Listen Money Matters - Free your inner financial badass. All the stuff you should know about personal finance.

by ListenMoneyMatters.com | Andrew Fiebert and Matt Giovanisci

46m

average length

565

episodes

25

followers

Honest and uncensored - this is not your father’s boring finance show. This show brings much needed ACTIONABLE advice to a people who hate being lectured about personal finance from the out-of-touch one percent. Andrew and Matt are relatable, funny, and brash. Their down-to-earth discussions about money are entertaining whether you’re a financial whiz or just starting out. To be a part of the show and get your financial questions answered, send an email to listenmoneymatters@gmail.com.

Best Listen Money Matters - Free your inner financial badass. All the stuff you should know about personal finance. episodes upvoted by the community

Last updated on August 13, 2020, 7:01 am

#2

5 Questions: Gold, Stock Options, Coupons

July 15, 2014 • 38m

 We’re answering listener questions about gold, stock options, coupons, investing, and how to avoid student loan debt. 1.  Should I invest in gold and silver?  The short answer is no.  It’s risky and speculative.  Gold and silver prices fluctuate wildly from ridiculous highs to tremendous lows.  To make money this way you would have to time the market and we’ve discussed before that it is inadvisable to do so. 2.  Should I buy company stock at a 15% discount or continue with Betterment?  This question was detailed but at the end of the day, the company was getting a year long loan and the money was not accessible.  It’s also the problem of too many eggs in one basket.  Having your income and investments coming from the same place is risky.  Continue putting the money into Betterment. 3.  Are coupons worth your time? Coupons are to get you into the store knowing that once you’re there, you’ll buy more than what you came in for.  If you have a lot of self control and are using the coupon to buy something you normally buy, than they can be a good thing. 4.  I have an $8000 loan with 3.45% interest.  Should I pay it off before investing or invest and make a lower monthly loan payment?  Andrew calculated this out.  If you put $1000 into investing every year for eight years and got a return of 7%, you would make $410.90 more than if you did the same with the $1000 by buying off the loan.  But that was on paper and actual life is variable so you can’t count on 7%. Also, the interest rate on this loan is very low.  So in a vacuum, you would invest the money rather than pay down the loan but in the real world, pay off the loan before investing. 5. How do I avoid going deep into debt during my two year graduate program?  If you have to take out loans, take out federal loans over private when possible.  The interest rate is lower and there are programs for debt forgiveness for federal loans.  Put any savings into an investment account.  The day you graduate, pull it out and pay on your loans.  They don’t accrue interest while in school.  Even if your program is full time, find a few hours a week for a side hustle.  An Uber driver sets their own hours and has clients seek them out.  Take everything you just learned in class and create a blog or a Youtube video.  It’s tutoring but to a potentially huge audience.  I’ve added our student loan episodes to the show notes. Thanks guys, we love these episodes so keep sending in your questions. Show Notes LMM Episode 32:  Adam Carrol educates us about student loans. LMM Episode 70:  Student loan expert Heather Jarvis talks about student loan repayment and forgiveness programs. Smart Passive Income:  Pat Flynn’s site that teaches ways to make passive income. Betterment:  The easy to use investment tool.  Use this link and get six months free.Learn more about your ad choices. Visit megaphone.fm/adchoices

0

0

0

#3

Should You Buy or Lease Your Next Car?

