In this episode, Kat delves into how she funded her journey to over 40 countries through savvy stock investments and a strategic shift to ETFs. Learn from her experiences at Georgetown, Columbia Business School, and her insights into personal finance that enable a luxurious nomadic lifestyle. Kat offers valuable tips for emotional investment management and diversifying portfolios, proving that smart finance is the key to unlocking endless travel adventures. Tune in for an inspiring blend of financial wisdom and travel tales!
Instagram @katshortsleeve
Tik Tok @katshortsleeve
Youtube Shortsleeve Travel with Kat Shortsleeve
In this episode, Kat delves into how she funded her journey to over 40 countries through savvy stock investments and a strategic shift to ETFs. Learn from her experiences at Georgetown, Columbia Business School, and her insights into personal finance that enable a luxurious nomadic lifestyle. Kat offers valuable tips for emotional investment management and diversifying portfolios, proving that smart finance is the key to unlocking endless travel adventures. Tune in for an inspiring blend of financial wisdom and travel tales!
Instagram @katshortsleeve
Tik Tok @katshortsleeve
Youtube Shortsleeve Travel with Kat Shortsleeve
Welcome back to the short sleeve travel podcast. I'm your host, Kat Shortsleeve. My journey from finance and wealth management to the world's hidden gems to over 40 countries has ignited a passion for me. I like to make every trip feel first class without the first class price tag. I'll share inspiring stories, curated guides, insightful tips, and diving into a lot more of the financial side of things more recently. Short sleeve travel is your compass pointing you to experiences that are elevated yet attainable. And I will definitely be sharing the budget along the way. Dive in with me and we will fill in your life with as much travel as you desire. I am so excited for this episode because my most recent episode, the one just before this, I talk all about how I funded travel for myself, how I am able to afford traveling full time. Because I am a nomad and I don't actually have a home at the moment. Essentially my last episode, I talked all about my investment strategy for the past five years and how I've been picking stocks and investing in the stock market to generate passive income. And by passive, I actually mean actively managing my investments. But you get the point in the most recent episode, I talk all about the stocks that I was picking how I used to think about my investments, how I actually even got started in the investment space. And so to provide you a little bit of overview and background on me, in case you missed the last episode, I grew up in the Boston area, but went down to Georgetown for college. And after college, I went to working wealth management for five years. It was there that I learned the best practices of personal finance and became absolutely infatuated with travel and money, realizing that if I was able to manage my own money, I'd be able to travel so much more. And a major part of managing my own money was learning how to invest it. I was in the perfect space to be able to do so, working in wealth management, and I spent a ton of time on Investopedia and just researching online how other people manage travel credit cards. How they manage their finances, how to manage spending versus retirement accounts, and so on. I then went on and got my MBA at Columbia Business School. And this further aided my passion for personal finance. I needed to figure out how to manage student loans. And I was going full time to Columbia Business School, so I actually was not supposed to be making money during this time, but of course, typical me, I ended up finding a bunch of side hustles and internships to make money at the same time. I love to always do a little bit of freelance work on the side and generate passive income. I graduated from Columbia Business School this past spring and had worked in private equity during my time in school and after school. Most recently, I've been working on my travel company full time. It is called Short Sleeve Travel. You can check out my website, Kat Short Sleeve. And I've had to become even more interested in personal finance so that I can figure out how do I manage my taxes? How do I manage my own 401k where I don't have an employer matching contributions? So essentially my investment strategy for the past five years, like I mentioned, was so different. I was picking stocks and just investing large amounts of money into individual companies. This is probably obvious, but I do need to disclose. I'm not an expert here, and this is just what I have done. But yesterday for the very first time, I completely changed my investment strategy. I sold all of my stocks and put all of my money into an ETF. This was extremely hard because I think that the companies I was investing in are great companies. And I do think that they will continue to perform, but this is actually not the right way to think about investing, especially investing all of your savings, which I had been doing. In this episode, I'm going to talk about my background and my history. So where I worked and what kind of got me to this place and how I've been able to learn how to invest on my own. I