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WTF is Fintech? The Creation of the TikTok Investor and What’s Next

kim and kylie as bitcoin and ethereum

Bitcoin, NFTs, Robinhood, Coinbase. Besides constantly being in the headlines like Paris Hilton in the 2000s, what do all of these things have in common? They’re all new developments in the world of Fintech and are revolutionizing an industry. 

Financial Technology, or Fintech for short, has been taking the financial industry by storm, but what exactly is it, why is it so popular, and how will it change our lives in the future? Grab your popcorn. We’re going to answer that.

What is Fintech?

Fintech is used to describe any new technology that is intended to improve and automate financial services. This includes anything from backend software that’s used to make your experience with a company or product more seamless, to physical goods like the Square Reader that made it possible to accept credit card payments right to your phone. 

Many of the early innovations in fintech have evolved into things we now take for granted. Things like being able to deposit a check using our smartphone instead of having to go to the bank, opening a HYSA with an online bank like Citizen’s Access instead of going to a brick and mortar, or being able to download an investing app like Public and start trading immediately. We can now keep up with our finances the same way we keep up with the Kardashians, right from our smartphone.

Some of the newest innovations in fintech include crypto currencies, two of which, Bitcoin and Etherium, have become quite mainstream. As more companies like PayPal and Tesla start to offer Bitcoin payment options, these groundbreaking financial innovations will become more and more commonplace in the runnings of our daily lives. But since Bitcoin itself doesn’t actually have any tangible value, what is making these fintech innovations so popular?

Why is Fintech so Popular?

Since the turn of the 21st Century, fintech has been booming. 2019 was fintech’s biggest investment year on record with global investment reaching $168 billion, before dropping slightly in 2020. The US is the leader in fintech investment and makes up almost 80% of all dollars invested in the sector. So what’s driving US investors wild about fintech?


The obvious first reason why Fintech companies are so popular with investors and with consumers like you and I, is because they make our lives easier. I had to actually go to the bank for something recently and was super annoyed that I couldn’t take care of what I needed to using my Chase app. Fintech has conditioned me to do all of my banking through my phone because it’s so much more convenient. While the convenience economy is ballooning as fast as Billie Eilish’s popularity, there is another more powerful force behind the rise of Fintech and that’s democratization.


Traditionally, it has been difficult to invest in the stock market unless you were close to Kardashian level wealthy. There were high investment minimums, more fees, and no fractional shares trading. In fact, fractional shares trading didn’t become available until as recently as 2019! Without the ability to invest with smaller sums of money, pretty much everyone below the upper middle class was unable to build wealth through stock market investing. Then came the fintech revolution.

In the last few years, commission free trading apps like Public and Robinhood have been popping up like pimples before your period, which has made millennials and gen z flock to stock market investing. In a little over a year, we’ve seen TikTok become the default medium for investing advice, and watched young people use Reddit forums like WallStreetBets to “stick it to the man”. An entire new class of investor has been born. 

But investing isn’t the only area fintech has democratized. It’s also helping out entrepreneurs. Square’s phone plugin made it possible for small businesses to travel to any location and accept credit card payments, and crowdfunding websites like GoFundMe have allowed startups to skirt the traditional fundraising methods like venture capital and angel investing, and raise money in a new way. 

Without crowdfunding, many small businesses never would have been able to get a first meeting with a venture capital firm, let alone an investment. That’s because these investors are looking for the next billion dollar company, and one that can make it there fast. Crowdfunding websites help smaller businesses pitch their product to future customers, and raise money directly from their end users. This significantly increased the capital available to startups, and allowed more new businesses to enter the market.

The Future of Fintech

The latest disruptor in fintech is cryptocurrency. Bitcoin started the trend and revolutionized the way we store and transfer data through the development of blockchain technology. Think of Bitcoin as the Kim K of crypto. None of the other coins would be where they are without her. 

Then came Kylie, aka Ethereum. Ethereum changed the crypto game by introducing easy to use smart contracts. Before this, crypto consisted of fungible tokens, where one bitcoin is the same as another bitcoin. It’s just like a US dollar. If you exchange one dollar for another one, you can’t distinguish the difference. If you acquire more dollars, your balance increases, but you can’t differentiate any individual dollar from the others. 

Smart contracts added a new layer to this so non-fungible tokens, or NFTs, could be created. This meant you could create a completely unique element, sell it on the internet, and back it with a contract that was virtually unhackable. 

Currently, investors are using NFTs and crypto currencies as a store of value, similar to gold and tangible art. If you have too much money lying around, you can invest in digital art or crypto, and hope to combat the effect of inflation on your money while diversifying your portfolio. But since most of us don’t have an extra $69 million hanging around to spend on a Beeple NFT, the future for us peasants is in the application of smart contracts to the things we buy.

Smart contracts are the virtual paperwork behind one of a kind items, and normal people buy one of a kind items all of the time. Your house is a great example. It has its own address, features, amenities, problems, and good or bad, it’s unlike any other house in the world. The same is true of your car. 

The first way smart contracts can help everyday folks is by simplifying the buying process. All contracts can be signed securely on the blockchain network, and ownership can be easily transferred digitally. Again, like early fintech, making financial transactions more convenient.

The more revolutionary way smart contracts can be used in the future is by, you guessed it, democratizing the ownership of expensive assets. For example, let’s say that a developer wants to build a 300 unit apartment building in Miami. Traditionally, they could get some wealthy investors to give them money for the project, and would have their lawyers review contracts with their investor’s lawyers until they came to an agreement. 

With smart contracts, these agreements can be drawn up digitally, and once all conditions are met, ownership can be transferred. That means fewer attorneys involved, which opens the door for projects worth tens of millions or more to have hundreds or thousands of smaller investors instead of only a few larger ones.

Past the conceivable concepts of how smart contracts can be applied are all sorts of other ideas that seem completely out of this world. Will college students start selling their career in tokens to potential employers? Will hospitals start selling tokens to the public that offer varying levels of services? It’s impossible to understand or conceive of all of the ways blockchain technology and smart contracts will affect our future going forward, but I predict the innovations will have two features. They’ll create convenience, and promote democratization.

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Move Over WallStreetBets, There’s a New Way to Invest in Meme Stocks

Bee on pink flowers with the word buzz

Want to get in on the meme stock drama without having to monitor forums like WallStreetBets? Well, now there’s a way.

Introducing the BUZZ ETF. This ETF was created by investment firm VanEck and tracks the BUZZ Index, which uses artificial intelligence to select the 75 large-cap meme stocks that are generating the most “buzz” on social media. Hence how the ETF got its ticker symbol BUZZ.

If your FOMO is at an all-time high right now because you aren’t sure how you can get in early on the next popular stock, investing in this new ETF could offer you a solution. To help you decide whether the BUZZ ETF is a good addition to your portfolio, we’re going to break down what exactly a meme stock is, what criteria the BUZZ Index uses to select its holdings, and what the pros and cons of investing in this ETF are.  

What is a Meme Stock?

A meme stock is a stock that gets hyped up on social media, which causes an increase in the stock’s trading volume. Basically, people start hearing about the stock on platforms like Twitter and Reddit, so they go and buy it. The sudden hype and subsequent market transactions cause the stock’s price to go up, often to well above market value. 

How the BUZZ Index Selects Stocks

The index uses AI to search social sites, blogs, and other platforms and find the companies generating the most discussion on the web. It then looks for which companies in that dialogue have the most positive and bullish social sentiment. During these searches, the algorithm doesn’t only focus on talk of the company’s stock, business dealings, or financials but looks at everything from how people feel about a recent ad, to the reviews people are giving on a new product. It then forms an index of the top 75 scoring companies with a market cap of $5 billion+.

The index’s list of holdings is reviewed every month and updated as necessary. However, to cut down on transaction costs, if a company ranks in the top 75 one month and then moves slightly outside of this range the next month, say to 80th place, the algorithm will keep the company in the index and review it again in the next period.

Because of the month-long wait period between evaluations, the creators of the BUZZ Index say that short-term blips in stock prices, like we saw with GameStop, won’t affect the index. GameStop isn’t part of the fund’s holdings, mostly because its market cap was well below the $5 billion threshold when the short squeeze happened, but also because of how short-term its popularity was. Stocks that are extremely volatile for a very short period will most likely not make it into the index.

