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Hey, guys.

It's Chelsea from The Financial Diet. And today, I am back in the TFD office not doing the Financial Confessions, although we are in the TFC set because this is Manhattan.

We don't have a lot of space. This is where the chairs are. And I am back for a highly requested follow-up video to our recent video interview with our resident investing expert, Amanda Holden, a.k.a.

Dumpster Doggy, all about the bad investing advice that there is on the internet that you are often likely to run into. But a lot of you guys-- in also saying we love Amanda we want more of her-- were asking about what about some of the more general investing questions, some of the good advice, some of the basics. And I thought this would be a perfect time to bring her out.

Because she is not only a huge investing expert, and amazing, and such a resource, she is also the keynote speaker at our upcoming all day digital conference on November 12, the Intentional Wealth Summit. It is an all-day conference, all about building your wealth long term. So that means it covers investing.

It covers retirement planning. It covers even some of the more sort of life upgrading aspects of wealth building, things like learning how to master credit card hacking, things like using real estate as another tool of investing. All of these things are going to be covered in that Summit.

And for those of you who worry, hey, maybe I'm not quite at the level to be understanding all of that yet, we are-- a few days before-- having a free workshop called The Wealth Building Prep Class where we are going to be teaching you guys all the 101 stuff. We define a lot of the terms you'll be hearing at the Summit. So both of them are great, but especially for those of you who are really looking to level up your long term wealth building plans, the Summit on November 12 is going to be a must-attend event.

While the wealth building prep class is free, the November 12 Summit is $49. And that covers all of the day's activities, all of the interactive Q&A portions, as well as the take home workbook of like 40 pages worth of exercises. But you are YouTube viewers-- will get this ticket for a full 50% off by using the code YouTube at checkout.

Just click the link in our description, use that code. You will get 50% off. And you will still get all of the day's amazing learnings headed out by our keynote, delivered by none other than my guest today, investing expert Amanda Holden.

Hi. I'm so excited to keynote. Oh my God.

What are you going to be talking about, girl? So I'm going to be talking about everything investing that I wish I knew when I was 22 years old. And this will be, by the way, great advice for anybody, no matter what their age is, but also sprinkled with a really nice dose of self-deprecation about all the stupid shit I did when I was 22 years old.

So you're not alone. No you are not. So in terms of the investing questions that we get most from our audience-- because we're just going to be going through some of our best of questions that you guys ask about investing-- one of the primary things that people ask us is, what are the different types of retirement accounts and which ones do I need?

Sure. So that's a really big question. And the reason for that is we have retirement accounts because when you invest within the shell of a retirement account-- I like to call it a caboodle-- when you invest in a caboodle that is a retirement account, the whole reason for it is you're getting some sort of tax benefit.

And so if you're ever, like IRA, 401(k), WTF, like, why is this all confusing? Well, it's because the IRS done this to us. And, therefore-- because they are giving us a tax benefit, right?

They're throwing us this tax bone. On the flip side of that is that they get to write the rules for use. And so if you're ever confused about which one you qualify for, you are not alone.

It is kind of confusing. A great place to start is if your workplace offers a workplace retirement plan or an account like a 401(k), 403(b), TSP, or for 457-- that's a great place to start. If you are somebody that does not have a workplace retirement account, that's OK.

You can open up one yourself. A really great starter account for a lot of people is a Roth IRA. And, in fact-- hot tip-- if you have a 401(k) through work or if you have a workplace retirement plan, you might also be able to use a Roth IRA.

And so that's a really great place to start. And then also if you're self-employed you've got options. Probably the best self-employed accounts are, in addition to a Roth IRA, doing either a solo 401(k) or a SEP IRA.

So another question that we get all the time is, OK, I'm investing for retirement. I don't know whether or not they're maxing out, but let's say for the argument-- the sake of this question-- they're maxing it out. What should I do beyond that investment-wise?

And how do I invest beyond my retirement account? Sure. Well, I do think a really good first goal is to max out your retirement accounts.

And then the next step would be to-- I hate to use the word optimize. I feel like it's-- Very bro-y It's very bro-y. But what you want to do is optimize the investments that are held within the retirement account.

