Talk Wealth to Me

#094 Understanding ETF's and other 21st Century Investments with Kyle Woodley

July 16, 2021 Felipe Arevalo, Chase Peckham, Kyle Woodley Season 4 Episode 16
Talk Wealth to Me
#094 Understanding ETF's and other 21st Century Investments with Kyle Woodley
Show Notes Transcript

The word invest can be a source of anxiety for some as they get further down the road of life because they know they should. But... how and what should I invest my hard earned money in? In today's world there are so many options but what is right for you? Today's guest Kyle Woodley the Senior Investing Editor for Kiplinger.com explains some of the options we have and what might be the best options for you.

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Intro:

Welcome to Talk Wealth To Me, a safe space podcast, where we chat about anything and everything related to personal finance. The information contained in this podcast is for educational and entertainment purposes only. It does not constitute as accounting , legal tax or other professional advice.

Chase Peckham:

Afternoon, Phil, how are we doing today?

Felipe Arevalo:

Doing all right . Doing all right.

Chase Peckham:

Well, I'll tell you what, that was fun.

Felipe Arevalo:

It was a fun interview. It was definitely. And we got to talk a little soccer, so bonus points for me,

Chase Peckham:

But we did , we're not here to talk sports. Of course, we have talked about the show Friends before. So that is what this podcast is about, is having a lot of fun. But , uh, boy, I'll tell you what he is an editor for kiplinger.com and he specializes in ETFs and ETFs for those that aren't familiar are exchange traded funds. Uh, but boy, was he knowledgeable and was he personable? He just jumped off the, off the microphone. He was a blast.

Felipe Arevalo:

Absolutely. And I think it cleared up a lot of, do I really know what an ETF is? Do I know that the difference is between an ETF and a mutual fund, just because I have some of them, do I even know what I'm doing? Uh, so I think it was very insightful.

Chase Peckham:

Yeah, It really was. And if , uh, if you have questions about just the word investing is so people can get so scared by it or paralyzed by it, but he really simplifies it in a way , uh, with all the information that's out there. It can be information overloaded depending on where you are in your life. Uh, he really explains it pretty well. And about websites like Kiplinger , uh, and other places that you can find that information.

Felipe Arevalo:

I think it's something for every age group. We start off with the already retired age group, and then we worked our way all the way to kids. So, and everything in between. I think everyone could benefit from the useful information.

Chase Peckham:

Absolutely. When you listen to Kyle today , uh, like us follow us, do all of the things that you can do, subscribe and get every episode that comes down the pike and enjoy Kyle Woodley, the senior investing editor@kiplinger.com. Can't uh, can't thank you enough for joining us today.

Kyle Woodley:

Oh no I'm really happy to. I was thrilled when I saw the invite come across. I mean, it's always nice to, you know, get out there and get some reps in, you know what I mean?

Chase Peckham:

Oh absolutely. And it's funny because there's so many questions that people have and Felipe and I, you know, we do this for a living, but we don't have the background in investments and those kinds of things. And you know, outside of doing our own retirement , uh, and , and these conversations have actually come up a lot recently with my father. Um, my mother has passed away. My father is retired. We're trying to figure out, you know, you know, he's invested his whole life. He's done all these things and he's panicking right now because all those things, he's not, he's not a high risk guy. Never has been, he's been in bonds and , and all those kinds of things before, but yet there's no return on , on these safe investments now. And just to get things rolling, like right off the top, what do you recommend to people that are, you know , they're at the end of their , um, I don't want to say the end of their run, but they're in the Twilight of their life and they want to put their money away. But how do you get money to work for you if you're not in the place of willing to risk it?

Kyle Woodley:

So.

Chase Peckham:

Not to put you on the hot seat, like right off the bat.

Kyle Woodley:

One thing I'm going to apologize right out front for is that a lot of the things that I say, they're going to start out with something that sounds like boiler plate, but it's one that I truly mean all of them are ones that I truly mean, which is to say, you know, for instance, this one, if I were to recommend anything to anyone, everyone has to, everyone listening to this would have to know that like, that decision is based on your own risk tolerances, you know, what your retirement, what you want that retirement to look like. That is. Um, and so whatever it is,

Chase Peckham:

For sure.

Kyle Woodley:

That I put out, this is not me talking to you specifically. This is me just, you know, giving out generalities.

