Money Rehab with Nicole Lapin - Your Richest Investment Is Closer Than You Think

Episode Date: November 21, 2023

The stock market can feel unfamiliar— but if you look around, your next super investment is closer than you think... literally. A good place to start looking for investments is in your very own home...! Today, Nicole explains— with help from her other podcast Money Assistant. If you want to see if your favorite companies are investable, have your very own chat with Magnifi and download the Magnifi app at moneyassistant.com. Subscribe to Money Assistant here, or wherever you get your favorite podcasts.

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Starting point is 00:01:56 every occasion, and every celebration. Be sure to check them out at justinwine.com and receive 20% off your order for a limited time. I'm Nicole Lappin, the only financial expert you don't need a dictionary to understand. It's time for some money rehab. If you're new to investing, the stock market can feel so intimidating and so unfamiliar. But the truth is investing is closer to home than you might think. Literally. If you look around right now at the things you have lying around your house, you can probably invest in most of the companies behind those products. Like,
Starting point is 00:02:33 do you have a Mac laptop? You can invest in Apple. More of a Dell person? No problem. You can invest in Dell too. If you have a car in your garage, snacks in your cabinet, soda in your fridge, a cell phone in your hand, you are already investing as a consumer. But you can invest as a, well, investor as well, which will allow you to reap the major benefits of successes of your favorite companies. Looking around at the things you touch every single day is an exercise I recommend people do if they're just starting to get into the market. And I actually took a listener through this exercise on my other podcast, Money Assistant, in an episode I'm going to share with you today. In the episode, we
Starting point is 00:03:08 determine not only how to figure out which brands you can invest in, but also which brands you should invest in. Here's Money Assistant. I'm financial expert and New York Times bestselling author Nicole Lappin. And I'm Magnify, the AI assistant that powers the Magnify app. And we are your money assistants. On the show, we help people overcome financial setbacks and meet their money goals. So here's what we're going to do. First, you'll hear me talk to a guest about their relationship with money and their financial dreams.
Starting point is 00:03:38 And then I'll provide a personalized game plan developed by the most cutting edge financial technology. If you want us to be your financial assistants, listen to the end of the episode to hear how. Until then, this is who we'll be assisting today. My name is John. I have been a healthcare professional for over 15 years, focusing on business development operations and project management. Currently in my position right now, I am making about $110,000 a year as a base salary with a 7% contribution to a pension plan. So with that said, my goal is to really grow my money for retirement.
Starting point is 00:04:14 You know, I do have a few buckets for short-term saving goals by using high-yield savings accounts, whatnot. But, you know, I'm not getting any younger and I want to make sure that I have a future that is as healthy as possible in terms of finances. So right now I do have a starting budget about 10 to 50,000 that I really want to grow long-term to a good sizable retirement plan. So John, we're going to put your money assistant to work soon, but we can't start there. Of course, we're going to put your money assistant to work soon, but we can't start
Starting point is 00:04:45 there. Of course, we have to start with your story and how money has played a role in that story. So let's, if you will, play a little game of word association. I'm going to say a word and then you tell me the first word that comes to mind. Cool? Sure. Cool. Retirement. Relaxation. Investing. Future. Debt. Not good. Two words, but I'll take it. Savings. Managing. Security.
Starting point is 00:05:13 Vital. Money. I would say I need it. Don't we all? What are some of the early memories you have, John, around money? Let's dig deep. Yeah, my earliest memories of money, of course, is, of course, getting maybe that first paycheck, you know, what do I do with it? I want to keep it, I don't want to spend it. So I definitely know the value of money, you know, and especially, you know, coming from my background that my parents are Vietnamese came to America after the Vietnam War with literally $25
Starting point is 00:05:41 in their pocket, and then saving and, you know, doing growing that money to not only buying a house, but owning a house, you know, and definitely through the eyes of entrepreneurship, because my both my parents are entrepreneurs. So I think I've been very I've been raised with knowing the value of money from as a kid. So I've been always making sure that every time I spend something, I think about it twice. So I've been very, I wouldn't say frugal, but I've been definitely very educated in terms of making sure that I know where to go to get the best bang for your buck. So I really have learned the worth of money from early on in life. I love that. So would you say that money has historically been a
Starting point is 00:06:23 source of stress or empowerment for you? Or a little bit of both? Yeah, I would say a little bit of both. And so it's always the stress of, let's say, I lose my job, then there goes my source of income. Also, the stress of making sure that, you know, I do have enough money to pay the bills, but also have something to save. I do have enough money to pay the bills, but also have something to save. But also the reward, the reward that I've done a great job, that I've been rewarded by my hard work through the money that I received at the end of the month, aka the paycheck. That's really smart. Can you tell me about a time when you felt like you needed a money assistant there with you, holding your hand, helping you along the way?