will talk about exactly what happened yesterday when I decided to sell absolutely every single stock that I owned. I'll tell you how I'm now thinking about the stock market, how I'm thinking about my future portfolio and explain some of my tips and tricks and how not to be emotional when you're investing, which is extremely difficult and easier said than done. I'm going to share with you some of my tips for how I'm thinking about the future of my portfolio and This is more so if I were to recommend anything how I would recommend to my family and friends they invest on their own So a little bit about my story and my portfolio essentially Over the past five years. I was picking individual stocks more often than not I would try to stay in these stocks for 12 months or longer because You're taxed at a lower tax rate for the capital gains on those investments If you're able to stay in them longer than 12 months. So that was always my goal. I always had a long term mindset But I had chosen to find a few stocks that I was really interested in I did a ton of research on them spoke to people that are in the financial planning industry and decided on which stocks to put a lot of my money I owned somewhere around 15 stocks at any point in time, which is not that many And the risk here is I had large amounts of money in each of these. So if one company does well, you're going to do really well. But if that company doesn't do well, you are a little bit screwed. It made me very nervous to have so much money in individual companies because you can't predict what's going to happen at a company. If leadership changes or, another company comes out of the woodwork and they have a major competitive advantage that gives them an edge over the company that you're invested in. Your portfolio can just tank. So I was nervous for a long time and actually at a few points I knew that I was in a really bad spot because I would be nervous to check on my portfolio. Any wealth manager or any financial planner will tell me that I was very lucky and that I didn't have anything absolutely tank. And I knew that I was kind of just riding off the energy of doing so well for so long. But eventually, had I not sold yesterday, I think that it could have absolutely come crashing down. Because one bad investment would just tank the entire portfolio. So I learned so much more over the past year and a half about how to diversify my portfolio, how to think about it more long term. And I also became slightly more risk averse because I am starting my own company. I need to have savings. Whereas when I was working and making money and didn't have a ton in savings that I had invested, but later on it did feel it's a, it's essentially glorified gambling. So I started to learn about what are smart investments. And ultimately, yesterday morning, I knew that it was time to sell. The day prior I was ready to sell around noon and I was looking at my portfolio and it was actually at an all time high and then for the rest of the day I, I got sidetracked, completely sidetracked, found out that it was 4 p. m. when I was going to sell. It was about 4 or 6 p. m. I was six minutes after the closing bell and I wanted to sell. But I saw that from the time when I was planning on selling around 11, 12 o'clock that morning to four o'clock when, when the markets had closed, my portfolio had gone down 3, 000 and I just thought it was so silly that because I had gotten sidetracked, such a large amount of money was lost. And this is the emotional piece that I keep talking about. Despite the fact that I do have an investment strategy, I know the right thing to do. It's emotional. So rather than selling after hours, which I'm able to do in my portfolio, I decided I'm going to wait until tomorrow morning where a lot of these stocks just tanked towards the end of the day. There was something weird going on with the market. A lot of sellers had, a lot of big institutions had just sold a lot of their holdings 2023. And they were selling off because we've had a major bull run. But anyways, I decided to wait until the next morning rather than to sell after hours. And I knew that this was going to happen. Essentially the market opened at 9 a. m. and all of my stocks popped back up. And so about an hour and a half after the stock market opened I sold everything and I was sitting there in my car and one of my stocks I had I had 94 shares of this one stock that I had so much conviction in and It's so emotional, like I'm saying. So I sold 90 shares and I decided to keep four for the time being. And then I sold everything else in my portfolio and I was looking at these four shares, they were continuing to go up. And then I ultimately realized and remembered, okay, stick to your investment strategy, don't make emotional decisions. And I finally sold those last four shares. And I'm grateful because it's only two days later and this shouldn't matter, but apparently. And to the emotional side of me, it does. Those stocks have definitely been going down. They've gone down 15 ever since then. Which is not a huge amount of money. It would only be 60, but this just goes to show, despite having an investment strategy, it's still really hard to sell stocks that you have a conviction in. Like I said, the emotional side of this is that