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What’s the Secret to Picking Winning Stocks? Don’t Fall for the Bullshit

According to the Financial Trust Index, Americans’ trust in the finance industry is at a measly 33%, which is an all-time high

It’s no surprise Americans are so distrustful of the finance industry either. We’re constantly bombarded with stories of bad actors like Bernie Madoff, billionaires are getting richer while regular folks are having trouble paying their rent, and at the most basic level, the finance industry uses complicated jargon to make regular people uncomfortable with investing so they’ll hire a financial advisor to do it for them. 

But unless you’re a millionaire, hiring a financial advisor is a complete waste of money. You’ll end up paying them, at best, only tens of thousands of dollars over your lifetime. At worst, you’ll pay hundreds of thousands or millions to have them manage your money, and many will do a worse job than if you’d learned the basics and invested it yourself.

Like financial advisors, 401ks and investing apps use marketing tricks to get you to make bad investment decisions too. If you’re looking for the secret to picking winning stocks, it’s to not fall for these bullshit marketing tactics. Here’s how to do it.

Skip the Aggressive Growth Mutual Funds

Aggressive growth funds are the sexiest looking mutual funds. They charm you by promising super-high rates of return, but long term, they usually fail to beat the returns of cheaper passive funds. Aggressive growth funds are commonly offered in employer-sponsored retirement accounts, like 401ks, which is why their poor long-term performance can’t be overlooked.

When you invest for retirement, you leave your money invested for decades. Because of the long-term nature of investing for retirement, you want to invest in funds that offer the best long-term returns. Actively managed funds, like aggressive growth funds, don’t do that. After just 10 years, only 11% of active funds beat comparable passive funds. 

The reason active funds fail to achieve the outsized returns they promise is because they charge much higher fees, called expense ratios. These fees are charged as an annual percentage of the assets (cash) you have invested in the fund. The higher the percentage, the higher the fees.

Fees for mutual funds, like aggressive growth funds, are higher because they try to beat the market. The market refers to the stock market as a whole. Indices like the S&P 500, Dow Jones, and Russell 2000 track a large portion of the stocks available on the market, and indicate the performance of the market. Passive funds mimic these indices and provide the same return as them. For example, if the S&P 500 goes up 25% this year, so will the funds that track the S&P 500.

Active funds, on the other hand, try to beat those 25% returns, and to do that, they need to hand-select which stocks they put in their fund. To find the highest-performing stocks, brokerage firms hire fund managers and analysts to do tons of research. This is an expensive and labor-intensive task, which the brokerage firms charge you extra for.

The bad news is that it is incredibly difficult to pick top-performing stocks in the short term, and nearly impossible to do it for decades. Because of that, these funds often fail to achieve returns that are high enough to compensate for the higher fees their investors pay. This leaves their investors (you) with lower returns than if you’d just invested in a passive fund instead.

The Alternative to Aggressive Growth Funds

Target date funds are often offered in 401ks and other retirement accounts and are great low-fee passive investments. These funds are incredible because they manage the risk and asset allocation of your portfolio up until retirement for you. Learn more about them here.

Don’t Fall for the Democratization of Investing Line

Cough cough, Robinhood, cough cough.

Robinhood has had its fair share of highly publicized issues, from stopping r/WallStreetBets traders from making trades during the runup of GameStop last year to a recent data breach, but those aren’t even their worst offenses. 

Vlad Tenev, one of Robinhood’s founders and its CEO, says he started the company to give more Americans the opportunity to participate in the US stock market, aka democratize investing. To do that, Robinhood ditched trading fees and became the first brokerage firm to offer commission-free trading.

This helped Robinhood investors pocket more of their earnings, but Robinhood isn’t exactly the white knight they claim to be. Commission fees were one of the main ways other brokerage firms made money. Without charging these fees to their investors, Robinhood had to come up with other sources of revenue. And thus, Robinhood’s predatory tactics begin.

The number one predatory tactic Robinhood uses is gamification. By adding emojis and game-like features to its trading app, Robinhood gets its investors to trade more frequently. This may not seem like a problem because these trades are commission-free, but it’s a huge problem.

Trading stocks is one of the fastest ways to lose money in the stock market. For a company that promotes itself as a hero for average investors, manipulating its users to adopt bad investment strategies that will most likely lose money seems pretty, to put it lightly, off-brand.

One study found that 80% of day traders lost an average of 36% of their money within 12 months. Another study from Fidelity found that its best-performing investors were either dead or had forgotten that they had an account. Why were these investors the best performers, you ask? Because they traded the least frequently.

While pioneering commission-free trading to help the everyday American build wealth through investing is a great marketing story, using gamification to get these beginner investors to adopt a losing investment strategy is predatory. And while these trades are “free” to investors, they make Robinhood a lot of money.

One of Robinhood’s main sources of revenue is something called payment for order flow (PFOF). I have a full breakdown of how Robinhood makes money using this strategy to the detriment of its investors here, but long story short, the more its users trade, the more money Robinhood makes.

On top of that, Robinhood also makes money by offering even riskier ways for its users to invest, like margin trades and options trading. With traditional investing, called taking a long position, an investor can only lose the amount of money they initially invested. When investing in options or on margin, investors can quickly lose even more money than they initially invested. 

For a company that bases its entire existence on helping the everyday investor, it sure doesn’t seem to be living up to its mission.

Robinhood isn’t the only platform conning investors into thinking they’re getting a good deal, though. Acorns, a subscription-based investment app, also charges exorbitant fees to its investors under the guise of making investing easier for the 99%. You can find a full breakdown of all of the problems with Acorns here.

Alternatives to Investing with Robinhood and Acorns

Low-fee robo-advisors are a great alternative to apps like Acorns. A well-priced robo-advisor will charge a management fee of around .5%. For self-directed investing, like Robinhood offers, apps like Public that don’t use payment for order flow, don’t allow day trading, and don’t provide super risky investment options are great alternatives.

It’s no wonder people are so skeptical of investing when the most popular investment vehicles are using predatory marketing tactics to try to trick you into making bad investment decisions. The good news is that the secret to picking winning stocks is to keep it simple, and if you do that, there are only a couple of things you need to avoid. 

  1. Don’t invest in funds with high fees
  2. Don’t buy and sell investments frequently
  3. Don’t risk more money than you have to lose
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Women Are Exactly This Much Better at Investing Than Men – Spoiler: It’s A Lot

Just 9% of women think that they will outperform men as investors. 

Just 14% of us say we know a lot about saving and investing, and just 33% say we feel confident making investment decisions.

