Hi seekers,
Today we will talk about the easiest strategies to invest in your wallet!
If you haven’t watched my last video on personal finance, here is the link. I talked about how money or the lack there of, affects your mental health as well as scary numbers showing why you should start investing as soon as possible.
Investing may sound scary, but believe me, you don’t have to be an expert and do loads of research to make your money work for you.
Working for money is so passée…
1. Save
First make sure you don’t live over your means.
Oh my god I heard this tip like in every video ever!
I know, I know, but I will address many more tips and ideas im sure you haven’t heard of yet.
Remember: Everything you buy is either and investment or an expense. You can put money in education or in a third pair of nikes.
Invest in what you need, and cut the costs where you can:
- Get roommates
- Sell you car and bike to work
- Become a building manager so you don’t have to pay for rent
- Switch your phone plan to a monthly cheaper one
If you don’t make much, you can get support from the government to reduce gas and electricity fees by applying online to it.
2. Bank accounts
One of the first thing I realized is that not all banks are equal.
Check your bank accounts to make sure they don’t charge you all sorts of fees and that you get a high yield. Like 0.5 % if you can.
Since inflation is 2% year over year, if your yield is 0,5% you are losing 1.5% of your money. So make sur you have money in your savings just for emergencies and daily expenses like to pay rent. As well as 3-6 months funds in case of a, I don’t know,,, a pandemic of a zombie apocalypse?
3. Credit cards
Credit cards are great as long as you don’t use them to spend on stuff you don’t need.
On Amazon: I totally need these 7 pink Pokemon onesies.
Credit cards offer cashback options, you can get points, miles and other benefits so use that. Check out banks like Discover. In Japan I use Rakuten and get 1% points that I can redeem in shops and restaurants.
4. Debts
Try to pay off any debts you may have. Usually not as much an issue if you are not American, but avoid any debts unless you used it as a leverage to by property or use credit cards to get cashback. You cannot really invest if you owe money to someone.
5. Invest
When you start investing don’t invest money that you need in the next couple of months or years.
I do need all my money, what do you mean?
For instance, for countries where you have social security and medical care is affordable, and you don’t have a family and live alone. You may need only 5 to 10 thousand dollars of savings to get back on your feet. If you don’t have that yet, first work on saving that before starting to invest.
6. Tax benefits accounts
The first thing to invest in is
Teslaaaaar!
No, first, if you don’t have one, open a retirement account. IRA s in America, Tsumitate Nisa in Japan, or Third Pillar in Switzerland. You can also get life insurances.
That sounds like rich people s#!t!
We’ll call actually, that maybe a way to put money tax free in an account that you can claim at 65 or even before with some fees.
Automate it so you don’t have to think about it.
In Japan, SBI or Rakuten are the best places to open them. In Switzerland, Frankly by Zürich insurance or Viac by WIR bank are really easy to get started with a third pillar. In America there are loads of options with companies like Vanguard, Fidelity and more.
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7. What to invest in?
Okay, but I am not an expert, and numbers scare me a little. What should I invest in?
That’s what keeps most people to even look into investing…
Good news, there is a lazy peasy schnitzel squeezy way to invest safely without having to check any numbers.
ETFs
The easiest and safest way to invest is in ETFs or exchange traded funds. ETFs track indexes. What’s an index? It’s a list of stocks. Like SP 500 is a list of the best 500 performing companies. The Nasdaq 100 follows the best tech companies. ETF or Index funds basically buy the best stocks listed on the index it tracks. So instead of having to do the research, and buy individual stocks, you buy a basket of all the best stocks.
So it’s like if ETF were grocery shopping and buying a bunch of good products and then I kind own a bit of each?
Sure. I guess you could put it that way!
But stock are so expensive
Well now with fractional shares,
What’s fractional share?
It’s like buying bits of shares with the money you have. you don’t have to buy a whole share of Amazon at 3,400$, you can just put 50$.
What’s great about ETFs is that it has the best return you can get in the stock market, usually about 10%. to 15%. Even the famous Warren buffet says, and I quote:
Most people won’t beat ETFs. Y’all should put 90% of your keesh in the SP 500. yo!