it's difficult to sell everything because you might have a conviction that your winning stocks will continue to bring you nice gains. And bottom line here is just sell anyways. If you have a large portfolio right now that is not very diversified and you're investing in single stocks and you're interested in, you know, setting yourself up for the longterm and, Actually creating some stability in your portfolio. Just be happy, sell your stocks at a gain, pay your taxes, put the money into an ETF, and there's a possibility that your trading platform will let you do something cool where you can directly convert your investments in the individual stocks to an ETF without incurring capital gains, but I'm not sure if that is possible across all platforms. So something to check out. So I know that some people do not understand what an ETF is, so I want to break it down as if I'm explaining it to a fifth grader. And here is how I would explain it. So imagine you have a big box of chocolates with different kinds of chocolate inside. You have milk chocolate, dark chocolate, white chocolate, some with nuts, some with caramel, all sorts of different varieties. And so this box is going to represent. An ETF or an exchange traded fund. That's the name of it. So just like a big box of chocolates and ETF is a collection of different investments. So these will be things like pieces of companies, which is a stock loans or bonds, or even types of money from different countries. So you can invest in a currency from Argentina or the Euro. Now in our chocolate box, each type of chocolate is different. Similarly, in an ETF, each investment is going to be different. This means one type of investment isn't doing well, the others might be doing just fine. So if you don't like one piece of chocolate in there, there are so many others to choose from. And you're kind of hedging your bet when you pick up this box of chocolates with a diverse flavoring. Because if you don't like a few, some of them are going to be good, and you know that. So now imagine you and your friends each get a piece of the big chocolate box. You're all sharing it. When you buy an ETF, you're buying a small part of a big collection of investments. So you don't own the whole box. You just own piece of it. And you can think of this box of chocolate kind of like a trading card. You can buy and sell your box of chocolate. So your ETF. Any day that the stock market is open, just like you could trade cards with friends at school. So now, if you keep some chocolates and they become more popular over time, they might be worth more when you decide to share them with others. With an ETF, if the value of investments in the box goes up, the piece that you own becomes more valuable. Now, of course, there are different types of boxes of chocolate. Similarly, there are many types of ETFs. Some might only have dark chocolate, and that might be an ETF that only has technology companies, while others will have a mix of everything. Just like chocolate boxes are easy to find in stores, ETFs are very easy to buy through a brokerage account and you do not need a lot of money to start. So essentially, long story short, in my conclusion here, an ETF is a big, diverse, shareable box of chocolates that represents different types of investments and it can be a really simple and fun way to invest your money. There are five major reasons as to why I'm choosing to put all of my money these days into ETFs, and I'm going to share those five major reasons with you now. The first and most obvious is diversification. And ETF provides instant diversification across the assets that they hold. This will reduce my risk compared to investing in my single stocks. Second, they are cost effective. The expense ratios are much lower than that of mutual funds and other investment vehicles. And there are no sales loads or minimum investment requirements like some mutual funds as well. Number three, liquidity. So ETFs are traded like stocks. They can be bought and sold throughout the trading day. And essentially it's very easy to sell an ETF when you are done with it. Just like it's easy to sell a stock. Number four, the variety of offerings with ETFs is incredible. You can have sector ETFs, international ETFs, thematic ETFs, like technology or healthcare focus ETFs, and it's going to give me great access to the market. Finally, the last piece of the puzzle here, reason number five, it's twofold. One is tax efficiency and the other piece of that is dividends. So ETFs are more tax efficient than mutual funds. And other investments due to their unique creation. Basically how ETFs are, are created. So you'll have lower capital gains distributions. And that brings me to the ETF side. Many ETFs actually pay dividends, which can be reinvested or taken straight as cash. The dividend yield will vary depending on what the underlying asset is, but this is a perfect way to kind of think about why ETFs are a good choice. All right, now I want to move on and talk a little bit about timing. So if you have a portfolio that you're not very proud of at this moment and you're trying to sell and ETFs like I have done, you're trying to think about the timing. I guess if you have other income to be taxed, like you're selling your house at a gain, you could