Friends, I have wanted to (and promised to) write this post for years. While intimidation has kept it on the back burner (investing can be a complicated topic, and I wanted to get it right!), the desire to help and knowing I have something to share has kept it on the stove at all :)
Why? There have been a million articles written on investing, but sometimes you just need to hear it from a “normal person” – someone you trust. I hope I can be that person. Investing doesn’t have to be as intimidating and scary as it can sometimes seem!
So, here we are! My goal with this post is to begin to demystify the topic of investing for the beginner, to tell you a little bit about the difference it’s made in our life, and to give you the push you need to take the next step in your own investing adventure – whatever that might be!
Now is as good a time as any to issue my periodic reminder: I am not a financial planner, and nothing I say here should be construed as financial advice. I’m a gal who loves personal finance, has spent lots of time thinking about it, and wants to pass on what she knows!
Let’s start at the beginning, shall we?
What does investing even mean? Generally, you can understand investing as any tactic or vehicle to grow your money. It usually means assuming some amount of risk. You can invest in things like a CD (low risk), bonds (moderate risk), or an individual stock (high risk). And you can invest through vehicles like 401ks, IRAs, or brokerage accounts.
You can also invest in things like real estate, though for the purposes of this post, we’ll be sticking to financial assets (basically, money).
Why do people invest? Why might you want to invest? Investing allows you to harness the power of compound interest, which is putting your money to work for you – yes!! And when you reinvest your earnings, the pool of money you’re earning interest on grows, which begins a virtuous cycle.
Personally, investing my money is one tool in my financial independence toolkit. The more money I have (to a point), the more freedom I have throughout my life – to make decisions about how I live and give. This is motivating to me. And as a Christian, I believe it’s a part of stewarding what I’ve been given well.
Finally, on a very practical level, most of us need to save for our retirement. A common benchmark is that you should have 10x your ending salary saved if you retire at 67 (you’ll likely need more if you retire earlier). This is nearly impossible to do with the rate on a savings account (you’d have to save SO MUCH!), which is where investing helps you turn time into money (a.k.a. makes your money work for you).
The graphs below illustrate this clearly: the top one shows a growth rate of 1% over 30 years, and the bottom shows a growth rate of 8% over 30 years. The ending balance is wildly different ($216k vs. $740k), and all of that difference is due to interest earned. Both go up, but you’re doing almost all the work in the first scenario.
Do I have to know a lot about investing to be successful? Good news – the answer is no! HOORAH! And it’s a good thing, too, because most of us don’t have the will, the skill, or the time to be investing experts. If you’ve attempted it, you’ve probably realized it can take a LOT of time and brainpower to research and manage your own investing portfolio. (My hand is very much raised here! There are dozens of things I’d rather spend my time doing than researching investments and investment strategy!)
So, how to be successful? Here’s the key: you have to embrace the fact that you’re a novice, and make choices to safeguard against your weaknesses. You’re looking for something that will construct your portfolio for you, and manage it on an ongoing basis. Here are three options:
Option1: A target date fund. If you have a 401k through your work, you’ve probably encountered this investment vehicle before. They’re an extremely common offering in plans because they’re simple and they prevent big mistakes, ha!
A target date fund is an entire diversified portfolio (US stocks, international stocks, bonds, etc.) in one package. It knows when you’ll need to start using the money (your target date, or prospective retirement date) and automatically rebalances to become less risky in its investment mix as you approach that date. For example, it might start out with a 90/10 mix of stocks (higher risk) and bonds (lower risk) when you’re 25, and shift to a 50/50 mix in your 60’s. And you won’t have to take any action to make that happen!
If you choose a target date fund, that’s hypothetically the only thing you’d need to invest in! Experts consider them most appropriate for retirement accounts if your retirement is still pretty far away (20+ years?), because they are simple and not individualized to your unique needs. (After all, they only know one thing about you: when you want to retire. They know nothing, for example, about your comfort level with risk.)
This is what I used in my old 401k!
Option 2: A robo advisor. Welcome to the future! :) This is a digital investment service – just a computer algorithm, with no person behind the scenes – that constructs and manages your portfolio for you. To determine your investments, it will ask you a few questions about your situation, preferences, and goals, then split your money across investments. It will automatically rebalance your investments periodically, and may check in with you periodically, too, to see if your situation has changed.
