With a wide range of investment types and varying amounts you can invest, figuring out where you belong in the investment world can be challenging. Let’s dive into the different investment scenarios and tools available, so you better discover how your financial goals fit in the vast investment landscape.
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Transcript:
(00:08) all right welcome to the true wealth radio show I’m your host Dave Littlejohn in studio today with me Matt Dickson and this is of course the greatest Tuesday you’ve had all week are you ready stoked to be here um and so we have a delightfully Loosely scripted show today yeah but I think this may be one of the topics that is of highest interest to our listeners perhaps ever in the history of topics I was going to go as far as to say David do you realize this might be the best show we ever do without a script it’s possible it’s just
(00:44) the best show that’s ever happened ever yep have we oversold it yet no we’re we’re under selling it yeah yeah let’s go for it look we got to thinking about what is something that we could talk about that would be really useful for investors right in general and you know we talk about all kinds of stuff the the reality is right now Market’s really difficult to handicap you don’t know which way it’s headed everyone trying to figure it out and if someone knew well they’d be a billionaire right so that’s
(01:14) the the the first issue here markets tough to handicap then we talked about the news cycle and yeah it’s just a bunch of everybody should hate everybody else per the usual there so then we got to thinking well how could we provide some value to our listeners yeah okay and uh we we started asking the question so you know there’s a bunch of things that we take for granted as Financial professionals because we assume people know stuff that they don’t actually know maybe yeah it may be that and so we
(01:47) thought about it so well what if we were to do a show that was really built to say what is available to investors at various stages of investment from like your brand I knew you’ve never done this I don’t even know how it works all the way up to hey we’ve got a lot going on here where should I be headed with this right and so I think today what we’re going to do is attempt to help investors figure out where am I and what is available to me I want to say what options are available to me but when I
(02:22) say options option is an actual type of investment we kind of touch on like what helping people identify what they need so that they know like not only what’s available but what do I kind of need given my circumstance no I mean like why would we be that useful that seem like all right maybe he not asking too much yeah and I you know the TR the tricky part we can’t give personalized investment advice there’s a bunch of liability associated with that but what we can do is talk about the broader circumstance and what I want our
(02:52) listeners to be able to do today like just think about where you’re at and and maybe it’s not just for you maybe this is something that you can help uh somebody else right so maybe you’re already an investor maybe you’re a parent or a grandparent but you want to help a kid or a grandkid get started and you’re thinking well how do we do that okay so I’m going to start out with the very most basic here uh let’s talk about what are the most common Investments that people buy and and then because the
(03:20) show’s going to kind of orbit around those a little bit okay today we’re not really talking about real estate a whole lot okay I think that that’s certainly a worthy invest but I don’t want to talk about the Exotic you’re talking more like what do people actually go out of their way to invest in that’s not like well I have to own a home because I need someplace to sleep you’re talking like actually going out to invest and I’m also talking about what might you own inside of a retirement plan so there are
(03:48) some things that we could talk about and I’m just going to sort of glance over them right we’re not going to talk about investing inside of life insurance policies today nope too weird okay we’re not going to talk about buying art today we’re not going to talk about collectible items like maybe you want to buy classic cars and you know fix them up and flip them okay that these are all real things by the way but that’s not the the flex today if you will right okay so what I want to talk about first
(04:17) and foremost is some of the the standard things so stocks and bonds mhm first of all we’re get to take what are they and then we can talk about how does somebody buy them okay so first can you tell me what is a stock and what is a bond so a stock is where you are going out and you are buying a share or two or three or four or five however many you want but you’re actually getting a partial ownership in that company that you are buying that stock in so it gives you the ability to vote as a shareholder in the
(04:52) company so if you own one share you get one vote because you’re a part owner right if there’s a million shares outstanding you own one millionth of the company sometimes stocks are referred to as equities mhm because just like the equity is the portion of a home when you’re when you you have a mortgage the part that belongs to you is the equity the part that you’re still paying for that’s the mortgage but the equity is the ownership stake right and then you asked the question kind of what is a
(05:22) bond well on the flip side you could go get a bond where you are in essence loaning your money out to uh you know it could be the government if it’s a treasuries or you could be getting a bond through a corporation where you’re letting that Corporation borrow your money for a certain period of time and then they’re going to pay you some interest to borrow that money and then they’re going to return it to you at a specified date in the future right so very simply stocks are ownership y bonds are loans y
(05:57) there’s terminology around both of them but we don’t want to over complicate this today here’s there is a challenge right like if you wanted to go out I’m just going to try to pull up the price of something like real time here so I’m looking at the price of um Microsoft okay we talk about Microsoft how much do you think a share of Microsoft is will cost you to purchase oh man I’m going to guess it somewhere around $230 that’s over 400 is it up that yeah yeah $414 And1 as of today’s close I noticed that