Make sure that you understand, what exactly is it you're investing in. And are you paying too much in fees for those investments? And so that's, in my opinion, step number two.

Because even using the caboodles example that I used before, right? We know caboodles as these, like, hot pink and teal, like, double decker treasure storage units, right? That's the Roth IRA.

That's the 401(k). Really, it is just a place where you hold your treasures. The treasures inside, those are your investments.

So those are the funds, mutual funds, index funds, ETFs, stocks, bonds, and so on. And so you can think of it as like your tie-dye scrunchie collection, your OPI nail polishes-- those are the treasures you hold inside. And what we want to make sure-- because those are actually going to be what generates your rate of return not the Roth IRA itself.

And so what we want to do is make sure you understand what you're investing in. So I would say that that's the next step. And then if you are somebody that's like, I am maxing out my retirement accounts.

Well, don't worry. You do not have to stop there. Maxing out a retirement account simply means that's how much money in any one given year you can put into that retirement account.

But we don't want to let the IRS's arbitrary rules about what you can put into a retirement account stop us from doing more. And the next easiest thing to do is open up a brokerage account. A brokerage account is just a place where you can buy and sell investments.

But you can invest it pretty much the same way you're investing within your retirement account if the goal is for long-term growth. And what is the purpose of investing outside of retirement? Kind of what I said earlier, where-- let's say that the only account that you qualify for is a Roth IRA, which that could be the case depending on your employment situation.

In one year, you can save $6,000 to a Roth IRA. By the way, that's all that the word contribute means. Contribute is just a fancy word for "save to." And so you can put 6,000 bucks into a Roth IRA per year, and then, of course, you want to invest that money.

But that number-- that $6,000 number-- has nothing to do with how much you're actually going to need to retire or to reach financial freedom. It's literally just the limit of the IRS's generosity. Right.

And so for most people-- and I want to say that maxing out whatever retirement account you have is not easy. And it's a great first goal. And don't beat yourself up if you're not quite there yet.

We'll get you there. But at some point you may want to look to invest beyond what the IRS says you can put in one of these retirement accounts. And how does utilizing non-retirement investment accounts help people-- because you mentioned financial freedom-- how is that a tool people use to achieve financial freedom?

Well, first of all, more is just better than less, right? More investments is better than less investments. But also what we have with a brokerage account is we don't get the same tax benefits, but we have more flexibility of use.

And so you can tap into that money, tap into those investments, really for any reason and at any time you want. Whereas with a retirement account, there may be ways to withdraw or take out money before you reach what the IRS says is retirement age, which is age 59 and 1/2. There may be ways to-- I know-- there may be ways to access the money before.

But, generally speaking, if you're using a retirement account right, you're using it for the years beyond that. And so let's say that you are somebody that's doing amazing and you're on track to retire earlier than age 59 and 1/2. Well, a brokerage account might give you one of those places where you can withdraw money without worrying about upsetting the IRS.

Love that. So you talk about a brokerage account. One of the questions that we get all the time is, should I use a robo advisor?

How do I decide? A robo advisor is, like it sounds, a robot advisor. I mean, it's not necessarily like R2D2 investing a portfolio for you.

Beep-boop-beep. But what it is is basically you answer a bunch of questions about what your goals are, what's your investing timeline, what are you trying to accomplish. And then they're going to slate you into an automated investing portfolio.

And just so you know, what they're doing is essentially investing you in a handful of different index funds. Index funds are just ways to get just real, broad, easy exposure to the different markets that you may want to invest in, including the US stock market, and the international stock market, and then maybe the bond market as well. And so the big question with the robo advisor is, should I use a robo advisor?

And should I pay them a fee to help them build me this portfolio of index funds-- which is designed to be passive. It's just you're along for the ride, right? Should I pay them for that service?

Or should I not pay anybody and just buy the index funds myself? And so, for example, for me, I personally would not pay a robo advisor, because I'm very comfortable buying my own index funds. That being said, I've been stewing in this shit for 15 years.

And I'm very comfortable with my ability to navigate the websites, which are trash by the way. Trash! I mean, truly just like from the dinosaur ages, because the websites are very difficult to navigate.

