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Investing expert and friend of TFD Amanda Holden stops by to share the worst advice you're likely to run into on the internet, and what you should do instead to build your money in a healthy way.

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Hey, guys. It's Chelsea from The Financial Diet. And if you're watching this-- which I don't know why you wouldn't be-- you clicked on it. You're probably noticing that I am not in my usual spot. I am indeed at the TFD office on The Financial Confessions set. But I'm actually not filming an episode of The Financial Confessions today because the person that I am making a video with today has already been on the show. And it was great. You should go check it out. Click the link in that description. And get all of her wisdom on our episode of TFC together. But I wanted to bring her in today for two reasons.

One, because she is our absolute favorite investment guru. There is truly no one better. She gives us all the knowledge we need, and the looks we crave while doing it. And she's also very good at telling us what not to do, which I think is often some of the most practical advice when it comes to concepts that can be a little scary, like investing can. And I also wanted to talk to her because she is doing a very special and exciting thing with TFD that I hope you all will join us for. But I'll let her speak a little bit more to that right now. So without further ado, welcome back to the channel, Amanda Holden, a.k.a. Dumpster Doggy.

Thank you so much for having me. So tell us what is happening October 5. So October 5 is going to be the first of four live taught classes by me. Basically what we're going to do is we're going to pack you so full of investing knowledge over the course of just one month. Is it fair to say that this is everything you need to get started investing? Absolutely. And the exciting news is that it's normally $199 for the full course and all of the extras and resources that come with it. But for YouTube subscribers, you are getting a $49 discount. So click the link in our description to sign up and use the code YOUTUBE at checkout to get your discount. We know you love a deal. Before we jump into what is wrong and bad out there, can you give me a 30 second description-- what the hell is investing? Sure. So investing is really just buying some sort of asset. That's just a word we use to describe an investment, that you ultimately hope is going to increase in value over time or pay you in some sort of way over time, whether that's through dividends or interest. And so when people are talking about investing in the stock market, what does that mean? So a stock is really just a teeny tiny little sliver of ownership in a company. So folks like us could own a piece of Apple or Bumble or Sea World. And so there's lots of different stocks, lots of different businesses that you could own. But when we're talking about the stock market, that's really all we're talking about-- is this marketplace for all of these different shares of companies. So responding to the market, talk a little bit about the traps that people fall into when they're just looking for investing advice or ways to invest online.

OK, well I think that we should start with what's going on this week. So we have seen a little bit of frenzy in the market. And so one of the things that I see people ask me or people say online is they want to make changes because of what is happening in the market right now. They want to make conservative changes. They want to sell out of their stock. And the reality is, for most new investors, for most young investors it only doesn't matter that we're experiencing volatility. It can actually be somewhat of a good thing because if you are investing and let's say that you are purchasing shares of companies, shares of businesses, which is what a stock is-- would you rather buy those shares for cheaper or for more expensive? Cheaper. For cheaper. And so that's what we're seeing, right? When the market loses value, what you're actually seeing is these shares of stocks, these shares of businesses, being on sale. And I kind of hate when people say that it's on sale. It's not like you're walking to a Bloomingdale's and it's 25%-- it's not like that because really what we want to encourage is regular consistent investing, no matter what is going on in the market. But we do want to start to train our brain a little bit differently, even maybe investigating what we think is good and bad in the market because when the market is falling we call that bad. And it is bad if you are somebody that is trying to sell or live off of your investments right now. But it's actually not bad if you are somebody that is in collection mode. You're collecting these investments that you hope will ultimately increase in value over time.

So the most common trap that people fall into it sounds like when they're trying to learn about investing is they hear something's going on in the market, and they're way too reactive. And they often react in the wrong way, because if things are down our sort of rational brain is like oh, I've got to get out of this before I lose more. But it's actually usually the opposite approach that would be more recommended. And in terms of some of the bad habits that people have when it comes to investing, obviously being too reactive to the market is the worst. But what are some of the other bad habits that people have? Not getting started because they're feeling intimidated. The terminology can be crusty, and dusty, and boring. But also the system does make it seem like it's too complicated or that it is something that you're going to have to be tethered to for the rest of your life in order to understand this stuff. But the reality is that's not true. In fact, there is a set amount of terminology and concepts that once you learn them, set everything up to be automated. And you're good to go. And you will get it and you will be able to be a successful investor without having to have your hands in it all the time. What are some ways that you can identify someone who's maybe not a good source to listen to?

Anytime anybody tells me that they have a way to make money fast and it's a 100% bet, I run, right? I head for the hills because the reality is that's gambling. That is gambling. And that is not what investing is. Investing is breathtakingly boring. Alternative investments. Now there's a lot of alternative investment vehicles out there, we can say, like the real estate investing where you buy little tiny pieces of real estate. There's even ones where you can buy little tiny pieces of artwork. You can obviously invest in cryptocurrency. Are they all bullshit? Are they all to be avoided? Where do you land on these? I'm not going to go as far as to say that they are all bullshit. Some of them are absolutely bullshit. Which ones are bullshit? I mean I kind of think gold is bullshit. Ooh, why is gold bullshit? Sorry I want to divulge on this. Well, and so something like gold or even cryptocurrency, they are not what I would consider to be productive assets. The success of a cryptocurrency or the success of gold hinges on one thing-- and one thing only-- and it is our belief in that thing.

