investments · money · savings

Some financial info resources. (TLNR: Out from under your mattress and into an ETF)

scroogeI spent a while this morning composing the below email to a family member interested in doing something more with their money.  I figured since I wrote it and it’s (potentially) useful, it was worthy of posting here!   

Hey!

It’s exciting that you are thinking of getting into some new “products” (or tools) for your money.

Though I’d been listening to Marketplace daily for many years (and still do!), my true start to learning about money was when, about 3 years ago, J explained to me what inflation was. Though I’d nominally understood it before, what clicked for me—and spurred me into immediate action—was that for several years I’d been putting my savings into Bank of America or Capital One (formerly ING) “savings accounts.”  What J’s story informed me was that, despite several years of diligent saving (“Look at me, I’m saving!”), my “savings” accounts were not keeping up with inflation at all.  This meant I was in essence losing money (actually, losing “purchasing power”).  Every minute I kept a dollar in there, it was worth less and less in the real world!

Thus began a mad dash to get my savings into a higher yield savings account as I continued to learn more about where my money could be most profitable.

Here are some resources I’ve found helpful as I’ve continued on my path to NOT LOSE MONEY TO THA MAN!!!  This is a long read, though is certainly not an exhaustive or complete survey. My hope is that it piques your curiosity, rather than overwhelms. 🙂

Good luck, and remember: There’s always money in the banana stand.
With love,
Molly 

 

SOME BASICS:

“Money: Master the Game“ (book by Tony Robbins): Gives a comprehensive look at different types of investments, what they mean, why people use them.  This was my textbook as I began learning (read: highlighter and marginalia!), though it’s had its detractors. He does try to push his own products but he also has a philanthropic lens that I find refreshing.

Ray Dalio’s “Economic Principles”: A medium-length animated video about how the economy works; also, I just like him.

Investopedia and NerdWallet (also MotleyFool) are great sites for researching any financial topic and getting a layman’s answer.

 

SAVINGS ACCOUNTS:

High-Yield Online Savings Accounts: Read up on which accounts have the highest yields and other parameters, and open an account!  It’s very simple to do. Yields are not very high right now because interest rates are falling, but because inflation is not climbing either, it’s kind of a wash.  (I’m currently in Marcus and Synchrony.)

In normal times, inflation is about 3% (hence why many people get a “cost of living” increase of 3% to their annual salary).  My online savings accounts have been as high as 2.55% during our more robust economy years, though right now they’re down to 1.55%.

By contrast, right now the Bank of America savings account rate is 0.03% (!!!) and Capital One 360 is 1.5%.  You can imagine my chagrin when I learned I’d been keeping all my hard-earned cash in such measly accounts under the illusion that it “at least was something.”

These types of accounts are where I keep my 6-9 months of emergency funds (or “Prudent Reserve”) as the money is insured and safe.

 

OTHER WAYS TO MAKE YOUR $$ WORK FOR YOU:

If you’re not needing the cash right away, and you already have about 6-9 months of Prudent Reserve/Emergency Cash in a savings account, you can look at putting the “extra” into other products.  A few that are relevant are here, in order of payoff from least to most: 

CDs: It’s funny that this is one of your first ideas, as it was mine, too! And while it is entirely true that your cash is completely safe, this also means that its returns are inversely beneficial — read: totally safe = hardly existent returns.

I did “experiment” with putting some $ in a 12-month CD at Marcus at 2.1%, and at the end of that year I moved it to their savings account — which was then  earning 2.25%! Moral: interest on a savings account will change throughout a year — sometimes down, so your CD money may be “winning the game” but sometimes interest will go up and your CD money will be “losing the game.”

Personally, I won’t be using a CD anymore as there are more advantageous places to put my $$. (Unless I use a CD ladder, which is a specific strategy.)

 

Short-term Treasuries: One way to get your money into “the market” with very little risk is to purchase a US Treasury bill, note, or bond (listed in order of length to maturity from shortest to longest). One recommended to us by our financial advisor is USFR, which is currently yielding just shy of 2%.

 

ETFs: Exchange-traded funds are one of the best tools to take advantage of the stock market.  This means that you are purchasing a portion of the entire stock exchange, such as the S&P 500.  One advantage of this is that the exchange (and therefore the fund) is constantly adding and subtracting companies who fall into the top 500 earners, so you’re never saddled with a losing company and you don’t have to keep track of which individual companies you’re holding.

Because this strategy is relatively simple for the investment company to manage, ETFs generally have a very low expense ratio (see below; and if your ETF does not have a low expense ratio run away quickly!)