Should You Invest in the BUZZ ETF?


  • Young people are increasingly using social media platforms, blogs, and other alternate sources for information over more well-established news outlets. Platforms like Twitter, TikTok, and Reddit now have real power in shifting a company’s public perception and influencing the price of its stock. Since those sources are having a tangible effect on stock prices but aren’t considered in the traditional evaluation process for index holdings, investors in this ETF could see gains from information that would have been missed during a typical evaluation of a company’s financial statements.
  • Social media is playing an increasingly large role in a company’s marketing strategy. Companies that utilize social media well could have the upper hand against their competitors in terms of revenue growth. This index should pick up on the companies with good social media strategies, and investors could see better long-term results from the predictions the algorithm makes based on social media chatter.
  • By focusing on more stable, large-cap companies, the index reduces the risk a typical meme stock investor faces. Most of the companies we’ve seen pop up in the WallStreetBets saga would have been screened out by the index for having a market cap below the $5 billion threshold. They also only experienced brief peaks in their stock prices before they plummeted back to more normal levels. Based on this fund’s criteria, short-term fads like this most likely won’t impact BUZZ investors’ portfolios. 


  • While there is a month-long waiting period between evaluations to screen out super fast fads, there’s still a high potential for frequent fluctuations in the fund’s holdings, which isn’t ideal for the long-term investors who usually buy ETFs. If the index’s holdings fluctuate dramatically, investors may not be able to capture any real growth and will instead just be stuck holding that month’s most popular overvalued companies. 
  • Consumer sentiment doesn’t equal sound financials. At the end of the day, investing is about making money. It doesn’t matter how much you cheer a company on. If they don’t have a solid financial foundation something like the coronavirus can come along and knock them down, leaving you with little money.
  • Basing the fund’s holdings off of hype, which often inflates a company’s stock price, means that you could just end up paying more for the shares you’re buying than they’re worth. It’s like walking into a store and seeing shoes for $100 and offering the cashier $150 for them. You’d never do that with shoes, and you shouldn’t do that with stocks either. 
  • None of the behind-the-scenes companies will make it into the index because consumers don’t know their names and therefore won’t be hyping them up on social media. A good example of this is Tennant, the company I used to work for. They make industrial floor cleaners that I now notice everywhere. At airports, Home Depots, even at a train station in Italy. Large companies like this that are responsible for the inner workings of the brands we know will be missed by this index.
  • This has been done before. There was another social sentiment ETF that started in 2016 and ended after just 3 years. 
  • The expense ratio is relatively high at .75%.

The Verdict

If you aren’t super concerned about what’s been happening with GameStop, AMC, and Nokia, I say skip the BUZZ ETF. The expense ratio is fairly high, and the last attempt at an ETF like this didn’t work out. If you’re getting FOMO and think investing in this ETF could help you capture some earnings from meme stocks, try it out. Only time will tell how this ETF will perform, and since it just launched in March of 2021, we’ll have to wait to see how it all plays out. 

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Meet the S&P 1500, The S&P 500’s Bigger Sister

mean girls representing the s&p 1500 made up of the s&p 500 s&p 400 and s&p 600.

The S&P 500 is like the most popular girl in school. Everyone knows her name and the details of her life, even if they don’t know her personally. And while everyone has been hyper-focused on what she’s doing, they’ve completely missed out on getting to know her big sister, the S&P 1500.

She may be flying under the radar, but the S&P 1500 has all of the great qualities her more popular sister does, and then some. To help you get to know her better, here are all of the details on who the S&P 1500 is and whether you should invest in her or the S&P 500.

Who Is the S&P 1500 Index?

The S&P 1500 is an index that tracks the famous S&P 500, as well as the S&P 400 and S&P 600. Haven’t heard of the S&P 400 or 600 either? Not surprising, but they all have something in common. Like the 500, they’re indices that track the performance of several hundred US companies. What sets them apart is the size, or market cap, of the companies they track.

Market capitalization, or market cap for short, is the total value of all outstanding shares of stock in a company. For example, if a company has 100,000 shares of stock trading at $50 per share, the company’s total market cap is $5,000,000 (100,000 shares x $50).

Each of the S&P indices tracks a different sector of the market based on market cap. The S&P 500 index only tracks large-cap companies, some of which are the most high-profile companies in the US. 

An investor needs to know the market cap of any funds or companies they invest in because a company’s size impacts how risky it is. In general, large-cap companies are the least risky because they are better established and tend to be market leaders in their industry. The risk of them going bankrupt is much smaller than it is for a small-cap company that is in an emerging and unpredictable industry and has only been in business for a few years. 

Think Coke vs a CBD company. Coke has solidified its place in the beverage space and is the market leader in its industry, making it unlikely to go defunct in the next 20 to 30 years. On the other hand, while CBD is extremely popular right now, it’s a relatively new product and has a much higher probability of fading away over the next few decades. If that happens, CBD companies will be nonexistent. 

To help you understand the difference between the S&P 500, 400, and 600, here is a breakdown of the market cap and risk level of each index.

The S&P 500

  • Large-Cap
  • Typical market cap above $10 billion
  • Risk – Lowest

The S&P 400

  • Mid-Cap
  • Typical market cap between $2-10 billion
  • Risk – Medium

The S&P 600

  • Small-Cap
  • Typical market cap under $2 billion
  • Risk – Highest

Should You Invest in the S&P 500 or the S&P 1500?

One of the number one rules of finance is the greater the risk, the greater the expected or required reward. In layman’s terms, that means the riskier something is, the more money you can expect to make from it. Unfortunately, with a larger upside also comes a higher possibility of losing money.

Since the S&P 1500 contains small and mid-cap companies, it is a riskier investment than the S&P 500, again because the 500 only contains large-cap companies which are less likely to fail. While your odds of losing money are lower, that also means that if a smaller company in the S&P 400 or 600 breaks out, you’ll miss out on the earnings from its above-average performance.

The bump you get in overall market coverage by investing in the S&P 1500 vs the S&P 500 may seem small at only a 10% increase, but that’s nothing to scoff at. Buying the S&P 1500 means you’re investing in 90% of the entire value of the US stock market vs only investing in 80% of the market with the S&P 500. And remember that those smaller companies now could turn into the next Google or Facebook.

My Overall Assessment

If you can handle the added risk, invest in the S&P 1500. If you’re really risky, invest more heavily in the S&P 400 and 600, which have both historically outperformed the S&P 500 and 1500. If all of this talk about risk makes you anxious, stick to the popular sister you already know, the S&P 500. 

*full disclosure: I am invested in an S&P 1500 ETF.

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How to Get Over Your Fear of Investing

The stock market is a chaotic place. One day the market is hitting a new high, and the next, it’s in freefall. These constant ups and downs can make investing seem like that toxic relationship you had in high school you promised yourself you’d never repeat.

Sure, you had some great times, but the breakup was terrible! What if investing is the same way, and when you finally decide to call it quits, you have to cash out your investments when the markets down? Think about how quickly all of that money you worked so hard for that would vanish! Then what will you do? Sell your possessions, move in with friends or family, kiss the possibility of retiring goodbye, and find a job you think you can tolerate until the day you die? Talk about a nightmare. 

If you’re scared of investing, you’ve probably played a scenario like this out in your head. But I have a question for you. Do you actually know anyone who lost all of their money investing in the stock market?

My guess is you don’t. And if virtually none of us know someone that lost it all investing in stocks, why are we so fearful of it? I’m going to answer that question by breaking down the psychology behind why stock market investing is so intimidating, tell you how to overcome your fear, and fill you in on the investing strategy that makes it almost impossible for you to lose money.

Why You’re Scared of Investing

The reason you’re so fearful of investing is because of a concept called loss aversion. This is when people do more to avoid a potential loss than they would do to acquire a potential gain. The reason we do this is because losses feel considerably worse to us than gains.