And you could potentially argue the same for let's say the stock market. But let's say you invest in an S&P 500 index fund, which is essentially an investment. You actually own a piece of the 500 leading largest companies in the United States. And those companies are actively paying dividends. So every year, even if the market is down, even if they lose value, you're still getting paid out in dividends. Also companies, if you've ever worked in a company, what are you incentivized to do? Create profit. Every single one of these companies that you own has an entire group of people that are working towards one thing and one thing only, and that's profit. You cannot say the same for a bar of gold.

To me, a productive asset that's paying interest or paying dividends has people working actively on creating value is a lot more interesting of an investment than gold, which is a very beautiful metal. But it's kind of a useless metal. Picking individual stocks. So explain a little bit more on these other alternative investments that people see out there. What I'm never saying is that you can't invest a little bit of money each month in anything that interests you. If you think that Bitcoin is going to be the choice currency 20 years from now, then take a little bit of a gamble on it. But you should understand what it means to invest in something that is extremely high risk, right, like betting on any one cryptocurrency, betting on any one stock. These are things that we think might have really good odds of success. But they kind of don't. At the end of the day-- I mean it's not a perfect analogy-- but people think they can go to Vegas and make it big. But ultimately on scale, the house always wins. If it was that possible for the average person to know what stocks are going to hit and bet correctly, the whole system wouldn't work.

The last one that I'd love to hear, just if you have a sound bite on, is the REITs, the real estate investment-- Trust, REITs. Yeah. People see all kinds of those. They are advertised everywhere. Are they scams? No. They are not scams. And if you want to integrate a little bit of real estate into your strategy-- and we're not talking about owning a primary residence-- what you can actually do, just like you can buy a big old fund-- a fund is really nothing more than a big old basket of some other investment types. So a big old basket of stocks, or a big old basket of bonds, or through REITs, you can buy a big old basket of real estate holdings. The way that these REITs are structured is that they are required actually to pass through 90% of profits to the investors in those REITs. And so what you tend to see with REITs is you get paid out a lot of money in interest and dividends. But you don't see a lot of growth to the REITs themselves. And so rewind to even just right before COVID, people were loving on REITs because rates generally will invest in a portfolio of commercial properties. And so that could be anything, right? It could be office spaces. It could be shopping malls. It could be cell phone towers. But what happened during COVID Chelsea, to commercial spaces, and commercial leases, and commercial rents? They weren't doing so hot, Amanda. They did not do so hot. And so it's just a good reminder that real estate is not a silver bullet, just like individual stocks are not a silver bullet, right, just like crypto is not a silver bullet. And the idea here is sure, if you want to invest in a REIT, go for it. But maybe it should be a pretty small piece of your overall pie.

Outperforming the market. Here's the deal about trying to beat the market-- is we often talk about the market average. And when we hear average, what we are really inclined to think is that means that half of let's say stock performance falls above the average, and half falls below. When in reality, that's not the case because what we see instead is we have such out-performers in the stock market. So for example, Amazon is an extreme outperformer. And so instead what you see is one out of every 10 stocks outperforming. It's not a 50/50 shot. It's really difficult to do. It's really difficult to pick the best stocks with any sort of regularity. And so beating the market is really, really difficult because anytime you're taking that type of risk, you're taking the risk that you could lose that much.

As a last question, Amanda, why is your class worth $199? I work hard for that money. Oh my gosh. I wasn't expecting that. That's a really great question. Here's the thing. This information exists out there. If you want to read all of the investing books-- that I know are collecting dust on your nightstand right now as we speak-- Throw out investing for dummies. It's from 1998. Then you totally can. Or what you can do is pay me and us to do it for you. I read all the investing books so you don't have to. And what I've done is I've worked so hard to take this information, and not only make it easy to understand, but to make it fun. And also you're paying for the accountability. You're paying for the program. You're paying for the resources. And ultimately you're paying to be able to walk away with a plan and feeling totally confident in your own ability to do this. And that's going from absolute beginner, don't even know what investing is, all the way up to I'm comfortable with it. Absolutely. And good news. It is worth $199. But you don't even have to pay the $199 we're charging because you get that $49 discount when you use the code you YOUTUBE at checkout. So click the link in our description to go register for Amanda's course. That starts on October 5. But if you can't watch any of the classes live, you can watch them after the fact. Don't worry about it. It goes for the whole month of October. And we'll also link you in the description to some of our other videos on different aspects of investing so you can continue to beef up in preparation for that class-- not as a replacement for it. And as always, guys, thank you for tuning into this special episode. And we will see you every Monday, Tuesday, and Thursday back here for new and awesome videos. Bye. Thanks, Amanda. Thank you. Bye.