What are the best ETF?
It all depends on your strategy but what seems to be the safest, cheapest with highest return ETFs would ones that track the SP500 and/or the total stock market. They actually prefers the best on the long term. Most ETF who track these indexes will have the same return since they track the same companies but what you have to look into is the expense ratio.
What’s that?
To invest in ETFs, since you don’t chose what to put your money into, they charge some fees. Some have as little as 0 percent like fidelity zero large Cap FNILX, Schwab SP500 SWPPX at 0,2 or Vangard SP500 VTI has 0,03%. Some good resources to check their performance and expense ratios is on You morning star or the app yahoo finance or even etf.com
The ETFs that look pretty good to me are:
Fidelity 500 index fund or FXAIX, it pays a 1.24% dividend per share. Every share you own will pay you 1.24% of the price back quarterly minus the 0.015 expense ratio. It has a ***** Morning star rating, which is really good and has an about 16% return per year in the last 10 year.
Vanguard SP 500 or VOO it pays a 1.34 % dividend minus the 0.03 exp ratio. It has a **** morning star rating and has a return of about 14% per year in the last 10 years.
Schwab US large cap or SCHX tracks the Dow Jones Total Stock index, which is the top 750 names by market cap. It pays a 1.41 dividend minus 0.03 expanse ratio. It has a performance of about 14% return per year in the past 10 years and has a ***** morning star rating.
Vanguard total stock market or VTI pays a 1.26 dividend minus 0.03 expense ratio. It has an about 14% return per year in the past 10 years and a **** morning star rating.
Of course make sure to do your own Due Diligence before buying anything.
The prices varies so the dividend varies. I tend to check which one has the best returns based on yield and performance and chose from there but these are all pretty good.
I do this simple calculation where if I was to buy 200$ of each and see how much the dividend would amount to. It’s just easier for me to see how much the potential return is.
8. And where do I buy them?
Okay, so where do I buy them eetfs?
If you already maxed out your retirement accounts, and are looking for other places to invest in etfs,
You can use Robinhood and Webull if you live in the US. Because I am not currently in the US not a US citizen I use PASSFOLIO where you can trade for free.
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You cannot get ETFs if you are based in Switzerland on that app though. So I recreate my own version of these ETFs but more on the next tip.
9. Blue chip companies
Okay but what if I don’t want to pay expense rations, or fees. Or if I have out enough in ETFs and wanna play with my money?
Next thing you can do, and this is totally up to you, and not necessary to do since you are already invested, and diversified in the best companies out there, you can pick and choose individual best performing stocks or blue chip companies.
Blue chips are internationally recognized, well established and sound companies who often pay dividends which is great if you want to develop passive income.
Or if you life in Switzerland and you don’t pay capital gain taxes, non divided stocks are good too to grow your overall wealth.
Who are these bosses of dividends paying companies you ask! Let’s see:
Johnson and Johnson, ticker symbol jnj
They have been paying dividends for only 59 years. That’s with going through all the crashes and crisis.
They pay about 2.56% per share, which is pretty good. It has. 43% payout ratio which is good. Below 60% is considered healthy for most companies. It has P/E ratio of about 24 which is a bit high. We want that to be closer to 15. At the moment it’s a recommended buy by analysts.
Microsoft, ticker symbol msft
They pay 0.77% dividend per share, a bit low but that’s usual for tech companies since they tend to be more growth oriented. It has a 32 % payout ratio. The PE is a bit high of 36, and it is a strong buy according to analysts.
Amazon ticker symbol amzn
They don’t pay dividends, so that would be more of a growth investment. It grew over 300% in the past 5 years. It has a target price of 4,145 and is now at a discounted 3,446 at the time of recording this video.
If you want to reproduce the SP 500, you want to diversify and get some stocks from each category. But not all are equal, here is the breakdown:
- Basic materials 2.27% (like CE or RIO)
- Consumer cyclical 12.01% (mcd, HD)
- Financial 14.2% (jpm, C)
- Real estate 2.58% (CBRE, BAM)
- Consumer defensive 6.32% (COST or CAG)
- Health care 13.10% (UNH or CI)
- Utilities 2.43% (NEE or NRG)
- Communication services 11.14% (FB or CMCSA)
- Energy 2.84% (FANG or PXD)
- Industrial 8.86% (ALLE or AMETEK)
- Tech 24.24% (APPL or ADBE)
10. Bonds
The other popular asset class is bonds.
