Financial Fluency Episode #14: Investing for Beginners

Today is about investing for beginners, and I include myself in that, because although I have had investment accounts for my retirement for some time, I still consider myself a beginner when it comes to investing.

You can listen in or read below and Tweet it out here

Here’s how I see it. For the simple fact of interest rates and inflation, unless we’re investing something for the future in some way, we’re really losing our buying power year by year as we go through life. Because of that, I do think that having an amount of money in tax advantaged investment accounts of some kind is really important for everyone’s future.

I’ve never had the kinds of jobs that were attached to 401ks or included employee investment plans, so I didn’t actually start saving for my retirement until I was 30. When I was 30 I put on my list a ‘to do’ that said, “open IRA”. It sat there for most of a year because I just wasn’t sure what to do. I got on the internet, I read a few books, I searched around and I was overwhelmed with analysis paralysis.

I kept thinking,

I need to learn more!

The problem with that is while it is good to learn more and good to get an idea of

  • What you want to invest in
  • What’s important to you and
  • Why you want to do it

there’s also a point where you just need to get started. I’m so happy that nowadays we have some new platforms we can look at to do just that.

The truth is, with losing money over time to inflation and to interest in terms of credit cards and so on, we need to counteract that with getting some gains somewhere. My advice – and I am not a financial planner or a CPA, which means I’m not going to tell you to buy any particular stocks – is to open an IRA.

Your two basic kinds of IRA accounts are the traditional IRA and the Roth IRA. If you go to somewhere like Vanguard – which I do personally like and recommend – you can open either a Roth or a traditional IRA account.

OK, So What’s The Difference?

Short answer? The difference between the two is the way that tax is figured out and also the income cap.

Roth IRA

With a Roth IRA you use after tax dollars, meaning you pay taxes first, but you invest that after tax money and it goes completely tax free, and you can take out as much money as you need on the other end without paying any more taxes on that.

That’s really exciting when you look at the idea that taxes tend to go up rather than down, and also if you look at the idea that nowadays part of lot of people’s retirement plan is to continue to have some kind of ongoing income throughout their life, either through investment properties or ongoing residual income.

A lot of us look into the future and it looks a little grim in terms of being able to retire in the way that we used to think of retirement, and by that I mean sitting on a beach somewhere or golfing or just having enough money to not need any supplemental income in our old age.

Saving the amount of principal that we need to live off for the extended lifespan that we all now have is pretty daunting.

If you think you will have some kind of ongoing income, there will still be some income tax in your old age. If you can offset some of that with a Roth IRA, it’s a great idea.

Traditional IRA

The other kind of IRA is a traditional IRA which means that you save on taxes right now.

You put money in there and it saves you on your tax bill this year which is pretty exciting if you need those tax savings. What it also means is that on the other end you will be paying taxes as you take money out.

You’ll have taxes on your gains and because you put in money pre-tax, you will also have taxes on the money you originally put in. It’s a tax advantaged wrapper, and within that wrapper you can then invest in all kinds of different things.

Income Caps

Another difference between the two different types of IRAs is that Roth IRAs do have income caps both for individuals and couples, so it is worth checking out each year what that cap is. It changes year by year like the amount you can invest and I believe it was around $5500 last year.

We have actually switched to doing a solo 401k for ourselves now because we’re able to contribute both as employer and employee, but again that’s slightly more advanced once you’ve been doing it for a while and you are, like us, trying to make up for some lost time of not contributing when I was younger.

Where To Begin

For beginners, if you’ve done nothing in the past, I totally recommend looking at a low fee index fund which Vanguard has lots of. Other companies do as well, but I tend to recommend Vanguard because it’s very simple, they were the first passively managed index funds that existed, and they’ve continued to do a really good job. They also run the business as a non-profit, which means that they are not paying third party fees.

All of the funds that you buy from Vanguard are Vanguard funds, there are no kickbacks for them selling more expensive products and it’s very straightforward and simple. I like the interface, the website’s easy to understand and you can always call or chat and get information from somebody there.

However, in order to start with somewhere like Vanguard, you do usually need a thousand dollar minimum. It’s great if you can max out your contribution every year which will change slightly year by year.