(06:29) Intel today you could buy a share of that for around $20 right a little over 20 bucks for a share of Intel and this is relevant right because if you and we’re going to talk about how the marketplace is changing and there’s more and more options for investors today than there have been in a long time perhaps the most options I’ve ever seen in my career for investors right I’ve been doing this for 25ish years now right and so we’re seeing tremendous access okay it used to be if you didn’t
(06:57) have you need $414 to buy one share Microsoft well if you only had $100 you can’t own Microsoft right okay so it used to be if you wanted to own Microsoft you could buy it through a mutual fund can you tell me about mutual funds for a second yeah it’s kind of a fancy way of saying this mutual fund group is going to go buy a bunch of different stocks from a bunch of different companies and then they’re going to value that basket of Holdings and let you buy shares of that batch of Holdings at a certain price so
(07:35) you might be able to buy one share of the mutual fund and that mutual fund owns you know 500,000 shares of Microsoft 200,000 shares of apple and so you’re getting exposure to it but in fractional little tiny pieces yeah it’s think of it as sharing in a pot of Investments with other investors so a company is formed that investment company’s purpose is to pool investor monies together and then manage them to build a shared portfolio amongst everybody that’s contributed and so everybody gets proportion and ownership
(08:08) to what they’ve contributed and when money wants to go into the fund you give it to the company and then they put it to work when you want to take money out you go back to the company and redeem it from them and they will cash you out through either the new money coming in from new buyers or from the uh shares bought or sold in the fund right but they’re going to manage this influx or outflux of investors and their money and invested on behalf of the group okay there’s a cost associated with doing
(08:36) that okay but but that’s how you would access things is through a mutual fund that is still a perfectly viable thing to do to this day that is available right um we’ve seen some Evolution we other instruments have arrived now things like exchange traded funds they have similarities to mutual funds and they have some differences they trade on an exchange so you don’t necessarily have to go back to the fund company that created the Fund in order to make contributions or distributions right you may be able to Simply sell the unit on
(09:06) an exchange and another investor will buy the unit directly from you and then you take the money and you go do what you need to do okay so an exchange traded fund is Diversified like a mutual fund is it’s a whole portfolio but it trades like an individual stock might trade now I mean that could be kind of cool especially because here’s one thing to think about the mutual fund it’s got they analyze the value of that once a day whereas in an ETF you could sell that and have it execute almost instantly yeah the the the downside of a
(09:43) mutual fund is that because there’s money coming and going all the time they only let you in or out at the end of the day so they wait for all of the trades to settle and then they kind of balance them out and the final pricing is what you get and it’s a little blind you won’t know the price until after the market is closed so you submit your order and you wait and see what the final price is going to be that would really suck if the market melted down at the end of the day and then it sells it for you at the end once they total the
(10:08) value and you’re like gosh dang it I was hoping to get a little bit more right and so there that is one of the dangers is that there’s a certain amount of uh blind uh investing it’s it’s nominal typically but nevertheless it’s there so uh where do people go to buy these things okay there’s kind of three primary places if you want to buy a stock uh it’s pretty old fashioned but you used to be able to go to the company itself and you could buy shares directly and purchase them or what’s through
(10:36) known as register and transfer so there’s a companies out there that track the ownership of shares in various companies okay you could go to a fund company and buy them through a mutual fund or you can now go to various brokerage organizations and what they do is they create an account that is capable of holding things where they’re tracking the ownership okay and and a brokerage account is probably the most common one that you see from financial institutions mutual funds you often get directly but you may own a brokerage
(11:14) account and not realize it it’s just kind of non-traditional it’s not a brokerage account like You’ think of it’s a holding account or a custodial account and it’s in your 401k right or perhaps you have a government pension or something they hold mutual funds and those mutual funds FS being held in that account well that’s the custodian is who’s holding these various mutual funds and that’s how you get your proportion and ownership and everything interestingly enough you don’t get voting rights in
(11:40) stocks through a mutual fund the fund company votes on your behalf right so you get representative ownership but you don’t get the same you can’t have you get the same voting benefits so um so let’s not get lost on the weeds of the really hypers specifics of investing what we we’re trying to say is investors can get started at smaller Levels by buying into mutual funds or buying lower share prices but there’s also another way to do it and it’s through brokerage accounts and the question is is it with
(12:14) help or do it yourself and there’s a pretty big development that’s happened in the last few years that we need to talk about and you know what it is I would love to know of course and so with our listeners but you have to wait until after this break stick around we’ll be right back I’m Dave Little John and mad Dix got true wealth on news radio 939 FM at 1240 kqen hey welcome back to the true wealth radio show I’m your host Dave Littlejohn in studio today with me Matt Dickson we are answering the question
(12:42) today uh or attempting to answer the question um how does investor gets started and if you already started what are the options that uh are are available to you and it’s really geared a little bit more towards the DIY investor today um if you want to catch up on it grab our podcast right so at our website at Little John fs.