My name is Bonds, Governmental Bonds.
Bonds is an investment in a government or a company. But at the moment, bonds don’t offer much of a yield. It may change in the future but since it’s not very exciting at the moment, I still let you do your research on the topic because I don’t own individual ones, but I am sure my life insurance does.
11. Crypto
Now one of the potentially best returns you can get are with crypto, but they are also very volatile. Which is not necessarily a bad thing. Remember, wealth is built during crisis.
So most suggest to invest less than 10%, or what you are willing to loose.
Okay but not all Crypto are equal!
Wanna be safe? First,go for the blue chips, the most established and safe ones to invert in are bitcoin and ethereum.
Bitcoins are legal tender in some countries like El Salvador, it’s legal tender in Florida, and big companies like Tesla or PayPal have lots of it. It has a market cap of about 1.2 T dollars and has been growing strong for the past 13 years. It’s often called the digital gold, because like gold its rare and difficult to produce. Have you heed off the 5 qualities of money?
durability, portability, divisibility, uniformity, limited supply, and acceptability.
Well Bitcoin does all of these better. Unlike money, its deflationary, which means it doesn’t lose value overtime because you don’t have the fed making it rain.It’s easy to carry around, its traceable and impossible to counterfeit. This asset is incredible and some experts see an about 200% return per year over the long term. That’s insane! Compared to the 7-10% for the stock market! So you should definitely look into that!
Next?
Ethereum is more of a platform than a coin, and has many other coins on its network, art, smart contracts and so forth. There are some really high returns expected for this one on the long and short term.
Good to know
Now, before putting any money, check the 52 weeks high and lows. And only buy big when the coin is at an all time low. But the best strategy is dollar cost avenge. I’ll talk more about that later. Don’t freak out when the price drops. It will, so don’t invest the money you need right now.
Scary as duck… as my autocorrect would say
Remember, on the long term, it’s an incredible technology and will most likely change the world like the internet, electricity or cell phones changed our world.
Where to buy crypto?
There are many apps for investing in crypto. Some if the most famous ones are Coinbase, Binance or even banks like Revolut.
Personally I use Swiss company Swissborg to buy crypto’s because they have great prices and high yields too.
Oh yeah, compared to 0.01% yields on banks, with crypto’s you can get joy to up to 20% yield on crypto savings.
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Gemini: Get 10$ in Bitcoin https://gemini.com/share/zyglaxc9
Blockfi: Best interests: Get up to 250$ in Bitcoin with my code: https://blockfi.mxuy67.net/e4kkVX
But you can also use Gemini to buy and then put them in BlockFi to get good yields. I would avoid using Robinhood or Revolution for crypto because you can only buy, hold or sell. You cannot send to someone or put them on a wallet to get yields.
But what about crashes? Won’t I lose my money?
12. Dollar cost average
If you worry about stock crashes. Well you should….Are companies over valued because of the crazy amount of dollar that the federal bank is printing? Most likely….
The thing is, it’s impossible to predict exactly when a crash will happen but most likely there is one coming up soon.
The best way to avoid loosing all your money and missing out on growth opportunities is by dollar cost averaging your investments or putting small amounts in those companies you believe in. And when the crash happens: make sure you have enough cash on the side to buy great blue chip stocks at discounted prices.
The other thing you can do is invest in some assets like gold that usually does pretty well during crisis (like on GOLD or NEM)
13.Diversify
Diversifying is the best way to absorb a shock or a crisis because most likely not all categories are going down. You can focus on some companies that won’t suffer too much from it like FB, Google or Amazon. Because et hey don’t really really on other companies and let’s face it, you won’t stop using social media or Google even if there is a drop on the stock market. What did you do during the lockdowns? Tiktok!!
In the next video I will talk about some alternative investments that you might want to consider to not rely only on the stock market. So keep an eye on my channel
Luca Nicora 