Imagine if your boss sat you down and gave you one compliment and one criticism. You would probably fixate more on the criticism than the compliment. If one person leaves you a positive comment on Instagram, and another person leaves you a negative one, you’ll probably feel more strongly about the negative comment than the positive one. It’s not that we don’t enjoy the positive part, it’s just that we dislike the negative part more. The same is true for money.

Take the popularity of the debt freedom movement, for example. People absolutely HATE the idea of “losing money” to interest, so they throw massive amounts of money toward their debt to pay it off asap. But how much does this actually save you?

Let’s say you take out a loan for a $250,000 house at a 3.5% interest rate for 30 years. If you pay an additional $1,000/month on your loan, you save almost $100,000 in interest and shorten your loan by 17 years! That’s an incredible savings, but what would have happened if you had invested that extra $1,000 instead?

Assuming you’ll receive the average return of 10% per year, investing $1,000/month in the S&P 500 for 13 years (the same amount of time it would have taken you to pay off your mortgage), would earn you almost $300,000! And since your extra $1,000 isn’t going toward your mortgage, it’ll take you the full 30 years to pay it off. While that sucks, the good news is that if you keep investing your extra $1,000 over those 30 years, you’ll earn over $1.9 MILLION!

So it’s a no-brainer. You’d take the $1.9 million in earnings over a savings of $100,000, right? Many people don’t. Even though they know they can earn 19X more money by investing, many people still choose to pay off their debt rather than invest. Why? Because of loss aversion and certainty.

You know with 100% certainty that if you pay an extra $1,000 toward your loan, you will pay it off early, and you will save money on interest. Investing is more abstract. While highly probable, the massive gains from investing are not certain. The fact that there is a possibility, however small, that you could lose money investing holds people back.

Now that you can see the massive potential investing has, how do you overcome your fear and start doing it?

Start Small

If you think you need to have thousands of dollars saved before you can start investing, that couldn’t be further from the truth. You can start off investing $5 or by contributing 1% to your 401k. These ultra-low investment minimums have been made possible by the popularity of fractional shares.

What Are Fractional Shares?

Fractional shares are exactly what they sound like. They’re a fraction of a share of stock. Back in the old days, you could only buy an entire share of a company’s stock. This made buying stock in many large, well-known companies difficult for early investors because of their high share prices. 

Here are some of the current (by current, I mean the day I wrote this post) share prices for some popular companies.

  • Tesla – $670
  • Chipotle – $1.444
  • Google – $2,030
  • Amazon – $3,110
  • Berkshire Hathaway (Warren Buffett’s company) – $380,402

No, that isn’t a typo. To buy 1 share of Berkshire Hathaway costs almost $400,000! Few people have that kind of money to invest when they’re starting out, and that’s where fractional shares come in handy. If you only have $100 to invest, you can still invest in the companies listed above by buying the following fractions of a share.

  • Tesla – 3/20
  • Chipotle – 7/100
  • Google – 1/20
  • Amazon – 3/100
  • Berkshire Hathaway – 3/10,000

Being able to buy fractional shares means you don’t need to save up thousands of dollars and then get anxious about putting a large lump sum of money into the market at once. Instead, you can invest small amounts of money at regular intervals, an investing method called dollar-cost averaging.

What Is Dollar-Cost Averaging?

Dollar-cost averaging is an investment strategy where an investor divides up the total amount they’re going to invest into multiple smaller purchases. The goal is to reduce the potential losses you could face if the market drops immediately after you invest a large sum of money. Here’s an example.

Let’s say you want to invest $10,000 this year. If you invest all of it today, and the market drops tomorrow, you’ll lose money on all $10,000. But, if instead, you use dollar-cost averaging and invest $833/month, you’ll only experience losses on the money you’ve invested up to that date. If it’s June, for example, you’ll have invested $5,000 of your $10,000, so only $5,000 will be negatively affected.

Even better is that when the market drops, shares of stock become cheaper. So now, when you invest your $833 next month, you’ll be able to buy more shares with the same amount of money. Later, when the market goes up, you’ll be able to recover your losses and make money on the shares you purchased at the lower price. 

Another perk of dollar-cost averaging is that you can automate your stock buys, so you don’t have to constantly work to make investing a priority. Instead, you just set up automatic purchases, and everything happens behind the scenes. You don’t have to lift a finger.

To do this, open an investment account if you don’t already have one, select the amount you’re comfortable contributing, and determine how often you’ll make your contributions. Remember, $5/month is better than $0/month. You can always increase your contributions later as your comfort level increases. You’ve got a while to get comfortable, which brings me to my last point.

Invest for the Long Term

Long-term investing isn’t glamorous or thrilling like the investing you see in the movies or on the news, but it is a surefire way to make lots of money. According to a study by NerdWallet, a 25-year-old that invests 15% of their income into the S&P 500 for 40 years, has over a 99% chance of maintaining their initial investment. That means it’s almost guaranteed that you’ll at least get your money back. But the study went a little further.

It also showed that there’s a 95% chance that you’ll earn nearly 3X your initial investment! While this is just a simulation, if you look at the returns of the S&P 500 since its inception, you can see that they’ve gone waaaaay up.

If you had invested $100 in the S&P 500 in 1957, you would have over $50,000 today. That’s an incredible amount of money to make from such a small investment. So how can you do this?

Invest in a Diversified Fund

The key to great performance over the long term is investing in a diversified fund like an index fund, mutual fund, or ETF. Funds that track the S&P 500 are a great example of this. They hold all 500 companies that the S&P 500 index tracks, and when you buy one of these funds, you’re actually buying a fraction of a share of all 500 companies. 

Remember the saying, “don’t put all of your eggs in one basket?” Well in investing terms, this can be translated to, “don’t put all of your money into one company.” If you do, and that company fails, you’ll lose all of your money. If instead, you invest in an S&P 500 index fund and own 500 different companies, if one fails, you still have 499 more that you can make money from.

Investing in so many different companies reduces your risk because your chances of losing money decrease dramatically. If the thought of losing money in the stock market is holding you back, investing in a diversified fund is the way to go.

Hold Your Investments for Decades

The second thing you need to do is to hold your investments for decades. In the NerdWallet simulation, the investors held their S&P 500 shares for 40 years, and in our debt vs investing example, the investor held their shares for 30 years. Once you buy the diversified fund, you need to let it do its thing for a long time before you can earn a substantial income.

Take a look back at the S&P 500 graph from earlier. You see how the line is almost flat before it jumps dramatically up? This is due to compounding, which provides exponential growth. You have to wait out the slow period to reap huge gains later on. After decades of investing, the extreme growth in your investments will make it near impossible to lose it all.

So while it’s totally normal to be anxious about investing in the stock market and want to avoid it, it’s also irrational. Even though there are peaks and valleys, it’s basically a guarantee that you’ll make money, and a lot of it, if you invest in the stock market. You just need to stick to investing in diversified funds, automate your investments, and let them grow for decades.

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WTF is an NFT?!

Over $69 million! That’s the astronomical price that the highest-grossing NFT by artist Beeple sold for on March 11, 2021. And Beeple isn’t the only one making the big bucks. Cryptopunks, the creators of the first NFTs, made millions selling out all 10,000 of their pixelated character portraits. The top-selling of which grossed over $7.5 million!

In total, over $100 million in NFTs has been sold in the last 30 days. For reference on just how much that is, NFT sales for all of 2020 were just over $250 million. That’s a 500% increase in sales, so it’s safe to say the NFT market is booming.

All of the money pouring into NFTs has generated a lot of hype, but WTF even is an NFT? If you’ve been asking that question and are getting some serious FOMO, I’m here to help you out. In this post, I’m going to break down what an NFT is, tell you how they use blockchain technology and what that even is, fill you in on why they’ve become so popular, and give you my opinion on whether their popularity is here to stay.

What is an NFT?

NFT stands for non-fungible token, and since that probably didn’t help your understanding at all, here’s what that means. Non-fungible means that the item is one of a kind and can’t be exchanged for another one of the same item. For example, an original piece of art by Ashley Longshore (If you don’t know who that is, look her up. She’s incredible.) is non-fungible because only one exists. If you make 100 prints of her original piece, those are fungible because you can exchange one print for another copy of the same print.