Also, decision paralysis or fatigue-- when it stops you from investing, then it's worth it. Like it's absolutely worth it to use a robo advisor service. It is 100% better to get started using a robo advisor service-- even though, yes, you're paying them a fee-- if it means you get started.

And if it means that you do more. That's really what I always tell my students is that if it makes you invest more, then it's worth it. I totally agree.

It's funny. When we get asked this question, I totally agree that it's a question of whether or not using a robo advisor will either A, get you started in investing, or B, allow you to invest more. Because when you use the example of savings, for example, when your savings are automated, studies show clearly that people save more.

And that they have a lot easier time saving even without any other changes to their budget. So for a lot of people, that same automation, not having to think about it, just being able to look and check, hey, the number looks good, that will lead them to save more. But I also think in life in general, especially if you're the kind of person who watches a personal finance YouTube channel, you're probably very interested in optimizing.

You're probably very interested in reducing costs. And you kind of have that, like, I don't want to pay for something that I could do myself. But, for me, I use the example-- a couple of years ago, I made the executive decision.

I was like, if I buy pre-cut fruits and vegetables, I eat so many more fruits and vegetables throughout my day. Yes it costs more money, no two ways around that. But at the end of the day, if it allows me to eat more vegetables and fruits, that's a net win for me.

So I feel like leaning into that with investment is the right way to go. The point that I want to bring up is that even if you do decide to go with a robo advisor to get started, we love it. They make it so simple and beautiful.

It's on your phone. It's easy. It's automated-- all the things Chelsea said.

But do be aware that you are investing in the market-- the stock market-- in a passive way, which means that these robo advisors are not designed to save you from the next market crash. You're going to be playing the whole game. And I actually shouldn't use the word "game." You're going to be along for the full ride.

And so just do know that you're on the stock market's ride now-- ups, downs, all of it. Love that. This is, I think, a question that I'm sure anyone who's familiar with Amanda will know the answer to.

But for those who need a refresher, what do people do-- what should they do when they open up whatever their brokerage account is and they see that their account has taken a big hit because of a market dip. What should they do? Oh my gosh.

Just stay cute. Stay unbothered Oh my gosh. Stay cute and unbothered.

Stay cute and stay unbothered. Yeah, so the stock market, no matter which way you invest in the stock market, most of us will use either funds or robo advisors which is using funds. And so we're all on this journey with the stock market.

And the stock market is a very capricious thing, where we always say the average returns historically have been 10% per year. If you're using a 10% rate of return-- fine. That's what we have seen, specifically, the S&P 500 do, which is a measure of the biggest, baddest, US stocks.

But what we're really glossing over is that 10% is really, really, really an average. And rarely are you going to get just a pretty neat, little 10% year tied up in a bow and dropped on your doorstep on December 31. I mean, well first of all, like the stock market does not care about our calendar-- the Gregorian calendar.

And it's just doing this doing its own thing. And it's working in these cycles where you'll have years that are up a lot, so that are up like 20, 30%. The last two years, now, have been up about 25% per year, which is a lot considering what's been going on.

And then the flip side of that is you could also have years like 2008 where the stock market was down more than 50%. So it lost more than 50% of its value. And so that's why investing in the stock market in the short term is a fool's errand.

It's a little bit of a gamble. It is a gamble. Whereas what we see is that over time, yes, you still get the up and down and the up and down.

But then that graph starts two slant upwards. And you still have the volatility. But if you give it enough time, it does move higher.

So to kind of provide a metaphor for people, because I know a lot of people watching the news around the 2008 crash you know they hear things about people losing their life savings and things like that. And obviously in some cases like, let's say they lost their home or they lost their job. All of those things are very real and not necessarily a question of-- what's the word I'm looking for-- like theoretical losses.

Because one thing that's important to state is that until you actually take the money out of the account, all of this is theoretical gains and losses. That's why they have the term "locking in your losses," to refer to you literally take the money out when it's dipping. And that means, well, now it's cash.

Now it's real. But for the context of 2008 when people hear these stories-- which I think really scares people, especially as it comes to saving for retirement-- can we think of it almost like a musical chair scenario where people who had been investing are now at the point in their lives where they need to draw on that retirement? They need to take that money out to live because they're no longer taking in an income.