Chase Peckham:

Absolutely and our listeners know that that's the world of finance. That's right. Nothing is, nothing is absolute,

Kyle Woodley:

But it's funny. I mean, the, what you just mentioned, what you're going through , um, what your father is going through right now , um, is, is actually something that's like, this is hitting the insurance markets is a good for instance. I mean, for the longest time, you know, insurance companies, how they would make a lot of their money is they take the money that they collect from you. They don't, you know , automatically pay it out. It happens over events over time. And so that money they put into investments. And so one of the things they naturally put it into for decades and decades is bonds, because bonds would provide a decent return over time. And all of a sudden we're sitting here, you know, interest rates right now, you're down to, you know, today I think it plunged down to, you know, the 10 year was at 1.25%. Um, which not saying that I necessarily expect it to say there, but that's, that's, that's a horrible longterm return, you know, for if you're sitting in 10 years. And so the point is, is that a lot of people, not just people, people, but like literally businesses are facing this same question, which is what do I do for some sort of guaranteed rate of return? And the answer is that you, frankly, you do have to be a little bit more aggressive as long as bond yields are as low as they are. Um, I will say that this is not necessarily a new phenomenon in that, like, this is not the first year in which this , this , uh, this has been happening , um, for years , um, you know, retirement planners, wealth planners, they have been suggesting that, you know, the old 60, 40 just isn't going to cut it anymore. Um, and so the idea that you should be that heavily invested in bonds, you know, when you're say, you know, when you hit 65 or whatever , um, it just, it doesn't quite work because when that, when that was when 60 40 was conceptualized, I mean, people were living a lot shorter than they are now, but now you have people easily living into their eighties, their nineties. And so you can't just coast. You can't just wealth preserve. You still have to grow your wealth even into those, like, you know, into those later decades. And so , um, the answer very broadly, sorry to take such a long time to get around to it is people do actually have to be a little bit more diversified into stocks. I think at this point in their lives than they would have been say back in the aughts in the nineties and the eighties , um, you know, what you do , um, sort of from a more micro level, you know, whether it's say I want to add more commodities into the mix, you know, to become more diversified or whether you go to Europe and , and , uh, you know, more international stocks, emerging markets, I mean, that's all sort of in the air, but largely speaking, we're talking more stocks than bonds. Um, then, you know, probably more so than ever before.

Chase Peckham:

And that kind of brings up, you know, especially for people like my father and in that generation who, you know, never really trusted mutual funds, didn't get into the, you know, the 401k was new as they were ending, you know, they were getting into to the end of their careers. And so the whole model of retirement kind of changed on them for, especially for my father. Who's a boomer, right?

Kyle Woodley:

They were sitting on pensions.

Chase Peckham:

They, a lot of them were, eh , but if you worked for yourself, you know, you , that 60 40 you just mentioned was, was really the way to go and , and get working commodities and gaining , uh , getting dividends and having those , and then having bonds mature and all those kinds of things, and then reinvesting those mature bond into other things that reality isn't really there anymore. So if you were to just kind of talk broadly , um, for somebody, and obviously everybody's situation is different, but people that are in retirement have a savings, let's just say their bonds have come into , um, that they've, those bonds have come due and now you have to figure out what else to do with that money. I mean, it's unreal, but there's actually the thought of actually just taking that money and putting it into a savings account, even though it might get 0.01%.

Kyle Woodley:

So I wouldn't go that far. I mean, I just, I, I simply don't think that that's really realistic unless you are sitting on a very, very large.

Chase Peckham:

Large amount of money right .

Kyle Woodley:

You know, you're sitting on say, I dunno , like 30 mil and you're 75 years old. That's fine. You know what I think you're going to make it, you're going to be just fine. Um, but , uh, no, it let's just say that you're, you know, sort of in general, whatever you're in retirement and you all of a sudden have this, this option, what do I do with my money? Um, without, again, giving specific recommendations into, you know , this particular type of stock or this sector or whatever, I would start very broadly by saying that you actually can, I'm sorry that he didn't trust mutual funds. I hope that a mutual fund manager somewhere didn't do something horrible to him at some point may not trust them, but , um, mutual funds.

Chase Peckham:

No. No

Kyle Woodley:

And you know what , obviously I'd like to talk a little bit more about today, ETFs.

Chase Peckham:

And we're going to get there trust me.

Kyle Woodley:

Yeah. I think they're a really good place to start simply because the , the managing part of it, a lot of that is taken off your shoulders by putting your money into, into these diversified funds. Um, it doesn't mean, you know, you can always just set and forget them, obviously, market conditions, your own lifestyle conditions, whatever these things can change, and that's fine, but they're a good start. That's a, it's a starting vehicle. It's a way that you don't have to sit there and look at, say, you know, 50 holdings, a hundred holdings and manage them all yourself. And you know, this guy, this one company lost their CEO and this one created an iPhone that all of a sudden explodes in your hand. And you don't have to worry about these individual companies so much. So the starting place is really start thinking about these very easy sources of diversification.

Felipe Arevalo:

So Kyle, you touched on it and this is what originally caught my attention. When I, when I saw you on Twitter , um, was ETFs and mutual funds. And.

Kyle Woodley:

That's weird because most people that see me on Twitter, they, they, they all , uh, they automatically know my love for the Columbus Crew. That's so weird. I do finances. This is what I do for a living.

Felipe Arevalo:

As a soccer person, I appreciate the love for the game .