To put it mildly, women are not confident investors, and it’s no surprise. Many women defer to their male partners when it comes to finances, most financial advice for women focuses on budgeting, and the financial industry is heavily dominated by men. I can honestly only think of one other woman I knew that studied finance while I was getting my degree in finance. Only one.

While this lack of confidence is frightening because it keeps women from investing at all, it’s also what gives the ones of us who do invest a leg up. 

Fidelity analyzed 5.2 million investment accounts and found that over a 10-year period, its female investors earned .4% more annually than their male counterparts. And before you bros get all up in arms about whether or not these women were actually managing their own investments, the analysis looked at individual retirement accounts, 529 plans, and basic brokerage accounts that were managed by individuals, not financial advisors. It also excluded workplace accounts, like 401ks, which often limit your investment choices.

While a .4% victory over the men may not seem that sweet, it is.

If you leave your money invested for decades, which is typical if you’re investing for retirement, and you contribute $500 to your investment account every month for 30 years and receive a 10.4% annual return, you’ll end up with over a million dollars and almost $79,000 more than a man who invested the same amount and only received a 10% annual return. Unlike you, the men in this scenario won’t even become millionaires.

So what secret sauce are we using to make our millions? A dash of a lack of confidence and a pinch of our ability to bargain shop. Here’s how to invest like the best.

Be Passive, As a Lady Should Be

Cringy heading, I know, but being passive is the best way to make money investing. 

Passive investing is an investment strategy where you build your investment portfolio using funds that track an underlying set of investments and then leave your money invested in those funds for decades. Let’s break this down further.

What are Passive Funds

Passive funds are index funds and ETFs that track an underlying set of investments and seek to achieve the same return as those investments. A popular example of this is an S&P 500 index fund or ETF.

The S&P 500 is an index that tracks the 500 largest publicly-traded companies in the US. When these 500 companies perform well, the S&P 500 index goes up and when they perform poorly, it goes down. 

An index fund or ETF that tracks the S&P 500 buys a tiny portion of stock in each of the 500 companies in the index and will produce the same return as the index. If the index goes up 5%, your index fund or ETF will do the same and vice versa.

Passive investing works because over the long term, the stock market has always gone up. It does experience short-term peaks and valleys, but after 40 years, there’s a less than 1% chance an investor will lose money investing in the S&P 500. 

The Alternative to Passive Investing

The alternative to passive investing is active investing. A strategy that overconfident male investors love. 

Unlike passive investors, active investors don’t just want the same return as the market, they want to beat it. To do that, active investors build a portfolio of stocks that they think will perform better than a comparable index. Over time, these investors have to reshuffle the stocks in their portfolio by selling some off and buying new ones if they want to continue to beat the market.

The problem with this strategy is that only 11% of large-cap active funds perform better than their passive counterparts after 10 years

There are several reasons for this. The first is that it’s incredibly difficult to time stock trades to buy low and sell high because stock market fluctuations are unpredictable. Did you predict Covid striking and causing a huge drop in the stock market in March of 2020? Active investors didn’t either.

The second reason is that active investors often do the opposite of what they’re supposed to, and buy a stock at a high price and sell it at a low one. It’s a classic case of FOMO.

When a stock is performing well, meaning the price is rising, everyone wants to buy it and get in on the gains. Queue the FOMO. Women’s lack of confidence often keeps us from actually getting in on the hype, but overconfident male investors can’t help themselves. The problem is that these guys often wait until the price is high and they feel confident about buying, but by this point, the price has often neared its peak and is about to drop back down to a more reasonable level, leaving investors with a loss.

While the data clearly shows that active investing rarely makes as much money for investors as passive investing, men’s overconfidence causes them to use this strategy at least 50% more than women.

Bargain Shop

If there’s one thing we ladies are good at, it’s bargain shopping, and we can credit this ability to the constant bombardment of shitty information from the finance industry that tells us we’re spending too much

90% of articles about money in women’s magazines focus on spending less, while 73% of finance articles aimed at men focus on investing. One of the unintended consequences of shaming women for our spending is that we use our bargain shopping skills to choose cheaper investments.

Saving on Investment Fees

Active investing isn’t only a bad investment strategy because it’s nearly impossible to predict short-term stock fluctuations, it’s also a terrible strategy because active funds charge exorbitant fees.

There’s a lot of research that goes into finding the stocks an active investor thinks will beat the market. All of this research takes a lot of time, and active fund managers don’t work for free.

To cover the fund manager’s salary, active funds charge much higher fees than passive funds. These fees are called expense ratios and are charged as a percentage of the money you have invested, which can be deceptive. 

Active funds typically have expense ratios around 1-2%, which doesn’t sound like a lot, but just like those extra .4% earnings over several decades, small percentages can add up.

In our earlier example where an investor contributed $500/month for 30 years and received a 10% return, we didn’t include the cost of fees. If this investor invests in an active fund with a 2% expense ratio, they will spend about $355,000 on fees over 30 years. If instead, they invest in a passive S&P 500 ETF, like VOO, with an expense ratio of .03%, they’ll only spend about $6,500 in fees over those 30 years. 

That’s an almost $350,000 loss to fees for the men on top of the $79,000 in earnings they’ll miss out on.

The Numbers

Here’s the final tally for a man and a woman investing $500/month for 30 years.


Annual Return: 10%

Expense Ratio: 2%

Ending Investment Value: $739,106.54


Annual Return: 10.4%

Expense Ratio: .03%

Ending Investment Value: $1,178,199.08

Difference in earnings: $439,092.54

So, ladies, you’re almost $500,000 better at investing than the men. Muster up enough confidence so you can invest in the stock market and become a millionaire, but not so much that you start investing like a man.

Investment Fee Calculator

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Should You Invest with Acorns?

Fall is officially upon us and the squirrels are fully invested in rounding up acorns for their winter food cache. This practice is similar to the highly advertised round-up feature used on the investing platform, Acorns. You can link all of your cards to your Acorns account, and whenever you make a purchase, they’ll round it up to the nearest dollar and invest the extra change. It’s a super-easy way to ensure money is constantly flowing into your investment accounts. 

To make investing with Acorns even simpler, they use a monthly subscription model in lieu of complicated expense ratios, so you never have to guess what you’ll end up spending in fees.

These features make Acorns seem like a simple and hassle-free way to invest in the stock market, but when deciding which brokerage firm to invest with, you should pick the one that will make you the most money. So does Acorns’ subscription model really work in your favor?

Is Acorns’ Subscription Fee Worth It?

Acorns offers two subscription plans. The Personal Plan for a monthly subscription fee of $3, and the Family Plan for $5 per month. Both plans offer investment options in brokerage accounts and retirement accounts, a checking account, and investing education. The Family Plan also offers an option to invest in an account for your kids and gives you access to exclusive offers. 