The pros: it is more tailored to you than a target date fund, and it’s low cost since there’s no person involved. The cons: there’s no person involved :) There’s no advisor who’s taken a deep dive into your situation to help you develop a plan to meet your financial goals.
Though most people use a robo advisor in addition to their 401k for retirement savings, we experimented with using one for our mortgage payoff account. (We liked it, but are currently trying something else!) Most large investment firms, like Fidelity and Schwab, and small firms, like Betterment, have robo options to explore. Here’s a place to start!
Option 3: Wealth management. This option (the most personalized) gets you a trusty sidekick for every part of the investing journey! Your advisor will consult with you on the full breadth of your financial life (your goals, tax situation, upcoming life events, desires, preferences, etc.), and then they’ll use that to design and manage a tailored financial plan and investment strategy.
Unsurprisingly, this is the most expensive option because of its comprehensiveness and customization, and there will likely be a minimum amount of money outside of your 401k you need to have available to invest. (This amount varies, but is probably around $250k+, depending on the firm/advisor.) Often, the higher your balance, the lower the fee, so the higher your balance, the more appealing (and useful!) of an option it is.
If you’re ready to go this route, you might start by looking for an advisor wherever your 401k is housed, or ask for recommendations from trusted friends. And look for someone who is certified as a CFP, or Certified Financial Planner, the gold standard in this industry.
WOW THAT WAS A LOT! Just a few more things, friends.
What can I do to set myself up for success as an investor? A few final suggestions:
1. Honestly evaluate whether you have the will, the skill, and the time to manage your own investments. Remember that one of the biggest dangers to your investment success is you! 2. Remember that investing can feel stressful in the short term. Choose a wise strategy that accommodates your weaknesses and strengths and then check in only at designated intervals. 3. Invest consistently, even when the market goes down. That’s when you’ll get the best deals :)
What is the best way to get started with investing?
1. Start now! Start small, if needed! Remember the power of compound interest. 2. If you have a company match in your 401k, start by contributing enough to meet the match. 3. If you’re already meeting the match, consider increasing your contribution. 4. If you don’t have a 401k, consider opening an IRA. If you already contribute to an IRA, consider increasing your contribution. 5. If your retirement goals are on track, consider opening an investment account, an HSA, or a 529 plan and contributing toward another big goal.
Friends, I’d never be able to answer all of your individual questions about investing, but I hope this post has served to demystify the topic a bit. Accessing the power of the stock market has been incredibly impactful even in just our first decade or so of “adult life,” and I know that power will only grow as compound interest continues to work its magic – and I hope the same for you!! I’m most definitely cheering you on as you take your best next step, and would be happy to answer any follow-up questions below! :)
This is my third pregnancy, but will be my first time doing any sort of official maternity photos! Instead of something more traditional, we’re taking the opportunity to squeeze in photos as a family of four… where I just happen to have a bump :) I’ll likely be between 28 and 31 weeks for our shoot. This is what I’m hoping for:
I can pull photo inspiration all day, but choosing outfits for the family is always a challenge for me. I do find it’s helpful to start with one person’s outfit, and then build out from there. This time around, that person gets to be me :) I’ve scoured the internet (with the help of a few friends!) and rounded up a few options that might work. Note that only two are actually maternity dresses! Most of the maternity options I found are either too flowy and fancy for my taste, or cute but too casual for what I’m picturing. The non-maternity dresses I’m eyeing have bump-friendly features, like a higher waist, smocking, or a loose silhouette. Once I narrow it down (with your help!), I’m assuming I’ll need to order several options to try on at home to make sure they fit as I’m picturing!
Here’s what I’ve got…
1. Cornflower Lolita Dress | This one is lovely and looks quite bump-friendly, but won’t be back in stock until after we expect to take our photos.
2. Liberty Mini Floral Dress | With a high tie waist, I think this one will work nicely with a bump. The floral pattern would be fun to pull colors from for everyone else’s outfits!
3. Ellie Nap Dress | My dream Hill House dress is this pattern in blue and white, which seems to have disappeared from their website (argh!!). I have a gift card and would have loved to use it for this occasion but I think I’m going to hold out until my blue and white dreaminess comes back in stock – fingers crossed. [I ended up wearing this dress in another pattern and can confidently say the nap dresses are a DREAM for pregnant people!! I wear a small, and I typically wear a XS or S!]