And now that money that they're drawing on has taken a 50% or more hit. Is that what we're talking about? Yeah, absolutely.

And that's the interesting thing about the stock market specifically is we often describe markets as good or bad. But it all depends on the vantage point from which you're watching the market. So, for example, a 2008 is devastating if you are somebody that is at the point where you have enough money saved and invested, and you're ready to start drawing down and using that money for retirement.

That's devastating. But for someone who is trying to invest and their sole goal at this point is not to live off of this money but to collect investments, to collect shares, then a bad market is actually good. Right.

And so our beautiful brains are just very mismatched with the task of understanding what is good and what is bad in the market. And when we see the market have a real dramatic moment, a Real Housewives of Wall Street moment, then our instinct is, oh, this is bad. I should sell.

In reality, what we should do is train our brains to think a little bit differently. If we have more investing ahead of us than behind us, what we want to do is start seeing that as an opportunity. Like imagine if it was a real estate market.

Imagine if we had a huge bubble and then a crash in the real estate market. And now all real estate around you was half of the price that it was a year ago. Would you be like, oh, I got to sell my house right now?

Or would you be like, man, I wish I had some money to buy more houses? 100%. Listen, I mean everywhere else in the country was like going crazy for people outbidding each other by over 100 grand. And there were some deals to be had in the island of Manhattan, let me tell you.

And Chelsea Fagan got one of those deals. So suffice to say, things being bad for others can be good for you. It's important to remember that.

So what would you say to a student who is afraid-- well, what if I'm at retirement and the market's in a really bad place? How can I prepare for that? How can I help offset that?

What should I do in those situations? Yeah, sure. So, ideally, you're not in a situation where you're only invested in the stock market at the point in which you retire.

And that's why we say that you shift into a more conservative strategy over time. For some people, that might mean bonds. For some people, that might mean five years out.

If we have a good stock market year, take off some profits and put it in cash. So you enter into retirement even if the market crashes, even if you have 70% or 80% of your money invested in the market, it doesn't matter. Because you have the cash you're going to live off of until the market can recover again.

Got it. So really the key is just making sure that you're never totally beholden to the market? Yeah.

Especially if you're at that point. That's why it's recommended that for young people, if you're not trying to live off of this money, you have the time to allow the stock market to work for you. As you get closer to the point in which you need it, you might want to cool your jets a little bit on the stock market.

And what about-- obviously for most people, it's not a question of home buying or investing. But for people who are looking to really weigh those priorities in their wealth planning, what do you say to them? Oh, man.

I always feel like I am the messenger of retirement, which, like, there's no worse messenger to be. To tell people like, oh, you need to save your money for something that's going to happen 40 years from now. I mean, I'll be the first to admit, it's kind of terrible.

But what I tell people is that "financial freedom" is the word I like to use for retirement. But retirement is going to be the single biggest expense in our lifetimes if we live to be a normal lifespan, which by the way is 80, 85. Now but for many of the people that are watching this video could easily be 100.

And so think of how many resources it takes to be alive for one year. And now think about how many resources it takes to be alive for all of those years that you're hoping to have a bad-ass granny future retirement. And so because it is such a big savings goal, my recommendation is to-- any year that you can-- and if you have years that you can't, it's OK.

Nobody's perfect. But in every year that you can, try to bake it into your financial plan. Because as scary as this sounds, a retirement may cost more than a house.

That is very true. Also, I feel like an interesting contrast between-- so most people-- I don't know. It's tough to use words like "most." But for many, many people the long term value proposition of owning a home will make financial sense, right?

Because you have to live somewhere. And you can't live in a brokerage account-- yet. So, obviously, buying the home does, to some extent, offset the cost that would otherwise be represented in rent.

However, I think that for our generation, so many of us grew up with this really hard-core messaging around ownership, that-- I hate to say it-- is like A, no longer overly based in our current economic market or pegged to wages. But also for many people, it literally doesn't make sense financially. There are many, many housing markets in which buying a home-- and also just many life circumstances-- where buying a home over time is not better than renting.