For self-employed people there are also a few other options like SEPs and solo Roth IRAs that you can look at as well.

For beginners I’m going to move onto these new platforms where you don’t need to have as much as a thousand dollars saved up to get started. Two of my favorites are Betterment and Acorns.

Betterment does allow you still to use this tax advantaged wrapper, so if you want to start an account and have it as an IRA, you can do that with very small amounts of money, such a ten dollar a month recurring transfer from your checking or savings account. The more you put in, the better and the more you’ll get set aside over time, but there is no minimum.

Acorns does not have IRAs at this time, however the Acorns strategy is to round up from your purchases. You hook up the Acorns account to a checking account that you’re already making purchases out of, and if you buy something for two dollars and 50 cents, it will grab that 50 cents leftover, make your purchase three dollars, and that 50 cents is going to go into the account where it can be invested. Cool, right?

Once it’s In, it’s In

With all of these options, these are not things that you want to put money into that you’re going to need in the short term, especially for the retirement accounts, the IRAs. Putting money in there means it’s staying in there. If you pull it out early, there are tax consequences, there are fees, it’s much worse than putting it into a savings account and pulling it back out.

So you need to be serious about your commitment to leaving this money alone, and even in Acorns – which does not have the tax advantages or the tax consequences for pulling it out – there are trading fees involved. This is investing, this is not just savings.

You will get the advantages of investing by having higher returns than a savings account, but it also means that there are some fees involved, particularly if you put money in and pull it out within a year.

There are slightly different tax consequences to different types of trading when it comes to investing. Because so many people do this sort of day trading where they’re really quickly buying and selling different things, that has different tax consequences than the buy and hold. If you buy and hold for more than a year, you’re taxed at a different year than if you buy and sell within the same year.

My Advice

My advice to anyone looking at all of these things is that this is money for your future.

This is you buying yourself some nice things and some security in your old age.

This is something your future self will definitely thank you for! Look into this really seriously. I’m going to leave it at just these first three companies that I talked about because I think that’s a really good start. Take a look at Vanguard, take a look at Betterment and take a look at Acorns and see what you think.

How You Can Get The Minimum Investment More Quickly

If you want some time to save up towards a Vanguard account and are having trouble getting that thousand dollars together, another great option that I want to bring up is Digit. I talked about this before in an episode on savings and I was just looking at my own Digit account again the other day and I am really impressed with how much they have been able to pull out of my accounts without really feeling much pain from it.

I can see the transfers go out, but it’s not been large amounts and it built up pretty quickly. I have about three thousand dollars in there from last summer and it’s worked really well.

If you want to save up enough to get a Vanguard account instead of going with Betterment or Acorns, you can open a Digit account (this is my invite a friend account, so if you use it and open an account we’ll both get a little gift!).

It studies your spending habits, and decides when to pull out these small amounts. It does have an overdraft guarantee, so there’s a little bit of extra added security, plus it can get you to that thousand dollars where you can start really investing more towards the future.

Over To You

I hope that this will encourage you to start saving towards the future, especially if you can do a tax advantaged account. Sometimes people are really surprised by how much they save in taxes by putting away money into their funds. It’s not a one for one, or anything, it’s not like you get ten thousand dollars off your tax bill by putting ten thousand dollars into a tax advantaged savings account, but it might be more like you get 7500 off your tax bill by putting ten or 11 thousand into this savings account.

You don’t have it to spend now, it’s money coming out of what you make this year, but you have it for the future, and you’re going to want that in the future.

I highly recommend that you sit down, take a look at this, think about your retirement accounts and think about what your goals are, how much you want to have. There are some great calculators for this at, and Vanguard has their own calculators as well.

You can put in how much you want to have available to you and see what kind of accumulation you’ll need to get in terms of principal to live off that amount in retirement. You can compare that with social security income, you can pair that with other streams of income if you have any or are planning any, but it’s great to take a look and think about what kind of lifestyle you want in your old age.

None of us want to be very old and very broke, so this is the time to think about it right now. Tweet That!

Thank you so much for listening.