Starting point is 00:07:04 Yeah, definitely. I would say more the savings part, I've been more passively saving just through traditional bank accounts, maybe I'll do a CD, maybe I will do a high use savings account. But for me, I'm always afraid of doing the wrong thing. You know, I've heard horror stories about my friends and colleagues who have had a financial planner that got burnt or maybe invested the wrong way. So then their their savings is now have gone. So I'm always afraid of what to do and who to trust. And so I think that's when you're mentioning about that person to handhold you or that mentorship. about that person to handhold you or that mentorship.
Starting point is 00:07:48 I think that is the challenge that I'm facing right now is how can I make my money grow and who or where should I trust to get that going? Well, John, you are doing awesome. Just let's take a moment to appreciate that. You're making six figures. You're contributing 7% to retirement. It's awesome to hear. So you're doing great. We can all get better no matter where we are. But do you feel like overall, you're in a stable place with your finances right now?
Starting point is 00:08:18 Yes, I feel like I'm in a very stable place. I do have an emergency fund. So I definitely feel like I'm stable, but I can always want to be stronger in that stability, both short term and long term. I feel the same way as a first-generation American, too. There's a lack of that. And so once you get to a certain place where your former self wishes you were, it's nice to appreciate that. But there always feels like there's more. You said you're ready to start investing, though. What made you feel ready? A number of things. First time is my enemy in a sense. I'm in my mid 40s right now. So I know that I don't have that much longer to just basically be complacent. I feel that it's time for me to really make a jump and make a jump immediately or around soon, I should say. And then I just feel that I want to see my money grow. Yeah, you work really hard for your money. Yeah. I think it returned the favor.
Starting point is 00:09:26 Exactly. It's only fair. Yes. Did you say, just to clarify, that you have between 10 and 50 to invest or 10 and 15? 10 to 50, 5-0. Oh, okay. Yeah.
Starting point is 00:09:38 And where is that money right now? Right now it's in the savings. It's in high yield savings. So 50 grand is sitting in high yield savings. 50 grand is is sitting in exactly high yield savings do you know what percentage that's getting i think right now it's getting about 4.4 percent okay that's not bad not bad but can always do better exactly exactly so let's get into it as a starting point john do you think the conventional wisdom of building out a portfolio allocation with your age in bonds is a good idea so So that means that in your portfolio,
Starting point is 00:10:06 the ratio of bonds to stocks would be based on setting your bond allocation to your age. So when I was 25, I had 25% of my portfolio in bonds, 75% of my portfolio in stocks. As you get older, the rationale behind this is that you get more and more invested in bonds because you want less and less risk and bonds are less risky than stocks. Does that make sense? That makes sense. Cool. So let's talk about stocks.
Starting point is 00:10:29 If you're ready to get into the stock market and you're a new investor, starting can feel totally unfamiliar and foreign. But that's not true. It's actually more familiar than you think. For example, what are some of the companies that you love or you use a lot? Definitely. Well, I am a coffeeholic. Starbucks all the way when I make pastries is too. And exactly. I have my drink here as well. Cheers. I haven't been to Seattle yet, but I definitely want to experience the first Starbucks and walk through those stores.
Starting point is 00:10:59 Oh, you're like a super fan. Yeah, maybe I am. My cardiologist might not like me, but I think you're right, Nicole. Maybe I am a super fan. Yeah, maybe I am. Like cardiologists might not like me. But I think I'm I think you're right, Nicole, maybe I am. Maybe I am a super fan of well, coffee in general, coffee in general, but definitely worse addictions. Yeah, exactly. I'm with you on it. Yeah, can't start my day without my Starbucks. And then, you know, I'm weird. I love Mac products on computers, laptops, everything but the phone. For some reason, I'm not an iPhone person, I'm an Android person. So when it comes to phones, I'm always a Samsung guy. So I love Samsung, I love everything that has to do with that, you know, but I'm also interested in just learning
Starting point is 00:11:36 more about technology, especially in the healthcare space, healthcare, AI, brain, AI, neuroscience, all that I'm very interested in to learn. So a lot of the brands that are out there, I'm very interested to learn more about what's out there. My fiance is a runner. I'm not. I pretend to be a runner, but she got me Hoka's. I think they're the best shoes ever. Cool.