4. Yellow Gold Mini Dress | I think this color is so fun! I’ve been crushing on yellow in family photos after my friend Katie wore it for hers. The fact that it is a mini dress concerns me a bit, since the bump will bring up the hemline, but might work if I size up a bit? [Tried on and updated to add: length was too short and didn’t love the sleeves on me!]
5. Rainbow Gingham Dress | This is such a happy dress (with smocking!), but I’m not sure if it’s “me” enough for the occasion?
6. Embroidered Sundress | One of the maternity options! It might be too casual for what I’m shooting for?
7. Ruffle Tiered Dress | I’m not convinced I’d love the fabric on this one, and though I love the pink color online, it’s billed as “neon,” which again, is not exactly what I’m looking for.
8. Navy Polka Dot Dress | I LOVE THIS DRESS! It’s maternity, and it probably would have been my pick without all this discussion, but it’s currently sold out in every size (argh!).
9. Ruffle Stripe Dress | I own this dress! It’s very sweet and comfy and I look forward to having it in the rotation for the next few months and beyond, but I don’t think the quality/fit is good enough for lasting family photos.
10. White Sleeveless Dress | This dress has been on my wishlist for months! I think the style is so chic and classic, and other family members could wear fun patterns or colors to complement it. Will probably order to see if the fit works. [Tried on and updated to add: I LOVE THIS DRESS!! I actually don’t think it’s great for maternity photos, since it doesn’t really show off the bump, but I’m going to keep it to wear both during and after pregnancy. A reader also pointed out that it’s very breastfeeding friendly, which I love!]
11. Green Floral Dress | Gah, this one is fun, too. I think the waist is high enough that it would be bump-friendly.
12. Chambray Dress | I have also loved this dress for a long time, but alas, it is currently sold out in every size.
Let’s vote! Which one do you think I should wear, or at least order to try on at home? If it helps, the setting will likely be some sort of grassy field.
Every time I tell someone when I’m due (July), they respond, “oh, that’s so soon!” Until just recently, it hasn’t felt that soon to me, but looking ahead to the next few months — which are filled with more activities and adventures than we’ve had in awhile — it is feeling closer and closer! I’m getting both increasingly excited to meet our little lady, and just really enjoying these days as a family of four. There’s so much to look forward to, including everything we have planned for April!
On my calendar this month: — Celebrating Holy Week. For Easter, we’re planning to go to an outdoor service hosted by a friend’s church and do an egg hunt in the backyard since we’ll already have given our baskets! — Our annual camping trip with the Rays, at 28 weeks pregnant for me and about 26 for Nancy! Oh boy. — A trip to the WRAL Azalea Gardens when everything’s in bloom — The beginning of June’s second soccer season. We can walk to the field for the once-a-week game – it’s perfectly low-key for a five-year-old!
What I’m loving right now: — Most of us are not hurting for delicious pasta recipes, but I’ve got one more to throw onto the pile. Unique flavor and easy to add veggies (our favorite being cherry tomatoes!). — If you’re looking for a dessert to complete your meal, might I recommend a warm Betty Crocker brownie and a scoop of Jeni’s Brambleberry Crisp ice cream, found in the freezer aisle of your grocery store? Gah, it’s SO GOOD. — I have worn these pearl stud earrings pretty much every day since my parents gifted them to me for Christmas, so it’s high time they made an appearance on the blog! They’re simple enough for daily wear but add just a little bit of extra interest with the gold. I have the small size. Love, love, love.
What I read in March: — Parenting with Love and Logic | Though it’s been years since I read this book, it’s still one of my most frequent recommendations to other parents, so when I was in between library requests I thought it might be time for a re-read. My review this time is still positive, though slightly more modulated. If you’ve never experienced or been exposed to the parenting ideas in this book – a consultant parenting style, teaching through consequences – it will likely be a revelation. That being said, our family certainly doesn’t follow it to the letter, and some of the writing and examples just come across as clumsy. — Heidi | Still waiting on library requests, I pulled this classic off our shelves. I’ve owned the Anna Bond version for years but had never actually read it! It’s very sweet and I can’t wait to read it with June someday soon :) — Homegoing | Like The Great Alone, it seems strange to say you loved a book that was so painful at times, but it also seems unfair not to! The writing was beautiful, the structure was creative and kept me racing along, and it helped me learn about and empathize with life experiences that are different from mine. I particularly loved the first half.