Chase Peckham:

That's probably why he followed you in the first place,

Felipe Arevalo:

but it's something where, you know, I was, I was watching, I think I saw a video with you doing, you did with , uh , Invest Diva, Kiana. I think that's the video that I first , uh , saw you in and it was something, or you hear ETFs, you hear mutual funds, but to the everyday person who isn't necessarily investing on their own, who maybe, maybe have a financial planner, or maybe are just starting to kind of understand or thinking about investing, what is an ETF and , and w how does that compare to a mutual fund? Which up until recently, I thought was a little more popular and in the news and in the media.

Kyle Woodley:

Sure. So the first thing I'll say before, even getting into the differences is this a lot of people, especially when it comes to their finances and doubly. So when it comes to investments is they tend to get decision paralysis. Once you start giving them a menu of too many things, they look at it and they go, how can I possibly decide? And so every way, the step down I'll explain that, you know, at a certain point you can basically hit the stop button and then just sort of make a decision, or, I mean, really talk to a financial planner. It is, it is never too late to talk to a financial planner, but, you know, even the difference between mutual funds and ETFs end of the day, if you decide that you don't even want to parse those differences, simply picking one of the two is better than doing nothing or putting into a savings account again, you know, unless you have the $30 million, but , um, as far as the differences go , um, we'll start actually with the similarities, which is they're both funds. And so a fund in short is just, you know, a pooled amount of money that is sort of, you know , divided into shares. Um, and it allows you to sort of share in the, in the collective investments , uh , that are in that fund. So let's just say it's a blue chip stock fund. You know, that fund might hold say a hundred different companies, you know, shares a hundred different blue chips company's shares. Um, and however, that fund performs, you are entitled to, you know, basically your portion of that performance. Um, and when they offer dividends also dividends. So in that way, mutual funds and ETFs, they're very similar. They both allow you to whether it's stocks or bonds. Those are obviously the two most popular things, you know , uh, the , uh, popular asset classes to hold within either type of fund. Um, they allow you to do so simply now you can have an index fund now, an index fund. Technically there is a person at the helm. It's not just a computer in a room all alone. Um, but you know, it's, rules-based, it runs on an algorithm. Um, and, you know, say like the S and P 500, if you own a fund that tracks the S and P 500, which is just a big, you know, a big , uh , blend of large and mid cap stocks in the U S they're just very popular companies. Most of which, you know, have heard of have interacted with , um, if you do that, that's just an index. It's just, there's, you know, sort of a rules-based methodology. And if you own a fund, the tracks that it tracks it, I mean, it's just whatever, you know, however much the S and P 500 holds Apple, you hold sort of the same percentage of that. Um, same with Microsoft IBM, so on and so forth. Um, then there are actively managed funds, and that is exactly what it sounds like. So you've got one person, or sometimes co-managers, you can have two, three sometimes. I mean, I've seen like nine, 10 people making decisions saying, I don't necessarily think that the S and P 500 has it right. Instead of holding, say 500 companies, we only want to hold a hundred. We want to hold much bigger percentages of these companies. Um, and so they make their decisions on their own, but in both cases, you have somebody else, you know, somebody else's hand on the wheel for you. You're not making those decisions, you're deciding what fund to buy, but they're deciding all of the stocks inside of there. And so you're not having to make all those individual transactions. Um, you know, it's , it's a lot easier for you. So those are the similarities , um, mutual funds. You can have index and actively managed ETF. You can have index and increasingly so actively managed . That's becoming sort of a, you know, a growing trend in ETFs. So here's sort of where the differences are and apologies . We're going to take a drink here.

Felipe Arevalo:

Yeah. Go for it.

Kyle Woodley:

So the reason why an exchange traded fund is called that is because it trades on an exchange like a major exchange, like the New York stock exchange or the NASDAQ. Um, and so a mutual fund actually only settles at the end of every day. If you go and look at the price of a mutual fund at say, like, you know, whatever 10:00 AM and then noon, and then 2:00 PM, it's not changing, it's not doing anything. Whatever happens to the underlying, in the whatever trades, you know, the , the , the manager makes throughout that day, all of that just settles at night. And so it's , it's not really like an active tool. It's not something that if you wanted to trade it, you re you really couldn't, you , you know, it wouldn't, you couldn't do so very accurately, I guess I would say an exchange traded fund. It trades just like a stock. You can go in at any time of day, and that thing is going to be moving. And so that does lend itself to being more tradable. If you are more of an active trader, you can go ahead and you can make intraday moves. And , um, and , and so that's sort of an advantage or disadvantage, you know, depending on your viewpoint, but, you know , for the most part, it really is more of an advantage , uh, to ETFs expenses tend to be lower on ETFs and mutual funds. And that's largely because more ETFs tend to be index than actively managed . A large number of, of mutual funds are actively managed. They , they span decades before index fund even existed. And so you just happen to have more mutual funds that are actively managed and thus, they cost more. If you have nine people like nine, very trained, skilled individuals, they're going to take up a lot more money than , you know, R2D2 sitting there in the corner, you know, popping out Mid-caps um, and so expenses tend to be a thing that having been said. I mean, there are some cases where you can actually buy, say a mutual fund from, you know, a company like , let's just say, Vanguard, it's a mutual fund index fund will cost X amount. And the ETF version will cost X amount, or very, very like a slim, maybe one or two basis points below that. So there'll be very similar in cost . Um, there's also, and this is a little bit more in the weeds, but there's tax efficiency. Um, and , and that is that like mutual funds based on the way that they trade. And I'm not going to get into the innards here, cause that's going to get really boring for everyone. But in short mutual funds, you know, sometimes pay out capital gains,

Chase Peckham:

Right.