Another advantage is that they’re relatively cheap to purchase.  Some examples of common S&P 500 ETF stocks are SPY (~$280) and VOO (~$250).  Anything owned by Vanguard or Fidelity are generally good bets.

Owning an ETF is one of the top strategies for investors, as is discussed here on Investopedia and at length in Robbins’ book.

 

OTHER THINGS TO NOTE:

Expense Ratios

All investments, from retirement to stocks, have an “expense ratio.”  This is how much the company that’s investing your money is taking from your earnings.  As Tony Robbins goes into at great length in his book, while a 1% expense ratio seems tiny, the amount they take is compounded (read: exponential), meaning that 1% can be an exorbitant amount in the end. (See the chart in this Investopedia article.) You always wants the lowest ratio possible and below 0.30% is one watermark for me.

Real-life examples:  My employer-sponsored 403b expense ratio is 0.45% which I consider to be very high, but it is the lowest one I found on offer.  I investigated which fund they’d automatically put me into and the expense ratio was even higher. I researched what other funds of theirs I could go in to and moved into a lower expense fund.  Yet, when I met with my 403b representative she was crowing that their 3% products were “so low” — luckily, by then, I knew that was WRONG!

By contrast, my Fidelity Roth IRA has an expense ratio of 0.015% (and yes, those zeroes are correct!).

Therefore, it is critical to look at what the expense ratio is for your investments.

 

How to buy a stock

Simply open an account!

I’m using Robinhood (an app with website access, too), which has 0% commission, meaning that I don’t pay Robinhood anything to buy or sell a stock for me (another important “hidden” fee to look out for).  It was easy to set up and to fund from my bank; it’s easy to monitor, buy, sell, etc. You can buy specific companies’ stock or an ETF.

For a more robust tool, etrade is a strong choice.

 

Bonus Read:

Quit Like a Millionaire.  Even though J and I are not in this boat (yet??), reading their strategies is helping us to frame our financial future.  We started down this line of thought by reading from others in the FIRE (financially independent retire early) movement.

* * *

These are some basics for how to take your money out from under your mattress safely.  And, perhaps it goes without saying, but: I am not a financial professional by any stretch and YMMV — your mileage may vary!  Carry on!

 

 

 

love · money · power

Head of Household.

10.18.18.pngIn the continued quest to unwrap the new question of love and power that I stumbled upon the other day — whether a person could have both — I’m remembering a moment when J and I were walking up in the suburban hills near my apartment a while back.

We’d been bandying around the idea that he take some time off, that maybe I become the breadwinner for a while, as he got a new business venture running that would only earn a stipend-like amount.  We were crossing this foot bridge overlooking a fancy suburban schoolyard, watching children play soccer on the neat, always-manicured plastic turf.  We were leaning on the concrete ledge of the bridge, and I experienced a gut-freezing moment.  A sudden pang of anxiety, as I considered what that would really mean to have to earn enough to support us both, and a family.

Some major financial things would have to change.  I would probably have to choose a different career.  I would need to work more.  I would need to count the pennies.  I would need to say no to things.  Maybe there wouldn’t be vacations for a while, or museum memberships, or dinners out.  Suddenly my brain became filled with spreadsheets and numbers and a sodden anxiety of trying to keep the whole ship afloat. …

My breath became shallow.  I saw the disparity between what I could currently afford and what I would need to afford to make a family life work for us.  It was dizzying.

I turned to him in this mild hysteria and asked: “Is this what men feel like when they feel they have to be the breadwinner??”

He wryly smiled and replied, “Yes.”

Love, and Power.

It is not merely women then, or, speaking for myself, merely me, who feels confused, torn, afraid that we cannot have both love and family and a life that feels fulfilling to our passions and goals.

I felt sudden, markedly new waves of empathy for every breadwinner.  (Including my father.)

(I also note here that single parents, gender non-conforming, non-hetero, adoptive, foster, POC, immigrant, differently-abled, parents of differently-abled have all these same financial anxieties and challenges — plus a whole additional mess of anxieties and challenges of which I cannot conceive, and I am drastically humbled and awed.)

I realized on that bridge the sweeping assumptions I’d made and held: that it was in any way “not that hard.”  That it was “easy” for the man to provide because they earned a dollar to my sixty cents (white men at least).  That they should just “suck it up” because this was their intended role, modeled since infancy. …

I suddenly saw with new eyes why J was so focused on financial success, why he struggled so hard, why he chose this business-suit life instead of the entrepreneur-t-shirt one he dreamed of.  I saw his challenge differently.

What I’d considered his deprivation addict, cookoo achievement bent, or Scrooge-like flaw I began to see as his battle toward providing.  (Whether this is the whole case, I don’t know, and it doesn’t matter to the point.)

