“Broke Millennial Takes on Investing” written by Erin Lowry was among my top 20 favorite books I read in 2022. It was an informative book packed with helpful information about investing basics and options available. *Disclosure: I am not a financial planner.
Where can I invest my $?
Full-service brokerages (cost more $): Morgan Stanley, Edward Jones, and Merrill Lynch
Discount brokerages (DIY approach, saving you more $ in fees): Vanguard, Fidelity, Charles Schwab, and TD Ameritrade
Online advisors: Betterment, Swell, Personal Capital, Wealthfront, Wealthsimple, and Ellevest
Apps: Acorns, Stash, and Robinhood
Fee models: assets under management, commission, trading or transaction fees, and account service fees
**Are you getting value for the cost of the expense ratio and any other fees you’re paying?
Many finance experts warn that paying an assets under management fee can be costly; as your investments increase, your costs increase, and that may not be worth paying if you are a hands-on investor.
What you need to know about an advisor:
- 1. Does he or she uphold the fiduciary or suitability standards?
- 2. How does your advisor get paid?
- 3. What are your advisor’s credentials? CFP?
Other things to consider:
- Rebalance annually to ensure that your overall asset allocation continues to be aligned with your goals, time horizon, tax strategy, and risk tolerance.
- You don’t make or lose $ until you sell! Remember your time horizon. Fluctuations are to be expected.
- When deciding whether to invest in stocks, research the company and determine: Is it profitable? Is it reputable? What’s the history of returns?
- Some brokers offer a stop-loss order option in which you can have your broker sell your shares when a stock falls more than a percentage you set. Not everyone offers this, so if this is important to you, make sure you read all of the terms before selecting a broker.
- Capital gains tax- long-term= 15-20%. Short-term= same as ordinary income (10-37%).
Further resources provided in this book:
- BrokerCheck- vet a potential broker/investment advisor
- CFP.net to find a certified financial planner
- Websites: Investopedia.com, MorningStar, Fidelity.com, Stock Series blog, Teal Holcomb
- Podcasts: Afford Anything, Better Off, Investors Podcast, Planet Money, and Marketplace Morning Report
I look forward to reading, learning, and sharing more with you soon!
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