For our analysis, we’re going to focus on the investing portion of the Personal Plan. Since typical checking accounts don’t charge subscription fees, opening an Acorns account for their checking account is, well, really dumb. So let’s take a look at their investing options.

Acorns’ round-up feature is incredibly alluring for new investors. It easily and mindlessly helps you keep upping your investment portfolio, but from a fee perspective, it isn’t great for newbies. Sure, a $3 a month fee doesn’t sound like a lot, but when compared to the expense ratios of the ETFs Acorns invests in, it’s incredibly high unless you have a lot of money invested.

For comparison, robo-advisors typically charge an expense ratio of around .5% to manage your portfolio, so choosing funds with an expense ratio at or below .5% is ideal. Your expense ratio is an annual management fee that charges you as a percentage of the money you have invested. So to compare an annual expense ratio of .5%, we need to annualize Acorns’ subscription model to a total annual fee of $36. To get the same bang for your buck as a .5% expense ratio when spending $36/year with Acorns, you need to have $7,200 invested. 

To figure out how long it would take someone to reach $7,200 of investments, I analyzed my monthly spending to determine how much the round-up feature would invest for me each month. I took the average of what my extra change would amount to over the last 6 months and came up with an average of $21.23 invested each month. At that amount, it would take me 340 months, or a little over 28 years, to contribute $7,200. Obviously, this doesn’t take into account any investment growth, but that’s still an incredibly long time to be paying excessive fees.

To make matters worse, many of the funds that Acorns invests in have expense ratios well under .5%. Their preferred stock ETF is Vanguard’s S&P 500 ETF, VOO. This fund has an expense ratio of, wait for it, .03%! To justify the $3/month fee Acorns charges vs investing directly in the VOO ETF, you would need to have $120,000 invested through Acorns. 

So it’s safe to say that most young or beginner investors should skip investing through Acorns. Their subscription fee is astronomical when compared to the fees you would pay if you directly invested in the same funds they do. And if you want to do that, Acorns breaks down all of their portfolio structures on their website. You can build the exact same portfolios they offer you at a cheaper price. But here’s why you probably shouldn’t do that.

Are Acorns’ Portfolios Good?

Most of my readers, and probably Acorns’ users although I don’t actually have numbers on that, are millennials or gen z. That means we have 30ish years, give or take, until we reach retirement. If you’re going to be invested for the next 30 years or so, you can handle taking on a lot of risk in your portfolio, so chances are you’d land in one of Acorns’ Moderate to Aggressive portfolios. 

While young people can and probably should have riskier portfolios while they’re building wealth, they should also incorporate some less risky assets, like bonds, into their asset mix. Acorns’ aggressive portfolio doesn’t do that. At all. It invests your money solely in the stock market. 

So if their aggressive portfolio is too risky, why not just bump it down to their moderately aggressive portfolio? Because that one invests a whopping 20% of your money into bonds. For most 30ish (give or take 5-10 years) year olds, around a 10% bond allocation is plenty. Doubling your bond allocation to 20% will substantially reduce the risk of your portfolio and your wealth-building potential. The moderate portfolio bumps this percentage up to 30%, which is even more conservative.

So while you can build the exact same portfolios Acorns offers at a much cheaper price, you probably don’t want to. That’s because they’re either too risky or not risky enough for most millennial and gen z investors. If you want to transfer your balance from Acorns to another brokerage firm after reading this, I don’t blame you, but you’re going to incur some additional fees.

Watch Out for Acorns’ Transfer Fees

After going through Acorns’ Program Agreement (yes, the fine print none of us read) I uncovered a few more fees that aren’t clearly stated on Acorns’ website. 

If you decide to transfer your Acorns investments to another brokerage, which you may now be considering after reading the last two sections of this post, you’re going to get charged a $50 transfer fee per ETF. Here is a breakdown of the total transfer fees by portfolio type.

  • Aggressive 
    • 4 ETFs – $200 transfer charge
  • Moderately Aggressive
    • 6 ETFs – $300 transfer charge
  • Moderate
    • 6 ETFs – $300 transfer charge
  • Moderately Conservative
    • 5 ETFs – $250 transfer charge
  • Conservative
    • 5 ETFs – $250 transfer charge

Acorns also now offers ESG funds. These are funds that exclude companies that aren’t up to many people’s environmental, social, or governance standards. But most of their ESG portfolios contain 10 ETFs, which means you’ll be paying even more in transfer fees if you invest in those and ever decide to move your money.

To try and avoid these fees, you could sell your investments and then take your cash and reinvest it with another brokerage. If you decide to do that, make sure to check with an accountant on the tax implications first. You can also call your new brokerage and see if they will cover the transfer fee for you.

On top of that, if you want to roll over money from other retirement accounts into your Acorns account to help justify your fee, you’re going to be charged a $25 rollover fee for every incoming balance transfer. Then if you decide later to roll that money out, you’ll be charged the transfer fees listed above. 

On another note, after you reach $1,000,000 in your Acorns account(s) your fee structure will change to be .01% of assets under management rounded down to the nearest million dollars, which is quite a good deal, but it’ll take you several lifetimes to get there using the round-up feature.

So if you’re still looking at choosing Acorns as your brokerage firm after reading this post, I honestly can’t understand why. Their subscription model is too expensive unless you have a lot of money invested, their portfolio structures aren’t ideal for most millennial and gen z investors, and they make it hard to break off your relationship with them by charging exorbitantly high transfer fees. So after my thorough analysis, I say leave the acorns to the squirrels this fall. They’re not good for humans. 

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How Robinhood’s Gamification of Investing is Tricking You Into Making Them Money

Since March 2020 when we were all locked inside with nothing to do, retail investing has been all the rage. We’ve seen Reddit investors cause hedge funds to lose billions on multiple occasions, teen TikTok traders have become financial “gurus”, and new trading apps like Robinhood have used gamification to explode their user base. 

While some of these retail investors have made money, many have seen huge losses because, well, trading is hard work and most people don’t succeed at it. It is widely known in finance that over 80% of traders lose money, but that hasn’t stopped Robinhood from using fun emojis and gamification to keep its users trading on its platform. And the reason they want you to trade more isn’t because they think it’ll make you money, it’s because it’s making them money. 

Active vs Passive Investing

Trading is a form of active investing. An active investor’s goal is to beat the market by timing their buys and sales. Active investors will buy a stock when they think it’s undervalued, or trading at a price lower than it’s actually worth, and then sell the stock once the price goes up. The difference between the low price they buy the stock for and the high price they sell it for is their profit. 