(13:02) com and you look under the educate Tab and you can catch this podcast I’ll post tomorrow so this question David like where do you start right you asked that and I want to ask you a question would you say that you’ve kind of noticed a trend where the DIY investor like that’s become a more popular thing in recent times because from my seat I look at it and I’m like I I witnessed Robin Hood as an example um really kind of blow up and become this really big thing during Co where a lot of people that had never
(13:34) touched investments before were like hey there’s this thing where I can go trade and it’s not going to cost me anything I’m going to go do it and so they got their covid stimulus money and they started everyone was a Trader overnight right um it was kind of this revolution um do you kind of still see that as like a a trend where people are kind of trying to do it themselves more I love this question because uh there’s some things embedded in it I can’t answer the question I’m just going to come right
(14:03) like I don’t know how to answer it but I love the way you’re asking the question because it makes me want to ask sort of another one which is um I can tell you what I think just because something is loud does that make it true yeah right because I think sometimes what we hear like the loud voice is everybody’s doing Robin Hood now but I don’t know that that makes it true I think it makes it newsworthy I think a lot of people were I think it was like one of those fads right like you see things swing into popularity
(14:35) where it’s like well Stanley Cups right like everyone wanted a Stanley Cup for the holiday season are is everyone still buying them or was that just kind of a trend that was here and gone yeah I I don’t know the answer but let’s get back to the original question um you may have seen a I think you did see a real surgeon popularity um we saw account statistics for how many accounts Robin Hood was opening I didn’t see as many statistics for how much how many assets were being managed by Robin Hood were
(15:04) assets going out or they coming in because here’s the thing we were talking at the last segment about how people could buy mutual funds but we didn’t talk about this sort of emerging Trend right now where you can you can access like if Microsoft’s a $400 plus dollar stock today M but you could buy a fraction of a share of Microsoft now through certain trading platforms Robin Hood was a great example you don’t have to buy a whole share of Microsoft anymore right you can buy a fraction of a share you don’t get to vote but it
(15:34) sort of still looks a lot like a mutual fund you didn’t get to vote there either but Robin Hood would allow you to buy a fraction of a share and what made Robin Hood really interesting is I don’t think there was a trading cost for it no there wasn’t right and if you ask like well how do they do that well whatever cash is in the account that’s staying in their banking system and it’s being lent out they’re making money on the spread on their cash but it’s very interesting that I think they were selling orders
(16:00) too well they were selling order flow which is the data they were selling information to hedge funds so that the hedge funds could see where the money was moving in their system right right I think Citadel was one of the big ones that was involved in that at the time U I think so anyway try not to you know you almost think that would be legal like in a way like you think like somehow that that should be because it seems like it to me because I mean it’s probably disclosed somewhere in the operating paperwork and people just
(16:25) clicked yes to open the account and didn’t look at it um it’s sort of like hey if you want to use your Apple phone right your iPhone look at the 20 pages of disclosure yeah cuz you read every word of it right yeah I mean you’re just like well I want to use the phone so I have to deal with this because it’s an all or nothing right like either you accept it and use the phone you don’t accept it and you don’t use the phone it’s like oh that’s interesting that I bought the phone and then there’s these terms that
(16:53) if I want to keep using it without it becoming a paper weight I must accept them right so uh but I think we see that in lots of places my larger point is put all the other things aside if you could buy a fraction of you could buy $5 of Microsoft mhm well then now the investment size isn’t the barrier to entry right so you could open an account at Robin Hood with I don’t know $50 $0000 and start trading stocks and I think a lot of people did that and a lot of people did it with uh low low risk and they could take big bets and if they
(17:32) could figure out how to make something work they would do so there was even a few times where there were glitches in the system and people were able to do things like buy massive options where you weren’t supposed to they were like leveraging up 100 to one and the thing is if they were wrong what was Robin Hood going to do well your account’s at zero well you need to bring us $100,000 and they go yeah let me know how that works out yeah right they could afford to just be structurally bankrupt and there was no way to collect but if they