It’s pretty simple to understand this in terms of physical art, but how does this translate into the digital art being sold as NFTs? Well, just like you need proof of authenticity for a piece of tangible art, buying an NFT gives you proof of authenticity for a piece of digital art. Sure, other people can make prints of the art, but they won’t have the real thing like you do. And you might be thinking, but isn’t it super easy to just fake this “certificate of authenticity” on the internet? Not with blockchain.

What is Blockchain

Blockchain is a type of database structure that stores information in a block, and once the block is filled, it chains it to the previous block. It then starts entering new information into a fresh block, and once that block is full, it gets chained to the previous block, and the cycle continues. This system stores data chronologically instead of the way a typical database does where the information is stored in a table format similar to what you see in an Excel spreadsheet, but on a much larger scale.

Another key feature of blockchain databases is that their information is typically stored on a decentralized network of computers. This setup is what makes it super hard to tamper with stored information or create fake certificates of authenticity.

A typical database’s information is stored on many computers that a company owns and houses in a single location. If the company wants to tamper with their stored data, they can easily do it because they have access to all of the components of their database.

With a decentralized database, like Bitcoin’s, the thousands of computers that store their information are owned and housed by thousands of different individuals. If one of these computers alters the information stored on it, all of the other computers, or nodes in the network, will recognize the altered information as incorrect and restore it to its original content.

This means that to fudge a certificate of authenticity, you would first have to get more than half of the individuals in the network to agree to modify their data in order to get the rest of the computers to accept the change. If politics is any indication of how hard it is to get the majority of people to agree, it’s safe to say that this task would be incredibly difficult. Unless you can climb that insurmountable hill and get over 50% of the nodes to agree to falsify their information, the rest of the nodes will never recognize your fake certificate as legit and will remove it from the database.

This almost tamper-proof technology is obviously great for traceability and security, but how is it making NFTs so popular?

Why NFTs are so Popular

The first reason is their ability to increase the value of a digital artist’s work. Before NFTs, digital art could be copied countless times, and the artist would never be compensated. This issue is demonstrated well by popular memes.

When a meme goes viral, everyone wants to use it so its demand increases. In theory, this increase in demand should push the meme’s price up, and generate more money for its creator, but since the supply of a viral meme can be increased by making a copy for free, the creator can’t take advantage of the popularity of their work and charge more for it. NFTs changed that.

Think of it like Van Gogh’s Starry Night. You’ve seen it everywhere. On wall prints for your house, postcards, mugs, you name it. And all of those knock-offs don’t decrease the value of his original oil on canvas, but rather, they increase it. The more people that recognize it, the more priceless it becomes.

NFTs could make the same possible for meme creators and other digital artists. When a meme goes viral now, the creator can sell the original copy as an NFT at a high price tag. If free copies of that meme keep circulating on the internet and generating more popularity, the original work will continue to increase in value, and the artist can capitalize on that.

On top of being able to sell their original work for top dollar, digital artists selling NFTs can also receive a royalty on all future sales because they maintain the copyright to their work. This is similar to how musicians receive royalties on their songs and albums well after their original release. NFTs make it possible for visual artists, writers, and others to continue earning money on one piece of art for years or decades after its first sale. 

In addition to the perks for digital artists, NFTs have also created a new market for art investors. Since the value of digital art can now appreciate, NFTs can be used as investments. This is what’s driving the price of the pieces selling for millions. It’s the same concept as a rich person buying a million-dollar work of art to hang on their wall in the hopes that years later, they can sell it for double the price. While the prices being paid for NFTs seem wild right now, investors expect these works to continue increasing in value, which means they can sell them at a profit in the future. But like with all speculative investments, the future value of NFTs is unknown. 

Will it Last?

Here are my predictions

  • Rich people gonna rich! Rich people will continue creating million-dollar valuations for digital art so they can invest in it and trade it amongst themselves, just like famous paintings and sculptures. For retail inventors like you and me though, I don’t see a great investment opportunity. When they start selling fractional shares of NFTs and create mutual funds for them, then we can get in on the action. Until then, us normal folks will be priced out of using NFTs as investments and will just keep stealing free digital art “prints” and won’t care at all about having the certificate of authenticity. 
  • If musicians start selling exclusive tracks as NFTs, it’s only a matter of time before we start using a platform like LimeWire to illegally download them for free. We’ve become accustomed to free music and I don’t see that changing, whether it’s fair to the artist or not. 

There have been several artists that have complained about the tiny cut musicians receive from streaming platforms like Spotify, but I just don’t think most people care that artists like Taylor Swift want several million more dollars. I do think original copies of heavily downloaded songs could sell at high valuations just like visual art NFTs currently are but I’m less certain about how this will affect the music industry.

  • The most beneficial thing for smaller artists will be the transparency behind the compensation other artists receive for creating content for big brands. NFT transactions hide nothing, so more artists will be able to see the rates other artists charge brands to use their content, which could increase the earnings for smaller creators. 

This transparency may also make it harder for brands to steal marketing content. Nowadays, if an artist claims that a brand stole his/her content, it’s pretty much a he said she said battle. Since small artists often can’t afford top-notch attorneys to compete with a brand’s legal team, it’s hard for them to prove a brand stole their content and seek compensation. This isn’t the case when it comes to NFTs, though. NFTs have a highly transparent ledger of ownership, so if a brand uses a creator’s content without authorization, the public could quickly look in the NFT ledger and see that the brand stole the artist’s work, which would be a PR nightmare.

  • These transparent and secure NFT transactions could also be used to streamline the buying and selling process of everyday one-of-a-kind items, like houses and cars. Using NFTs for these transactions would allow ownership to easily be established and transferred during purchases.

So I think it will be a while before NFTs become good investment opportunities for regular Joes and Joanns, but I also think their use of blockchain technology could start benefiting us immediately in other ways. They could provide a means for more digital artists to earn income, their traceability and transparency could help prevent billion-dollar brands from stealing small artist’s work, and they could streamline the buying process for other asset classes. Overall, I think NFTs are here to stay, but as for whether Beeple’s NFT will sell for more than $69 million in the future, I have no idea.

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Stock Market Investing Is As Easy As Grocery Shopping

It’s intimidating to start investing in the stock market. There’s tons of financial jargon casually being thrown around, lots of different acronyms, and sudden market swings that create chaos. All of this can make it seem like you’ll never be able to understand investing or make money doing it.

The good news is that the basics of investing are actually quite simple and if you master the basics, you can become a successful investor. To build your investing confidence, I’m going to tell you why stock market investing is just like a simple task that you do all the time, grocery shop.

Your Investment Account Is Your Grocery Bag

When it comes to stock market investing, the first thing you need to consider is the type of account you’re going to invest in. Each account has different advantages and disadvantages, but all of them do the same thing, hold your stocks.

Think of it like choosing between plastic, paper, or reusable grocery bags. All of these bags will hold your groceries, but each one has some pros and cons. Plastic bags are the most convenient and can easily be stuck under the sink to use as a dog poop bag later, but overall, they’re not very environmentally friendly. Paper bags are better for the environment, but they aren’t always available, and reusable bags are great for the environment, but you have to remember to bring them with you every time.

Some people prefer the convenience of single-use bags, while others bring their own bags to try and cut down on the waste they generate. The grocery bags you use reflect your individual goals and priorities, and so should your investment accounts. Regardless of which bag or account you choose though, all of them are designed to do the same thing, hold your groceries or investments.

To help you choose the account that’s right for you, here is a breakdown of the pros and cons of the most popular investment accounts.

Retirement Accounts

Retirement accounts are by far the most popular type of investment account. These are your 401ks, 403bs, and IRAs. All of them provide some sort of tax benefit, but they also have restrictions on how much you can contribute and when you can withdraw your money. Let’s get into the specifics of the main three.


401ks and 403bs are employer-sponsored accounts, which means you sign up for them through your job. Their main advantage is that their contributions are tax-deferred, which means that you don’t pay income taxes on any money you contribute to them until you withdraw the money later in retirement. This lowers your taxable income now, which means you pay less in taxes today.