Kyle Woodley:

And that's a taxable event.

Chase Peckham:

Yep.

Felipe Arevalo:

ETFs are built in such a way where that almost never happens. And so you actually get a little bit of tax efficiency from ETFs as well. Um, and the last thing I'd point out is transparency. All right. So mutual fund manager , uh, you know , if you, if you run a mutual fund, you really only actually have to put out what your holdings are once a quarter. So that's it. So let's say beginning of the year, you know, you , you put out your holdings and then you don't have to do that again until the end of March.

Kyle Woodley:

And so all that whole time, if something really, really big happens , say at the end of January, that's not going to be reflected anywhere.

Chase Peckham:

Right. Obviously it will be in the performance, but like, you're not going to be able to go and read a fact sheet or anything like that and get those holdings with an ETF, you know, every single day, what they're holding. Um, I mean, there's a, there's a couple of accounts that I follow, not for this, but I , I find it entertaining nonetheless, where like every day they will actually like report some of the big changes in Kathy Woods. Um, like in her ETFs will be like, yeah, she bought a bunch of this, or she sold off a bunch of this. Um, for those of you who don't know who Kathy Woods is , um, she is the fund manager over at , um, at Ark invest.

Kyle Woodley:

And she has a suite of , um, of ETFs that performed extremely well in 2020. Um, some of them were amongst the top ETFs for the year. They've been having a harder time in 2021, but she is sort of a , you know, a pop sensation of fund management , um, very, very talented. And like I said, I mean, people can see every single day what it is she's doing with these funds. Um, and so that's another thing. If you always want to know what your fund is holding, you will know that to a much more granular degree with ETFs and it'll be, you know, up-to-date every single day you

Chase Peckham:

So can you explain for the novice real quick, because a lot of people, when the ETFs came out, they hear electronic and they think day trading and they think that it's very similar to that. And yet they are significantly different. Can you explain the difference between the two,

Kyle Woodley:

I'm sorry, between the difference between.

Chase Peckham:

ETFs and quote unquote day trading, the E trades of the world, because there's so many people.

Kyle Woodley:

Okay. Yeah. So, I mean, in ETF, I mean, it's like comparing apples and lamps. So ,

Chase Peckham:

I haven't heard that before. I like it.

Kyle Woodley:

So an ETF it's a fund, you know what I mean? Like, it's just, it is, it's the fund. It is like a mutual fund. It can trade, you know, because it trades during the day, people can, you know, I can buy it at any time of day and it can in fact be used to day trade. You can do that. Um, E-Trade like, literally, I mean, are you talking about E trading or day trading? I'm just making sure cause those are those themselves are different.

Chase Peckham:

They are, they are different too. Yes. But I like a lot of people love to get into that. They think that they're like this market trader because they know how to, they have an account on E-Trade. So to speak,

Kyle Woodley:

Oh Okay.

Chase Peckham:

Not day trading where they're standing on, they're not in the New York stock exchange down on the floor. These are people that are at their computers, looking at the markets going let's gamble. You know, I mean , I'm saying that very loosely, but you could compare it to that.

Kyle Woodley:

Sure. Yeah. So we'll do these three in really quick succession. So E-Trade is just one of many places you can go to get a brokerage account. So Vanguard, Fidelity, E-Trade, TD Ameritrade, Bank of America, Wells Fargo. Um, there's a bunch more and my brain just stopped, but the point is that all those different places, they're just merely places you can go and get a brokerage account. So that's E trade . It's just one of those. So day trading is literally just the process of, you know , trading throughout the day. You're looking, you know, typically you're just looking at stock charts for , um, you know, different types of indicators. Uh, you know, it's typically referred to, it was just, you know, technical analysis, but you're just looking for certain patterns , um, that will educate the way that you make certain trades. Um, you know, you can trade just the stocks themselves, often they trade options and we're not going to get into that today or else. This is going to be two hours.

Chase Peckham:

Correct.

Kyle Woodley:

But the point is, it is a person who trades usually at a very rapid clip throughout the day. And then you have ETFs, which are, it's just a fund. It is simply an investment vehicle , um, that anyone, whether you are a day trader or a buy and hold investor or retiree, whatever can just hold on to until the end of time.

Chase Peckham:

So when we, when we talk about diversification in 2021, versus maybe what somebody considered diversification five years ago, is there a difference?