(18:00) were right they got the money so they could take huge bets well the problem was when Robin Hood was accurate and people were jumping in and starting to trade options and with leverage mhm there was stories of people who went in there and lost so much money money they didn’t even have and then when it was you know like hey you got to pay this up people were killing themselves like that was a headline news article like uneducated investors jumping into Robin Hood making bad errors and suicides like that was a thing and it was sad yeah
(18:39) well I wasn’t going to go that dark today hey uh but yeah the and incidentally that is a a separate aside for why you might want to still have a pro in your corner is that you know you go out there into the weeds yeah self-inflicted wounds are the worst ones and that’s the most common thing that uh impedes an investor right the number one thing that makes an investor lose money is bad decisions and we’re not talking about we picked the wrong stock it’s like well we picked the stock but we couldn’t be patient or we got and and so
(19:13) you know we sold with terrible timing we got scared and bailed at the bottom we got greedy and bought at the top I was going to say greed over fundamental investing right like you you lose your track you get greedy yeah and so that’s just that’s a huge issue is that the emotional swings are too much and so you know a lot of people really fail out like that’s why trading is so so difficult to do uh they’ve done some studies and essentially you’re better off being a sociopath to trade right
(19:40) like really disassociated with emotion you don’t get the same ups and downs when you see losses and gains that a typical human response would even the best investor has that issue where it’s like but I really like this company or this is something I’m like fond of so I kind of tend to gravitate towards that area that’s the thing it’s um you know you need a pretty disassociated emotional response it’s fancy way of saying like your going kill you so yeah uh but anyway back to what can
(20:10) you do right Robin Hood’s an option now you really can’t get started at low dollar figures you can start with 50 bucks you don’t have to put 50 bucks a month in it used to be that with mutual funds you could say well if you do like $25 a month and set up a consistent automatic payment every month they’ let you stay in it they’d let you in right and so they’d set up a you know what they call call an automatic reinvestment program right so that would or systematic investment program right so
(20:34) that would mean you’d keep put money in you could do that um now you’ve got all these other options so um I want to talk a little bit about the spread of options just getting started right mutual funds are one of them right brokerage accounts like Robin Hood with fractional trading are one of them there’s a there’s another one out there called Robo advisors okay and this you can kind of get it in a similar fashion through mutual funds as well but it’s the idea that for small figures you can buy into
(21:00) an entire Investment Portfolio right you see this in retirement plans all the time with what’s known as Target date funds oh yeah right I mean essentially these are pre-built strategies and they’re fully Diversified and they’re they’re risk managed so that uh they they hit a risk Target um a Target date fund as that fund gets closer to its Target date will automatically shift to become more conservative as it gets uh closer and closer to its maturity date a Target risk strategy will Target a specific
(21:32) investment objective on a risk basis so oh it’s aggressive investment it’s going to stay aggressive and it’s going to make modifications but stay in that aggressive category right uh and so the and the robo advisor is is like well we’ll go buy the the mutual funds and automatically reinvest for you and keep them sort of in in Balance those are really expanded there’s a whole bunch of them out there I was just trying to Force AI to tell me how many do-it-yourself brokerage accounts were out there and it just
(22:04) didn’t want to give me a number no right and it’s like well you know there’s like five or six of them here and said no there how many are there dozens well how many dozens um I don’t know somewhere between 24 and 60 like you’re kidding right like so name 24 gets to 12 but you better name me 12 more gets to there name me 12 more it kept going right kept laying into it this is that thing I talked about on a prior episode AI wants to conserve energy it can do it but at what cost and so I think there’s some
(22:35) sort of out now this is just Matt conspiracy the Matt conspiracy but I think there’s some sort of algorithm where when you put in a request for information it’s able to say to itself okay how much energy is it going to take for me to process this and then if it’s over a certain threshold it kind of like dumbs down the answer where it’s like well like you said I can give you 24 it says I’ll give you enough and see if you go away right but the reality is you could use the same energy consumption
(23:06) that it’s going to take to power a house for a day to give me the answer but that’s expensive and so you’re filtering me out I am I’m just laughing cuz so what you’re saying is AI is like a lazy teenager it totally is it’s like do your homework all right here you go no no do your homework fine hey teenager go run five miles I’m going to run five steps and say I’m tired yeah I’m going to go around the corner and see if you watch yeah that’s AI for you all right so um let’s talk about
