with an employer match. I contributed into the 401k but didn’t really know anything about investing. Scratch that, I knew *nothing* about investing. So the money just sat there in my account, for several months, not invested in anything.

A few months later, I opened up a Roth IRA with Fidelity (the same place where my 401k was). I was excited and ready to invest! But…most of Fidelity’s funds came with a $2,500 minimum to invest. I had nowhere near that.

After moving on from that first job, I rolled the 401k into my Roth IRA and started to look at how to invest.

I read several blog posts, listened to podcasts, and read a really great book called, The Index Card: Why Personal Finance Doesn’t Have to be Complicated. The information, although all good, didn’t give me the desire to fully manage my hypothetical investment portfolio.

Mulling over options, I came across the idea of using robo-advisor services. I wondered how to choose a robo-advisor service that was best for me. The top two platforms, Betterment and Wealthfront, both offered a very nice appeal to a beginning investor like me. Both services offered automatic rebalancing and investment portfolios geared towards your risk tolerance and goals.

It came down to fees and situation. I chose Wealthfront, since you can get the first $10,000 in assets managed for free. The fees becomes a flat rate of 0.25% after $10,000.

Now I have a portfolio of low-cost ETFs and my investing is automated! I don’t have to check on it as often as a do-it-yourself type of approach. I like that.

How to choose a robo-advisor

I want to go through some ways to help you figure out how to choose a robo-advisor for you. Let’s get crackin’

1. Management fees

One of the big things to do when investing, besides the actual investing part, is to keep your fees as low as possible. Fees from the funds you’re invested in, advisor/management fees, trading costs, they can all add up.

As actor Billy Eichner says, Keep your fees, like your milk, under 1%. Keep them wayyyyy under 1%.

Betterment charges a 0.25% advising fee. Wealthfront is free, having no advising fee on the first $15,000 managed. It becomes 0.25% after that.

2. Investment Options

With many robo-advisors, including Betterment and Wealthfront, you don’t have a choice in which funds to invest your money. The investment decisions are made by the platform (usually via a computer algorithm). So it’s important to see what investment options there are when looking at how to choose a robo-advisor.

The money is often invested in low-cost ETF’s like a total stock fund, emerging markets, international, and some bond funds. What is unique is your asset allocation (the percentage you have in stocks and bonds) based on your risk tolerance, which is usually based on a short questionnaire you fill out.

3. Minimum Opening Deposit

When you have little money to invest, low or no account minimums can be *wonderful*. Betterment offers no account minimum ($0, yeah!) and Wealthfront has a $500 account minimum.

Don’t focus too much on getting one with the lowest account minimum. Keep in mind the full scope of features, interface, and fees each platform has to fit your needs.

4. Platform Interface and Features

One of the things surprisingly mentioned when looking at how to choose a robo-advisor is their online interface. Some of them have really great interfaces that help you visualize your long-term goals and figure out ways to do more.

This is so great at motivating you to save for retirement and your other goals.

Betterment offers a RetireGuide calculator that shows you how much your money will amount to over time and how much you need to save per month or year to reach your goals. It lets you customize your accounts to different types of goals you have (retirement, house down payment, etc.)

Wealthfront offers a similar thing with their Path tool, a visual interactive tool used to set and see your savings goals over time. You can also connect your accounts to monitor your spending with it.

Robo-advisors are a fresh face when it comes to the world of investing. It’s going to be interesting to see how they do in the years to come.

A lot of people, including seasoned investors, are critical of them due their new-ness and spot in the investing world. We all have to start somewhere, right? Robo-advisors can be a great way to get started investing or for people who know they should invest but don’t want to manage it too much. For me, when it came to how to choose a robo-advisor, it came down to three things: fees, investment options, and customer help/online tools.

I want to keep my fees as low as possible, while still being able to passively invest. Ultimately I went with Wealthfront.

For investment options, I wanted to make sure most of the pre-selected investment options were low-cost funds. Also, looks matter (sort of… :)). I wanted a platform that had an interface that made it easy to enable auto-deposits, give a snapshot of investment loss or growth, and show me how much to save based on my goals.