Revisiting my March goals: Finish culling and sorting the second half of 2020 photos(Done!!!) Book our annual camping trip(Headed to Pilot Mountain State Park!) Book our mountains trip(Headed to Black Mountain this fall!) Plan and prep for our spring break trip(Done!) Focus on small tweaks and refreshes in our guest room (Very small… bought a new pillow for the bed :)) Style our mantel for spring(Peek here!) Have our carpets cleaned(Probably shouldn’t have waited as long as we did, ha.)
April goals: — Make a new design plan for the Magnolia Room (a.k.a. our guest room), which will soon also function as little sister’s nursery — Magic Eraser/touch up paint in Magnolia Room — Plan maternity/family photos (photographer, date, outfits, eek). Thinking we’ll take these either late April or early May. — Try twice a week meal prep/chopping nights, inspired by Lisa! — Have my Fearrington tea + pedicures date with June, one of her Christmas presents — Assist with June’s bake sale. Once she realized this was a thing kids did, and surely inspired by all of her baking this year, she’s been asking to have one, and I told her she could once it got warmer. Wish us luck? — Proceed with garden party planning. Nancy and I have been discussing hosting a little outdoor soiree for a few friends to celebrate new babies, vaccines, and warmer weather! — Clean out our pantry (I do this thoroughly every few years!) — Order our 2010-2014 family photo album
As a reminder, many of these are drawn from my 2021 goals!
I’d love to hear: do you have any good meal prep rhythms? Tightening up my meal planning/grocery shopping routines was a big focus last year, and I feel like getting ahead with prep is the last step!
What is a household or parenting task other people hate, but you actually really enjoy?
For me, it’s organizing my children’s wardrobes. No, I don’t mean shopping for them or picking out outfits (though I do enjoy those things, too!) – I mean the nitty-gritty of making sure they have the right amount of clothes that fit and are seasonally appropriate, at the right time, in the right place (and managing the steady size drip of too big –> just right –> too small). Throw in hand-me-downs and donation piles and rips and stains and what to keep for posterity and kid clothing management can get overwhelming quickly (especially when you have multiple ages and genders to wrangle!), but I’ve found a simple system that has made this process a breeze and, yes, actually enjoyable. Since many of us are in the process of switching over our kids’ wardrobes from fall/winter to spring/summer, I thought we could chat about it today!
Here’s what my process looks like:
— We are lucky to get 80% or more of our kids’ clothing from my older sister, who has a girl a few years older than June and a boy a few years older than Shep. (Thank you, Jesus!) Whenever she delivers a fresh load, I go through it immediately and return to her anything that’s not our style or that we don’t need. Clothes that are too big go in a designated spot. This could be a bin in the closet or a box in the attic – for us, it’s the drawers in June’s dresser (one for each kid). Gifts that are too big or for a future season go here, too.
— Clothes that fit and are in season are stored in John’s and my bedside tables – more about that here.
— Whenever a piece of clothing is too small, too worn out, falls out of favor, or no longer fits the season, it goes in a big bin under June’s bed. It doesn’t matter where it came from, who it belongs to, or what will happen to it next – it just gets tossed in the bin. This eliminates SO MUCH decision making on a daily/weekly basis!
— Once in the spring and once in the fall, I pull out the under-bed bin, dump everything on the floor, and sort through it. (I usually time it to coincide with my favorite consignment sale!) I make several piles:
1. Favorite items that will be saved for our future kids or nieces/nephews. This pile is generous – we have plenty of room for storage and I promised my younger sister I would hang on to all the good stuff until she’s ready! This is not just a few pieces for posterity. These get stored in big labeled bins in the attic, sorted by size and gender. 2. Items to return to my older sister. This is generally pieces we didn’t end up wearing much – she consigns whatever I send back her way! 3. Items in good shape we no longer want or need. These get set aside to tag for the consignment sale. 4. Items that will fit next season (for example, June wore many of the same dresses this winter that she did last winter). These go back in the dresser in June’s room. 5. Items to donate or give away. This pile is usually small, since I try to consign most things, but sometimes includes items that are out of style or too annoying to tag (socks, etc.). 6. Items to toss. Things with holes or stains.
And that’s it! Clothes for the new season get moved from upstairs to downstairs, the piles are dispatched, and we’re good to go for the next few months! It’s super simple, but that under-the-bed bin is a true game-changer and makes upkeep so simple.
Now, of course, I’d love to hear: what is a household or parenting task other people hate, but you actually really enjoy? If you have any questions about kids’ clothing management, I’m happy to answer those, too :)
