The Magic of Investing for Beginners Ep. 15

Step into the enchanting world of money management with the latest episode of "Money & Magic," where we blend the mystical with the practical. Join our illustrious host, Chey - the WitchyBookkeeper, as she demystifies the realm of investing for those just beginning their financial journey.

In this potent episode, Chey conjures the truth that women, often underestimated, can indeed be superior investors over their male counterparts. Breaking the societal spells that have pigeonholed men and women into different financial roles, she provides a potent potion of knowledge and confidence to empower all, especially women, to take the leap into investing.

Chey skillfully untangles the complex webs of 401(k)s, IRAs, stocks, bonds, mutual funds, and ETFs. She offers a cauldron of tips on how to get started with investing, emphasizing the magical effects of compound interest and debunking the scare of required million-dollar retirements.

Whether delving into the historical performance of the S&P 500 or suggesting that even a mere $100 can begin your investment journey, Chey ensures that beginners feel at ease with each step taken towards a prosperous financial future.

By the end of the session, listeners will not only be instructed on the elemental basics of investing but also be encouraged to remain steadfast and observant as their money works its own spells of growth and stability over time.

So grab your broomstick and fly into the financial future with "Money & Magic." And remember, no matter your age or background, now is the perfect time to start investing. Magic awaits!

*Stay tuned for the next bewitching episode where we'll discuss all things Beltane. Don't miss out on the wonders of Money and Magic – subscribe, review, and spread the word!*