(23:40) next I mean I relate to where we’re at we’ve talked about you know mutual funds the way in we’ve talked about a little bit about exchange traded funds but that’s not the purpose Today’s Show yeah kind of talk to me a little bit about I we’ve we’ve detailed a little bit of the option set that’s out there but kind of like how does someone look at their own situation and say well maybe maybe I kind of gravitate towards this situation given where I’m at is there like kind of
(24:03) a general broad spectrum of like kind of being able to know where you kind of fit in inside of these different products there kind of is right um I I feel like we could break that apart let’s let’s let’s do this we’re at the point we should probably grab our next break okay when we come back I want to talk about hey let’s paint a picture where you might be and what some of the decisions are that go into selecting the right options that all right stick around we’ll be right back I’m Dave Littlejohn
(24:31) and Matt Dickson got true wealth on news radio 939 FM and 1240 kqen come on Matt you can do it crank it up Crank It Up We’re just joking about it the end of the day and it’s like man I should have had a bigger lunch or something maybe I had too big of a lunch maybe too big yeah you have a whole big bowl of chili and you’re you’re bound to be lethargic oh jeez well I hope to yeah take your time with that chili this is a small room okay hey G we’re uh we’re talking about how or where what what stage uh
(25:04) might an investor be at and trying to I guess we’re really talking to the DIY investor today and what’s available to you at different levels and when you’re just getting started we’ve covered the idea that you know there’s mutual funds and so forth but I want to talk about the nuts nuts and bolts for a minute the things that I wish somebody had explained to me early on like how do I actually buy this thing if I want to own something I don’t even know how to buy it right okay so I’m going to use an
(25:29) example that’s not a recommendation but it’s just a familiar name Vanguard okay if you wanted to buy an S&P 500 index for example Vanguard has both mutual funds and I think they also have an exchange traded fund that will mimic the index right so what you would be able to do is go to vanguard’s web page and again I’m not saying do this but I’m saying this is how you would do it you go to their web page you open an account with them and then you’re going to select what it is that you want to buy
(26:03) to put in that account and then they’re going to connect and you’re going to have to put money in you’re going to have to send money to Vanguard and they’re going to take that money and exchange it for share units in your account so they’re going to put money in the account and then you’re going to take that money and they’re going to buy the mutual fund and then you’re going to get a statement that says I now have an account that has this money in it right and this much of my index that I
(26:28) purchased and then there’s a lot of options from there right and and the thing is they have a huge menu Vanguard has dozens and dozens of different mutual funds and so it’s a huge menu to choose from if you didn’t like Vanguard you could do the same thing by going to Fidelity different company and you’d be opening an account with Fidelity in order to buy these things and so the idea is you’re opening an account with the mutual fund company and then you’re buying whatever is on their menu of
(26:57) options right if you want mutual funds from different companies you have one of two options open accounts with each different place and then you have a whole bunch of different accounts or you open One account that’s a brokerage account and that’s like a holding tank and then you use that brokerage account to then buy from all of the other mutual funds and then you can get one account that can hold things from Fidelity it can hold things from Vanguard it can hold things from all over the place and if you’re going to do that so that’s
(27:28) sort of what Robin Hood is Robin Hood is a brokerage account or a custodian that allows you to use their system to go and buy different things so you open an account with Robin Hood you put money in the account and they do that by linking to your bank and just sweeping money out and it’s like a digital transfer you know click click money arrives in the account and then that money is used to purchase things right okay and the things are described by they all have their own sort of nickname or their symbol when you’re buying it so how much
(27:57) how many shares how many dollars what’s the symbol I’m looking for and all these different places have tutorials for how to do this but that’s mechanically what you do you open an account you fund the account you use those funds to buy the assets that you want to own you can open different types of accounts and that’s how the taxes are going to be treated if it’s a retirement plan if it’s a non-retirement plan and so forth um where you open E account there’s lots of different places to
(28:26) choose from right we’ve talked about Robin Hood we’ve talked now they have brokerage environment Schwab has brokerage environment um etrade a merit trade if that’s I don’t think they’re around anymore I think they got bought by Schwab so I guess one of the questions that someone might have that’s listening is am I having to pay them for this like if I go and open the account and and buy the funds am I having to pay for it or you know should I be paying someone at all it it depends right there