If you enjoyed this episode you can subscribe to Financial Fluency here at iTunes.

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Financial Fluency Episode #6: Changing Your Money Story with Danetha Doe

So this episode I’m chatting with the lovely Danetha Doe about how one can change their money story. I’ve been on her show and now here she is on mine! I love the comradery of the online world for this.

There are whole communities supporting each other who would NEVER meet in the “real world”!

You can listen in here:

A Real Life Example

Danetha has such an interesting story including cheer-leading in the NFL, starting a business, going broke and bouncing back from that. She really has changed her money story!

And, it just shows that we teach what we most need to learn (for me, it’s definitely organisational systems!).

Danetha and I both agree that budgeting is NOT always positive – one the things that Danetha says which I LOVE is:

Money is here to take care of ME. Not pay bills. Not take care of my friends.

Danetha gives us nuts and bolts financial advice as well as talking about the relationship we have with money. These things together are the key to having real financial fluency!

Thank you so much for listening to this episode, I really appreciate you being here. If you like it, please subscribe and join me every week. Thank you.

Available here on iTunes

Links We Mention

Ramit Sethi and automating finances

Kate Northrup’s idea changing book Money: A Love Story

AARP Foundation Tax Aide where you can get help with your taxes at public libraries in the US

Danetha Doe Bio Pic

Danetha Doe is a business strategist and author of the Simple Guide to Accounting & Financial Strategy for New Entrepreneurs and creator of the self-guided Bookkeeping 101 course.

Selected as one of the Top 40 under 40 accounting professionals by CPA Practice Advisor in 2015, Danetha was featured on Huffington Post Live with Suze Orman and named a “business influencer and next-generation accountant” by Quickbooks and Xero in 2014.

A former NFL Cheerleader, she loves to dance and drink champagne.


Financial Fluency Episode #5: Making A List And Checking It Twice

Hi and welcome to another episode of Financial Fluency. This episode I’m talking to you about holiday spending and sharing some tips on how you can keep in control of your finances during crazy season!

You can listen in below and Tweet it out here >>> Tweet: Check out how to stay on top of holiday spending with @Jturrell

If there were ever a time of year created with the specific intention of getting us all to consume and spend more than we would at any other time of the year, it is surely the Holiday Season!.

Benjamin Franklin supposedly said,

“Failing to plan is planning to fail”

So Let’s do Some Holiday Planning!

First up I want to talk to you about presents. Now, this is something we all know that we have to buy, and some of us save up ahead of time, but often we get caught out.

I know we’re already into the holiday season, but wherever you’re at in your process of getting ready for the holidays, sit down and make a list. Make a list of who you’re buying the presents for, how much you want to spend in total, then go through the list and figure out how much you want to spend on each person.

Once you have that done, take a look at how much you’re spending on each person. Does that add up to more than the total amount you want to spend? If so, you need to adjust one of those things.

You can do it either way. You can either realize you’re going to spend more and try to budget for that with the presents, or reduce the amount you’re spending on each person. Once you have that figured out, then I would say go and look for the presents.

And Don’t Forget Those Outside the Family

Think about remembering clients, co-workers, vendors or other business associates that you might want to buy something small for.

Top Tip: I think it’s a great idea to have a sort of go to present. Not that you want to get everyone exactly the same thing but for people who don’t know each other! If there’s something small and thoughtful (and extra points for relatively inexpensive) that you can give to them – especially if they’ll think of you when they see it or open it or eat it – it can save you a ton of time.

Another thing you’ll want to put on this list is holiday tipping depending on where you live and what kind of services you get.

Think about who and how much you want to tip them for. I know in New York this is a big thing, and I’ve never lived in New York, I’ve never lived somewhere with doormen and things like that, so if you do do holiday tipping, make sure you put that into this list so you can get it budgeted in for the entire overall holiday budget.

Once you have those lists, you can start looking at the presents.

Modern Day Santa Lists

I love Amazon Wish List and in our family several of us put things that we want on Amazon Wish List. It’s just like a modern day list for Santa! It saves time and can be really helpful in making sure you’re spending on things that people actually want.