Get Started with Fidelity: https://fidelity.app.link/e/4ttZRyO6dDb

Buy Me a Coffee

Connect with me on Instagram and TikTok @witchybookkeeper

Learn more about how we can work together by visiting my website

Check out my Money Alchemy 101 course HERE

Transcript

0:03

Welcome to money and magic, the podcast that combines the mystical with the practical to help you navigate money in the Muggle world. I'm your host, shy, remote bookkeeper and judgment free money coach. I hope this podcast helps you create a harmonious relationship with your finances that empowers you to lead your truly magical life. Let's get started. Hey, magical human. Welcome back to money and magic. Today's episode is a very important one to me because studies show that overall, women are better investors than men. So in this episode, we're going to talk about investing for beginners and how you can get started. I believe that it is a lack of information and fear that holds most women back from investing. When you go and grab a magazine designed for men, it's going to talk about how to invest and how to build wealth and all of the stock market type stuff. And when a magazine article is aimed towards women, it's going to talk about how to save money, how to coupon, how to bargain shop. And society treats men and women differently when it comes to money and investing. Most of the time, when you look up stuff about investing, it's always men. Most of the time, it's white men that are talking about this. When you think of the stock market, a lot of people think like Wolf of Wall street, you know, the stock market, bros. But overall, women do place better trades than men. When studies have been done, women are the better investor. So I want to teach you how to get started investing, because I know you should be saving for retirement no matter who you are. So the first question I get is, why should I invest? And the biggest thing is, investing is how you're going to retire. Investing is how you're going to make money when you are older. And as of now, studies show that millennials will need about $1.6 million to retire. And that might sound like a lot of money to you. Anytime I hear the word million, I'm like, wow, that's a lot of money. But when you sit down and actually crunch the numbers, it's really not that much money when it comes to, you know, a 50 year span or 60 year span or whatever you want to make it. So that is why we need to invest now. No matter how old you are, the earlier you get started, the better. But if you haven't gotten started, then you can start right now. So do not worry about your age. Whether you're too young, you're too old. Everyone should start investing right now. And there's two words on why you should invest, and that's compound interest. And what that means is when you put money in an investment account, the money that you make on that is called a return. And your returns end up earning returns of their own. And so that is how investments are able to build so much over time is because of that compound interest. Now, you can do this whether you are saving for retirement, education expenses, vacation expenses, whatever you want it to be. And there's a lot of different ways you can invest in this episode. I'm not going to get into a bunch of major specifics. I'm going to tell you how you can get started with investing today on a very small scale. Do not take this as advice. This is just educational purposes only. So when I say investing, what is investing? Ultimately investing is just putting money to work for a period of time in some way for you to generate revenue or to generate a positive return. That is all investing is. Economists actually view investing and saving to be kind of the same thing. Because when you put your money in a savings account, so when you put your money in your high yield savings account that we talked about a few episodes ago, the bank takes your money and invests it. So they're making money on your money, and then you're making money on your money. And so that is how the high yield savings account, or any savings account really works. But most of the time, your savings is often someone else's investment. And I'm not saying to go take your savings and throw it in investments, because that's how it works. That's how you want it to work. Your savings is liquid. You want to be able to take that. Investments are not as liquid. So just know that. That's kind of what happens with your savings in the background. So the biggest ways you can invest are stocks, bonds, and mutual funds or ETF's. So the first thing a lot of people think about when they hear investment is 401K. That is a retirement plan that most companies offer, or it could be called a 403 B, based on the setup of your company. But ultimately, that is a retirement plan. And what that does is they take money from your paycheck, they invest it into the stock market or into ETF's. And that makes money for you. That is how that works, which is why you have to keep it in there until you retire. But there are a lot of other options outside of workplace plans, like a. That's mainly what I want to talk to you about today. The first thing I want to say is if your place of employment offers a 401K or 403 B or some kind of retirement plan, and they have a match. The easiest way for you to start investing is to make sure that you are signed up for that plan and that you are getting your full match. So let me explain what that means a little bit. The last corporate job that I had had a 401K program, and when you got hired on, they automatically enrolled you at the full match of 6%. So your first paycheck, you automatically see that 6% go into your 401K. They would match however much went in. That's free money. Free money. I did that full match. I didn't go above that because after that, they're not giving you any free money. You're better off to take your investment to something new, like an IRA. But the easiest way to start investing is to make sure you're enrolled in your workplace plan and that you are taking advantage of the full match. You might think, wow, 6% of my pay, that's a lot. I can't do that. Start with 1%. When you go into work tomorrow, if you are not enrolled, enroll yourself and start with 1%. You can find a way to cut 1% from your expenses. And so once you start kind of seeing that come out of your paycheck and you adjust, then you can maybe bump it up, or a lot of times people will leave it at that 1% until they get a raise. And then if they get a raise, they bump it up another 1% and just kind of make your way up until you're at the match. So that is the easiest and quickest way for you to start investing. But what if you don't have employer? What if you're self employed? What if you're unemployed? What if your employer doesn't offer a retirement plan because they don't have to, and a lot of employers don't because it does cost them money. So if you're not able to enroll in a workplace retirement plan, like a 401K, then you have plenty of other options. You could always go and find a local financial advisor and pay them to help you get started. You could also do investments on your own. And that's personally what I do, and that's what I'm going to walk you through. I use fidelity. I think it's very user friendly. I like how everything operates. They give you a lot of help, articles and information. They're easy to contact, so I use fidelity. I think it's wonderful. There are plenty of other options like Vanguard or M one finance and a couple other bigger names out there. But just choose one of those. If you're not affiliated with any of them, then I definitely recommend fidelity. Now, something a lot of people will say is, oh, I use Robinhood or I use e trade. Those are okay. But honestly, for what we're trying to do for long term, for beginners, I