June 23, 2014 • 35m

Matt and Andrew bicker like two five-year-olds fighting over a toy about what is the better choice, buying a car or leasing one.  Andrew gets sweary and Matt gets hangry.  Who will prevail? Unlike some of our topics, there is no clear answer to this question.  Should you invest? That one is easy.  Yes you should.  Should you go to college?  That question does not have a black or white answer.  The decision to buy or lease a car is one that will depend on the stability of your current situation and your priorities.  We’ll list some pros and cons of each. Leasing Advantages:  A lower down payment and monthly payment.  Maintenance and repairs will be covered.  You can drive a brand new car every two or three years.  When it comes time for a new car, there is no trade in hassle. Leasing Disadvantages:  You will never own the car.  You have limited mileage, typically 12-15,000 a year.  The contract can be confusing.  If your circumstances change, ie. you get a new job further away or move to a city where having a car is expensive and a hassle, you’re stuck with the lease. Buying Advantages: You can make modifications like a new stereo system.  You can drive as many miles as you like.  Eventually you will have no car payment.  You can sell the car anytime you like. Buying Disadvantages:  Your down payment and monthly payments are higher.  You have to pay for maintenance and repairs outside the life of the warranty.  The trade in process can be a hassle.  A big chunk of your cash is tied up in something that depreciates. These are all things that you will want to consider when deciding to buy or lease.  Or maybe just take Andrew’s advice and buy a bike.  In order to end an argument with no clear answer, I sent Matt and Andrew both to time out.  Andrew had to wash his mouth out with soap and we gave Matt a snack so his hanger would subside. Show Notes Edmunds.com:  A list of pros and cons for buying versus leasing. Allagash Tripel Reserve:  A strong, golden ale. Motherfucking Bike:  You just have to watch.Learn more about your ad choices. Visit megaphone.fm/adchoices

0

0

0

#4

Inside CommonBond with David Klein

November 20, 2014 • 41m

You know we at LMM want to help you any way we can to reduce your student loan debt.  David Klein joins us to discuss refinancing to save you money. CommonBond is a student loan lending platform that provides lower cost financing to graduate students and graduates.  They started out as a pilot program at one school and now they have expanded to over 109 programs. The federal government holds over 90% of student loans.  They set the same rate which inflates them for credit worthy borrowers.  When David went back to school in 2011, his rate was 8%.  He saw an opportunity and with his two partners started CommonBond. CommonBond works a bit like Lending Club.  Borrowers save money when they refinance, on average, $10,000 over the life of the loan and investors have access to a kind of investing that was largely closed to them in the past. What should you look at before deciding on grad school?  First, the median salary for the field you’ll be studying.  Then look at your loan options.  You want a low interest rate but also calculate what your monthly payment would be. CommonBond offers a hybrid loan, the first of it’s kind on a national scale.  It’s a fixed rate loan for the first five years and variable thereafter. There is a cap on the variable rate of 10.99%. CommonBond also offers forbearance for three months at a time, up to twelve months in cases of economic hardship.  They will also help you find a job within their community.  They also offer paid consulting work. There is no reason not to refinance other than the hassle.  CommonBond has streamlined the process to make it as quick and easy as possible. CommonBond has partnered with Pencils of Promise to help fund education for students who would otherwise not be able to afford it.  More Millenials doing good things in the world! What can you do if you’re having problems paying your loans?  Call your lender directly and inform them of your situation.  They should be able to help you out.  If they won’t, refinance with CommonBond because they will.   Show Notes CommonBond:  Refinance your graduate school loans. Betterment:  The easy way to invest.Learn more about your ad choices. Visit megaphone.fm/adchoices

0

0

0

#5

Tax Efficient Investing with Larry Ludwig

November 03, 2014 • 49m

You’re investing, great!  Now we can take it a step further and learn how to optimize your taxes while investing.  Larry Ludwig will explain the best tax efficient investing practices. The tax man gets enough of your hard earned bucks. Larry Ludwig from The Money Tree Investing Podcast will teach us how to optimize our investments for the biggest tax benefit. Larry recommends eight steps to maximize your tax savings: 1.  401k up to your employer’s match. 2.  Traditional IRA 3.  401k post match. 4.  Roth IRA 5.  529 Savings Account if you plan to send a child or yourself to college. 6.  US I Savings Bonds, low yield but a good place to keep some emergency cash. 7.  MLP and Muni Bonds for higher net worth, more sophisticated investors. 8.  Taxable and Non Taxable Accounts, depending on your goal, buying a house, getting ready to retire, create a balance between taxable and tax deferred investments. If you’re looking for the most simple option, funnel money into a Roth IRA.  If you are self employed, start a solo or SEP 401k.  All the more reason to start your own business.  It gives you so many more investing options than when you work for the man. Tax forms will be going out in a few months so you still have some time to get that money into an account that will give you the most tax shelter.  Don’t overdo it though.  You can have so much in tax deferred accounts that you don’t have anything liquid for an emergency. Show Notes Tax Efficient Investing: Here’s a link to Larry’s post that outlines all the concepts talked about on the episode. The Money Tree Investing Podcast:  A weekly interview podcast devoted to personal finance. Betterment:  Sign up today for six months free investing. HSA Accounts:  Explanations about age restriction.Learn more about your ad choices. Visit megaphone.fm/adchoices

