Apps in this section: Wealthfront, Robinhood, Redtail

I don’t have a story for you for this section. Sorry!

Instead, I wanted to take a moment and just reflect with you on what you’ve accomplished so far. Everything you’ve looked at and signed up for is going to help you on your journey forward - you’re controlling your present, saving for emergencies, and basically setting yourself up to be awesome with minimal effort.

This is no small feat. Millions of people go through life letting it happen to them, and then wondering where it all went wrong once it’s too late. You’re not letting yourself be a victim to life, and that’s awesome.

This section is for those who really want to prepare for the future - once again, painlessly. I’m going to show you how to invest, and how to do so in a safe and informed way. As always, everything I’m showing you I personally use, and I’m always here if you have any questions.

So! Let’s talk about the future - let’s talk about investing.

Retirement, for me, is a good… 40 years out, most likely. It’s so far in the future, most people just don’t even think about it; it’ll solve itself, or I’ll figure it out when it’s closer. Thankfully, you’re not most people.

Investing in the stock market is the only way for the average person to amass enough wealth to retire in comfort and dignity. On average, the market returns roughly 6% - 9% a year - and through the magic of compounding interest, your small dollars now will be worth large dollars when you’re ready to pull them out. Although the market does go down - and sharply, when it turns, it always goes up more than it goes down. Reflect on that for a moment.

I know some of you are still scared about the market fluctuations. “I put my money in, and then Bankers/Big Corporations/The Man will just scam it out of me!” Well, let me put this into some perspective for you:

The Dow Jones Industrial Average (DJIA), aka “The Dow”, is a broad index of large companies; basically, people use it as a benchmark to see how the market as a whole is performing. If it’s up, the market is “healthy” and if it’s down, the market is having a problem. The Dow is sitting at roughly 19,700 at the time of writing this.

In 1995, The Dow was at roughly 4,000.

The Standard & Poor’s Index, aka “The S&P500”, is a broad index that tracks the top 500 largest companies on the market. It works just like the DJIA in that it’s a benchmark for the market as a whole. The S&P500 is at 2,200 at the time of writing this…

in 1995, it just passed 500.

Are you seeing the pattern here? During that time, we had the rise of the Internet, the first Dot Com bubble burst, 9/11 and the Enron/Worldcom Scandals, The first recession, The long Iraq war, The Great Recession….

If you had just kept your money in the market, you would’ve made money.

This is why people invest - this is why it’s important to put some money away. If you make sure to tune out the market and the latest reason why The World Is Going To End™, you’ll be fine.

Now, there are many ways to invest, and many different reasons for each one. I’m going to cover both passive investing and active investing, and I encourage you to engage in both types.

Passive Investing is where a majority of people participate in the stock market. This is done through investing accounts like a 401k or a Roth IRA. If you don’t have either of those, go sign up right now. Usually your job offers a 401k program, and if you’re making under 130K/yr you can participate in a Roth IRA. The important distinction is that a 401k program grows before

it is taxed, and you’re taxed when you withdraw your money at retirement. A Roth IRA program grows after you are taxed, but you can withdraw your money tax-free.

If you have a 401k from a previous employer, or would like to start a private Roth IRA program, there is no better place to do it than at Wealthfront. Let’s go to the Quick Stats!

Quick Stats:

App name: Wealthfront

Creators: Wealthfront, Inc - backed by an A-team of investors

Cost: 100% Free for first $15,000 of money managed

What it does for you: Awesomely invests your money for the long term

Now, I say there is no better place to invest your money than in Wealthfront, and that’s a pretty bold claim. There are multiple reasons why I say this, but here are some of the big ones:

Responsive support: Every time I call I get a person almost immediately
Low fees: Other investment companies charge you a high yearly % to manage your money. Wealthfront is mostly technology, so they pass the savings onto you.

New-investor friendly: They waive any fees on the first $15,000 you invest. This means you can deposit a couple hundred dollars, leave it for a decade, and only once it grows past $15,000 would you be charged a dime.
Responsive App: Their phone application works like a charm and shows me a ton of data. I have more insight into my nest egg with Wealthfront than I did anywhere else.

Before I found Wealthfront, I had 3 separate 401k accounts from previous employers. Just think about that - I had 3 little nest eggs that I got a paper statement from once in a blue moon, and if I didn’t throw it out it would tell me that I lost money from my advisor fees. I didn’t know what I was investing in, I didn’t have a choice, and I had no way to really contact anyone to manage these accounts.