Because of this benefit, there is a limit to the amount you can contribute to your 401k/403b each year. The limit for 2021 is $19,500. In addition to your contribution limit, you also can’t withdraw your money without paying a 10% penalty until you’re 59 ½. 

Traditional IRAs

Traditional IRAs are very similar to 401ks, but they aren’t employer-sponsored. Like 401ks, they take tax-deferred contributions, and you aren’t able to withdraw your money until age 59 ½ without paying a penalty. However, IRAs have a much lower contribution limit at $6,000.

Roth IRAs

Unlike 401ks and traditional IRAs, Roth IRAs take after-tax contributions, which means that you’ve already paid income taxes on the money you put in them. Later, when you withdraw your money after age 59 ½, you pay no additional taxes. The contribution limit for Roth IRAs is the same as traditional IRAs at $6,000.

The main difference to consider between the two IRA accounts is how you pay taxes. Because your contributions are tax-deferred in a traditional IRA, you end up paying income taxes on your earnings and contributions when you withdraw your money in retirement. Since your Roth IRA contributions are after-tax, you only pay taxes on your contributions and pay no taxes on your earnings.

Taxable Brokerage

Taxable brokerage accounts offer none of the tax benefits that retirement accounts do, but that means they also have far fewer restrictions. There is no contribution limit or minimum withdrawal age, which means you can put as much money in them as you want and take it out whenever you want. 

Your contributions to a taxable brokerage account are after-tax, just like in your Roth IRA, but your earnings are taxed at the capital gains tax rate, unlike in your Roth IRA.

Your Stocks Are Your Food

Once you’ve chosen your desired grocery bag, aka investment account, then you have to fill it up. Just like the food you buy at the grocery, some stocks are “healthier” for your portfolio than others, and those stocks should make up the bulk of your “diet”.

Index Funds/ETFs

Index funds and ETFs are the health food of your investment portfolio. Many people avoid them because they don’t have a lot of brand recognition or get a lot of flashy advertising but they should make up the bulk of your shopping list.

These funds are so good for your portfolio because they’re cheap and well-diversified. Their low price tag is due to the fact that they’re set up to track an underlying set of investments, which means they require minimal upkeep and research. 

One of the most popular indexes they track is the S&P 500, which is made up of 500 US companies. When you buy an index fund or ETF that tracks the S&P 500, you buy a partial share of all 500 companies in the index. It’s like buying a variety pack at the grocery so you can get a sampling of everything. 

Owning 500 companies instead of 1 gives your portfolio diversification, which reduces your risk. If you only own one company and that company does poorly you risk losing all of your money, but if you own 500 companies and one does poorly, you have 499 that can still make you money. 

With so many companies working for you, it’s nearly impossible to lose money if you invest in a market tracking index fund like the S&P 500 for several decades. That’s why these are the healthiest stocks for your portfolio. Over the long term, they’ll keep your earnings up at an extremely low price.

Actively Managed Mutual Funds

Actively managed mutual funds are the name brands that charge you more for their products because of their name recognition. Unlike index funds and ETFs that track the market, actively managed funds try to beat the market. They do this by hand-selecting a group of stocks they think will perform better than all the rest. 

To find these superior stocks, fund managers need to do a lot of time-consuming research, which is expensive. They then pass this expense on to you by charging you a high administrative fee called an expense ratio. 

The problem is that most of the time, these funds underperform the market. That means you end up paying more to invest in them but earn less. Just like the brand names at the grocery store that charge a higher price even though they’re not any better than the generic.

Individual Stocks

Just like all food is fine in moderation, the same is true for buying individual stocks. As long as you maintain a healthy long-term investment strategy for the bulk of your money, it’s ok to treat yourself every now and then. 

With food, you might splurge on your favorite ice cream or some cake and cookies. With money, you might buy the latest stock market gem. I’m looking at you, Tesla and GameStop. I’d recommend keeping your individual stock picks to less than 10% of your overall portfolio but it can be beneficial to indulge in individual stock picking from time to time to avoid FOMO.

Just like it’s tough to stick to a strict diet and eat only healthy foods for a long time, the same goes for investing. The constant chatter about people getting rich on the latest hot stocks can make it seem like your long-term investing strategy isn’t working. Allowing yourself to get in on a small piece of the hype can help you avoid feeling like you need to dump all of your money into GameStop or Tesla to try and get rich quick.

So while investing may seem intimidating on the surface, it’s actually as simple as a trip to the grocery. You should choose a shopping bag that fits your investment goals, fill it with mostly healthy food, save money by buying generic brands, and splurge on some of your favorite treats every now and then. 

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Investing Strategies Explained in Terms of Owning Pets

Investing can be hard to understand, but pretty much everyone knows what it’s like to own a pet. Maybe you’re a dog lover, a cat lady, or the oddball that’s really into snakes. No matter what furry or scaly friends you’re into, you know that different pets have different needs. Some take up a lot of your time and need daily attention, while others can be left alone with enough food and water for weeks at a time. Investing strategies are the same way.

The investing strategy you choose determines how much time and effort you need to put in if you want to be successful. To help you understand the different investment strategies out there and find the one that fits your lifestyle best, I’m going to break down each strategy in terms of which pet it’s similar to owning.

Passive Investing

Passive investing is a set it and forget it strategy that requires a moderate amount of effort to initially set up and needs very little ongoing maintenance. It’s similar to owning a goldfish, where most of the effort is in configuring the fishbowl and after that, you just need to feed your fish regularly. 

This strategy is so effortless is because passive investors buy index funds and ETFs that track the market and hold them for decades. This works because historically, the stock market has always gone up over the long term, and it’s nearly impossible to lose money after you’ve been invested for over 20 years. 

To become a passive investor, you need to open an account and build a well-diversified portfolio. There are several ways you can build your portfolio, and the way you choose will determine the amount of effort it’ll take to maintain it. 

Hand selecting all of your own investments requires the most effort. When you build your own portfolio, you allocate your money at a certain percentage to each asset based on how risky you want your portfolio to be. Over the year, some of your investments will perform better than others, and this will throw your asset allocation out of whack. To maintain your desired asset allocation, you should rebalance your portfolio about once a year. This method is similar to buying a regular ol’ fishbowl that needs frequent manual cleanings to prevent algae from growing. 

If you want to avoid this extra manual clean-up, you can use a robo-advisor or a target-date fund instead. Both of these manage your investment portfolio for you so you can be 100% hands-off. This is similar to buying a fish tank with a filter. You should check up on everything once in a while, but it’s much less work than a regular fishbowl. 

Value Investing

Value investing was made popular by the OG investor, Warren Buffett, and is when you find a company whose stock price is lower than what the company is actually worth and buy their stock “on-sale”. To find these companies, value investors pour over financial statements, calculate many ratios, compare the company to others in their industry, and project the company’s future growth. To be an incredible value investor like Warren Buffett, you have to use this information to make correct calculations and assumptions, and that’s not easy. If it were, there would be a lot more Warren Buffetts.

Because of the extreme amount of work value investors undertake to accurately price a stock, value investing is like owning a dog. As a puppy, they’re A LOT of work. You have to housebreak them, spend hours training them to sit, take them on a gazillion walks to wear them out, and replace several pairs of shoes they will inevitably decide to destroy. But if you put in all of that hard work, you’ll end up with a well-trained, amazing dog to call your own. Even better is that as your dog gets older, they get easier and easier. The same is true of value investing.

While a value investor could sell their stock immediately after the price corrects, they usually don’t. Value investors are in it for the long haul, and by long haul, I mean sometimes for decades. 

Value investors pick companies they think are on sale, but they also pick companies they think have great long-term growth potential. This way they can cash in on the short-term price correction, and with no extra effort, also cash in on the company’s growth in the long run. Just like with Fido.


Trading is what comes to mind when most people think about investing. GameStop is a great recent example of trading, which is when you try to buy a stock at a low price and sell it at a higher price. You might be thinking that this sounds exactly like value investing, but there’s a huge difference. The length of time the investment is held.

Traders look for short-term price fluctuations and sometimes only hold a stock for mere minutes before selling. This means they are constantly analyzing stocks to find the next deal. If you’re a trader, you can’t just skip a day and leave your portfolio to fend for itself. You constantly have to tend to its needs, be at its beck and call, and continually feed it more money. For those reasons, trading is most like…. having a newborn baby.