don't like any of those platforms. They're too clunky. And we are not going to be investing in single stocks. That's what a lot of people talk about nowadays, especially on TikTok and in the influencer world. You know, oh, let's buy this stock, this stock. We're not investing in individual stocks over here. We ain't got time for that. So figure out which brokerage you want to go with. If you don't have a preference, then go ahead and sign up at Fidelity and we will figure out whether you like it or not. So the first rule that you need to understand when it comes to investing is the rule of two. Investing is a two step process. First, you fund the account you put the money in. In the case of your 401K, it is taken from your paycheck. It goes into an account. Step two is to actually invest the money. You're picking where you want to invest that. Most of the time with workplace plans, you choose a target retirement date. Okay, I'm supposed to retire at 65, that's in 2057 or whatever year it is. And they have kind of a bulk load of stocks that are meant to grow until that period. That's the whole goal of that. But if you're not using that, you might think, how do I figure that out? I invest in the Fidelity five s and P 500 fund. And pretty much what it is is it is a group of the 500 best do best stocks right now, and it bulks them all together into one fund. And that is the only thing that I invest in. I learned all of this information from a book called the simple path to wealth by JL Collins. And in the finance community, a lot of people call this VTSax and chill, and that is the clicker code for the Vanguard 500. The FX Aix, which is what I do at Fidelity, is the same thing, just their version. So when I first started investing, I said, I'm going to pick and choose my stocks because I want to figure out what's going to perform. And over time, that is just so cumbersome. This is easy, and it has been working for years. This fund, since the inception of the stock market, has overall averaged out about 11% rate of return over time. So even on the times like during the Great Depression and recessions, where the stock market dips, the rate of return still evens out to be about 10.5% to 11%. So the goal with investing is you are putting money in. It is making money, and then it is making money on that money, and so on and so on and so on. So this is not like your high yield savings account. This is not something that you're going to put money in. And then, oh, you need to pay some bills. You're going to take money out. No, this is long term now, investing like, this is not like retirement. This is not the same as a 401K or an IRA. These investments you can sell if you would like, but the goal is not to. You want to hold on until you retire, and then you can start collecting the dividends. So in order to do this, you need to find your brokerage account. If you haven't figured that out yet, choose fidelity. When you go, you're going to open an account. When you open that account, you're going to fund it. You're going to need to put money in. I suggest $100. At this point in time, I currently only put $150 a month into my retirement account. I would like to put more, but where I'm at right now, I cannot comfortably do that. So at least I'm putting 150 in a month. And that grows, and it builds interest, and it just keeps reinvesting itself. So you don't have to start with much. If you can come up with an extra hundred dollars, try to start with that. Open the account, put the $100 in, and then you're going to go to buy. And when you, you go to buy, you're going to type in FXaix, and that's going to bring up the Fidelity 500 mutual fund. And you're going to put in that. You want to buy $100 worth of that. What it's going to do is at the close of market, it'll buy however many shares you can get for $100, and you're good to go. Let that sit there. If you don't want to invest anymore at that exact moment, just kind of watch it for a little bit, but know that the more money you put in, the more money your money makes. So I recommend trying to start with$100 a month. Try to figure out how you can come up with an extra $100 a month to transfer to this account. In the beginning, I do not like to do anything automatically, so just know that every time you put money in, it's a two step process. So you have to go in and actually buy the investment. You're going to do that every single time. Two step process fund and then buy. If you are using some other platform that's not fidelity, you're using Vanguard or something else, then you can use the VTsax and buy that. It's the same thing, just different broker. Ultimately, you want whatever the S and P 500 that you have at your brokerage firm. Now, a lot of these brokerages do offer like an auto type robot thing that'll invest for you. Most of them have people that you can pay to do this as well. So if you're not comfortable with this, you can definitely look into that. You can definitely look into a financial advisor. But I personally don't like to hand over a bunch of my money for something that I can do myself. Now, this is as far as I go in investing right now. I haven't sold any of these. I just put $150 in a month and I let it do what it does. I check it every now and then to see if it's up or down. Like today I was down 10%, but a few days ago I was up about 30%. So you cannot check this every single day. It's something that you just kind of have to let go. And that is something that was very difficult for me in the beginning. But now I think it's kind of cool watching my money kind of ebb and flow. I hope that that kind of it gave you a little bit more into investing. Now, I know we didn't talk about IRAs or Roth IRAs or anything like that because to me, that is a little bit more in depth. Those are retirement products and that is something that we will cover in a completely full episode all on its own because there is a lot to those. And I don't want to give you too much information at once. Right now, I would love for you to figure out how you can start investing, how you can get one account set up where you can start buying these mutual funds. If you have any questions, please reach out to me through email or Instagram or TikTok or however you found me. There is also going to be a link in the show notes for my fidelity referral code. I don't get anything out of this. It just makes it easy that you can click on it and know exactly that you're at the right page to get started. So that will be in the show notes for you. Our next episode, we are jumping back into the witchy world and we're gonna talk all about Beltane just in time for Beltane celebrations to happen on May 1. And I have one little side note here at the end. Just kind of a life update for you guys. I'm recording this the day after the solar eclipse and I live in the path of totality, and yesterday that was one of the most amazing experiences of my entire life. So I'm just telling you that because if you were not in the path of totality and you are still around in 20 years when it comes back, I highly recommend doing that because it was life changing. I will see you guys in the next episode. And that's a wrap for another spellbinding episode of Money and Magic. I hope you learned something that can help you navigate money in the Muggle world. If you have any questions, topics, or even your own money and magic story that you'd like to share, reach out. To me on social media. I'd love to hear from you. And if you have found this show insightful, I'd truly appreciate it. If you could take a moment to subscribe, leave me a review and share money and magic with your friends and family. Think of it like casting a spell. Well, to help others on their financial journeys. As always, stand tall, shine bright, and stay grounded. I'll see you next time.