Traders aren’t the only ones who time the market, though. Many mutual funds are actively managed as well, but instead of trying to make a profit on a single stock, fund managers will construct a portfolio of stocks they believe will outperform the stock market over a certain period. 

The problem with both of these active investing strategies is that they usually fail. We already noted earlier that over 80% of traders lose money, but actively managed mutual funds have performed equally horrendously. For nine consecutive years, almost 65% of large-cap active funds trailed the S&P 500. After 10 years, that number jumps to 85% and after 15 years nearly 92% of funds have underperformed the S&P.

Passive investing, on the other hand, just means you invest in funds that track indices like the S&P 500. Based on the stats above, you can see why this is a much more lucrative strategy for investors, so why do companies like Robinhood promote losing strategies to their customers? It’s simple. Because the more you trade, the more money Robinhood makes, all thanks to payment for order flow.

Payment for Order Flow

Payment for order flow is the compensation a brokerage firm receives when they route your trades to a third party to execute. It works like this. You buy 1 share of stock in your Robinhood account so Robinhood needs to figure out how to execute the trade. It is quite complex for a brokerage like Robinhood to execute thousands of trades per day, so they send your trade to a market maker to be executed. The market maker looks for an ask price on the stock you want that is lower than the price you want to pay, or the bid price. Once your trade is executed, the difference between the bid price and ask price, called the bid-ask spread, is the profit for the market maker. Then, as a thank you to the brokerage who sent them your trade so they could make a profit off it, the market maker gives a tiny cut of their profits back to the brokerage.

Since Robinhood makes money on every trade they send to a market maker, they want to keep their trade volume as high as possible to make as much money as possible. This is why they use gamification to keep their users glued to their phones and want to incentivize them to trade, regardless of whether the trade is a smart idea for you or not.

To make matters worse, Robinhood doesn’t need to route your trade to the market maker that is offering you the best price on the stock. Rather, they can route your trades to the market maker that pays them the most for your order flow. So not only are they actively using gamification to get you to trade so they can increase their revenues, but when you do make a trade, they also have no incentive to try and get you the best price on your trade.

What Brokerage to Use Instead

Hopefully, this has convinced you that Robinhood does not have your best interest in mind and that you should definitely switch to a new brokerage firm, but hopefully, it has also convinced you to stop trading. The stats show that the vast majority of traders lose money or underperform passive investments. The point of investing is to make money, and passive investing is the best way to do that. 

Use a Robo-advisor

Robo-advisors are one of the most effortless ways to invest passively because they use a quiz to assess your risk tolerance and then based on the results, put you into the investment portfolio that’s best for you. After you take the quiz, the only thing you need to do is keep funneling money into your account.

One of Robinhood’s selling points is that they offer low fees, but luckily for you, so do many Robo-advisors. 

Use a Brokerage Firm That Doesn’t Use Payment for Order Flow

If you still want to build your own portfolio, make sure to use a brokerage firm, like Public, that doesn’t use payment for order flow. Public still offers commission-free trading but uses optional tipping instead of payment for order flow to make money.

Public is also doing other things to keep their customers’ best interests in mind. They don’t allow day trading on their platform, which again, is one of the easiest ways to lose money on stocks. They don’t let you trade on margin. They label risky stocks so you know they’re volatile. And more. Basically, they do the exact opposite of what Robinhood does. They put their customers first.

When it comes to investing, the best strategy is the one that makes money. Robinhood has fully adopted that strategy for themselves, but they’ve tricked their customers to do it. They’ve used gamification to promote trading when it’s a losing strategy for most investors, and when they execute those trades, they have no incentive to get the best price for their customers. So it’s time to ditch the tricksters and invest with a better brokerage so you can be the one who’s making the money.

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The Effortless Strategy for Investing in the Stock Market

When you think of stock market investing, trading is probably what comes to mind. It’s the strategy that’s been popularized by movies, WallStreetBets, and TikTok. They teach you that to be successful at investing in stocks, you have to investigate the stock market constantly to find hidden deals you can make millions off of. But few people hit it big, and who has a few hours a day to spend watching stock prices? Not me, and probably not you. 

While trading is a highly publicized investing strategy, it is the exact opposite of effortless and has an 80%+ failure rate, which actually makes it one of the worst strategies. The good news is that there’s a different way to make money investing in stocks that historically, has worked 100% of the time.

What is Long-term Passive Investing

Long-term passive investing is a buy-and-hold strategy where you build a well-diversified portfolio and take advantage of the almost guaranteed gains the entire stock market will have over time. It’s way less risky than trading and way easier.


It works because it exposes you to hundreds or thousands of different companies across many market sectors, asset classes, and geographic regions. This diversification helps protect you from losing all of your money if one area of your investments is impacted negatively by something. For example, maybe one of the companies you’re invested in goes bankrupt. If you’re only invested in that one company, you’ll lose everything. If you’re invested in hundreds of other companies as well, this one company’s failure will have little impact on your money. That’s the power of diversification.

Time in the Market

The other reason long-term passive investing works is because your risk of losing money when you’re invested in the total stock market declines significantly over time. In fact, after 40 years of investing in the stock market, you have a less than 1% chance of losing money and a 95% chance of earning almost 3 times your initial investment. Those are pretty good odds.

This works because historically, the stock market as a whole has always gone up. There are dips and sometimes huge drops in the short-term, but thanks to diversification and compounded earnings, you’re essentially guaranteed a return if you can ride out the short-term bumps to take advantage of the long-term gains.

All-time returns for S&P 500 – Google Finance

But figuring out how to build a diversified portfolio and manage it for 40 years is still a daunting task. Traditionally, people hired a financial advisor and paid them hundreds of thousands of dollars in earnings over several decades to avoid having to do this work themselves. Luckily, with the help of technology, there are new cheap and effortless ways to invest in stocks so you never have to build your portfolio, manage your investments, or learn really anything about the stock market. 

Effortless Strategies for Investing in the Stock Market

Use a Target-Date Fund 

Target-date funds are the one-stop shop when it comes to effortless investing in retirement accounts. These include your 401k and IRAs. Target-date funds get their name because to find the best one for you, you select the target date for when you’ll want to sell your investments. Typically, these funds are offered in retirement accounts so that date is your retirement date.

Target-date funds are usually offered in 5 or 10-year increments, so choose the date that is nearest to your retirement date. When you do that, your fund will build your portfolio at the appropriate risk level based on the length of time until you retire. 

Not only will your target-date fund build your portfolio for you initially, but it will also manage it for you forever. As you age and get closer to your target date, your fund will update your investments to reduce your risk level. Remember, the longer you’re invested, the less likely you are to lose money, so the closer you are to retirement the safer your portfolio should be and vice versa. This will ensure that you maintain your investment earnings to use as income in retirement.