0

0

0

#8

Hourly vs Salary: Advantages, Disadvantages and Opportunities

October 05, 2014 • 32m

In a battle of hourly vs salary, which prevails? We take a look at the advantages and disadvantages of each. It can seem more prestigious to be in a salaried position, maybe more because of what it used to mean that because of what it means now. It used to mean white collar, benefits, an office. Some salaried positions still offer those things but they’re not automatic. How Many Hours? This is the big question when you’re considering hourly vs salary. In some cases, employees are exempt from overtime laws, including commissioned salespeople, drivers, farm workers, and administrative, executive, and professional employees. This is the sticking point because many of you reading this would be classified as one of those last three. Currently, even salaried employees who make less than $23,660 per year are eligible for overtime. The Department of Labor is considering changing that to make anyone, even those once considered exempt, earning less than $50,440, eligible. If you’re a non-exempt hourly employee, you are paid time and a half, your hourly rate multiplied by 1.5 for every hour you work over forty in a week. Sometimes employees are paid double time, your hourly rate multiplied by 2 for holidays and weekends. Some unscrupulous employers will dangle the offer of a salaried position to hourly employees, counting on the employee believing a salaried position is beneficial for all those perks we talked about above. But it might be a trap. It might be the exact same job for the same pay only know with additional duties and hours that they don’t have to compensate for. Some employers will forbid hourly workers to work more than forty hours per week, expecting exempt employees to pick up the slack, essentially uncompensated for the additional work and hours. Hourly workers will have more restrictions on their time, you may have to clock in and out at the start and end of each shift as well as during breaks. Understandable certainly but having to clock out when you need to do a ten-minute errand or grab a cup a coffee, or go to the bathroom can start to feel like being micro-managed. It’s not actually legal to not pay you for those kinds of breaks. A break 5-20 minutes long has to be paid but some employers don’t know that or do know but hope that you don’t. Benefits Some hourly employees will have access to benefits but you’re more likely to have them if you’re salaried. Currently, if you’re employer has more than fifty full time employees and you work 30 or more hours per week or 130 a month, you are eligible for employer sponsored health insurance. Given how stingy most companies with time off since, in America the only people with any legally mandated, paid vacation is Congress, paid vacation is a big “perk” to consider when choosing between jobs. A salaried job is more likely to include paid time off and paid sick leave than hourly. Where Are You In Life? Hourly might be better for younger people just starting their career. You have more time to work and probably need the extra income that time and a half will offer.  When you have a family, working long hours and weekends will be less appealing. Scheduling Salaried employees tend to have more regular schedules than hourly employees. If you’ve ever had an hourly job where you didn’t know your schedule week to week, you know what a draw back this is. Trying to schedule things like doctor’s appointments, child care, and going back to school while you work is almost impossible withou...Learn more about your ad choices. Visit megaphone.fm/adchoices