Kyle Woodley:

No, I mean, it , I really, there isn't very much of a difference and I'll, I'll say I will try to explain that. Um, so funds have been around for a very long time. And so simply the ability to get exposure, to say, you know, 50 stocks of a hundred stocks, 200 stocks, whether it be, you know, just U.S Stocks or European or, you know , emerging markets, whatever , um, that, that is actually largely been the same for decades. What has changed is just how many different strategies, how many products are actually out there. Um, for whatever reason, you know , uh , part of it is just sort of how they're built on the back end , but ETFs are relatively easy to launch there they're much more nimble. And so whenever, like say a new technology comes out, it's really easy to just build an ETF, throw it out there and see if it will attract assets. And so for that reason, you tend to have a lot of ETFs out there that, you know , they're seemingly like very niche. And so in that way, you , you can become more diversified in a lot more things than you used to be able to with mutual funds with mutual funds. There was a lot of say Morningstar categories, you know what I mean, large blends , small value, things like that. And so there were plenty of mutual funds for those, and you have plenty of those for ETFs as well, but ETS will get as niche as say, you know, JETS as a good, for instance, that's ticker, J E T S that's. I mean, it's just, you know, basically a , an ETF of airlines and air , you know , airline related stocks. And so , um, and actually, I apologize for that one because I want to make sure I'm a hundred percent correct on that. Uh, I kind of hedged myself on that.

Chase Peckham:

We can fact check .

Kyle Woodley:

Yeah. I was gonna say , um, I think it's just mostly the airlines, but it might hold like a Boeing or, you know, like a couple of the airline related ones as well.

Chase Peckham:

So you saved yourself when you said airlines. I mean that ,

Kyle Woodley:

Yeah. Yeah, but just, just cut out that little end if , uh , actually I'm just going to yeah . I'm just going to bring it up real quick. Cause I'm a stickler for that kind of thing. Um ,

:

I actually looked it up you're right.

Kyle Woodley:

It does actually hold does whole Boeing ,

Felipe Arevalo:

Um , I don't know how to get to that part.

Kyle Woodley:

So are you actually on the provider's site? Or

Felipe Arevalo:

No it's just Robinhood. very basic.

Kyle Woodley:

Okay. So yeah, so here's so whatever this is, I, if you want to include it great. If you don't, I mean, it's no big deal. Um, but it was something that I think I was eventually gonna wheel around , uh , period , uh , or Wheeler around to anyway. And that is that, you know, one of the best you can go , um, for, for fund information is literally just the fund provider page. Like you think about that and it like, it , it makes sense sort of, you know, like at whatever first tier level, second tier level you go, but wait a minute, their whole deal is like, they want to sell you their product. Right.

Chase Peckham:

That's it.

Kyle Woodley:

So they're going to try to gussy it up and make it look great. And, you know , um, like they're going to mislead you in some way. Now they're going to make the they're , they're going to make the page itself look attractive, but they're regulated. Like they have to actually provide a certain amount of information. So if you go to whether it's Vanguard or Fidelity or Invesco, or just, you know, anybody, you know, BlackRock, well , I shares , um, you know, any of their provider pages, they're all going to provide relatively similar sets of information. They might package it a little differently. They might, you know, give you a pretty little chart where one doesn't spend as much and they just, you know, sort of table it out. But the point is is that they actually are really good sources for information and Kiplinger. When I write like, you know, every year I do a bunch of ETF stories when , you know , like say the 21 best ETFs, the 2021 at the end of each frame, I actually put for more information about this fund go-to their, you know, like whatever the website is , um, because they really actually can, you can get good information there and that's how you keep tabs on what it is you own. You can find out that, Hey, in this particular case, JETS does his own a little bit and say Boeing and then Expedia, whatever. But like the biggest weights in it are exactly what you think would be United airlines and American airlines and Southwest and Delta. Um, so by the way, that also answers that question. It does actually hold a little bit of the others.

Chase Peckham:

It does, but you hit something , you hit something that a lot of people get scared of just for the mere fact of who do I trust? How do I know that this person has my best interest when they might just want to be selling me a product so they can fill a quota , uh , for , for a sales let's say, and how do you know that man, this person that I'm working with has my best interest at heart. And I know we all the word fiduciary gets thrown in there. So, I mean, where do, where does a person who is, who has not been doing this for a long time, but does understand enough that I need to put away for my retirement. I need to, I'm definitely not going to live on social security when I get to that time. Totally. Who do I know to go with? If, if I don't have somebody that's referring to me and how do I know, even if somebody refers to me that they're the right one for me,

Kyle Woodley:

That's really difficult for me to answer because you want to say that like, you know, if they come from whatever, an Edward Jones or any type of company like that, that, you know, they know how to train, you know , like professionals that actually have your best interest at heart. And the thing is, I've read enough, you know, like FINRA and SEC releases and, you know , um, and things where they've, they've charged people, you know, with , um, you know, with various offenses that sometimes you just don't know. I mean, you just like it . Sometimes it happens, but it's, it's sorta like the news, you know, you watch the news every single day and you see a person got shot and got drowned, all these terrible things it's happening every single day. Like, oh my God, this is going all around the world around me all the time, every day. And technically they are, but like the percentage that is actually happening, isn't nearly so much as you really think it is. It just, you're so immersed in that, that that's what you think is the case. And it's the same deal with the financial advisory space. Most of these people, like they really just want to do the right job, you know, there's, it's almost like any job. I mean , it's like mine, it's like your guys, you take pride in what it is you do.