potentially offset some of those gains by selling your lower or loser stocks in that year. That is going to help lower your taxable income in that one year, which is called tax loss harvesting. And also, if your whole portfolio is at a loss, maybe you want to time the selling with some other capital gains that you might have for tax loss harvesting reasons, tax loss harvesting reasons as well. But if you are trying to think about timing, getting out of the market, I really recommend not doing that because you can't predict where stocks are going to go. You want to have your money in an ETF. Last but not least, I want to explain how I think about the S& P 500 and why this is such a good investment. So the S& P 500 is essentially a really good pulse and a test on the market to see how the overall market is doing because it's made up of about 504 companies, I believe. And so it's a really good gauge on the prominent U. S. equity performance and the overall market. Now, when I think about the S& P 500, I think about it as the best way to invest my money over the long term. So, if you're looking at the S& P 500 within 12 months, so sub 12 months, the returns might not look incredible. They might be 25%, they could be down 25%, which is the absolute worst year that the S& P 500 market ever had. It could be down 8%, up 12%. You know, the S and P 500 goes up and down. So within 12 months, it might not look like the best investment within five years, it's likely going to be trending upward, but again, because it goes up and down, it's going to fluctuate. Now, once you get beyond the 10 year mark with the S and P 500, you are expected to see around 10 percent increase. at this point in time, the 10 year return for the S& P 500 is 153%, whereas last month it was 140%, and last year it was 188%. These are of course higher than the long term average of 113 percent, but there is no other diversified investment like this where you can really expect to see these types of returns when you're 10 years out. investment has been around for 90 years and it does average this around 10 to 13 percent return. To have a historic annualized average return of around 10 percent is pretty incredible Which is why so many wealth managers will say it doesn't matter when you time the market it matters how much time you spend in the market That is my background on how I got into Investing what my portfolio used to look like how I've been changing it for the future It is kind of scary when I just changed everything yesterday, but I'm so excited to see what happens to my portfolio over the longterm. I'm going to be watching it and the emotional side of me will definitely be checking on the stocks that I got out of, but it's important to remember individual stocks are very unpredictable. You're essentially glorified gambling when you're choosing one and putting a lot of your savings or money into that. Of course, the returns can be incredible, but the risk is also so great. If I could give you three pieces of advice, it is number one, just start investing, get in the game. Number two, do not time your investments. Spend more time in the market than anything else and three diversify and really stick to your investment strategy, avoiding emotional investing. Now, if you enjoyed this, I have a blog post on my website, all about my investment strategies and how I think about investing where you can get some more information. I've also posted some TikToks on this topic, so if you have some questions or you are looking to invest for the first time and are interested in hearing more, please reach out, let me know your questions. I think this is a really exciting topic and something that I wish more people, young people, were interested in. And hopefully by spreading the word we can get some more people to invest in the stock market. And not on Robinhood. I have been known for meeting people when I'm traveling and telling them all about how to invest, how to open a savings account, how to open an investment account. And so I thought, what better than to take to the entire internet and tell everyone how to do it. If you meet me on the road, I'm likely preaching something about investing or something about getting a travel credit card. I just love this topic and I'm super passionate about it. So if you want to hear more, please check me out on any social media platform. And if you could like, and also provide a comment as to if you like this podcast or don't like this podcast, any feedback is great feedback for me. So I really would appreciate that. Thank you all so much for listening. I hope you enjoyed this episode. I'm really looking forward to the next episode because. I'm going to talk about some of the side jobs and hustles that I've had to make money for travel and I've done this, on the side to create more income so I can put those into my investments and fund some more travel. And then also coming up, I am headed off to Austria next week, which I am thrilled about going skiing in the Alps for the very first time. We'll be there for about a week and then headed off to the other side of the world. So it's going to be quite the adventure and I'm taking you along for the entire ride. I hope you enjoyed this episode. Thank you so much for catching up with me and we'll see you next time.