(28:56) there may be fees associated with the account there can be transaction fees okay right when you buy or sell something you can be charged a fee for that not that so there what type of fees are there how could those be paid so you could you could literally be forced to pay something just because you bought into it or because you sold it um what are some other fees that you might come into like if you own a mutual fund that might have a fee just to be in the fund right and so you could pay fees there as well well mutual funds have an OP
(29:28) operating cost right so you don’t really see that it’s debited out of your return right you know if you put $100 in right but you’re still technically paying it you’re just not seeing the money yeah just try not to confuse our listener because you’re not going to see somewhere on your statement oh here’s the fee I paid my mutual fund what you’re going to see is oh when I go to redeem this thing they’re going to take their fee out of it and then give me whatever the dollar figure is afterwards
(29:53) so it’s going to be sort of a an invisible transaction to me but I did pay them well in different mutual funds have different fee structures it could be a front loaded one where you pay a bunch of money up front to get into it one time um well there’s commission structures Associated and so forth and again I I think that our investors are we’re pretty smart you know you you got to know that if you’re going to buy something there may be transaction fees Associated there could be commissions Associated even
(30:19) without a broker just so you’re aware uh you know without without a person associated you could still have fees buying things digitally right there can be they’re they’re called ticket charges right it’s not a commission because commission is a percentage of a transaction right so oh $100 and a 4% commission I have $96 of investment after commission but a ticket charge could be I pay a dollar every time I make a trade right okay well then it doesn’t matter if I spend $10 on the trade or $100 on the trade it cost me a
(30:49) dollar right okay that’s a ticket charge um other times it’s a per share charge uh I think interactive brokers at one time I don’t know what it is now but at one time it used to be half cent per share with um $1 minimum right right so I bought 250 shares then that was going to be a $25 trade right or do25 trade sorry I had to do math well in some places now are charging like a flat monthly fee right in order to have an account with them that it could be I don’t I don’t know I don’t know what
(31:21) they’re but the the usually there there are there can be annual account fees just for keeping the account open and this kind of covers post poage and stuff which is a legal requirement to send you documentation of everything um there can be account closing fees if you close things there can be fees for moving money around right especially if you’re doing it by wire wire transfer fees um can be can be there could be fees for certain assets you buy maybe you’re purchasing a bond Bond may have a different fee than buying a stock or a
(31:48) mutual fund right so you you do need to be aware of the fee schedule associated with the various custodians they are not all created equal NOP okay and so while the concept right hey what’s a car okay well a car has four wheels and you know two to four doors and it’s are you leasing the car well but but we know a car is not a truck mhm okay and we know well what’s the difference between so we know a car is not a truck but then well what’s the difference between a Chevy and a Ford and a Toyota ah which kind of
(32:18) car what features are you getting or not getting right is it a sports car or is it a sedan right and then you know oh well an SUV is not a truck or a car oh good point they’re not all the same no they have similar features like some of the chassis is similar and they do s similar things and then there’s differences mhm and as investors you need to pay attention to those differences right so do you want to talk a little bit then about like how it’s maybe different self-directed where you’re doing it yourself versus where
(32:49) you’re hiring someone else to do it um I suppose we have to now that you set the table that way I mean what do you mean why don’t you since since you brought this up why don’t you share with our listeners um conceptually right I mean it’s the I think the chassis yeah kind of not all that dissimilar between DIY and having somebody else do it but what are some of the things you’re thinking of well I mean when you’re doing it yourself part of what you’re having to do is some research right like
(33:18) or at least you should be I in my opinion you’re not just going to go and blind and say well I’m just going to click a bunch of buttons and buy a random set of things so you kind of having to spend your time figuring out you’re talking about deciding what to purchase yeah there’s a decision factor that goes into it right and I think that stacks on top of the original point of make sure that you’ve got you understand that like what are the costs associated with the chassis you select M right what
(33:45) what custodian or what brokerage firm are you going to use and now you’re talking about and then how are you going to decide what to buy and you’re well the DIY person is now responsible for figuring that out and you might be completely competent in this you know what you’re doing you know it is that you want and you are maybe you’re younger and you’re like hey I’m going to be in this for a long period of time I don’t really feel like I need someone I know what I want and so you’re perfectly