0

0

0

#12

Managing Your Money Paperwork

June 29, 2014 • 39m

Despite being promised a “paperless society” we’re still drowning in reams of paperwork.  Find out what you need to keep and what you can toss. Do you all have a “junk drawer” in your kitchen?  Is it filled with appliance manuals to appliances you maybe don’t even own anymore?  Like the juicer, you bought for a long discarded New Year’s Resolution?  Well, you can chuck it.  That goes for electronics manuals too.  You can google any of those.  This searing revelation changed my life, or at least neatened up my junk drawer. Don’t keep bank statements, use Mint.  Many financial statements are paperless now including credit cards, rent or mortgage, and utility statements.  You just have to opt out of paper and select paperless on the company’s websites. This is good for the environment as well.  You know those annoying slick paper ads that are sometimes included in things like cable or internet service statements?  Now they don’t have to send those.  Before I went paperless I use to put them in the envelope with my check and send them back.  Time Warner can deal with their own hard copy spam! Educational records like transcripts should be kept for one to two years after you begin working.  No one will care that you took Calc 1 after your first grown up job, maybe not even before.  But better safe than sorry. Medical records for yourself and pets are important and should be kept long term.  There are certain places oversees where you may need, particularly vaccination records, for yourself or your pet before being allowed to travel. Personal records such as birth certificates, marriage license, divorce papers, and citizenship documents should be kept in hard copy form in a water and fire proof safe or perhaps a safe deposit box at a bank.  These forms can be replaced but if you need them quickly, it’s better to have them accessible. If you would like to keep more documents than your home can accommodate or that you can effectively organize and keep safe, there are some digital services that you can use.  Shoeboxed is a company that allows you to e-mail or even mail receipts to be digitized and placed into a file that you can access. You can also buy a scanner although they can be expensive and not practical for documents that are double sided and dozens of pages long like mortgage documents. There is a balance between obsessively hoarding every Duane Reade receipt and throwing out your social security card in a depressive cleaning spree.  Digitize what you can, lock up the really important stuff and let the rest go. Show Notes Ommegang Abbey Ale: The beer that heralds summer.Learn more about your ad choices. Visit megaphone.fm/adchoices

0

0

0

#13

Launching a Successful Kickstarter Campaign with Chez

October 12, 2015 • 58m

Have you ever thought about starting a Kickstarter campaign? We interview Chez Brungraber about how she did it for her travel bag.It takes some doing to get people to give you money for something that doesn’t yet exist. Chez tells us how she did it.Kickstarter is a place to get funding for a product that is still a prototype or a project that hasn’t been completed. The first rule is to have a product that you believe in. Once you have that, you have to get the word out, friends, family, bloggers, media.You have to keep your backers updated with how the project is progressing and when they can expect it to be complete. Chez’s company makes money but not enough to make large capital investments in things like new products. And it doesn’t make enough for a bank loan. That’s why she chose to fund this way.You have to hit your funding goal in order to receive the money towards your project. That sense of urgency helps to reach the goal. Most campaigns over $10,000 fail on Kickstarter so don’t ask for an insane amount of money. Keep in mind too that Kickstarter will take a percentage of your earnings, so factor that in.Once the goal is reached, you can set a “stretch goal.” Extra features that will be added to the existing product as higher funding goals are met. Chez recommends making sure you know what your stretches will be before starting the campaign. She had three days to come up with her first.Kickstarter isn’t a place for free money. Chez took four months to craft her initial campaign and more time to change it for her stretch goals. Make sure you have your basics set up, you’re incorporated, have a business bank account, you can’t deposit that money into your checking account! There are tax implications too.Kickstarter can be a great place for small businesses to get funding but do your research before starting a campaign.Show NotesPumpking: A pumpkin beer from Southern Tier. Kickstarter: Chez’s new campaign for her travel bag. Gobigear.com: Here you can find more of Chez’s awesome gear LMM Community: Join the money revolution! Learn more about your ad choices. Visit megaphone.fm/adchoices