Because I’ve been doing so many audible books this year, I actually asked that people give me some audible gift certificates so I can get more audible books to listen to.

Using Pinterest boards is another great idea, and you can either make private boards where you pin things that you’re thinking about getting different people. Doing that also allows you then to look at the products that you want and then go and shop for the best online deal.

I’m a pretty big online shopper these days, and I know lots of people go in person to do Black Friday shopping and things like that, but I find the atmosphere during those big sales a little too much for me, especially when I’m trying to enjoy my time around the holidays.

If you are an online shopper that gives you more time to do the comparison shopping, and there are a lot of sites that can help you do that.

A few of the most popular comparison sites are: Google Shopping, PriceGrabber and so once you have that figured out, you can check it back with your list of how much you want to spend on different people and how much you want to spend overall. This will really help you get that plan and overview of how much you’re going to spend on everything.

Tis Also The Season to Party

Once we have the presents out of the way, some other things you need to think about are parties and events.

If you’re going to other people’s parties or events, what are you going to bring and what are you going to wear?

If you’re hosting the event yourself, how much are you going to spend on food, decorations and different things?

Try to plan that out, write those down, and then in order to pay for all of those things, I think it’s a great idea to go and do a bit of hunting for hidden cash in your home.

Hidden Treasure

A great way to do that is to look for gift cards. Do you have any gift cards sitting around that you never used, maybe a gift card to a store that you don’t really frequent, but you’ve kept because you thought, someday I’ll use it? Can you use that now to buy any of these gifts or to go towards food or decoration for parties?

Another thing you can do is to check your rewards points on your different cards. If you can use these towards travel – if you’re travelling – that’s probably usually the best way to do it. If not, can you use any of them towards gifts?

The rate that you get on a lot of those cards isn’t fantastic for buying gifts, but if you want to save money right now and there are some gifts that fall into the range that you want for the people that you want, that’s the way to do it without stretching your budget too far putting too much on credit cards.

Make Way for the New (and Earn from the Old)

Another thing you can do is declutter your home to make room for the tree and the new presents that are coming, and see if you can sell any of the stuff you’ve decluttered on eBay or different websites. You can check out a great guide to doing that here.

Another thing to look at is old electronics sitting around. Do you have any that you can either sell online or trade in? Some great sites are Gazelle for mobile devices and GameStop for video games.

Target and Best Buy also do trade ins nowadays, so if you kept the last phone from your most recent upgrade, you can possibly trade that in towards something else, maybe something from the electronic department, or you may be able to get gift cards.

Now it’s Up To You

These are a few ideas for first ways to plan out how much you’re going to spend, and then to try and find some hidden cash around to go towards that so it won’t stretch your budget quite as much as we’re used to having it stretched over the holidays.

I feel so bad when I talk to people about that January 1st holiday hangover in terms of their finances. When people say they look at their credit cards and see how much they put on them over the holidays. And then you’re starting out the New Year – a time for making all those resolutions, starting afresh and making new plans – but you have all this extra debt to pay off for quite a few months into the New Year.

If any of these tips help you to have less of a holiday hangover in terms of debt, I would be so pleased about that. Tweet these tips! >>> Tweet these tips! #holidayspending

Another thing that I think is great to do around this time of year, especially right after the holidays, is to start planning out how much you want to spend next year on the holidays.

I suggest having a savings account where you put just a little bit of money each month, however much you need to put away each month to make it come to the full amount you want by the holidays.

So maybe you want a thousand extra dollars? Divide that by 12 and put that much away each month going forward so that next year at the holidays you won’t have to put things on credit cards and it won’t feel like as big of a stretch for you.

Another way of doing this is to use something like Digit to help you save without even realising it (more about using tech to help with your finances here.)

So there you have it, that is my Make The List And Check It Twice podcast episode, I hope it was helpful to you. You can Tweet out my podcast here: Tweet: Check out how to stay on top of holiday spending with @Jturrell and share the love!

If you liked it, please subscribe to the channel and I would love to hear more from you. You can email me at I read all my emails personally and respond to as many as I possibly can.

Thank you, and happy holidays.

Also available on iTunes