Chase Peckham:

Right.

Kyle Woodley:

Most people take pride in it. And that alone is enough to at least make them have the right interests in mind. Whether or not they're good at it. I mean, that's a completely different story. You should, you should obviously try to ask for any performance measures that they can give you, but you know , like as far as, you know, whether or not it's sort of like when you get into the car in the morning, you know what I mean? Something bad, technically could happened to you.

Chase Peckham:

For sure.

Kyle Woodley:

But like you still, you know, you, you, you, you're taking a very, very, what I would call a small leap of faith. And it doesn't seem like that because you're handing the keys over financially to someone else. But it really is. I mean, if these people are actually licensed professionals, you, you should have a certain amount of trust that they will do their job. Um, now when it comes to, you know, going back to the , the information thing, just like, how do you trust that an ETF company is giving you say the right information? Um, it's sort of the same idea in that, like I said, they're, they're required, they're required to provide this information. So if you go to their provider's site, don't get me wrong. There will be areas of the site. You like, you know, places that you can go to, where they will talk up their game, they'll explain their bull thesis, things like that. But there will be very definitive information that they have to give you a little bit , be the same, the world round. Now, if you really don't want to take that chance, my suggestion would be you go to a third party financial site , um, as it pertains to mutual funds and ETFs, Morningstar's immediately front of mind . Like that's just immediately where I go. Now, if you want to get recommendations as a for instance, then obviously I'm going to go here and , you know , I'm going to plug Kiplinger . You should absolutely come to us. Um ,

Chase Peckham:

For sure .

Kyle Woodley:

You know, we, we have recommendations for mutual funds ETFs. So we actually have a running portfolio of both. So the Kiplinger 25 mutual funds, the cave BTF 20 , and that's just a rolling portfolio. We've kept up for years on each. But if you just want to go and you know, you , there's five funds that you're looking at and you want to see what they're about. You go to Morningstar , you plug in the ticker and it will provide you the exact same types of information for each one. And it's Morningstar. They don't care. They , they , they're not incentivized to sell you an Invesco fund or anything like that. They're just providing data. So you can go there and feel good about the data that you're looking at and still learn everything about that fund that you could over at the provider site. And in some cases a little bit more, cause you know, Morningstar and other data providers, they like to give a little value add. So they do their star rankings or the gold silver bronze metals . Um, and so I would say like, if you really are worried that Invesco is lying to you, which I don't think they are , um, you know, go to a morningstar type, that's a, it's a good place to start. You can get in there for free. You don't have to have a membership or even sign up with an email to use their basic screening or not screening tools, but they're basic, you know, ticker search tools , um, and fund research. So , uh, that's a really good place to start for , for people. If you just want to learn about a fund that you're interested in or that you already own.

Chase Peckham:

So yeah , you brought up Kiplinger and I think that that's a good place to go explain what a company like Kiplinger or will do

Kyle Woodley:

In the case of Kipling or what we do. What we've always done is we've basically shown people how to save and smartly spend their money. And obviously that stretches out to investment . So, I mean, we talk about anything from taxes to like Costco. I mean, we actually go and we look at, you know , sort of where you're getting your money's worth from certain Kirkland brands and where you're not necessarily, or, you know, Hey, is your Amazon Prime subscription actually worth it? You know, from an investment standpoint, what we do is we just, we sort of look at the world the way it is, not the way that we want it. You know what I mean? Uh, and by that, what I mean is , um, we just look at the investments that are the investment opportunities that are available out there and try to make sense of them for other people and explain, Hey, right now, this might be an opportunity in the case of stocks, for instance, you know, this might be an opportunity because of this situation , um, you know, Hey is inflation just skyrocketing. Okay. Well, in that case, maybe you would want to move into these particular sectors when it comes to funds. Um, you know, my personal philosophy is that I look at funds and specifically ETFs, because again, they're, they're , they're just so many niches you can use with them. Uh, you want to know, you want to invest in biotech, okay. Here are a bunch of different ways to do it, and here's how they differ. And so this one might be right for somebody that just wants to be really conservative about it, but still enjoy the upside of, you know, companies that can just sort of pop like this. Or if you just really want to, you know, if you really want to ramp up the risk and the potential rewards, like get into all these, like, you know, it's, you know, they're ETFs that like only get into like, you know , um, early trial stage companies like companies with no products yet whatsoever. They're all in trial stages. There's a lot of possibility in there. There's a lot of upside potential, but of course a lot of those can fizzle out.

Chase Peckham:

Extraordinary risk.