You’ll still find me reading over articles on investing and looking over different investment portfolios, but for now, using a robo-advisor service like Wealthfront works great for me.

Are you confused about the world of investing and want to learn more? Enroll in my free 7-day Investing 101 For Millennials email course.

The course will walk you through the basics of investing, why it’s important, why everyone should be doing it, and how to set up and get your first investing account ready to go.

Click the image below to learn more!

Have you ever considered using a robo advisor? How do you choose the best robo advisor?

Robots Got Me To Start Investing

August 8, 2016

Investing always seemed like a complicated and scary process. Using a robo-advisor helped me get over my fear and confusion of investing. Click through to read more about it.

I’ve always had a problem with waiting until things were perfect and tidy before doing something.

Whether it be spending half an hour to write a simple email, waiting until I had the perfect desk set up before I started working, or spending an hour in Sam’s Club trying to buy all the things in order to get my money’s worth. Yes, I definitely need that 30 pack of paper towels. Err…

My Type A tendencies are partly to blame. My personality seems to prefer when things are organized, put together, and backed with several hours of research.

This bad habit somehow trickled into my retirement planning. I read several (read: dozens) of blog posts about ways to save for retirement, different accounts to have, how to maximize, amounts to save and so forth.

I gobbled all the information up and had a craving of curiosity for more. I read more about the different types of investments to buy and why low-cost index funds were great. I stared at so many graphs showing the importance of compound interest that I started having dreams about it.

It felt great reading all of it! I was inspired and went out and set up a Roth IRA account with Fidelity. I felt semi-obligated into opening an account with them because my 401k with my then employer was there and I wanted to keep the accounts under the same branch.

Then, for the next several months, my Roth IRA just…sat there. I was contributing to it but the money wasn’t invested in anything because I didn’t have the minimum investment amount to buy into any funds.

Most of the funds Fidelity offered required a $2,500 minimum to invest. I wasn’t near that, given my situation. My quick thinking made Vanguard pop into my head. Lots of people in the personal finance blog world use them! Awesome! I’ll switch to them! Nope. Vanguard required a minimum to invest for many of their funds. The only way to get around the minimums was to enable auto-deposits, which I couldn’t do.

I looked up ways on how to invest with little money, not expecting to find anything worthwhile.

I was still under the assumption I needed a good sum of money before I could invest. When I found a robo advisor, like Wealthfront, I found out the possibilities of being able to invest with a small amount.

Holy moly. These things can be really awesome! Robo-advisors make investing less scary.

After reading countless articles on investing to make myself more comfortable with it, I realized I’m more of a hands-off type of investor. At least for now. No matter how much I read about index funds and ETF’s, I still don’t feel comfortable buying them and rebalancing my portfolio myself.

When I finally realized this. I went out to find the robo-advisor to go with. While there are many, the two big ones are Betterment and Wealthfront. It seems like eeeevery PF blogger has covered Betterment. So I knew a lot about them already from the many articles I had already read.

Ultimately I ended up choosing Wealthfront.

Wealthfront won out over Betterment due to their fee structure. Betterment charges $3 per month for accounts under $10,000. 0.35% for account under $10,000 and $100/month auto-deposit enabled. The fees drop to 0.25% after $10,000 account balance and 0.15% after $100,000 account balance.

Wealthfront’s fee structure was more simplified. The first $10,000 is managed for free. Then it’s 0.25% afterwards. I signed up through a referral and was able to get my first $15,000 managed for free! Whooo!

I love it. With my first $15,000 being managed for free, I’m just paying the ETF fees (which average 0.12%). So I’m getting the simplicity and peace of mind of having a robo-advisor without having to pay the additional fee for the service (at least right now).

Setting up the account was super easy. I answered 10 or so questions relating to my age, when I want to retire, risk tolerance, and goals. The Wealthfront account dashboard was really well designed and laid out. Everything was easy to find and visually appealing.