(34:12) fine to just go do that on your own whereas it could be different if you’re maybe say closer to retirement and maybe you are unfamiliar with what these Investments do how they operate and you don’t have the time to figure out what is actually going on with these Investments and there’s just a lot of complexity to your landscape someone who’s just starting out if you’ve got you know $5,000 and you’re going to plan to put $50 a month into something maybe you don’t need someone to you know do
(34:47) the planning portion of your you know your whole picture but maybe you do it really varies so yes I mean when we talk about why DIY versus why have somebody else it’s the the the question comes down to like there’s a lot of things you’re going to be responsible for if it’s DIY um let’s do this I’m looking at the clock let’s grab our last break when we come back what I want to do for everybody is kind of layout here’s some here’s the options here’s the pros here’s the cons of what
(35:31) you’re using but yeah let’s let’s take this last break we’ll stick around we’ll be right back I’m Dave Little John and Matt Dixon you got true wealth on news radio 939 FM at 1240 kqen all right gang welcome back to the true wealth show we got the home stretch here and um we’re talking to the break a little bit about how do we bring this home for everybody that’s been listening today and like really make sense of it and Matt I think you brought up a great point in the last segment where where you know we’re
(35:59) talking about the complexities of n complexity makes it sound really hard right but there’s just there’s variables in picking a custodial environment like if you’re going to if you’re going to do this yourself you got to figure out where am I going to invest and there’s a bunch in the decisions there people are trying to figure out what do I do how do I know what the right option is and that’s that’s just one layer right the next layer that you I think again you laid it out it’s like then you got to go
(36:24) do it yeah and there’s all this stuff involved and and so uh when I think about like like what is the stuff that do-it-yourself or has to be able to or they have to be able to is like what’s the stuff they’re going to be responsible for right and so like you know you talked about there’s research right right um there’s deadlines you have to maintain it too yeah like sometimes I mean some people just set it and forget it but I mean what if you made a new contribution and it wasn’t automatically
(36:57) set up to reinvest and you just and I actually saw that recently with someone they had put for 9 years straight they put all of their money into a retirement account but they never set the investment up and for 9 years it sat in cash it did nothing it was completely uninvested man I saw that months ago yeah nine years I think that is probably the number what was the thing I said at the beginning right what’s the number one thing that impacts investors self-inflicted wounds self-inflicted wounds yeah and that’s one of them and
(37:30) you could see the look on their face they were mortified yeah N9 years they had over $100,000 in that account what if they had just bought an index or like invested in a bond fund like what could they have instead of $100,000 well 9 years it arguably should be double what it was yeah so it was a $100,000 mistake right and this person was 30 something years old yeah and it’s not unrecoverable that’s not the point the but the point is ouch the point is ouch here’s the thing right mistakes are possible
(38:03) professionals make mistakes too but the probability drops I think the issue that I get to and we’re allowed to say this right I’m just going to come right out with it like we’re advocates for working with Pros we are Pros we better be right we better be advocating for that if I’m sit there going like go do it yourself look you can do it yourself will you the question is could you be in business for 12 years if you were completely horrible and made those similar mistakes over and over again no because word of mouth is
(38:32) going to be like hey that guy sucks right and it’s true we we’re in too small a town if you made too many mistakes I mean the word’s going to get out that’s yeah I think that’s kind of the bigger point right like yeah and I think maybe that’s something to consider too all well sure and and again it’s the the issue is not whether or not a financial Pro can pick better Investments than you that that’s the misnomers like somebody thinks well if I go to a pro they should be able to sort
(39:00) of trade and make me gazillions of dollars like no you’re you’re going at this for the wrong reason maybe that advisor is going to keep you from making huge errors that cost you it’s that it’s tax efficiency it’s actually following through and getting things done that’s a huge one right if you don’t get the follow through from your uh adviser that’s a problem right that’s part of what you’re hiring them for so I think those are huge I mean when you were talking about research Matt I mean that