0

0

0

#14

Inside Wealthfront with CEO Adam Nash

February 29, 2016 • 81m

What features do novice and experienced investors get from Wealthfront? How does Wealthfront stack up against the other Robo-Advisors and what sets them apart? We’ll be answering these questions and more in our Wealthfront Review.Luckily (or skillfully) we got an interview with the Wealthfront CEO Adam Nash. After doing our research, chatting with him for nearly two hours and then doing a metric ton more research we’ve got a pretty good idea of where they stand in the Robo-Advisor space. Wealthfront has more than earned their spot at the table. Remember the epic rap battles with the East Side vs the West Side? Sharks vs Jets? In the Robo-Advisor space that’s Wealthfront vs Betterment. Wealthfront is a San Francisco startup with a boatload of funding and Betterment is an NYC startup with an equally large boat filled will funding. If you’re on the east cost you probably know more about Betterment, if you’re on the west cost, the same is probably true for Wealthfront. We’re based out of NYC (ok, fine, Hoboken) so you’ve heard us talk more about Betterment. Now it’s time for you to learn about what’s been happening on the other side of the country. Robo-Advisor’s are competing for my money? If you’re as excited as I am that there is another serious competitor on the scene, this review is for you. In this review we’re going to break down the good and the bad sides of Wealthfront as well as suggest where it might be able to fit into your portfolio. Hint: It might have something to do with the free part. A Quick Look Wealthfront’s pricing and feature set is very straight forward. * Everything below $15,000 (for LMM fans) is managed for free. Ideal for the beginning investor. * Minimum balance is $500. Instead of charging a rather high percentage fee for beginning investors, they set the low bar at $500 and once you’re in it’s free as per point #1. * Tax Loss Harvesting for everyone. Not only will they capture your losses to offset taxes on your gains, everyone has the potential to benefit here. Even the $500 investor. * Advanced features for accounts above $100,000. With features like Direct Indexing you stand to make quite a lot more through economies of scale than you would below that price threshold. * Portfolio Review is the optimization tool you’ve been dreaming of. Want to avoid some capital gains on your existing investments while slickly transferring that money over to Wealthfront for better management/diversification? That’s what Portfolio Review is – more on that later. * Path – Financial Planning Experience. Path connects to all of your outside bank and brokerage accounts to give you an accurate and real-time view of your finances. Their PhDs handled complex calculations on the backend to show you how saving and spending impacts what you will have in retirement. * Wealthfront’s Portfolio Line of Credit. Portfolio Line of Credit is available for any Wealthfront client with an Individual or Joint Wealthfront account valued at $100,000 or more. You can request cash up to 30% of the current value of your Wealthfront account and they you’ll receive it as quickly as 1 business day.Learn more about your ad choices. Visit megaphone.fm/adchoices

0

0

0

#16

5 Questions: Windfalls, Real Estate and Building Credit

October 24, 2016 • 42m

This week the guys tackle five questions from the audience on windfalls, real estate, and building credit.Question OneFirst off, let me start by saying I’m loving the Investment Property series you guys are doing. I totally want to get into this, just need to figure out how to save for that first down payment…My question is this…you guys talked about saving 15% a month for the reserve account to cover vacancy and break fixes…Let’s say you own a great property, and you don’t have to dip into the reserve account much for a long time. Is there a point where you cap it and stop contributing to the reserve account?Aaron via EmailYou won’t want to keep all of the property earnings in your reserve account because in the unlikely case you do get sued – say goodbye to that money. Part of our strategy is to choose insurance policies with high deductibles so for fixes and updates that are not major will pay out of pocket. By not making small claims, our monthly premium low.e are keeping the reserve account up to our deductible. We don’t want to use the insurance unless we have to to keep our monthly payments low going forward.What we are keeping in our reserve account is the amount of our deductible. So, if let’s say our deductible is $10,000, we want to be able to cover anything below that therefore we keep $10,000 in our reserve account. There will be big fixes eventually if you hold the property for many years so plan for significant expenses. If you know, you have to replace the AC unit or roof in the next year, plan for that by putting extra money aside in the reserve account the months leading up to it.Question TwoCould you walk me through your decision to go with Roofstock as opposed to Memphis Invest or some other traditional turn-key company? My wife and I have spoken with Memphis Invest, and it seems like they run a tight ship and have an excellent reputation in the REI community. Were you simply looking for higher returns than their markets offered? I’m drawn to the fact that the properties are completely rehabbed before being rented, and they seemingly do an excellent job of reducing risk within their property management (minimum of 2-year leases, very in-depth vetting, etc.)Joseph via EmailMemphis Invest is an extremely high-quality operation and great company. For us, the properties Roofstock offered were more what were-were looking for as a beginner investor. The homes were cheaper with Roofstock so we were able to try it out without investing a significant amount of money.As new investors, homes with Memphis Invest were just more than we wanted to spend on a property. We also wanted to spread around the risk by investing in multiple properties rather than putting all our eggs in one basket. This strategy has worked well for us making our average returns are higher with the less expensive properties.Question ThreeIs there anything I can do credit-wise/savings-wise/career-wise to increase my likelihood of getting approved for a mortgage loan?Nyequita Smith via EmailGetting approved for a mortgage is all about your attractiveness to creditors. To improve that you’ll need to increase your credit worthiness. Try for more on time payments. If you only have one credit card and then you only have one on time payment a month regardless if it $3,000 or $30. Get more credit cards and put really small things on them like Netflix, Hulu, coffee, etc. Pay each of them off every month. This is a simple way to increase your number of time payments and credit score.Increase credit utilization. Call your card companies and request to increase your limit. When you have more available, your percentage utilize is lower. If you are maxing out your cards everything it doesn’t look good to creditors. If you increase your limit and only using a small amount ...Learn more about your ad choices. Visit megaphone.fm/adchoices