Use a Robo-advisor 

Outside of your retirement accounts, the best option for effortless investing is to use a Robo-advisor. Robo-advisors typically ask you a set of questions when you open your account to determine your investing risk tolerance. They then invest your money into one of their diversified portfolios based on your responses. If your risk preferences change, you can update your risk tolerance and your Robo-advisor will move your money into either safer or riskier portfolios. 

The Effort You Need to Make

There’s only one bit of effort that you need to make after you invest in a target-date fund or with a Robo-advisor, and that is to make sure you keep investing more money into it. The effortless way to do that is called dollar-cost averaging.

Dollar-cost averaging is a fancy way of saying automating your investments. It’s when you invest a fixed amount of money at regular intervals. 401ks use this strategy by regularly withdrawing a fixed percentage of each of your paychecks to invest for you. Once you set your contribution percentage, all of the investing happens behind the scenes without you having to lift a finger. 

You can use this same strategy in your other investment accounts by setting up automatic investments at whatever amount and frequency you’d like. If you want to max out your IRA accounts, for example, you can take the $6,000 annual contribution limit and divide it by your contribution frequency to determine the dollar amount of your automatic contributions. If you’re contributing monthly, you would divide $6,000 by 12 months to get a $500 per month contribution. Automating your contributions will ensure that you’re always investing and making more money with zero effort.

While investing is portrayed as being difficult and time-consuming, it can actually be effortless and stress-free. You just need to choose a method that builds and manages a diversified portfolio for you and automate your contributions. Then you’ll be passively investing and building wealth so you can focus your effort toward other things you love.

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Is Investing in Stocks Worth the Risk?

A whopping 90% of stock market day traders lose money, and many of their losses make incredible headlines. Think of stocks like GameStop, AMC, and Tesla. You hear about them all the time because their wild price swings make some traders millionaires while decimating other’s fortunes. One college student even committed suicide after seeing a negative balance of over $700,000 on his Robinhood Trading App.

All of this stock market drama probably has you asking, “is investing in stocks worth the risk?”

Risk vs Return

Making money in the stock market is all about weighing an investment’s risk against your expectations of a return. This is called the risk-return tradeoff. In general, when the risk of an investment is higher, you should expect a higher return for taking on more risk and vice versa. 

The investments that make headlines are usually incredibly risky. This is why some of the people who invest in these risky assets make an absolute killing, while others lose it all. That’s the nature of risky investments. They give us FOMO because we see people become millionaires overnight by investing in a single meme stock. Unfortunately, this FOMO often leads people to buy into an investment once the price has already peaked, and then lose everything when the price drops. The good news is that the risky stock market investing strategies used to make headlines aren’t the only ways to invest in stocks.

Trading vs Investing


Trading is the stock market strategy that we always hear about. It involves choosing individual stocks to invest in when the price is low and then selling that stock when the price rises. Traders typically only hold a stock for a few days, hours, or sometimes minutes before selling. 

The problem with this strategy is that it is nearly impossible to predict how a stock’s price will fluctuate in the short term. And if traders tell you differently, they’re lying. As was mentioned earlier, about 90% of day traders lose money. That means nearly all day traders are unable to predict how a stock’s price will fluctuate, and with those odds, you probably can’t either. 


Investing is the alternative to trading. It involves building a diversified portfolio of many different stocks and holding those stocks for years or decades. By spreading your investments across many different companies, or diversifying, you reduce your odds of losing money because a larger portion of your investments has to perform poorly to generate a loss. 

For example, let’s say that your friend invests all of her money into a single company, while you invest your money into an S&P 500 ETF. By choosing that ETF, your money will be invested in all 500 companies that make up the S&P 500. If only one of those companies is struggling, you have the other 499 to keep you afloat. Your friend, on the other hand, only has one company working for her and that means if they do poorly, so does she and vice versa.

Actively Managed Funds

When it comes to investing in diversified investments, there are two types of funds you can invest in. The first is an actively managed fund. These funds are curated by financial institutions to try to beat the market. That means that if the S&P 500 index, which is widely accepted as the best gauge for the overall US stock market, has a return of 10% this year, an actively managed fund tries to earn its investors a return greater than 10%.

The problem is that these funds often fail. Over a 15 year period, more than 91% of actively managed funds underperformed the S&P 500. Because of the research and analysis required for a fund manager to try to beat the market, they charge much higher fees, or expense ratios, to investors. These high fees substantially eat into your investment returns over time and can cost you hundreds of thousands or millions of dollars over several decades.

Passively Managed Funds

To save on fees, make higher returns, and reduce your risk, you can invest in your second diversified investment option, a passively managed fund. These include index funds and ETFs that track an underlying set of investments and provide the same return as those investments.

For example, if you invest in an S&P 500 ETF, the fund will provide you with the same return as the S&P 500 index. Because the fund manager doesn’t need to spend time researching and analyzing data to try and beat the index, the fees for passively managed funds are much lower. That means more of the returns you receive for taking on the risk of investing go into your pocket.

And if you stay invested in an S&P 500 fund for several decades, you have almost zero chance of losing money. In fact, the S&P 500 has had a positive return in all 20 year periods from 1872-2018. This is where the time factor comes into play.

In the short term, the stock market fluctuates wildly. For several months or even years, the S&P 500 can produce negative returns. If you only stay invested for a short time, even in a diversified investment, you risk losing money. The longer you keep your money invested, the lower and lower the probability is that you will lose money. You’ll at least break even.

But why even take on all of this risk and put in this effort to just break even? In a simulation of 10,000 investors that NerdWallet ran, based on the historical returns of the S&P 500 and Treasury bonds, investors had a 95% chance of earning nearly 3x their initial investment, while traditional savers had a less than 3% chance of doing the same. 

So is investing in stocks worth the risk? If you invest in diversified, low fee funds, for several decades, and are almost guaranteed to nearly triple your money, then yes. Investing in stocks is 100% worth the risk.

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How to Invest in Stocks with Little Money

One of the biggest misconceptions people have about investing is that you need to have thousands of dollars ready to invest before you can even think about dipping your toe into the stock market. If this is a thought you’ve had, you’re in good company, but you’re also wrong. 

The reality is that you can start investing today with a little as $5. There are tons of options for opening zero minimum investment accounts, no minimum investment funds, and countless platforms offering fractional shares. All of these efforts to democratize investing have made it incredibly easy for you to start investing with no money saved. Here’s how to do it.