Kyle Woodley:

And just become bankrupt. Yeah, exactly. And so I, you know, that's what I do. I just try to present everybody with a list of options. And then you say to yourself, what kind of investor am I, how much money do I actually have to risk? And how much do I need to make sure is there in a year, five years, 10 years, then you go out and you make an informed decision for yourself because that's how it should be. I mean, I , I, I want everybody to come and read Kiplinger because that's my job and that's how I get fed, you know? Um, but what you should be doing, whether you're going to Morningstar, whether you're coming to Kipling or whether you're going to other financial sites is you should be going to them and looking to them for information, but ultimately making an informed decision for yourself because no one knows you better than you. Right?

Chase Peckham:

Well, I mean, that's the point of getting to know and having as much of a personal relationship with a financial advisor as you can have is so they can almost think like you get to know you well enough that they can, they not only have your best interest at heart because we'll , they've gotten to know you over a period of time, but if you succeed, they succeed.

Kyle Woodley:

Exactly. And , and, and importantly, you know, they have , uh , a huge, I mean, a very high base level of expertise and, you know, and historical knowledge to be able to make, frankly, in many cases, better financial decisions than you could on your own. You know what I mean? Like you can, you can know yourself very well, but you still might not have as much knowledge about the products to be able to express yourself in that way. And that's a way that a financial professional will help you.

Felipe Arevalo:

That's something that's great. And sorry, I froze there a little. So I missed that part of it. But I was saying when we present to youth, a lot of times, community college, 18, 19 year olds, and they're like, I don't have a lot of money, but I want to invest it on these, like, invest your own money apps on their phones. It sounds like mutual funds and ETFs. If they can get in there without the fees, it's like an instant diversification that they can kind of diversify their portfolio very widely or very narrow to an industry is that seem accurate.

Kyle Woodley:

You hit it right on the head there. Um, so I will say, you know, one of the, one of the great technologies or, well , no , we'll call it a technology. I mean, technically it's, it's a new product offering, but whatever it's a technology is, you know, kids these days , oh God, you know , you can actually go out and do partial shares. That was the thing that was a , you know, but it was a thing that you couldn't do, you know, 20 years ago, you couldn't go out and say, buy $5 worth of Amazon. It wasn't an option. And that is something that everybody, you know, that more investors actually do have the ability to do. And it's , it's great. I mean, really, I , it is, it's such a great innovation for people that don't have a lot of money. So I have to say, I mean, as much as I am very much a fund person and we'll get back to that here in a second, I do have to say partial shares. Uh , it's great. Because you know, there are people that don't really have a lot, but they want to get in the game. And the best thing you can possibly do is start the habit. You start the habit and you're going to be a lot more likely to continue it down the road, but you have to start first. That's usually one of the biggest hurdles. And usually people don't, they don't start the habit because they figure I have to have a thousand dollars or $10,000 or whatever it is to matter. Sure. It helps. Obviously, the more you start with the better a chance you have of accumulating more over time. But like, even if you have a little bit, you can at least make money on that alone and then add to it as you go along. But if you don't start, you can't continue. You know what I mean?

Felipe Arevalo:

Yeah. So it's something where I don't do my own real investing, but I , I started, I've mentioned a couple of times, like initially it was a social experiment to try out cryptocurrency. And so I opened up a Robin hood , but then I noticed how interested my seven-year-old was. So I started not putting any significant amount of money into it, but because you can buy the little partial stocks , Hey buddy, let's sit down and buy some Disney, you know, let's sit down and buy, you know, and , and then, you know, what , what do you want to buy buddy? And my wife has a Subaru. So he said, why don't we buy a Subaru thingy? And I was like, it's a stock buddy, but yeah, we can buy one. They're like 10 bucks. We can not , I can buy you a whole one. Um, you know, so it, it triggered interest, but he's got that interest now to check my account or our account and like, Ooh, what did, what did Subaru do today? I heard Subaru on the news, they have a recall, or that they got sued for the glass and he's seven. And I never had any of that kind of intrest,

Chase Peckham:

I mean, that's huge,

Kyle Woodley:

It's the allowance for the 21st century. That's what it really is. It's the whole point of an allowance was to teach you financial responsibility. You, you know, you do a couple of chores around the house and you make money and you understand that, Hey, you can work and get compensated for it, but what happens then? You know what I mean? You get your allowance and what do you do? You immediately spend it on, you know, if you're, if you're me, when you're young, like Airheads, I was always eating taffy.

Felipe Arevalo:

Hot Cheetos for me.

Kyle Woodley:

You know what I mean? But the point is, is that like, it was sort of a one-step thing. You make that money and then you do one of two things. Either immediately spend it on something or you save it to get a thing. You know what I mean? But like, at the end of the day, you didn't quite learn sort of the full lesson. I , one of the honestly man stories like that, like they, they jazzed me about this. I mean, one it's another investor. So it's somebody is going to come and read Kiplinger. But also the fact that like, this is good. This is stuff that a lot of kids never, never had.

Chase Peckham:

We didn't I didn't.

Kyle Woodley:

And increasingly oh I certainly didn't.

Felipe Arevalo:

No I didn't.

Kyle Woodley:

And it's so great that like, people are becoming more aware of this. Um,

Chase Peckham:

Well, with technology, the phones, all that stuff, our kids are so into it. They get it.

