In this episode, Alyssa and Bridget discuss the advantages of self-directed investing versus relying on robo advisors. They also explore the impacts of stock market crashes and recoveries, and compare bonds to equities. The speakers emphasize the importance of personalized investing, risk tolerance, and understanding the relevance of age. They highlight the benefits of self-directed investing and provide resources for further exploration.
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Quick takeaways
Investing requires transparency and knowledge to take responsibility for where your money is going.
Self-directed investing offers greater control and potential long-term returns, but requires emotional discipline and financial literacy.
Deep dives
The Importance of Knowing Where Your Money is Invested
In this podcast episode, Alyssa and Bridget discuss the significance of knowing where your money is invested. They draw parallels between understanding the origins of our food and clothing and taking responsibility for our financial investments. They emphasize the need for transparency and knowledge in investing, highlighting the drawbacks of not knowing where your money is going. The hosts share personal anecdotes, with Alyssa discussing her excitement over purchasing a new tennis racket and Bridget celebrating quitting her job. They remind listeners about the importance of investing in their future and the potential benefits of self-directed investing.
The Rise of Robo Advisors and Their Limitations
The hosts delve into the popularity of robo advisors as an automated solution for investing. However, they express criticisms of these platforms, highlighting the lack of personalization and the risks associated with self-selecting portfolios based on a generic questionnaire. They discuss the recent challenges faced by robo advisor portfolios due to market volatility and bond-heavy allocations. Alyssa and Bridget emphasize the importance of understanding your own risk tolerance and financial goals when choosing investment strategies. While acknowledging that robo advisors can be a suitable option for some individuals, they encourage listeners to invest the time in gaining financial literacy and considering self-directed investing for greater control and potential long-term returns.
The Emotional Discipline and Long-Term Perspective of Investing
A key theme in the episode is the emotional discipline required for successful investing. The hosts stress that investing is not a get-rich-quick scheme and that patience is essential. They compare investing to tending a garden, requiring consistent care and long-term commitment. They address common fears, such as the inability to access funds for several decades, clarifying that investments can still be liquid and emphasizing the importance of time when it comes to reaping the rewards. Alyssa and Bridget highlight the need to manage emotions in volatile market conditions and recommend building financial literacy to make informed decisions and strengthen overall investment resilience.
Encouragement to Start Investing and Take Control of Your Financial Future
In concluding the episode, Alyssa and Bridget emphasize the importance of starting to invest rather than delaying due to fear or uncertainty. They encourage listeners to take control of their financial future by making decisions aligned with their risk tolerance and financial goals. They emphasize that even small steps, such as opening an investment account, can lead to long-term financial growth. While acknowledging the current challenging economic climate and market conditions, the hosts express optimism about the potential of the stock market and the role of investing in wealth creation. They emphasize the need for financial literacy and understanding, signaling the upcoming opening of Alyssa's course as a resource for comprehensive investment guidance.
When it comes to investing, being in the market is key. But once you're in, how do you decide who gets to manage your money? Are roboadvisors enough? Let's discuss this and more in this week's episode of Money Feels!
We're your hosts, Alyssa and Bridget. Welcome to the podcast, where we talk through our money trauma and create a better understanding of building a healthy relationship with finance.
In today's episode, we discuss the following:
Why you need to invest
The cost between self-directed vs having someone else invest for you
Stock market crashes and recoveries
Bonds vs equities
The reality of the roboadvisor portfolio
Personalization of investing
Risk tolerance and understanding why risk is relevant to age
Thanks for listening to our final episode in season 4! If you want bonus episodes while we're off until January, you can join our Patreon! Until then, follow us on Instagram @mixedupmoney, @bridgiecasey and @moneyfeelspodcast, and we’ll see you next time!
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