Use Dollar-Cost Averaging

What Is Dollar-Cost Averaging

Dollar-cost averaging is an investment strategy where you buy stocks at regular intervals regardless of the price. Most people haven’t heard of dollar-cost averaging, but if you’ve ever invested in a 401k, you’ve used this strategy. 

When you invest in your 401k a certain percentage of your paycheck gets deposited into your 401k and invested every time you get paid. It doesn’t matter if stock prices are up on payday, or down, your money gets invested regardless.

You can use this same strategy to invest small amounts of money over time in other investment accounts, like IRAs and brokerage accounts, as well. Whether you have an extra $5, $20, or $100 a month to invest, all of your small investments will add up over time and create the large amount of money you think you need to have saved to start investing.

Dollar-Cost Averaging vs Lump Sum Investing

The theory behind dollar-cost averaging is that it reduces the impact of volatility on your investment portfolio. Volatility is the fluctuation of stock market prices and is necessary for you to make money investing in stocks (when stock prices go up), but it’s also what provides an opportunity for you to lose money investing in stocks (when prices go down). 

When you invest using dollar-cost averaging you buy the stocks in your portfolio at many different prices. Sometimes stock prices drop and you buy your stocks at a low price, and other times the market is up and you buy them at a higher price. When you buy at a low price, you make larger gains, and when you buy at a high price you make smaller gains.

You’re probably thinking, ok, well why don’t I just buy stocks when they’re at a low price then? There are 2 reasons for this. 

  1. You don’t have a lump sum saved to invest right now, and the longer you wait to invest, the more earnings you’ll lose from compound interest. Dollar-cost averaging is a long-term investment strategy, and the stock market has historically always gone up over the long term. If you start investing today, you’re almost guaranteed to make huge gains over time. There’s no need to save up and wait to perfectly time your purchase.
  2. It’s incredibly hard to time the stock market. If it were easy, everyone would buy stocks at the bottom of a market crash and sell stocks at the peak of a market expansion. However, no one, not even the pros, knows when the market is going to crash or peak. If you try to save up and wait to time your buy during a crash, you’ll probably time it wrong.

It’s also worth noting that if you had invested in the S&P 500 at market highs before the great recession in 2008 or the covid crash in 2020, as of today, you would have made all of the money back that you lost during those crashes, plus some. This is why you don’t need to worry about buying stocks at high prices sometimes, and what makes dollar-cost averaging an incredibly easy, low-stress, and lucrative investment strategy.

What Stocks to Invest In

Index Funds and ETFs

You know the phrase, don’t put all your eggs in one basket? Well, index funds and ETFs are firm believers in that phrase, and their diversification is what makes them great investments.

Typically, people think they need to be able to choose winning stocks to be a good investor. The bad news is that choosing winners is hard and is why so many traders, over 80% in fact, lose money. The good news is that index funds and ETFs take the guesswork out of picking a winning stock by combining many different stocks into a single investment.

Let’s take an S&P 500 index fund or ETF, for example. When you buy one of these funds, you’re actually investing in a tiny sliver of stock in all 500 companies that make up the S&P 500. For you to lose all of your money, all 500 companies would need to perform poorly. This does happen when the market drops in the short term, but as we mentioned earlier, the market has always gone up over the long term. When you buy all 500 companies in the S&P 500, you’re essentially buying the market, and therefore are pretty much guaranteed to make money over several decades.

Buying index funds or ETFs and holding them for long periods of time significantly reduces your risk of losing money in the stock market, which is a great first step, but you still need to construct a well-rounded portfolio that includes 3-4 different funds. If constructing a multi-fund portfolio sounds daunting to you, you can use a Robo-advisor or a target-date fund instead.


Robo-advisors are digital advisors that provide algorithm-driven investment services. When you use a Robo-advisor, you tell them certain things about you like your tolerance for risk and your investing goals and they build your entire portfolio and manage it for you based on your personal preferences. It’s a great option for people who want to be completely hands-off investors.

Target-Date Funds

Another great option is to use a target-date fund. These funds are typically available in retirement accounts like 401ks and IRAs, and they offer similar services to a Robo-advisor. 

When you use a target-date fund, you select the year you plan to retire and your target-date fund will construct and manage your portfolio based on your length of time to retirement. The further you are from retirement, the more risk your portfolio can handle, and the closer you are to retirement, the less risk your portfolio can handle. By investing in a target-date fund, you’ll end up with a well-diversified portfolio that will automatically become less risky over time. This is another great option for people who want to be completely hands-off investors.

Beginner Investing Tips to Remember

Now that you know how to start investing without any money saved, here are some beginner investing tips to remember.

Start Small

Investing $5 a month is better than $0 a month. No matter what your level of investment is today, it is better to start small than not start at all. When your income increases or expenses decrease in the future, you can increase your monthly investments. The most important thing is to start investing now so compound interest can help grow your investments.

Choose an Account and Funds with No Minimums

When you’re starting to invest with no money saved, you want to make sure you choose an account provider, investment account, and funds with no minimums. Some accounts and funds require that you maintain minimum balances, or have buy minimums. Avoid those when starting out.

If your ideal fund has a minimum buy, invest in a similar fund that doesn’t have a minimum until you can earn/contribute what you need to buy the fund you really want. Once you hit your goal, you can sell your current investments and buy into your ideal fund.

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Have You Been Finfluenced by These 3 Bad Pieces of Financial Advice?

finfluencers taking selfie

You know the phrase don’t believe everything you see on social media? Well, it doesn’t only apply to influencers’ waistlines and wrinkle-free faces. It also applies to the advice dished out by the newest category of influencer – the finfluencer.

Finfluencers are financial influencers and they make financial education fun by turning it into a meme or controversial quote and putting it into a beautiful Canva template. And I’m not throwing shade. I mean, I am one of these finfluencers. The problem is that many in this industry aren’t financial experts and shell out a bunch of trash finance tips. Even worse is that the trash tips are oftentimes to ones that go viral. They make you think to yourself, “OMG that makes so much sense! Why didn’t I think of that?!” And I hate to be the one to break this to you, but if it were as easy to get rich as some finfluencers make it seem, we would all be rich. 

If you want to actually start making progress on your financial journey, you’re going to have to stop believing the trash tips and start getting educated by real experts. To help you weed through the nonsense and find the good stuff, here are 3 very popular and very bad pieces of financial advice you may have been finfluenced by.

Invest in the Companies You Buy Products From

Hindsight is Always 2020

There are so many examples of posts that say things like, if you had invested $399 in Apple in 2001 instead of buying an iPod it would be worth a bazillion dollars today. The problem is that in 2001 we had absolutely zero clue that Apple would become the dominating force that it is today. Here are just a handful of the things that have grown Apple into the behemoth it is but didn’t exist back in 2001.

