Episode 5 Summary
The second pillar of financial independence: growing wealth. As you are saving more and more money, you need to put your money to work for you and grow your wealth.
Episode 5 Show Notes
Mike talks about his new $48 REI jacket and clarifies how saving money works. Maggie admits her biggest financial regret over the last two decades was saving a lot, but not investing and growing her savings.
If you’re overwhelmed by the choices and complexity in investing options, we encourage you to simplify things and just do something now. Like now-now. Like stop reading this, and go make some changes. If you don’t know where to begin, then open up a Wealthfront account. Ok, after that come back and keep reading or listening.
Mike explains how compounding growth works. You’ll earn returns upon your returns upon your returns. Which is why it’s important to start investing early on, even if just smaller amounts.
We talk about the importance of taking advantage of your company’s 401k match, and even better max out your 401k if you can afford to.
Other topics we cover on this episode:
- Investing in the stock market. Mike talks about ETFs (exchange traded funds).
- When overwhelmed by options, just do something broad and diversified now.
- You need to save money so that you have money to invest. You need to know your level of lifestyle expenses so you know how much money you need to grow to sustain your lifestyle.
- Why we would never ever ever invest our money through a financial planner that charges an ongoing % of your annual assets invested through them.
- A little friendly competition – Mike and Maggie are going to each invest $5,000 for 90 days and see who’s investment does better. We’ll provide check-ins on progress at 30, 60, 90 days. We have no idea what the winner gets, so if you have ideas let us know.
- Comparing cholesterol to 401k performance, and which you’d rather have performing well.
- Maggie finally stumps Mike on the “Mike’s minute on the mic” question, as Mike answers with an “it depends” answer.
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Show References