Kyle Woodley:

So much less friction.

Chase Peckham:

And that's why I said with my father, people like him, who, you know, the cell phone to them as it's still an apparatus, just to talk to somebody with a phone call and maybe check the weather, you know, there's nothing else. And that's why, you know, old habits die hard. And that's where I can see technology. And as you get older, the get off my lawn person, you know, which as I get older, I'm finding, I'm getting closer to that. Even though I am more evolved because we I've been involved in more technology and seeing it than my father has. That's why it's so important to talk with somebody that, that can learn and keep going through the way that these changes, because it's not just mutual funds and bonds and all those things anymore. Because when I was a kid, my parents bought me a savings bond and then it matured over 10 years and then I got more money for it. And that was like, here, that's an explanation, you know? So yeah , it's just different and different isn't necessarily bad.

Kyle Woodley:

No, in this case, different is very good because it teaches them the more complete version of this lesson. It's not just that, Hey, you can save. And then that exact amount of money will be there later. It's that no, you really can actually grow your money. You can show them how that does that over time . And that, you know, once they obviously get old enough, you can compel them and say like , listen, you can take your money out here. You can that like a savings bond. You can just say, you know what, I'm done whatever. Or you can, in the case of a bond, obviously you would reinvest that money. In the case of, you know, you own a stock, you would keep that money in, or perhaps put more money towards it. But you can say like, listen, I know it seems like it's a lot. Now it's a lot more than it was now. Imagine what happens after say 10, 20, 30, 40 years, you know, you can, you can literally make like a life-changing amount of money over that time and be extremely comfortable, do all the things that you always wanted to, you know, down the road. And obviously not, everybody's going to glom onto that because a lot of us are very much, you know, Hey, I want money now. I want to do my things now, but still it's a lot more people learning that lesson than we're ever able to before. And, and also on the technological front, I mean, you get them started on this stuff early and they're going to be able to pick up all of the, you know, all of the new things as they go along, you know, cryptocurrencies and NFTs and all these other things. Like, I mean, it just be like, you know, if you learn how to play, if you grew up on a Nintendo and then you play in SNES and then an N64, like you understand all of these because you have this base knowledge to sort of start out with,

Chase Peckham:

Right.

Kyle Woodley:

And you just keep getting better over time. And I think it's the same thing with these people. They will become increasingly savvy investors as they go along.

Chase Peckham:

You hope so.

Kyle Woodley:

And I think a lot of them will be able to be self-sufficient or at least a lot more self-sufficient than, you know, a lot of other people, their age were 30, 40 years,

Chase Peckham:

But they still have to go to the fundamentals. They still have to, you spend less than that to learn . Right. And you still have to, you know, saving just takes on a whole different meaning than it did when we were kids. It's , it's, it's a whole different, a whole different deal. You can put it in so many different places. Kyle, thank you so much for being with us today.

Kyle Woodley:

This has been great. I really,

Chase Peckham:

really appreciate the conversation.

Kyle Woodley:

Yeah, no, this has been fantastic. This is, I mean ,

Chase Peckham:

Just a quick can people find you?

Kyle Woodley:

Oh, so , um, so our site is www.kiplinger.com. Um, you can follow us at Kiplinger on Twitter, or you can follow me at Kyle Woodley. I pray to God. I think that's why Twitter. Um, uh, we're on Tik TOK now. Uh, we're on it . We're on the gram . Um, let's see here. I'm trying to think of where else, but yeah, but mostly, you know, just, if you want to see what we have to say about anything, I mean, whether, you know , it's ETFs mutual funds or if it's just, Hey, you know , um , what does Costco up to? Uh , and everything.

Felipe Arevalo:

I'm goin to look up the Costco one.

Kyle Woodley:

Yeah, no , that's something we do plenty, but I shouldn't, you know, we also have a really robust tax section as a good for instance , uh , the sky worked with Rocky mingle and he really is a brilliant guy, but , um, our tax section is just outstanding. Um, you know , uh, we also spearheaded a lot of , uh, you know, when the stimulus , uh , checks were coming out, we handled a lot of , um, you know, sort of the intricacies as those are coming out and now things with like, you know, the child tax credit and things like that. Um, but no, I mean, just anything, you know, from, you know , investing to taxes, retirement, whatever it is , um , you can find it at wwwdotkiplinger.com. U m, you know, if you would like to read more about ETF specifically, just go ahead and take that www.kiplinger.com and then add slash investing slash ETF to back that. U m, and that'll get you going well, it's

Chase Peckham:

Been a fantastic discussion. Uh, loved the conversation and , uh, we , uh, wish you all the luck in the world and love would love to talk to you again.

Kyle Woodley:

No, I'd love to come back. Thank you so much.

Felipe Arevalo:

All right . Perfect. Thank you, Kyle. Enjoy Ohio. Thank you. Very fun.

Kyle Woodley:

Yeah. Have yourselves a great one. All right.

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Go crew

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