If you’re feeling tricked and thinking WTF humans aren’t pets, hear me out. While trading gets lumped in as an investing strategy, it isn’t actually investing. Investing refers to long-term buy and hold strategies, which trading is not. It’s a short-term strategy. So it requires the most effort and time and isn’t even an investing strategy, just like a kid requires constant attention and isn’t a pet.

Even worse is that unlike children, trading often doesn’t even reward you for all of your efforts. In fact, well over half of traders lose money. That’s because it is really hard to predict short-term market fluctuations without insider knowledge. Think back to GameStop. If all traders knew the price was going to rise, they all would have bought the stock, and then sold it before it dropped again. But not all of them did. Once the price fell, traders lost a whopping $27 billion altogether. Just like it’s hard to predict a newborn’s behavior, it’s also hard to predict a stock price’s behavior in the short term. 

Overall, the amount of time and effort required to be a successful trader is extraordinarily high compared to what it takes to be a profitable investor. Because of this, trading can’t even be compared to owning a pet, but rather it’s more like having a child. 

Which Strategy Should You Adopt?

Unless you want to take on the stress and risk associated with trading, I’d cancel that strategy out because you’ll probably end up losing money.

So now you’re left with value investing or passive investing and while you may be a dog person, I’d still recommend avoiding value investing. If you can find a company that is undervalued, you can make a great return, but these hidden gems are difficult and time-consuming to find. Again, if it were easy, we would all be billionaires like Warren Buffett.

Passive investing is the strategy I use and what I would recommend for most people. It’s extremely low maintenance and provides great returns. If you still want to have a little fun with your money, you can use a passive investing strategy for most of your money and then set up a separate “fun money” account. 

To do this, calculate your retirement savings goal, and set up automatic contributions to your retirement accounts to make sure you’ll reach your goal. After that, you can splurge on trendy stocks in a separate fun money account. That way, you aren’t compromising your long-term plan, and you can avoid getting FOMO whenever you hear about the latest hot stock.

Because at the end of the day, your money should be working for you, not making you work for it. Save the hard work for raising your kids and training your pets.

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How to Pick Impressive 401k Investments

woman holding money in an office

About half of Americans are invested in the stock market, and almost all of them are investing through a retirement account like a 401k. While individual stocks like GameStop and Tesla get most of the news coverage, these aren’t the stocks making most people wealthy. Much more wealth is being built through mutual funds, index funds, and ETFs in retirement accounts. 

Unfortunately, many of the people investing in these funds don’t know what they’re doing. When I first started contributing to a 401k, I had no clue what investments to pick or how to understand the information they presented to me. And I had a finance degree! To help you navigate your 401k and make as much money as possible, here’s everything you need to know about how to pick good 401k investments.

You’re Investing for the Long Term

401ks are retirement accounts and are therefore designed for long-term investing. They’re so serious about this that they charge a 10% penalty if you withdraw your money before the age of 59 ½. Yikes!

The good news is that it’s a piece of cake to make money in the stock market if you remain invested for a long time. Historically, the stock market has always gone up over the long term, so if you invest for several decades, it’s almost guaranteed that you’ll make money.

The keys to making the big bucks are to reduce your risk exposure by investing in a diversified set of assets and to invest in funds that ensure your return will exceed your expenses. Here’s how to do both.

Understanding Your Investments

Expense Ratio

High expense ratios are your ENEMY! A fund’s expense ratio tells you how much they charge you to cover their administrative expenses. The higher the expense ratio, the more of your money will go to paying fees. 

When going through your 401k offerings, select funds with an expense ratio of .5% or lower. Many funds offer expense ratios around .1% or lower, which is ideal. The high fee funds are going to try to tempt you to choose them, though.

Usually, funds with high expense ratios are actively managed. That means that a fund manager handpicks companies they think will provide their investors with higher returns than the market. Remember, the market goes up over time and usually provides investors with a positive return. Actively managed funds promise to provide returns that are ever higher than the overall market return, which is what tempts investors into paying higher fees.

Unfortunately, most of these funds fail. In fact, 68% of actively managed funds provide lower returns than the overall market. That means you’re paying more money in fees and receiving lower returns. That’s a terrible spot to be in.

Luckily, passive funds have much lower expense ratios because they track an underlying set of investments and seek the same return as the market. Since the fund manager doesn’t have to do extensive analysis to try to beat the market, the administrative expenses are much lower. Therefore, by investing in passive funds, you can expect to receive a higher return and pay less in fees. Now that’s a good deal! 

Market Capitalization

A company’s market capitalization (market cap) is the total value of a company’s outstanding shares of stock. Large-cap stocks are typically worth $10 billion or more, mid-cap are worth $2-10 billion, and small-cap are worth under $2 billion. 

It’s important to consider a company or fund’s market cap when choosing your investments because as a company’s market cap increases, its risk decreases, and vice versa. Large-cap companies are lower risk because they tend to be leaders in their market sector, are well established, and have been around for a long time. Mid-cap companies are typically in a growth phase and have the potential to provide higher returns than large-cap stocks, but their future is less certain, which makes them riskier. Small-cap companies are the riskiest because they tend to be in their infancy and are in emerging or niche markets.

If you’re more of a risk-taker, you can add funds that contain more small and mid-cap stocks into your portfolio, and if you’re more risk-averse, you can invest in funds that contain only large-cap stocks.

Market Sector

Simply put, a market sector is a part of the economy. Some funds are composed of stocks spanning many different market sectors, and some are only composed of companies in one sector, like technology or retail. Some funds also include international companies, while others only contain domestic ones.

It’s important to consider the diversity of market sectors in your funds when choosing your investments, again because of risk. The more market sectors you invest in, the less risk you have in your portfolio, and the fewer you invest in, the more risk you’re exposed to in your portfolio. When you’re invested in a broad range of market sectors, if one sector is doing poorly, the other sectors can minimize the effect the struggling one is having on your portfolio. Limiting your investments to only one sector or a couple of sectors exposes you to much more risk and potential losses.

Choosing Your Investments

Asset Allocation

Asset allocation is an investment strategy that seeks to balance a portfolio’s assets to match the investor’s risk tolerance. To do that, each asset makes up a certain percentage of the overall portfolio. This allows an investor to increase their percentage of risky investments if they’re seeking a higher return or to decrease their percentage of risky assets if they’re more risk-averse.

In general, it’s recommended that you reduce the risk of your portfolio as you age, but everyone’s risk tolerance is different. Overall, stocks are considered riskier than bonds, and international investments are riskier than investing in domestic assets. If you’re young and a risk-taker, you can invest more heavily in stocks and international investments and less in domestic bonds. If you’re older and more risk-averse, you can invest more heavily in bonds.

3 Fund Portfolio

A 3 fund portfolio is a very popular portfolio strategy that allows you to quickly put together a well-diversified set of investments at a risk level you’re comfortable with. To build this type of portfolio, you select 3 index funds, a US stock fund, an international stock fund, and a US bond fund. 

Once you’ve chosen your 3 funds, then you need to determine your asset allocation. If you want a riskier portfolio, you can invest 80-90% of your money in stocks and 10-20% in bonds. If you’re more risk-averse, you can hold a higher percentage in bonds. The beauty of this type of portfolio is that it’s simple and can easily be tailored to meet most investors’ needs.

Target-Date Funds

If the thought of having to build your own portfolio terrifies you, no worries. Target-date funds are for you. These funds determine your asset allocation for you based on your retirement date, and automatically invest in each fund at the percentage they recommend. This means you can invest all of your money into one target-date fund and get exposure to international and domestic investments, and to bonds. Target-date funds will also automatically reduce your risk exposure as you near retirement to minimize any losses you could experience right before retiring. 

Managing Your Portfolio

Once you’ve built your portfolio, you’ve done most of the heavy lifting, but it is important to review your investments at least annually. Depending on how each of your investments performs, your asset allocation could get out of whack over the year. 

