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Investing (Part 2)

Disclaimer: Although my degree is in Financial Planning, I am not a financial advisor, accountant, attorney, or tax advisor. These blogs are for informational use and all advice is based on my personal research, my experiences, and my opinions. You have to do your own research and I do not take responsibility for any losses that come with my advice. Everyone has unique circumstances and consulting a professional is always the best option.

**************** Start with my first blog on investing *********************

What should I invest in?

The hardest question of them all… and the main reason I love the website Betterment (#NOTsponsored). But really.. with Betterment I don’t have to choose what stocks to invest in, they choose for me, I just deposit money every month. For those that do want to choose, I described some basic investing terms and came up with some analogies related to buying food to hopefully make it easier to understand. I will also include links to a better description of each term if mine doesn’t make complete sense. It is pretty hard trying to explain these things in simple terms.

  • If you’re choosing your own investments, always invest in things you’re interested in. You want to enjoy following the company's updates and reading news on the company/industry you choose to invest in so that you can make informed decisions. Plus, if you really support and believe in something you’re willing to ride the highs/lows.

  • Stocks - I mentioned this in part 1... It’s ownership in a company and you hope to sell your stock at a higher price than you bought it to make a profit

    • I buy a pear for $5, I hold onto it for 2 years, and then sell it for $10 - I made $5 from owning the pear.

  • Bond - “a bond is just debt in reverse” -@lowercasemoney on Instagram. When you buy a bond, you are lending money to a company and you receive interest payments back and eventually the initial payment back also. These are less risky because the bond market is less volatile than a stock, so you won’t earn as much as you do with a stock.

    • I lend you a bottle of ketchup today for 2 years, we agree that every month for the 2 years you will give me some tomatoes, and then at the end of 2 years, you have to give me my bottle of ketchup back. After 2 years, I now have ketchup and also tomatoes (which I could make more ketchup with).

  • Mutual Fund - a diversified group of stocks and bonds that an investment professional specifically selects. These are actively managed and you can buy different types that may focus on a certain sector or size of a company.

    • I buy a basket of fruit that a grocery worker put together with the best fruits! The basket of fruit costs more than just buying each fruit individually because the grocery worker puts time and energy into selecting each fruit. I trust that the grocery worker knows what he/she is doing and chose the best fruits.

  • Index Fund - a pool of investments that matches the returns of a certain group of stocks/bonds. The group of stocks/bonds is called an index. Similar to mutual funds, index funds can be made up of large or small companies, international or domestic companies, or a certain sector like technology, you decide.

    • I buy a basket of fruit with apples, pears, bananas, grapes, pomegranate that a machine automatically put together, but at any time the fruits in the basket may change because the value of those fruits may have increased (meaning they were put into the basket) or other values of fruits decreased (meaning those fruits were removed from the basket). This process automatically happens, I don’t have to go back to the store and buy more fruit baskets every time.

  • Target Date Funds - A group of funds that automatically adjusts to match the time frame you select. Your retirement account with your employer probably is in a target date fund unless you're managing it yourself. Usually the younger you are, the more risky the investments, and the closer to retirement you get, the less riskier the investments in the target date fund. For example, in the year 2060 I will be 64 years old, I could choose the fund called “Target Retirement 2060 Fund”, so the investments in this fund will have risks based on retiring that year.

    • I buy a cart of food, while I am a baby the cart has baby food, while I am a teenager it has snacks and pizza, and while I am an adult it has fruits and vegetables. The food in the cart is automatically changing with my age because it assumes my needs.

If all those definitions were really confusing I would recommend focusing on understanding index funds. My #1 piece of advice for everyone: DIVERSIFY, DIVERSIFY, DIVERSIFY. For most people, my recommendation is index funds because if 1 stock in your fund performs badly it won’t have a large impact on your earnings. My second recommendation is target date funds because the risk of your investments automatically adjusts with the time frame you select. There's really no need to have all your money in 1 stock. We know the term don't put all your eggs in 1 basket because if you drop that basket, you lose all your eggs. Instead, have 800 different baskets all with different eggs that way if you drop 5 baskets… who really cares? You have 795 more baskets of perfect eggs.

Here are basic funds that anyone just learning and not wanting to choose their own can invest in. Each bullet point has a ticker symbol in bold which represents a specific investment, the name of the investment in italics, and what the investment includes in it.

  • VOO: Vanguard 500 Index Fund --> Invests in the stocks of the 500 largest US companies (super safe, not much volatility)

  • VTI: Vanguard Total Stock Index Fund --> invests in US companies of all sizes, large & small (a balance of safe and more volatile stocks)

  • IJR: iShares Core S&P Small-Cap --> consists of small US companies (more volatile and risky, but also has more potential for growth than a fund consisting of large companies)

  • VTIAX: Vanguard Total International Stock Index Fund --> consists of stocks all around the world excluding the US (international stocks help with diversification but also can be more volatile)

“When you hold a stock for less than a year, you are not using the stock market to acquire business ownership positions and participate in the growth of that business. Instead, you are just guessing at short-term news and expectations, and your returns are based on how other people react to that news information."

Passive Investing vs. Active Investing

What's the difference? Passive investing is less selling and mostly just buying and holding your investments while active investing is consistent buying and selling to try to beat the stock market’s average return (8%). Active investing requires more research, more time, and knowing the right time to buy and sell. Historically, passive investors are more profitable than active investors!