  • The iPhone
  • The App Store, which charges 30% to creators for most in-app purchases, subscriptions, and paid downloads
  • The Apple Watch
  • AirPods
  • And so. much. more. 

20 years later, of course, we can easily say how great of an investment it would have been to buy Apple stock back in 2001, but it was a much riskier investment back then. As they say, hindsight is always 2020, and that’s the reason these posts never tell you which company is the Apple of today and will be a dominating force 20 years from now. Because they have absolutely no clue.

Purchases and Investments Are Not Created Equal

Another reason you shouldn’t base your investment portfolio on companies you buy products from is because you don’t buy a product for the same reason you invest in a company. Let’s break down the difference between why you buy a product vs why you buy a stock.

Reasons for buying a product

  • It will make your life easier
  • It makes you happy
  • It’s functional 
  • You look damn good in it
  • And a million more reasons

Reasons for buying a stock

  • It will make you money. Period. End of story.

A company making a product you love doesn’t automatically make that company a good investment. I mean, everybody loved Blockbuster in the 90s and probably thought that was a great investment, but we know today that it wasn’t. Having a great product doesn’t equal longevity or good accounting practices, and therefore doesn’t always make the companies behind your fav products good investments.

On top of that, there are so many behind-the-scenes companies we don’t know the names of that are critically important to our lives and make great investments. These can be logistics companies, semiconductor manufacturers, foreign companies, marketing firms, you get the picture. There’s a whole world of companies that aren’t consumer-facing but are making lots of money and are great investments. If you only focus on investing in the companies you know the names of and buy products from, you’ll miss out on tons of great investment opportunities.

Dividend Stocks Are a Great Source of Passive Income

It’s true what the posts say. Warren Buffett makes millions of dollars every year investing in dividend stocks. But he’s a BILLIONAIRE. If you’re reading this, I’m going to go out on a limb and assume that you’re not a billionaire, which means that you shouldn’t be investing like Warren B. 

The reason Warren earns so much passive income from dividends is because of the massive amounts of money he has invested. The average dividend yield of the S&P 500 is only 2%. That means to earn the average median household income of about $70,000/year, you’d need to have $3,500,000 invested in dividend stocks. That’s a lotta dough.

And sure, some companies offer double-digit dividend yields, but you’ll miss out on a ton of earnings if you use your dividend payouts as passive income instead of reinvesting them. Check out this post @personalfinanceclub did on how much more money you can earn by reinvesting your dividends instead of using them as income.

A whopping 68% of the total growth in this example was made by reinvesting dividends. And I know the thought of just investing some money and living off of the dividends sounds great, but to do that, you need to have a ton of money invested. To get that much money invested, you probably need to be reinvesting your dividends. So skip trying to use your dividends as passive income and focus on the growth of your portfolio instead.

Invest in Aggressive Funds in Your 401k 

This one isn’t really a finfluencer problem, but it’s a huge problem nonetheless because one of the most popular investment accounts is the 401k. 

Contributing to your 401k is absolutely fabulous. You get tax benefits and many companies will match your contributions, which is an easy way to get a non-performance raise. The problem is that some of the funds marketed to you in your 401k can be better at persuading you to invest in them than they are at actually making you the returns they promise. Here’s how to spot the fakers. 

The main thing to look for is whether the fund is actively or passively managed. Actively managed funds in your 401k look super fancy and claim that they’ll make you a lot more money. What they don’t tell you is that they have much higher fees, AKA expense ratios. This is the fee you pay to cover the fund’s operations and management expenses, and the higher the fee, the lower your return. 

When the returns of actively managed funds were compared to the return on the S&P 500, 85% underperformed the S&P over 10 years, and a whopping 92% underperformed the S&P over 15 years.

So while these funds promise sky-high returns, they usually don’t achieve them after you factor in their astronomical expense ratios. And since you’ll most likely be leaving your investments in your 401k for over 15 years, you could easily fall victim to making less money by investing in these funds. Instead, invest in passively managed funds with much lower expense ratios to see better returns over the long term.

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How to Pay Significantly Lower Taxes on Your Investments

woman shocked at paying lower taxes holding money fan

You know that weird guy that just seems to creep up out of nowhere and scare the shit out of you every time he says hello? Well, that guy exists in the investment world too, and he pops up whenever you sell your investments. His name is taxes.

Anytime you realize profits from an investment you have to pay taxes on it, but it gets a little bit more complicated. Taxes, complicated? Who could have guessed it?!

The amount you pay in taxes depends on when you decide to sell your investment and what type of account your investment is in. If you don’t pay attention, you can end up getting slapped with a big bill come tax season, but if you strategize properly, you can use these two variables to reduce your tax bill and pocket as much of your profits as possible. Here’s how to do it.

Income Tax

Income tax is a marginal tax rate you pay on earned income. The money you earn from work is considered earned income, not the money you earn from your investments. So why are we including this? 

Well, most people invest in retirement accounts like 401ks and IRA, which are taxed differently than other types of investments. Most profits on investments are taxed at the capital gains tax rate (more on that later) but money invested in retirement accounts is taxed at your income tax rate. Depending on the type of account you use you either pay your income taxes before you deposit the money, or when you withdraw it in retirement. 

Tax-Deferred Retirement Accounts

When you cash out your investments from a tax-deferred retirement account like a 401k or IRA, you’ll have to pay income taxes on your distribution. That’s because, in a tax-deferred account, you deposit money that you’ve earned but haven’t paid taxes on. This is beneficial because all of the money you deposit into these accounts gets excluded from your taxable income now, so you pay less in taxes today. This not only helps reduce your tax bill but also allows you to add more money into your account, which over time, will significantly increase your earnings from compound interest. But, if you thought the government would just let you get away with not paying income taxes, think again. You know they only let billionaires do that. 

While you get to skip paying taxes before depositing the money into your account, you don’t get to do the same when you withdraw the money in retirement. That’s when you’ll get hit with the tax bill. Fortunately, unlike in taxable accounts, you can buy and sell investments within retirement accounts whenever you want and pay zero taxes on the trades. The tax bill only arrives once you start taking your distributions in retirement. And make sure not to take them before 59 ½, or you’ll also get hit with a 10% penalty.

After-Tax Retirement Accounts

To lessen the blow of income taxes in retirement, you can take part of your distributions from an after-tax account like a Roth IRA. All of the money deposited into a Roth IRA is after-tax, meaning you already paid the income taxes on it. When you withdraw the money later in retirement, you pocket it all completely tax-free. 

By contributing to both tax-deferred and after-tax accounts, you can optimize your distributions in retirement to reduce your tax bill.