If you began the year 90% invested in stocks and 10% in bonds, but stocks performed exceptionally well last year, you could have over 90% of your portfolio invested in stocks now. To return to the 90/10% asset allocation you desire, you would need to sell some of your stock holdings and buy more bonds.

Again, if this sounds like a lot of work, you can use a target-date fund. On top of them determining your asset allocation when you start investing, they will also maintain it for you over time. 

It’s easy to get overwhelmed when trying to determine what 401k investments to pick. Luckily, there are only a few key things you need to consider to pick good 401k investments. You should keep your expense ratios low, manage your portfolio’s risk by diversifying your investments, and build a portfolio that will provide you with maximum returns at a risk level you’re comfortable with. And if all of that is still too complicated, target-date funds are there to save the day.

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Formula for Net Worth: How to Calculate and Grow Your Net Worth with Tips from Jay Z and Beyonce

beyonce and jay z with pink money

Remember in the Wizard of Oz when Dorothy finds out that the Great and Powerful Oz is just a regular guy hiding behind an elaborate display? That’s what it’s like to peer behind the curtain of many “rich” people’s extravagant lives. One peek at their net worth would reveal that a fair number of them are frauds.

Someone’s net worth is a great indicator of whether they’re actually rich or just fake rich. In today’s world, where so much of our lives are broadcast on social media, we’ve been plagued with an epidemic of people who are fake rich. They look like they have it all, but in actuality, their net worth is negative and they buy everything on credit.

Celebrities aren’t immune to the fake rich phenomenon either. While on her Monster tour, Lady Gaga found out that she was $3 million in debt, Michael Jackson reportedly died $400 million in debt, and Donald Trump has declared bankruptcy a whopping 6 times. 

Two celebs are keeping it 100 with their money and are definitely real rich, though. Beyonce and Jay Z. Their estimated combined net worth is $1.4 BILLION! To help you get real rich like the Carters, I’m breaking down how to calculate your net worth and how to grow it using lessons from Jay Z and Beyonce.

How to Calculate Your Net Worth

Your net worth is the total value of everything you own after paying off all of your debts. More formally, it’s the value of all of your assets minus all of your outstanding liabilities. 

If your assets exceed your liabilities, your net worth is positive. If your liabilities exceed your assets, your net worth is negative. A negative net worth means that even if you sold all of your assets, you still couldn’t pay off all of your debt. That’s a problem.

The fake rich have negative net worths and use mounting debt to buy flashy assets like cool cars and trendy clothes. The problem is that the more debt you pile up, the less financially secure you are. If your whole life is financed using debt, it doesn’t matter how rich you look, you’re one of the fake rich.

To make sure you’re getting real rich, not just fake rich, you should calculate your net worth regularly. If your net worth is increasing, you’re building wealth and on the right track.

Below is the formula to calculate your net worth. 

Net Worth = Assets – Liabilities

What are assets?

Assets are property that you own that has value. Basically, if you can list it for sale and someone will buy it, it’s an asset. Simple as that. 

Some examples of assets

  • Businesses
  • Homes/Real Estate/Land
  • Cars
  • Investment accounts
  • Cash/Savings

To calculate your assets, list out all of the big stuff you own along with its current value. Smaller items like clothing and furniture are also assets, but these aren’t usually worth very much for most people. If you have designer clothes, antiques, or collectibles that are worth a lot of money, list those out too. Try to be as accurate as possible with the fair market value of your items.

Once you have all of your assets listed out, add up all of their market values to get the total value of your assets.

What are liabilities?

Liabilities are things that you owe. Your debts. They’re financial obligations that you have to pay to another person or entity.

These include

  • Mortgages
  • Car loans
  • Student loans
  • Credit card debt
  • Personal loans
  • Accounts payable balances

To calculate your liabilities, list out all of your outstanding loans and their current balances. Then, add all of them up to get the total value of your liabilities.

Formula for Net Worth

Once you’ve calculated your total assets and total liabilities, plug those numbers into the formula below to find out your net worth.

Net Worth = Assets – Liabilities

How to Grow Your Net Worth

Now that you know your current net worth, here are some tips on how to increase it. 

Buy Appreciating Assets

Buy assets that make you money, not assets that make you look like you have money.

To get rich you need to use the money you have to make more money. This goes for cash purchases and purchases financed with debt. Contrary to popular belief, not all debt is bad, and it can be a great wealth-building tool. Regardless of whether you’re using debt or cash to finance your purchases, you need to buy appreciating assets if you want to build wealth.

beyonce with Apeshit lyrics "pay me in equity / watch me reverse out of debt" against a blue green background
Image Source CapWay on Twitter

Appreciating assets are assets that make money. They do this because their value increases over time. Two of the most popular appreciating assets are real estate and stocks. Historically, the returns on both of these have been excellent over the long term. For beginner investors, these are great assets to use to start your wealth-building journey.

One of Beyonce’s most profitable money moves was when she asked Uber to pay her $6 mill in stock for her performance at an Uber event instead of accepting payment in cash. Four years later, her $6 mill was worth $300 mill! Investing your money into wealth building assets like stocks and real estate may mean that you forego having extra cash on hand now, but it also means that you’ll have a lot more wealth later.

Other appreciating assets include businesses, art, commodities, and collectibles. Jay Z talks about building wealth by investing in art in his song The Story of OJ. He says, “I bought some artwork for 1 million / 2 years later, that shit worth 2 million / few years later, that shit worth 8 million.” 

Jay’s lyrics clearly display the ability to compound your wealth by buying appreciating assets. In his example, he grew his net worth by $7 mill just by buying that one piece of art alone. And that’s just a tiny portion of what he invests his money in. By investing in multiple appreciating assets, he can speed up his wealth-building dramatically. The same goes for you.

Capitalize on Your Talents

Jay Z started Rocawear to make money for himself instead of for other brands. He noticed that every time he wore a brand or rapped about one in a song, that brand’s sales skyrocketed. He realized that if he created his own clothing brand, wore it, and rapped about it, he could have all of that money flow to him instead of another brand. So, Rocawear was born.

While you may not have Jay Z level influence, that doesn’t mean you can’t monetize your talents. The first step in doing that is obviously finding your talent. A great way to do this is to think about what advice friends, family, and coworkers come to you for. Is it outfit advice, health and fitness, recipes, or money? Whatever it is, if other people ask you for advice on it, they want to be influenced by you. Chances are others will too.

Once you know your point of influence, then you can monetize it. There are a lot of different ways you can do this. You can start a blog or YouTube channel, create an online course, build a following on social media, start an Etsy shop, open a store or restaurant, the list is endless. 

This method will not work if you don’t want to dedicate substantial time, effort, and possibly money to your new hustle, though. Creating businesses and building up a following can take years. If you aren’t willing to put a lot of blood, sweat, and tears into a new endeavor, don’t do it. You’ll end up wasting money. Instead, invest in low maintenance appreciating assets, as we discussed earlier.

The formula for increasing your net worth is simple. Buy more appreciating assets, and use less bad debt. The hard part is avoiding the temptation to become fake rich. Being fake rich is fun while it lasts, but it comes at the cost of constantly being on the verge of financial ruin. One day, the facade will crack, and the truth will be exposed. To avoid going from being fake rich to being real poor, you should invest in appreciating assets and capitalize on your talents. Doing that will grow your wealth and make you real rich like Jay and Bey.

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When to Start Investing: 3 Tips for a Beginner Investing in Stocks

The craziness surrounding the stock market is usually what turns beginners away from investing but last week, Reddit investors changed that. They caused chaos and proved that amateur investors can band together and take down richer, older investors. This show of force empowered young people to start investing in huge numbers. 

While I love how invigorated the GameStop battle has gotten people about investing, I’m also worried that newbie investors will fall victim to predatory financial tactics. There is so much misinformation promoting get-rich-quick schemes and risk-free ways to make 1000% returns on platforms like TikTok.

If it were as easy to get rich as they make it seem, we would all be doing it.

If you’re new to investing, I’m going to tell you how to cut through the BS and invest the smart way. Your success with this method won’t happen overnight, but it will happen. If you’re ready to stop reading because I’m not telling you how to get rich fast, let me ask you this. Would you rather take a gamble on getting rich quick or get rich for sure? If you picked the second option, these are my tips for what to do as a beginner investing in stocks and when you should start investing.