(39:25) often falls under the phraseology of doe deal with right you know what what reason do you have for buying or selling something is there a reason right I mean Beyond just like I don’t know I used the force it felt like the right thing to do well here’s one just kind of example I KN I knew someone that wanted to be an investor but the only thing they were interested in was really really speculative Investments where it’s like oh I heard this thing from this guy that’s a friend of a cousin it’s really
(39:55) going to take off I know it and I’m going to put 10,00 000 at this and so they over concentrated into something they really actually didn’t know a whole lot about and it was just purely a speculation and they kept doing that time and time again and they’re like I’m an investor I’m an investor and I’m like no you’re a Speculator and you’re trying to win the lottery right and there’s a lot of people that have that Lottery mindset that are involved in the stock market I’m not sure where the the
(40:23) reputation that if you go to a stock broker they’re going to just gamble I hear that word way too often oh it’s just gambling it’s just gambling and I’m like well if you’re just making all of your decisions based on some speculation maybe you are a gambler but I don’t think that’s really how these you know bigger firms work where it’s like hey we have liability in this too right like I don’t think people get that well and let’s consider gamble for I mean it’s gambled the same way like if you plant a
(40:54) garden and you put zucchini in the ground right it’s a gamble that you won’t get zucchini next year I mean something could happen and famine or whatever but it’s a pretty good bet that you’re going to get zucchini if you do the things that grow zucchini mhm right I mean it’s it’s not like you plant zucchini and you’re going to get you know tacos right like it’s going to be what you put in there so this idea that the cause and effect are not linked and it’s all just a gamble um I sometimes
(41:25) think that’s actually an excuse that people make it’s like I’m not doing it and I just want to rationalize why I’m not going to do it mhm um they’re scared of it or they don’t know enough so they just default or it’s just you know there somebody’s unhappy about something so you just need to throw some rocks at it it’s we’ve all like I said everybody’s made mistakes that’s how you learn but uh it doesn’t mean that investing is gambling right any more so than like
(41:53) well the US economy is gambling right well you know we print money and you know we make stuff up policy-wise all the time and see how it works out okay then life is a big gamble yeah if you make the definition broad enough we’re all gambling I guess yeah but it feels pretty disingenuous no I mean you could make that silly argument for anything I have to I’m getting in my car to drive to work today oh you’re really gambling there’s a lot of car accidents it’s like but I got to get to work that’s it right
(42:20) like I got to make money to have a retirement account so that I can live when I’m old is it really gambling it’s it I’ll call them calculated risks but I still continue to say the probabilities are in your favor and that’s why we keep doing it yeah uh so it’s back to like if you won’t do this yourself like I I actually love when if somebody will do it themselves like then do it m right we like to do it I mean that’s literally we chose a career around it CU we enjoy it uh so it’s not like you can’t do it
(42:50) yourself but you have to you need to do it goes back to your car wash Theory do you wash your car uh not enough because you don’t want to do it but will you take your car through a car wash yeah I will yeah I will and so and you know on occasion I will wash my car because I it really needs to be done well right and it’s like it’s just not going to happen any other way unless I pay to have it detailed or something like that there are times when we trade our time and our money yep and and I think this is no different so you know anyway
(43:25) we’re getting to the tail end of this of our time today what are key takeaways Matt like what would you tell a a startup investor right now if you could just give him a high level there’s a lot of different investment options out there probably more than ever before and if you know what it is that you want and you have a plan in place and you’re competent go ahead and do it right there’s a lot of cheap ways to do it um for the person that doesn’t have the time maybe they have the knowledge but
(43:54) they don’t have the time it’s okay to reach out to someone and bring in someone to help you out or if you’re scared of it but you know hey I want to be an investor and I need help or there’s a lot of moving Parts in my life I need a second opinion it’s okay to reach out to someone yeah I have something that’s kind of exciting too um if we are now it’s not official yet but I think we’re we’re looking at rolling out a new program under our roof that’s going to be useful for the startup
(44:25) investor so what I encourage you is keep track of our website if you got more questions how can they reach us man yeah you can give us a call or a text at 541 375 898 or just go to the website and chat us uh little joh fs.com right so just reach out if you’re just getting started I got some different options that are uh becoming available but for now we’re out of time so until next time I’m Dave Little John and Matt Dixon and you’ve been listening to True well on news radio 939 FM and 124 40 KQEN
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