I think people like active investing because of the thrill. It’s similar to gambling and who doesn't want the pride of knowing they guessed right and made thousands off of it? So if you want to actively trade, do the research, look at company's financial documents, and limit your losses. Don’t just mindlessly trade, hope for the best, and continue to take loss after loss while not having any long-term smart investments set aside. If you need to designate a small amount of money so you can feel the thrill of active trading, you can do that. Just make sure you’re also thinking about your future self, not just what you want right now. Also, remember that most "get rich quick" schemes are not simple or easy… if they were, we would all be rich.

There are positives and negatives to passive and active investing. I believe that for MOST PEOPLE it is extremely hard to figure out the best time to buy and sell and I think it’s rare that people actually do choose the best time to buy and sell. That's why I don't do active investing. On top of that, RESEARCH has proven that passive investors have better returns than active investors. Passive investing requires patience and is honestly boring. Active trading gives you a new, hot stock to talk about everyday and bragging rights on the stocks you chose. Predicting things is hard… who predicted COVID-19? No one. No one knows what is going to happen. You can make educated guesses, but active investing can also be stressful if you don't have specific rules that you stick to. It will have you constantly checking your investments and constantly trying to make a decision about what to do. I think the best thing to do is to combine both! For beginners, stick to passive investing and slowly venture into active trading. If you do choose to actively invest, please make sure you have your priorities in order first. Again, money that you NEED soon should not be in the stock market, unless you’re okay with losing it.

I will finish the passive vs. active debate with a quote from Warren Buffett, one of the richest people in the world. “By periodically investing in an index fund, the know-nothing investors can actually outperform most investment professionals.” The humility in me considers myself to be “a know-nothing investor.” If I can outperform the smart people with index funds, why would I ever stress myself out trying to guess what stocks would be best to buy and when to buy/sell? I would prefer to do other things with my time like scroll through social media and watch Youtube videos. #Productivity

Should I just hire a financial advisor?

If you don’t want to handle investing yourself you can pay a financial advisor to manage your investments, but also understand that they probably won’t do anything magical. They will diversify your investments like I recommended and like you are capable of doing. The most important thing when choosing a financial advisor is ensuring they are a fiduciary. This means they are REQUIRED to act in your best interest. There are countless financial advisors investing in things that benefit them and recommending products to clients because it will help them make money through fees/commissions. You want to find an advisor that will prioritize your goals and what’s best for you. For more information on the importance of fiduciaries, read this blog.

I want to wait

I’m not gonna lie, I was the “I want to wait'' person for a long time. I always want to plan and learn and understand everything before I act, but that is unrealistic. You will never be ready! So when people say “I want to wait”, I say -- wait for what? There is never a better time… what if stocks go down? What if they go up? How will you know when? “I don’t want to lose all my money.” I promise you I was you. Do not keep all that money in your savings account and do not wait until later to invest. The stock market has always recovered, so there is no better time to start than now. Stocks may go down tomorrow, but if you are planning on long term investments it won't matter. The longer your money is in the stock market, the more earnings you can potentially make. Invest young, invest often.

Am I taxed on my earnings from my investments?

Yes, most people are taxed on their earnings unless you are in a certain tax bracket. Specifically, if you hold your investments for less than a year you are taxed higher than if you hold the stock for more than a year. This is one of the ways the government is trying to encourage passive investing.


Yes, I do have money invested in cryptocurrency, but I really only understand the basics. Cryptocurrency is digital money, it can be more private/anonymous than our usual currency, and many people like it because it’s decentralized since the government/banks aren’t involved. Although I don’t actually use the currency, I bought some Bitcoin, Litecoin, and Ethereum on the app Coinbase. I have much less money in cryptocurrency than what I have in my other investment accounts because I was very cautious when I invested my money and still am really cautious with cryptocurrency. This is an example of my low risk tolerance. I am not willing to risk losing a lot of money for a potential huge gain, I prefer slow, stable earnings. This also goes back to me stressing diversity, I put some money in crypto and some in index funds.

What about options and futures?

I have learned about these in classes and read about both of these things so many times and I still cannot understand them well enough to explain them in basic terms or to move forward with trying it out. What I do know is that it involves more risk and is typically used in a way similar to active investing rather than passive investing. What I am currently doing is working very well for me so I see no need, at this point in my life, to try to learn options or futures. So for anyone with FOMO, know that I am missing out on options/futures too and my investments are performing well without me using those. However if you are interested in it, go learn it, just be wise with the amount of money you are using in this more risky arena.

SOOOOO now you have all this information-- BUT reading/knowledge is only the first step. As I say in all these blogs, taking action is the second and most important step! Don’t let fear paralyze you, take the steps towards saving for retirement, building wealth for yourself and your future family! (For once, those words are not accompanied by a FOREX investor trying to guilt you into paying them a monthly fee so that you can become a millionaire and quit your day job.)

Where do I start?

Start by just investing a little, it will be scary at first but over time it becomes more and more comfortable. No amount is too small, if you have to start with $10/week then do that, but don't stay stagnant, push yourself to keep investing more. Starting is always the hardest but most important part. You can start right now by just making an online investment account and decide a later date to set up auto-deposit and invest your money.


  • Make sure you have an emergency fund set aside before investing

  • Don’t invest money you need ASAP

  • Know yourself and manage your risk wisely

  • Invest consistently and start young

  • Don’t take action based on your emotions, stay level headed no matter how your investments are performing!

  • Don’t keep checking your investments

  • Invest today, don’t wait any longer.

  • YOU CAN DO IT!! DM if you have more questions😊

Send this to your friends especially your female friends because research shows women are not investing nearly as much as men. Research also shows that women who do invest are better at it than men… (because we passively invest!)

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