0

0

0

#18

13 Common Money Mistakes You Can Avoid

May 28, 2014 • 47m

Forbes Magazine published a list of common money mistakes many of us make.   Which ones are you making? 1.  Not having a budget.  Chances are you have more than Matt’s three monthly expenses and unless you’re budgeting, you can’t keep track of them.  No need to be old fashioned and create a spread sheet. There are plenty of online tools available to make this a painless process. 2.  Avoid bank fees.  Bank fees are for suckers.  There are plenty of banks that don’t charge you for the privilege of housing your money while paying you crap interest. 3.  You have no emergency fund.  There are different definitions of what an emergency fund is.  For some it’s $1000 in a checking or savings account.  For others it’s a year’s worth of expenses invested.  For most of us, it’s somewhere in between and having any emergency fund is better than none. 4.  5.  Not taking full advantage of matching 401K funds and not contributing from your first pay check.  What if your employer doesn’t match?  It’s still worthwhile to contribute because it takes money from your check before you can miss it and if you can contribute enough to drop you down a tax bracket. 6.  Not knowing how much you should save for retirement.  If you don’t know this, listen to our episode on the 4% rule. 7. Not choosing the best student loan repayment plan.  There are several options depending on the type of loans you have, your income, and the field and sector you work in. 8. 9. 10.  The next three address estate planning, disability and life insurance.  Perhaps not something a lot of you are thinking about just now, but become more important the older we get and if we start a family. 11.  Using an investment adviser as you financial planner.  LMM is going to make the editorial decision to tell you that you don’t need either of these.  No one will ever care more about your money than you and these guys rarely beat the average.  So save your money, listen to us and learn to do this yourself. 12. Only considering the upside when choosing investments and choosing those investments based on ratings or headlines.  Yes you could absolutely pick a stock, get a lucky hit and retire at 25.  You could also lose your ass.  Do your research, don’t choose based on media hype, that’s what the media does.  Today’s Tesla could be tomorrow’s Edsel. We know our listeners are savvy and getting savvier but take an overview of your situation and see if you are making any of these mistakes. Show Notes Betterment: On-line investment tool. Mint: On-line budgeting tool.Learn more about your ad choices. Visit megaphone.fm/adchoices

0

0

0

#19

How to Calculate Opportunity Cost With Every Choice You Make

November 05, 2014 • 53m

Opportunity cost sounds ominous. Like you are really going to be missing out or possibly making a big mistake if you choose wrong. Without realizing it, we make minor decisions in our lifestyle choices that involve calculating opportunity cost.Opportunity cost is basically considering what you can’t do as the result of each possible decision you make. Don’t worry. We are here to teach you how to calculate opportunity cost and how it works so you always make the best decisions.Our professor on the show today is Dan Egan from Betterment and he’s drinking beer brewed at Betterment! What is Opportunity Cost? Opportunity cost is what you give up when you choose between options. No matter what we choose, there is a next best choice that we give up or an opportunity forgone, that is the opportunity cost. We want to minimize our opportunity cost by choosing the option that benefits the most. Considering that almost every decision you make has a potentially beneficial alternative, you will never be able to eliminate opportunity cost entirely. The important thing is not to brood over “what ifs” and “should haves”. Rather be pragmatic and responsible each time you are decision making. “One of the most important concepts of economics is ‘opportunity cost’ – the idea that once you spend your money on something, you can’t spend it again on something else.” Malcolm Turnbull Decision making typically involves constraints such as time, resources and rules – risk vs reward, cost vs quality, salary vs quality of life. Opportunity cost is considering what you can’t do as the result of each possible decision. Opportunity Cost = Return of Most Lucrative Option – Return of Chosen Option Scarcity We have to weigh opportunity costs because of scarcity. Scarcity means limited resources. All of our resources, time, money, effort, are not infinite and could be used in a variety of ways. You may be able to allocate the time you spend earning a new certification or degree into advancing within your current position, for example. In this situation, you would have to decide what the most valuable allotment of your time is and what would have the greatest potential for the greater return on your chosen investment. So we have to carefully consider our decisions to make sure what we are gaining by making one choice over another is more valuable than what we are foregoing. Simple Examples of Opportunity Cost Even simply deciding where you want to eat comes with unavoidable missed opportunities. You want to go out to dinner. You decide to go to the French place over the Italian place. The enjoyment of an Italian meal is the opportunity cost of that decision. Although you might thoroughly enjoy your meal at the French restaurant, even more so than you would have at the Italian place, you will still have missed out on the good food and enjoyable experience. And the baguettes. Oh, the baguettes! Opportunity cost can apply to your everyday purchases, as well. You want Netflix for the month and a new book. You don’t have money for both. You choose the book. Watching Netflix is the opportunity cost. Investing Examples Of course, there are situations where the opportunity cost of a decision is much higher than eating steak tartar instead of pasta. Choosing an investment vehicle is one area where opportunity costs must be more carefully considered. Any time you invest your money in the stock market, there are certain trade-offs that you must expect.Learn more about your ad choices. Visit megaphone.fm/adchoices