Starting point is 00:11:56 So Starbucks is a publicly traded company. Hoka's parent company is Decker's Outdoor. It's a publicly traded company. I've covered it for years, actually. So that means that you can invest in those companies. You like them so much. Samsung actually doesn't trade on a U.S. stock exchange, so it's difficult for American investors to invest in the company. But Starbucks and Decker's are totally fair game. So, John, here's what I'd love to do. Let's bring on your money assistant to see if those companies are good potential investments for you. You already invest in them as a consumer. Let's
Starting point is 00:12:31 see if you can be an investor as well. Awesome. The best place to start here, I would say, is to look at the ROI, which is an acronym for return on investment and the volatility, which is basically a measure of risk. You ready? All right. on investment and the volatility, which is basically a measure of risk. You ready? All right. Hi, I'm your AI investing assistant powered by Magnify. And yes, I'm AI. I'm engineered to answer your biggest investing questions and help you make your money work for you. Hi. I have done the research for you and I have compared Starbucks and Decker's across
Starting point is 00:13:01 volatility and returns over a one year period. Decker's has returned and returns over a one-year period. Decker's has returned 46% over the last year, and Starbucks has returned nearly 5% over the last year. Decker's volatility was 30%, and Starbucks's was 24%. Cool. Thanks, Magnify. So here are a couple of things to note, John. The last few years have been really nuts. So I normally look at a stock over a longer time horizon than just one year. So Magnify, can you share the historical returns of Starbucks and Decker's not just over the last year, but over the last five years? Absolutely. Decker's is up over three hundred and fifty five percent over the last five years, and Starbucks is up eighty one percent over the last five years. Do you want to add
Starting point is 00:13:47 these to your portfolio? Yes, definitely. So one thing I'd also do, John, is to keep an eye on that volatility. You know, Magnify mentioned that Starbucks's volatility is 24%, Decker's volatility 30%. The stock market is a volatile place. That's just how the stock market behaves. So you're not going to see a stock with zero volatility. But what I do is compare a stock's volatility against the market's overall volatility. And one way to do that is to look at a fund that tracks the market and look at the fund's volatility. Do you know what a fund is?
Starting point is 00:14:18 Could you define that? Of course. So a fund is basically a collection of stocks. And typically, investors will invest in funds because it's less risky than investing in just one particular stock. So investors use funds basically as a proxy to look at bigger trends. Like there are a bunch of banking funds that hold on to different bank stocks. And then by grouping them together, you can see the trends of the entire industry or the sector as a whole. So there are a few funds that are used as proxies to track the whole market.
Starting point is 00:14:47 One of them has a ticker symbol SPY, so that tracks the S&P 500. Do you know what a ticker is? Yes, I do. OK, cool. So the ticker is basically like the nickname for a company on the stock market. Magnify, how volatile was SPY over the last year? SPY's volatility over the last year was 17%. Okay, so both Starbucks and Decker's were more volatile last year than the overall market.
Starting point is 00:15:14 How does that make you feel, John? Confident, a little bit. Yeah. And there's also a pulse check that you can do with the VIX, which is a volatility marker of the stock market. You can check that like every day just to see if it is as volatile as it feels. And oftentimes, it can feel that way. Like when I first started investing, I felt like I needed a volume when I looked at the market. So if volatility makes
Starting point is 00:15:39 you nervous, you're not alone. There's another way though, to handle all this. Remember, I I said look at funds to hedge against risk? Well we can search for funds that contain deckers or contain Starbucks let's say. So Magnify can you search for funds with exposure to deckers? Yes here are the funds that hold deckers. QCGDX which is the Quantified Common Ground Fund, and TAGX, which is the Timothy Aggressive Growth Fund. Over the last year, QCGDX had a return of 0.2% and TAGX had returns of 3%. And over the last year, QCGDX had volatility of 17% and TAAGX had volatility of 20%. All right, Magnify, thank you so much.
