Wallet Therapy: Investing Isn't an Exclusive Club

For the longest time I thought investing was a members only club and nobody sent me the invite. People would say things like index fund and expense ratio and diversification, and I would smile and nod like I had any idea what was happening. Spoiler: I did not. This week Alex walks me through the whole thing from the very beginning, and it turns out the scary part was never the math. It was just the vocabulary.The SolutionSaving vs investing. Saving is parking your car in the garage. Investing is sending your money out to get a full time job. They aren't competing, they're doing two different things.Stocks vs bonds. Buying stock means owning a tiny piece of a company. Buying a bond means lending money and collecting interest. Owning part of a bakery vs lending the bakery money.Why Alex loves index funds. Instead of betting on one football player, you buy the whole team. Roughly 90 percent of professional fund managers fail to beat the S&P 500 over a ten year period, which means the pros usually lose to the thing you can just buy yourself.ETFs vs mutual funds. Both are baskets of investments. Mutual funds price once at the end of the trading day and often have minimums. ETFs trade all day like a stock and are usually easier to start with.The real cost of an advisor. Alex runs the numbers on $500 a month over 30 years. No advisor and low cost index funds gets you about $1.1 million. Add a 1 percent advisor fee plus 1 percent in actively managed funds and you hand over nearly $400,000. The question isn't does my advisor charge a fee. It's am I getting enough value to justify it.The investing dictionary. Diversification, compound growth, dividends, expense ratios, and dollar cost averaging, all in plain English.Plus a listener question from someone who hasn't filed taxes in ten years after a terminal diagnosis they thankfully survived. Alex explains exactly where to start, and it's less scary than you think.This week's homeworkDo one thing. If you don't invest, open an account. If you already invest, log in and look at what you actually own. Can you explain it in one sentence? If you can't, go learn one thing about it. Progress over perfection.Connect with usJoin the Patreon for episodes early plus Wallet Therapy Live: patreon.com/beckyhayterGot a question or a money confession? info@forthehaters.comTrack it all in one place with Monarch Money: https://monarch.com/referral/ey3kkk8c7eSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.