I began to consider the weight carried by anyone who desires to be an adult in a household.  I began to consider the decisions that person would have to make over a lifetime.  The micro and minor decisions of how to spend one’s money and time.  The decision of what area to study in school.  The decision to follow a career that wasn’t altogether fulfilling but “paid the bills.”

I had new empathy.  My perspective, and my judgment, had shifted.

Suddenly all the Google buses didn’t seem crammed with idiots driven by dollar signs.  Wall Street wasn’t just a grunting pit, but a battle for a family’s stability.

I’ve had judgment (clearly!) about the choices people make when living as a means to an end, rather than “living in the journey of every moment,” etc, etc.

As I continue to probe the “Can I have Love and Power simultaneously?” question, I notice that I’m wondering if breadwinners have been asking themselves that same question for eons.

 

balance · finance · money

Libre/Libra.

libra 8 17 17At the start of the year, I participated in a weekend-long “intention setting” meditation retreat with a few friends.  One of the major themes of the work was about sussing out our own optimal balance between our masculine and feminine aspects (according the “traditional” meanings of such, as in yin/yang, active/receptive, etc.).  Through some of this work, I got to see that my “masculine” or active-in-the-world self was much less developed than it needed to be if I were going to step into fuller power in my life.

In fact, both aspects of myself were going to have to grow precipitously to reflect who I really intend to be in the world, but as you might imagine from knowing me, my “feminine” side—my soft, emotional, reflective side—tends to take the reigns, so my masculine, active, forging side would have to be just a bit larger to keep things in the proper balance for me.  At least, at this time.

When I was talking with my mentor on Friday, regaling her with my pure and epic delight over all my new financial discoveries and activities, she said that the first “hit” she got on this change was that I was engaging my masculine side.  The “finance” side of things has historically, traditionally, stereotypically been the man’s world, and, indeed, there’s a voice within me (faint though it is) that says all this writing about finance is not what people (my readers) want to read.

That’s Class-A bullshit, but it’s there.

Whatever it is that “my readers” (all 12 of them!) want to read, they’ll vote with their clicks—toward or away from my blog, but it’s my job here, as always, to relate the truth of what’s happening in my spiritual and physical realm.

And presently, that’s the burgeoning, riveting, catalyzing world of personal finance.

J. joked that my bookshelf walls will be one self-help and the other personal finance.  Because, yes, much of the non-fiction I’ve read in the last few years is women-authored “get bigger” books.  Well, isn’t part of that bigger world one that includes shares and percentages?  It is.  And it feels perfectly aligned with the trajectory of my books, thoughts, progress to be stepping into this new realm of money.

No, it doesn’t feel “feminine” — but maybe part of my growth is to show that a lady can play, too.

awareness · finance · money

Cashing In.

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In a series of exceedingly sexy tasks during my Spring Break last week, I took my car in for its 100K service, went to the dentist, and, later in the week, went to the periodontist (gum guy).  (I also got a hair cut, a wax, and a pedicure, so, you know, sexy.)

At the visit with the periodontist, I told him that my last dentist referred me to one, whom I’d seen about 2 years ago, and he was extremely intent that I needed near-immediate gum surgery to restore/delay (slight) gum recession on my two lower teeth.

Well, gum guy, how much will this run me?  Well, with your dental insurance, it will cost about $2,400.  Ah huh.  Okay, well, thanks for the intel, I’ll start saving up and when I have that amount, I’ll come on back.

And so it’s been.  I began saving a little a month toward that surgery in a Capital One savings account until I paused last Fall when I changed jobs.  I didn’t know what my new benefits would cover, and now I had an FSA account through work, so let’s just keep that $1,100 in savings and wait til I’m ready.

In December, I figured I was, called up that periodontist to schedule the surgery… and then had one of my financial ladies monthly meetings.  I told them about the upcoming surgery and how I was going to split the 2 teeth over the change of the calendar year so that my dental benefits would cover more.

No! one declared, eyes wide.  She’d had that surgery and it was an incredible amount of recovery time, there’s no way I could do it on a Friday and go up to the mountains on Saturday for New Year’s.

Ugh, really?  Yeah, it’s best to do them both at once.

Okay, so I cancelled that appointment (had a great time in Tahoe), and considered that I would do the surgery over my summer break.

Well, I switched dentists and saw this one for the first time last week.  With her fingers in my mouth, she was saying that their periodontist was great and that the gum surgery wasn’t traumatic.

Not traumatic? I replied, aghast. They tear a chunk out of the roof of your mouth and staple it to your gums!