0

0

0

#20

Dollar Cost Averaging: Put Your Money on Autopilot

July 01, 2014 • 33m

Dollar cost averaging is a simple yet effective strategy that will help you grow real wealth. The best part is, you can put your money on autopilot.  Dollar cost averaging takes the fear out of investing. Do you have a lump sum of money that you want to invest, but you’re waiting until the exact right time to invest it? You don’t just want to dump a pile, especially a big pile of money into the market at the wrong time and watch it evaporate. There are two ways you can avoid that happening; one is the wrong way, and one is the right way. All investors have two major concerns when they invest, making money and limiting risk. We all want big profits fast with no risk. But that’s not the reality of investing. To make money while limiting risk, we have to employ a good investing strategy. Dollar cost averaging is just such a strategy; it’s good for all investors but especially for those new to investing. Some Good Days and Some Bad Days On September 29, 2008, the Dow Jones Industrial Average suffered one of the worst losses in Wall Street history. Upon the news that the House had rejected the $700 billion bank bailout plan, the Dow plunged 778 points. In an instant, $1.2 trillion dollars in market value evaporated. If you had been a wary investor but finally decided to take the plunge on that day, you would have had a very bad day indeed. Just two weeks later, Wall Street saw its biggest one-day gain in history. The Dow added 936 points, and a record $1.2 trillion dollars surged back into the market. If you had invested that morning, you would have had a very good day indeed. Timing the Market If you had known to pull your money out before that big crash and known to put it back in the day of the big gain, you would have timed the market perfectly. But how would you know the crash and the rebound were coming? Some people think they can predict such things by timing the market. Market timing means trying to predict the direction of the financial market by analyzing the stock market and economic data. It’s a good idea in theory because like we explained above, you would hate to invest your money right before a big drop in the market and love to invest it before a big gain. Do you have a Magic Eight Ball? Because if you do, give it a shake and ask it when you should invest. That will give you about as good a result as trying to time the market will. Professional fund managers can’t time the market with much success and not only do they have reams more data than you have, but they also have the time to pour over all of it and to understand what that data is telling them. And they still do worse than the market more than 80% of the time! Even if you did have the time and understanding to go over all that data, why would you want to? It’s boring! This is the wrong way to go about dumping money into the market if you want to protect yourself from unnecessary market risk. But there is a way to do that.  The key component if dollar cost averaging is NOT timing the market. What is Dollar Cost Averaging? The term dollar cost averaging sounds more complicated than it is. It simply means that you determine a set dollar amount that you want to invest. Then you invest that fixed dollar amount on a set schedule without regard to the share price instead of putting one lump sum investment in all at once. Here’s an example of a dollar-cost average strategy. You have $1000 you want to invest. You invest $100 a month over the course of ten months. Using this method, you will average out the cost per share so that you don’t have to worry about timing t...Learn more about your ad choices. Visit megaphone.fm/adchoices

0

0

0