They even had cool charts showing what my contributions could turn into over time. Everything about the setup felt way better than Fidelity’s interface. Even the mobile app feels better!A robo advisor got me to finally stop procrastinating about investing

A robo advisor got me to finally stop procrastinating about investing

A great thing about robo-advisors is the low minimum required get started investing. Wealthfront only requires $500 to get started. Betterment has no account minimum. This is great for people who know they should get started investing, but don’t have the $2,500 or $3,000 that many brokerages require. A lot of people say they can’t invest because they don’t have enough money. Robo-advisors, like Wealthfront and Betterment, are a way around this problem

I was able to let go of my restlessness from waiting around while I grew my savings enough to meet the minimum balance at Fidelity. Now I’m investing! Finally!

Do you use a robo-advisor for investing? What are some of the pros and cons to robo-advisors?

Is Retirement Harder for Millennials?

August 1, 2016

If you asked me about my Roth IRA at this moment in time, I would just give you a look of distress. The follow-up would be some grumbling noises since I wouldn’t want to discuss it. Then I would quickly change the subject. Anyone see the new Captain Marvel news?!

Saving for retirement is hard. Then it’s easy. Then it’s not so bad. Then it’s hard again. The tough part is having to actually see the money disappear from my hands every month.

Not long ago, my retirement savings were automated. I hadn’t gotten a Roth IRA yet and all I had was a 401k with my employer. I didn’t think anything of it. Countless articles and people older in age would tell me with terror in their eyes to sign up and contribute to my 401k.

Well-intended advice that falls short.

I was contributing to my 401k! #responsible Every two weeks when I would get paid, money would automatically get taken out and put into my 401k which had an employer match. Easy, breezy.

Not anymore. Since I changed jobs, my new position doesn’t offer a 401k plan. Saving for retirement has become a very conscious thing. In my current situation, I can’t do automatic transfers to my Roth IRA, it has to be done manually.

Physically seeing the money go out of my bank account and into something I won’t access for the next 45 years? It’s freaking hard.

Then I think back to a conversation I had with my dad about his retirement. He, along with many people from his baby boomer generation, didn’t properly save for retirement. My dad is 57 years old and only has a small amount in his 401k.

Luckily he has a healthy pension to look forward to as well as a decent size monthly social security check. Retirement will happen for him when he hits 67. One of the lucky ones.

While many baby boomers are having trouble dealing with retirement, a new focus is on millennials. Is retirement harder for millennials? How the heck are we going to to do it?

Student loans

Many people are graduating university with over $30,000 in student debt. The class of 2016 graduated with an average of $37,000 🙁

This increasing debt is causing shifts in life. With a high loan payment every month, little financial literacy, and a small salary, stashing money away for retirement isn’t a big priority for people. Pushing off investing until the late twenties and early thirties, they’re losing out on the power of compound interest.

High cost of living

Everything seems to be making leaps past the inflation rate: higher education, healthcare costs, homeownership and more.

More materialism

Everyone wants the biggest house, nicest wedding, brand new car, and cool new iPhone 7. There’s a reason the minimalism movement has gained popularity in the past few years. Materialism has been ahead of it and some people don’t want it anymore.

People are moving into big houses they can’t afford, buying new cell phones they don’t need, and generally not being conscious of their spending. Constant advertisements and things like Amazon Prime two-day shipping, one-click ordering and Amazon’s Dash button make getting things super easy. The barrier to entry with spending has been lowered.

Longer life expectancy

Longer life expectancies make the traditional retirement age of 65 more unlikely. Social security payouts are going to be a lot smaller for millennials than they are currently for baby boomers.

Are you ready to live well into your 90’s? Retirement planning is going to involve 25-35 year forecasts with our money.

With pensions being a thing of the past (even the U.S. military is cutting them), higher costs of living, and more debt, is retirement harder for millennials? I don’t think so. In a way, retirement is easier for millennials.

Millennials have resources at their fingertips that didn’t exist for previous generations: hundreds of personal finance websites and blogs offering money management insight, mobile apps for brokerage accounts, and even robo-advisors like Betterment and Wealthfront taking care of investing for you.

What do you think about millennials and retirement? Do you think retirement is harder for millennials?