No, no, she said.  We don’t really do that anymore.  Our guy has different techniques now.  You should see him.  And so I did, last Friday.

This guy agreed that the old way was barbaric and awful to heal, so they have a new procedure (using cadaver tissue…) that is much less invasive and much easier to heal.  He also said that, yeah, I could do the surgery, but it certainly wasn’t imminent and we will do a “watch and wait” and I’ll come back in the Fall.

Hm… okay, well, how much would this one cost anyway?  About the same.

Okay, so my FSA this school-calendar year all went to therapy (oy), so I’ll have to wait for it to re-up in August, so it won’t be until next summer when I do the surgery if I do it at all.

So… what do I do with this $1,100 that’s been sitting in savings?

WELL (and here’s my whole point!), in a blog post or many to come, I will describe to you the mind-altering/shattering revelation of J’s explaining “inflation” to me last Saturday.  It has exPLOded my brain to realize that the happy-joy-joy I receive from adding $.07 to my Dental Savings each month is a growth-rate that is FAR BELOW INFLATION, so that what looks like $1100 today will go way less far next Summer.

HOLY. SHIT.

So, in an effort to end this blog quickly and get off to work, I will say this summary:

I did a BLIZZARD of research in the last 4 days, discovered what a CD is, and have moved that dental money into a 12-month CD.  This means that I can’t touch it for a year, but I don’t want or need to, and that my money will make a LEEETLE bit more in interest than in the Capital One account, though it still won’t match inflation.

There’s a lot to come here about all the mind-blowing info I feel like I’m just opening up, but the general idea is this:

I have been saving $$ diligently for years.  I have been so STOKED about those seven cent increases each month.  I have felt adult and pleased and competent.  AND I HAVE BEEN MISSING OUT.

I’m so f’ing excited by this, I have to tell you.  I have opened more accounts in the last 4 days than I have in the last 10 years, and there is more (way more) to come.

Money, work for me better while I sleep, while I drive to work, while I dig plaque from receding gums.

I am f’ing psyched.

 

abundance · denial · deprivation · money

Use Water, Not Tears.

buckets_2 8 18 17

I’ve been very specific about tracking my money for a few years.  Specifically putting a large portion each month into various savings buckets: Prudent Reserve, Vacation, Dental, Retirement.

Every month, I’ve poured some of my abundance into a bucket, but today I come to find that I have been hoarding it.  Like an off-the-grid nut job, I’ve surround myself with “In Case of Emergency” water buckets while my crops wither and die of emergency thirst.

Because of my summer of switching jobs, I only earned half-pay for August.  Instead of using my already-filled buckets of money (e.g. my savings) to make up for that gap, I winnowed every spending category down:

Food? Spend Less!

Home supplies? Spend Less!

Philanthropy, clothing, entertainment? Spend Less! Need Nothing! Go hungry!

I have a pattern for this.  No matter how much I earn, I live like a pauper.

And this morning, I realized what the hell is the point in having a reservoir if you refuse to use it during a drought?

Instead of using the gifts I’ve already been given to support me during a time of need, I tell myself to have fewer needs?

That’s what got me on the “very strict about money” train in the first place: Not acknowledging, honoring, and supporting my own needs, but denying them.  (You may by now realize that money is just one symptom of a pattern exists in the rest of my emotional life…)

Need less, be less, have less, do less, share less, laugh less, enjoy less.

And, indeed, joyless is how I’ve felt this month as I watched my field dry and crack while stubbornly refusing to look at the bountiful well that I’ve already filled.

I’m stubborn about that well.  I’m stubborn because I fear if I take anything from it, there won’t be more.  Ever.  If I use the abundance I’ve been given, there may come a day when it ends.  But, dude, that’s the fucking point!  Today, this month, is a month when the money stream dried up — so USE WHAT YOU HAVE SAVED!!!

It all seems so simple when you type it in capital letters… but this lesson, the lesson that says, “Feed and water your-fucking-self, Molly!” is one that I am still very slowly (and even painfully) learning.

 

balance · money · relationships · writing

Early Bird and the Gimme Gimmes

libra 8 17 17

Today, I write you from the lounge in the building at my new school.  I wanted to see what traffic would be like if I tried to arrive on time for teaching, rather than on time for our faculty work day.

I wasn’t on time.

Even leaving before blogging, an hour in advance, I wasn’t on time for what will need to be my settling in and minor morning prep, particularly as Monday mornings will find me teaching from 8:02am to 12:20pm, with one 15-minute break.

… Oy.

