Learn the basics of investing, including stocks, index funds, and compounding interest. Discover the 50-30-20 rule for investing and the importance of saving for retirement. Explore the benefits of investing in index funds and the process of opening a brokerage account. Understand the sins of investing and the role of automation in wealth building. Also, get tips on online security and protecting personal information.
55:39
AI Summary
Highlights
AI Chapters
Episode notes
auto_awesome
Podcast summary created with Snipd AI
Quick takeaways
Investing early and regularly, while avoiding common pitfalls, is crucial for building wealth over time.
Index funds offer a simple and effective way to invest, providing diversification and low fees.
Living below your means and investing a percentage of your income are key principles for building wealth.
Deep dives
Save money with Erica's free challenge
Erica Kolberg announces a free five-day savings challenge that helps participants save extra money every month without changing their lifestyle. Over 200,000 people signed up in a previous challenge, collectively saving over $200 million.
Investing strategy: Building wealth by living below your means and investing early
Jeremy Schneider, a multi-millionaire entrepreneur, shares his money philosophy: to build wealth, live below your means, and invest early and often. He emphasizes the importance of spending less money than you make and investing a percentage of your income. Investing in stock market and real estate are two recommended investment options.
Investing basics: Compounding interest and index funds
The power of compound interest is explained, highlighting how money grows over time. Investing in index funds is recommended as a simple and effective strategy. A three-fund portfolio is suggested, consisting of a US stock market index fund, an international stock market index fund, and a bond index fund. Target date index funds are also explained as an easy option based on your retirement age.
Understanding Mutual Funds and Index Funds
Mutual funds are a type of investment where a group of individuals pool their money into a fund, which is managed by a professional who selects and buys stocks on behalf of the investors. Actively managed mutual funds involve high fees and rely on the manager's ability to pick stocks. In contrast, index funds are a type of mutual fund that aim to replicate the performance of a specific stock market index by buying all the stocks in that index. Index funds offer diversification, have low fees, and can be easily purchased online through brokerage accounts.
Simplifying Investing with Index Funds and How to Get Started
Index funds, such as the Vanguard Total World Stock Market Index Fund (VT) and the S&P 500 Index Fund (VOO), offer a simple and effective way to invest. VT allows investors to own shares of all the companies in the world, while VOO represents the 500 largest companies in the US. These index funds can be purchased through brokerage accounts, such as Vanguard, Fidelity, or Schwab, by typing in the respective ticker symbols. Investing in index funds early and regularly, automating the process, and avoiding common pitfalls like trying to time the market and paying high fees are key to building wealth over time.
#66: Jeremy Schneider, founder of Personal Finance Club, has doubled his net worth by reinvesting since he retired at age 36. Think of this episode as an Investing 101 course, where Jeremy and Erika guide us through the basics of investing. It’s completely beginner-friendly, even if you’ve never invested! We cover the most common questions you have about investing, including:
As promised, here is the link to join my course 3D Money - take control of your future and transform your money habits. https://erika.com/3dm
I’m running a free “Save $1,000 Challenge” to teach you creative strategies to save money. It’s 5 days long and starts on Monday. Grab your free spot here: https://Erika.com/go
If you are focused on increasing your net worth, then you should listen/watch the episode with Dave Ramsey next: https://erika.com/dave-ramsey
Thanks for tuning in and come back every Tuesday for a brand-new episode! Make sure you hit the follow button to get notified.
Did you enjoy the episode? Please leave us a review here https://erika.com/review : (just scroll to the bottom and tap on “leave a review”) It really helps the podcast especially since we’re just getting started. Even just a sentence is perfect!
Follow the podcast @erikataughtme across platforms.