Capital Gains Tax

Capital gains tax applies to investment income or profit you earn on your investments. It is taxed differently than earned income and comes in two forms. Capital gains taxes apply to investments in brokerage accounts, real estate, crypto, and other alternative investments.

Short-Term Capital Gains Tax

Short-term capital gains tax is like the ex you hope to never run into. Just when you’re starting to enjoy your earnings, short-term capital gains tax will come and rain on your parade. 

The reason it should be avoided at all costs is because it’s super high and will significantly eat into your earnings. The good news is that the only time you’ll run into it is when you hold an investment for less than a year. 

Any profits you make on investments you buy and then sell in under 12 months are taxed at the short-term capital gains tax rate. While it’s called something different than income tax, the percentage you pay is the same as the top tier of your marginal income tax rate. 

Unlike income tax, capital gains tax isn’t applied marginally. When you pay income tax, you’re charged different tax rates on different buckets of income. You start out by paying the lowest tax rate on the first bucket of income. In 2021, after deductions that’s 10% on the first $9,950 you earn. Then you pay the next tax rate (12%) on your second bucket of income ($9,951 to $40,525). And so on.

Since there are different buckets for income taxes, when you average the rates for all of the buckets you pay into, you end up with a lower tax rate than the top tier you’re taxed in. When it comes to short-term capital gains tax, all of it falls into your top tier, which means it’s even higher than your overall income tax rate. Like I said, it’s something you never hope to run into.

Below are some of the common ways investors run into short-term capital gains tax so you can try to avoid it.

  • Stock trading
  • Trading crypto
  • Flipping houses

Long-Term Capital Gains Tax

Unlike short-term capital gains tax, long-term capital gains tax is something you definitely want to run into. It is your BBF4L! It’s so incredible because the tax rates for long-term capital gains tax start at 0%! That’s right, folks. If you hold your investments for over a year, you pay 0% in taxes on your first $40,000 in profit! After that, you pay 15% on up to $441,450 of profits, and after that, all profits are taxed at 20%. 

Below are some of the ways you can take advantage of long-term capital gains taxes.

  • Value investing
  • Passive investing
  • Rental/investment properties
  • Holding crypto

So now you know how to avoid your ex, and keep your cool the next time the creepy guy comes up to say hi. Getting hit with your tax bill will never be fun, but as long as you stick with your BFF, short-term capital gains tax, as much as possible, you’ll pay significantly lower taxes on your investments.

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How to Start Investing In Real Estate Without Buying Property

Once you learn about the massive cash flow you can earn investing in real estate, you’ll become as obsessed with the idea of owning properties as little girls were with Justin Timberlake in the 90s. By owning just one multifamily, you can get other people to pay your mortgage and start living rent-free. If eliminating one of your biggest expenses sounds great, just wait until you get a few more properties under your belt. You’ll be living rent-free and have thousands of extra dollars flowing in every month. Sounds like living the dream!

But what this fairytale scenario leaves out is how hard it can be to get property number one. You have to save for a 3.5% down payment, which can be sky-high depending on where you live, and astronomical student loan debt can send your debt to income ratio through the roof and leave you with no loan options. 

If you’re stuck in this situation or the thought of dealing with tenants makes you want to pull a Gone Girl move, no worries. There’s a cheap and easy way you can become a real estate investor today without having to buy your own property. Allow me to introduce you to a REIT.

What is a REIT?

REIT is an acronym that stands for Real Estate Investment Trust. There are two types of REITs, Equity REITs, and Mortgage REITs, and they make money in completely different ways.

Equity REITs

Equity REITs are the most common and make money the same way you would with your own investment properties. They build, renovate, and operate properties that they lease out to tenants. You can think of them as the Jonathan Scott of the Property Brothers. They’re not afraid to get their hands dirty. 

Some equity REITs specialize in a specific market segment and only hold residential real estate, office buildings, or buildings in the healthcare industry. Each of these industries has its pros and cons, but as a whole, equity REITs generate the majority of their revenue from collecting rents.

Mortgage REITs

Mortgage REITs don’t make money operating investment properties but rather by lending money to the people who do operate them. They’re the Drew Scott of the Property Brothers. They handle the business side. 

Mortgage REITs make money from the interest they charge on the money they lend to real estate investors and from mortgage-backed securities. These are bundles of mortgages sold together as a single investment so companies can make money off of the mortgage interest.

How to Invest in a REIT

REITs are as easy to buy as stocks and are a great option for anyone who wants to become a real estate investor or add more income-generating assets to their portfolio. Both mortgage and equity REITs are required to pay 90% of their income to shareholders in the form of dividends, and if you own an equity REIT, you can also benefit from the property appreciation on the REIT’s holdings. This makes REITs a great income and growth option to add to your portfolio.

Adding a REIT to Your Portfolio

The simplest way to add a REIT into your investment mix is to create a 4 fund portfolio. This portfolio structure includes the following funds

  • Domestic Stock Fund
  • International Stock Fund
  • Domestic Bond Fund
  • REIT

To determine the asset allocation of your portfolio, start by deciding how much of it you want to allocate to bonds. Aggressive portfolios typically allocate 10-20%, and conservative portfolios allocate more. Once you know your bond fund allocation, then you can invest in the remaining funds at the following percentages

  • Domestic Stocks – 60%
  • International Stocks – 30%
  • REITs – 10%

To buy your investments, you’ll need to convert these percentages into the amount of your entire portfolio they’ll make up. For example, let’s say you decide to allocate 10% to bonds. First, take 100% minus your bond allocation of 10% to get the percentage of your portfolio that your other three funds will make up. In this example, 90%. Next, you’ll need to figure out how much of your portfolio the domestic stock fund will make up. To do that, multiply your portfolio balance of 90% by the 60% recommended allocation for this fund to get 54%. Then repeat this for the two remaining funds. The entire portfolio allocation for this example would be as follows

  • Bonds – 10%
  • Domestic Stocks – 54%
  • International Stocks – 27%
  • REIT – 9%

So now that you’ve been formally introduced to the JC Chasez of real estate investing, you can stop waiting around until you have enough money saved for a down payment or dreading the responsibility of managing tenants yourself. Just add a REIT to your portfolio instead and reap the rewards of a steady income and property appreciation while skipping the headache of dealing with noise complaints. 

Want to buy an investment property of your own? The book Hold will guide you through the entire process. From finding a realtor and accountant, to exact instructions on how to evaluate a property so you can start making money on day 1. It’s the book I’ve been using to start my real estate investing journey, and I can’t recommend it enough! Get it here!

*Disclosure: I get commissions for purchases made through some links in this post.