In a continuation of the Efficiency and Effectiveness in the World theme, it is likely that I will change this from a daily blog to a weekly blog starting Sunday.  I don’t want to do this. I like the process of writing you everyday, but to touch on the relationship theme I’ve also been jamming on, it’s also got to work for me.

Part of the reason I want to continue writing daily is a grasping one: I want to make money.

What??

Stick with me here:  There are several people in the world who have established a name and a voice for themselves via their blog, and then published a successful (even moderately so) book in the world.  I’d like to be one of them.

I want to publish a book because, a) I feel like a book is supposed to happen (likely several, of different genres), and b) I want to make money.

Ha!  Oh, Molly, your grand schemes and designs.

There’s nothing at all wrong with wanting to make more money, but if I think that my creativity is obliged to bring that to me, I’m sorely mistaken.  If as a natural, ancillary byproduct of Reason A (to write because I need and want to write), I arrive at Reason B, grand.  But I cannot make them the other way around.

Which is sort of what my attachment to writing this daily would be (to court, sustain, and curry your devotion), particularly if that was to mean waking up at 4:30am, instead of the current 5:30am.  (Did I mention I already have sleep problems??!)

I want your eyes; I hunger for your revelations and communion.  And because of that desperation, I will lose myself and you, not necessarily in that order.

So, lovely readers, our relationship will have to morph and evolve as both our needs evolve. We’ll have to support each other as best as we can as we work to support our selves. Sounds healthy, no?

art · fulfillment · money · self-esteem · trying

The Writing on the Walls.

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After yesterday’s heaviness, let’s talk about something
lighter: gratitude.
You know, there are a lot of things as I look around that I
have to be grateful for. It is always easiest for me to start with my
apartment, because, small though it is, and however much I’d love for my bed to
not be the main prominence of my studio apartment, I love it here. “Warm” is
consistently the response I get from friends and visitors who come in. It feels
warm here.
Someone just said it recently, and it’s precisely the phrase
I heard from a friend when he left one of my parties in my San Francisco
apartment: I felt warm when I left. How many parties does one leave feeling
that way? It was a thrill, and what I love to hear. Inviting, warm, cozy,
artful.
The art has been culled over a few years, and recently, in
the re-organization of my closet, I pulled out the enormous oil pastel lips
with flower, created for one of my Pre-Val Hearts & Stars parties in SF. I
think I’ll put it up again, but even if I don’t, it reminds me of what I can
accomplish when I set my mind to it.
I’d started with an idea. I made some sample studies, small
two-inch colored pencil drawings, and then I asked my artist friend if she had
any super large butcher-size paper. In fact, she did. And I stood with a pencil hovering over this
expanse of 5 foot wide and 4 feet tall paper laid on the floor of my apartment,
white, untouched, and daunting.

How do you start, where do you make a first mark? What if
it’s wrong, and you’ve ruined this enormous (and only) page you have?
I remember that moment, the taking of a deep
breath, and the creation of the first mark. And wherever it was on the page is now well-blended into the rest of the drawing, and you’d never know where
it began with a brave and tentative mark.
You drew that? Yep.
I’ve been drawing since I was a kid. I’ve stopped often. I thought I couldn’t
anymore, as a 40 oz went hand-in-hand with my art for a while. I
also tried again and so out of practice, was not so great, and put it away,
saying this wasn’t for me anymore.
Then, the parties began, and they were the impetus to draw
again, to paint, and make art again. With an aim and purpose, with people to
create an environment for, it was simple. It was enlivening, and it wasn’t
perfect. Yet it was fun.

I spoke the other week to my property manager about the
upstairs abandoned 4th floor room with the two work sinks, northern light, and
great ventilation. They’re happy to rent that space out to me for 25 bucks a
month. … Once I settle my account.
When I was sick, my landlord said about my rent, “Don’t
worry about it.” Which I thought meant, We’ll waive it. I found out later,
several months of not paying rent later, that in fact, what he meant was, “Pay
it when you can, and we’ll be counting every cent.”
So, I became over $4,000 in debt to my landlord, and even
though it was great that they held my rent for a while, it sucks that it wasn’t
clear that’s what was happening, as maybe I’d have begun paying sooner. But, it
wasn’t. I didn’t. And I’ve been paying $50 over my rent each month for over a
year now to help pay down the debt, because that’s truly what I can afford.
I have more than $3,000 left to pay back. Before I can
rent that art space. FOR TWENTY-FIVE DOLLARS!! God, I want that space! But, first things first, I suppose.
In the meantime, maybe I do unroll those lips and put them
up, proof and inspiration once again that I can do what I fear, that I don’t
have to be perfect, that I love producing things, and that I have talent when I
focus.
Who doesn’t need a reminder like that?