When to Start Investing 

A popular phrase in personal finance is ‘time in the market beats timing the market’. Time in the market means that the longer you leave your money invested in the stock market, the more money you’ll make. This is due to compound interest, what Warren Buffett calls the eighth wonder of the world.

He’s probably so fond of it because over 99% of his wealth was made after he turned 54. You read that right. If Warren Buffett had cashed out his investment portfolio to retire at 60, he never would have gotten super-rich and you probably wouldn’t know his name. He’s amassed so much wealth by lengthening the time he was invested in the market and letting compound interest work its magic.

Compound interest is so great because you earn interest on the interest you’ve already earned. This creates exponential growth in your investment portfolio, but it takes a while to see huge gains. That’s where the time in the market comes into play. The longer you leave your money invested, the more money you’ll make from compounding.

You can see the slow growth at the beginning of Warren Buffett’s tenure, and now much faster the growth is now. That’s due to compound interest. Graph from MarketWatch.

Timing the market, on the other hand, is fast-paced and means that you try to buy a stock when the price is at its lowest and sell it when it’s at its highest. This sounds simple, but if it were, the hedge funds would have seen their billion-dollar GameStop losses coming and been able to avoid them. 

The problem with timing the market is that it is a short-term investing approach and it’s nearly impossible to predict what will happen with the stock market in the short-term. If everyone had predicted the 2008 stock market and housing crash, it could have been avoided, and no one would have lost money. The same is true of the huge stock market drop in March 2020 when the novel coronavirus got to the US. And the same is also true of GameStop’s stock price surge. If it were easy to predict these swings, we would all be making lots of money doing it. But it isn’t easy. It’s almost impossible. That’s why time in the market usually beats timing the market.

To get as much time in the market as you can, you need to start investing as early as possible. Before you start, though, you should have an emergency fund saved. Investing is risky, and all of the money you invest can be lost in the blink of an eye. If you lose your job and your investments tank, you’ll still need money to live off of. That’s where your emergency fund comes in handy. So save for an emergency fund first, then invest.

Choose an Investing Approach

Once you have your emergency fund saved and are ready to start investing, there are three investing strategies you can choose from. Trading, value investing, and long term passive investing. Each method has a different level of risk and requires a different level of effort to succeed. To choose the strategy that’s best for you, you’ll need to assess your risk tolerance and the amount of effort you’re willing to put into managing your portfolio.

To assess your risk tolerance, take this quiz.

To determine the amount of effort you’re willing to put into your investments, read more about the 3 investing strategies below and select the one that is best for you.


Trading is a type of active investing that is all about timing the market. The goal with trading is to buy a stock at its lowest price, hold it until the price increases to a certain amount, and then sell it at a profit. Some traders only hold a stock for minutes or hours before selling. It’s fast-paced and requires a ton of research. 

Like I mentioned before, it is extremely difficult to predict how a stock’s price will move over the short term. That means there is a high potential to lose money with this strategy, so if you want to succeed at it, you’ll need to spend a lot of time researching stocks, market sectors, consumer habits, and more. Unless you thrive under high stress and want to dedicate most of your time to your investment portfolio, I wouldn’t advise trading.

Risk level: Very high

Time commitment: Very high

Value Investing

The second stock market investing approach you can take is value investing. This is the approach Warren Buffett uses. 

Value investing is an investment strategy where you buy stock in a company that you think is undervalued and has unforeseen growth potential. A stock is undervalued when the price it is trading for on the stock market is less than the actual value of the company. Basically, the stock is trading at a discount. It’s just like when you buy something on sale at a store. You feel good about your purchase because you know you paid less for the item than it’s actually worth.

You can make money using this investing approach because at some point, the stock price should adjust to match the company’s true value. When the price rises to the correct level, you make money. It sounds simple enough, but there are a lot of unknown variables involved in valuing a stock.

To determine if a company is undervalued, you first need to do a deep dive into that company’s financial statements. I don’t just mean glance over them. I mean, you need to use them to calculate their price to earnings/book/sales ratios, EBITDA, several other metrics, and to estimate their growth. Then you need to use all of these metrics to determine if the company is undervalued and has good long-term growth potential. If it does, it could be a good investment, but much of your assessment is based on assumptions. Those assumptions may be correct, or they may not.

To get great at value investing like Warren Buffett has, you have to make correct assumptions. Again, if becoming a billionaire were as easy as calculating a few ratios, we would all be doing it. Finding ways to predict the unknown variables correctly is what Warren is fantastic at and why he’s been able to make so much money. Unfortunately, his methods and earnings are hard for most people to replicate.

Risk level: Moderately high

Time commitment: High

Passive Investing

Passive investing is a long-term investing approach where investors try to receive the same return as the market instead of trying to beat it. Passive investors buy index funds and ETFs that track an underlying set of investments and hold them for decades. When a fund tracks an underlying basket of investments, it provides the same return as those underlying investments. For example, if you buy an index fund that tracks the S&P 500, your fund will perform the same way the S&P 500 is performing. No better and no worse. 

The reason passive investors are content receiving the same return as the market is because historically, the stock market has always gone up over the long term. Therefore, if you buy a well-diversified fund that tracks the stock market and hold it for decades, you can expect to make money even if the market drops in the short term.

Because passive investing doesn’t require you to predict market swings, this investing style requires minimal effort. The only time you need to exert any effort is when you select your initial investment and when balancing your portfolio. While there’s never 100% certainty when it comes to investing in stocks, since historically the market has gone up over the long-term, the probability of making money with this strategy is much more certain than with the other two investing strategies we’ve discussed. 

Risk level: Moderate

Time commitment: Low

Don’t Lose Easy Money 

Taxes and fees will eat into your earnings substantially and quickly. Here’s how you can minimize your losses to them.

Avoid Short Term Capital Gains Tax

When you sell a stock, you have to report your earnings as income and pay taxes on those earnings. If you hold your investments for less than a year, your earnings will be taxed at the short-term capital gains tax rate. For most people, this rate is the same as their income tax rate and is around 20-30%. All of the Reddit investors might not know this yet, but they’re going to lose close to a third of their earnings to taxes.

Instead, if you hold your investments for over a year, your earnings will be taxed at the long-term capital gains tax rate, which is around 15%. That’s 5-15% more money in your pocket for holding your investment for a longer period. This is another reason many investors take a long term investing approach over a short-term one.

Invest in Funds with Low Expense Ratios

Fees are another thing that will eat heavily into your earnings. If you’re going to take a short term investing approach, you’ll need to avoid trading fees. Fortunately, many platforms offer low or no trading fees, so these should be easy to avoid.

Long-term investors, on the other hand, need to watch out for high expense ratios. The reason so many people are tricked into investing in funds with high expense ratios is because, by normal standards, high expense ratios don’t seem high. What I mean by this is that a 2% expense ratio seems low to a newbie investor, but it’s actually super high. When deciding what fund to invest in, go for ones with expense ratios less than .5%. This may seem trivial, but high expense ratios can end up costing you hundreds of thousands of dollars.

If a person invests $1,000/month for 30 years into a fund with a .25% expense ratio, they’ll pay a total of about $55,000 in fees and end up with around $1.15 million assuming they receive a 7% annual return. $55k in fees may already seem like a lot, but just wait until you see the dollar amount for investing in a 2% fund. 

Instead, if they had invested their money in a fund with an expense ratio of 2% and received the same return, they would end up paying almost $376,000 in fees! That’s a loss of more than 6 times what the low expense ratio investor paid. Because of that, the high expense ratio investor winds up with less than $1 mill in their pocket. 

When it comes to newbie investors, there’s no shortage of misguided information on the internet. Social media platforms have made spreading misinformation even easier for the financial predators looking to get-rich-quick themselves. The truth is that smart investing isn’t glamorous or quick. It’s about making sure you’re financially secure enough to start, staying invested long enough to let compound interest make you millions, and minimizing the money you lose to taxes and fees. While there’s no guarantee that you’ll make money investing in the stock market, if you do those things, I can [almost] guarantee you will.