Starting point is 00:16:30 What about our favorite, Starbucks? Yeah. Here are the funds that hold Starbucks. FDLSX, which is Fidelity's Select Leisure Fund, and IMSCX, which is the IMS Capital Value Fund. Over the last year, FDLSX had a 18% return and IMSCX had a 27% return. FDLSX had 17% volatility and IMSCX had 19% volatility. All right, Magnify, that was a mouth full. Some of these tickers get really crazy. So this is the perfect illustration, John, of the cost benefit analysis of funds. They have less volatility than buying Starbucks outright or Decker's outright, but they also have a lower
Starting point is 00:17:25 return. It's a trade-off with funds. So the ones that tend to have lower risk also have lower return. The ones that have higher risk, though, tend to have higher return. So I'd love to just pause for a second and get your reaction. That's good, because it's good to know, because I'm always afraid of the high reward part because of the high risk. Like I said, I think I will be having an anxiety attack every time I go on, I check my data reports and whatnot. But with the funds, I think, I think I feel safer that way. Because I think I'm always the person that goes the safe route. And I think that, you know, doing something that's low risk, but low reward could be something that I want to start with. So yeah, I mean, it's good to know there's options out there. So many options. And let's talk on the topic of funds just for a sec. We just search for funds that contain a certain stock. So we could also search for funds that track a whole industry. So when you read the news, do you find yourself reading about any one industry in particular? It sounds like you have an interest in science and neurotech and AI. So you probably nerd out on some tech news like I
Starting point is 00:18:30 do. Yeah, of course. You know, of course, of course, listening to you, Nicole, and your podcast whatnot. But yeah, I'm always I'm always interested about, you know, what's going on in the financial world as well, because it's always interesting, especially that relates to health tech and technology whatnot. That's awesome. And that's really important, because it's always interesting, especially that relates to health tech and technology, whatnot. That's awesome. And that's really important, because that just makes you an overall more knowledgeable investor, and you can jump on things as they happen. So let's look closer at tech. Magnify, can you share some funds with exposure to tech? Yes, here are the funds with exposure to tech. IYW, which is iShares US Technology ETF, and QTEC, which is First Trust NASDAQ 100 Tech Sector ETF. Would you like me to compare these funds? Yes. Over the last year, IYW had a return of 35% and QTEC had a return of 35 and q tec had a return of 29 during that period i y w had
Starting point is 00:19:29 volatility of 26 and q tec had volatility of 30 all right so john i know this is a lot of information like so many numbers so many letters all the letters. But it's the information that really unlocks the next steps to wealth. So if we step back, you have a chunk of money that you have sitting in a high yield savings account, which is a great first step. But you want to invest that. So you want to step it up a little bit. You are going to invest your age in bonds. So it sounds like that's going to be 40-ish, right? In bonds. Ish, yes.
Starting point is 00:20:08 And then the remainder in stocks. And when you're building out a portfolio, it's a really good thing to invest in some of the bigger funds that track the entire market, like SPY that we talked about. There are also others that do very similar things, track the same indices like VOO, but sprinkle in also some companies that you really believe in and that you're a consumer of like Starbucks or Decker's or a fund that includes Starbucks and Decker's. It just depends on your risk tolerance. How do you feel about taking some of these next steps to getting into the market? No, I think it's great.
Starting point is 00:20:45 And thank you. And thank you for the AI because this is what I need. Some clarity, some real-time clarity on it. Because as you just said, Nicole, there's so many acronyms and so many numbers that one person like myself tends to get kind of drowned with so many data that just doesn't make sense. It just at the end of the day, just like a bunch of numbers and letters. So it's good that we were able to define that for me and shed some clarity in terms of what's out there for me and how do I proceed. I love that so much. I mean, I have the very same reaction. I get very emotional with money. You know, money is so loaded. We all have money stories and traumas and memories. And so using AI to pick out the data, which is still important,
Starting point is 00:21:32 that's most relevant to you. But taking out the emotion I find to be so valuable. Yeah, I think that's true. I think it's taking away that emotion, also taking away from that potential anxiety attacks, whatnot, and know that this is a long-term thing and get ready and be ready for that because like I say, it's a volatile market. So like a roller coaster, when it goes down, it'll go up. And so just having that mentality that it's for long-term.
Starting point is 00:21:59 All right. So while I don't necessarily believe in woo-woo money manifestation stuff, money is a mindset. And in order to get into the market and stay in the market, you do, I believe, need the confidence in your decision making. And stay true to that and stay steadfast. So if you don't mind, repeat after me. I will invest in myself. I will invest in myself.
Starting point is 00:22:32 Do the work. Do the work. And meet my financial goals. And meet my financial goals. Yay. Yay. Money Assistant is a production of Money News Network. Money Assistant is a sponsored podcast by Magnify. Magnify is the AI designed to help you invest. Yes, you. You too can have me and Magnify as your money assistants. Subscribe to Magnify at moneyassistant.com and not only will you get your own AI financial sidekick, but you'll also get access to a members-only live Zoom workshop with me where I'll answer your investing questions and together we'll get you on the road to financial freedom. Advisory services are offered through Magnify LLC,
Starting point is 00:23:04 an SEC-registered investment advisor. Mutual funds and exchange-traded funds, ETFs, are sold by perspective. Please consider the investment objectives, risks, changes, and expenses carefully before investing. The perspective, which contains this and other information about the investment company, can be obtained by the fund company or your financial professional. Be sure to read the perspective very carefully before you decide whether to invest. This is a sponsored podcast paid for by Magnify LLC. I'm a client of Magnify LLC, so this should be considered an endorsement or testimonial. Magnify LLC is a client of Money News Network LLC, so I do have an incentive to promote this client. The testimonials provided may not represent the experience of other clients and are not a
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