Wonderful.

Wealthfront helped me roll all these accounts into one single account, and diversify my investments accordingly. I was also able to start a Roth IRA, and all of it is managed by one company. So far, I’m very impressed with my return; it’s positive, for one, and if I keep saving I’m on track to have a nice ending to my career.

By itself, this would be enough. Every time I leave a job, I take the 401k money from my previous employer’s plan and pour it into Wealthfront… eventually I’d have enough to retire, and that would be that.

However, if you do not actively invest, you are missing out on participating in the companies you admire, building wealth for specific goals - like a car or home - and possibly getting a higher rate of return than with passive investing alone.

Active Investing is… I’m not going to lie. It’s a lot of fun. You’re able to buy specific companies that you believe in, you get to vote on their management, you share in their triumphs and defeats - and with your money, you also get to show the market as a whole what you believe in and what you want to see made.

The problem until recently has been twofold: To invest actively you needed to

sign onto an expensive broker platform which will nickel and dime you to death, and
you needed to perform rigorous research to determine what stocks are best for you to invest in.

This has pushed investing out of the reach of the average person. Why invest $10 if it costs me $6 to place that trade? Why invest if I don’t know the fundamentals of the company, and can’t invest hours each day doing research on a single stock?

This is where the next two programs come in; Robinhood and Redtail. We’ll start with Robinhood:

Quick Stats:

App name: Robinhood

Creators: Robinhood Financial, LLC - also backed by Google Ventures

Cost: 100% Free, 100% Free Trades.

What it does for you: Allows you to actively invest without costing you an arm and a leg

Robinhood is pretty awesome, in and of itself. It’s totally a phone application - you can’t get it on your computer. Robinhood makes their money from loaning serious day-traders money and off of interest of any leftover money in your Robinhood account. This means that they don’t charge you a dime for anything - you can make 100 trades in a day, and it won’t cost you a penny.

With each stock you search for, you’ll see a chart on how the price has changed over time, some recent news, and statistics of the company. For what it is - a trading application for the normal guy - it’s perfect. You deposit money from your bank account, it shows up in a day or so (or instantly, if you’ve been a member long enough) and start investing.

A couple taps, and that’s it. You’ve just bought Ford. Or Tesla, or Google - or any company you want to support.

Now, of course the next question is: “How do I know which companies to invest in? How do I know I’m making the right choice?” To be quite honest with you, there’s no way to know with total certainty.

I’m 100% serious. Billion-dollar companies and people trading on their morning commute face the exact same problem. There’s no way to know if you’re making the right choice, but you can know if you’re making the right choice for you. This is wrapped up in the concept of Due Diligence, which is the fancy term for “do your research and don’t invest blindly.”

Doing proper Due Diligence is a hard, but worthy process. You read financial statements, you research cash flows, you fill in algorithms and weigh that against the market and similar companies, you read news stories, chart out possibilities and talk with like-minded investors to bounce ideas off of them… or you can shortcut some of that work with Redtail Research.

Quick Stats:

App name: Redtail Research

Creators: Team Redtail - created by a bunch of finance and data geeks

Cost: $5/mo, Cancel anytime

What it does for you: Does your due diligence work for you

Now Redtail Research isn’t a stock picking service; it has no way to know whether or not a certain investment is going to go up or down, and anyone who makes that claim is pulling your leg.

What Redtail Research is, is an online resource that provides individual investors with the tools to make the best investment decisions for themselves.

It’s basically a “Regular People friendly” due diligence tool. With its programming, it crunches the public data available on a stock and gives its best guess as to how much the underlying stock is worth, as well as how much people are willing to pay for it. It’s the starting point for your own research, cutting down the time to review a stock from hours to minutes.

Is Company, Inc. trading for less than it’s actually worth? Redtail will tell you what it thinks - and then you see if they’re the type of people you want to invest in. Are they chopping down the rainforest, or are they building solar panels? Do you like how management treats it’s employees, or have you only ever heard bad things about them? Redtail gives you the foundation of confidence to dive deeper into a company and make the right choice for you.

Personally, there are some companies I’ve researched on Redtail that are worth more than what they’re trading for, but I don’t invest in them because I don’t like what they do; I passed up on a lot of coal and oil companies for that reason. But at least I knew, and according to GI Joe that’s half the battle.