People lose money on homes all the time. And also keep in mind, in this crazy market we're seeing where people are outbidding each other by 100 grand or more to get into a home, there is a level of emotion, and nostalgia, and all of these other factors that go into a home buying purchase that luckily investing is kind of free from. It's just the numbers.

And, in some ways, I think that can be liberating for people. Yeah. I absolutely love that.

And I never want to tell somebody that they shouldn't buy a home, especially because we have seen it be such a powerful tool for intergenerational growth. Oh, yeah. And so that's something that, of course, not everybody has had access to in this country.

And so I don't want to deter anybody from doing it. I just-- it makes my teeth itch to think that somebody would have that be their only investment. Because here's the thing.

Only having a house and having nothing to live off of in retirement could destine you to poverty. Having no house but having a really robust retirement savings is not going to leave you in that same position. 100%. And also, there are ways to outperform the average appreciation of a home in the US.

I think it's like 3% or something on average year over year. And there are markets where that's higher. And there are ways you can game that system.

And we recently did an event with Sarah of gobudgetgirl, who has really made it work for her. And she's actively making passive income off of her home now. But it's also important to remember that if you're in your home over the course of 10 years, 15 years, which is the minimum amount that many people need to be in their home for it to become a positive investment, who the hell knows what's going to happen to that market?

Like even if you're a really, really savvy real estate person, you really don't know what's going to be happening on that street of that city. Whereas when you're investing broadly in the market, you're talking about really consistent, if slow, average returns. Yeah, absolutely.

And that 3% figure is, what is the house worth now versus what is it worth next year? And we see growth. But that doesn't account for the cost that you have to spend to get that house.

And so mortgage interest is the least of it, right? I mean, what happens when you need a new roof? And so it's a little bit-- it's not always quite right when you hear somebody say like, oh, I made $50,000 off the sale of my house.

Well, did you account for everything that it cost you to get that house? I had a really-- I will be very vague with this, because this is not to put you on blast. I love you.

But I recently had a conversation with a loved one where they were talking about the amount of money that they made off of the sale of a home. And when you actually broke it down, they still made a little money but not very much. And the thing is that I genuinely don't think that people-- because we're so used to thinking of home buying as a universally good investment-- I don't think that most people really take into account all that it costs them to own and then sell a home.

Right. Like we were definitely fed the like-- well, first of all, grandma paid for her house with a roll of nickels. She really did.

Like, every boomer started working sweeping the floors at a movie theater and is now the CEO of AMC. And they bought a home in 1973 for $14. And then they sold it in 2005 for a million.

And then they told us to take out student loans and then they got mad at us for taking out student loans. I just-- listen-- We could devolve into this. This is a boomer safe space.

You guys are welcome here if you're one of the good ones. But hold your brethren to account. Because they really did a number on the economy.

So when it comes to people who want to get started investing from zero-- zero, zero, zero-- what is the very first step they take? Learn what stocks and bonds are. Then learn what funds are.

And when you're feeling ready, you open up an account first. And so decide whether you want that to be retirement account or a regular brokerage account. Again, like a Roth IRA is a great starter retirement account if you qualify.

So open up a Roth IRA. Fund it with cash. And then use that cash to purchase an investment like an index fund that invests in the total US stock market.

Do something like that. Or, like we said, use one of the robo advisors. I actually disagree.

Do you know what I think the best first step is? Attending our Intentional Wealth Summit on November 12 featuring Amanda Holden as keynote speaker. And also to give yourself a little extra prep, attend the completely free, no excuses Wealth Building Prep Class on Tuesday, November 9.

In the evening, I'll be hosting that. Come. Learn.

Get all of your questions answered. Nothing too basic. It is a friendly space.

And it's also-- we're going to be talking about all of the different aspects of wealth building with, of course, savvy investing being a cornerstone of that. Amanda, thank you so much for your time. Thank you for having me.

I love TFD. We love Amanda Holden, a.k.a. Dumpster Doggy.

Where can people go to see more of what you do? Just find me on Instagram @dumpster.doggy. I'll be there.

Dumpster dot doggy. All right, guys. As always, thank you for watching.

And don't forget to hit the subscribe button and to come back every Monday, Tuesday, and Thursday for new and awesome videos. Bye.