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5 Things to Do to Be Financially Successful

Taking care of your finances doesn’t have to be hard. About one-third of adults lack appropriate financial literacy, and that lack of awareness is passing on to younger generations. That’s why the New York Women in Communications held its second annual Finance February event in the offices of Betterment, a company that is changing the investing landscape by democratizing financial literacy and investing. Here are the five things we learned about investing, planning for retirement, how to recover from mistakes, and more.

1. Educating yourself is easy

There is so much information out there on investing that it can be overwhelming to start your financial literacy journey.

Jenn Monahan (left), a Level 3 trainer at Financial Gym, said that listening to a podcast like Martinis and Your Money, Money Matters, and Her Money while on a daily commute is an effortless way to become financially independent.

Corbin Blackwell Corbin Blackwell (left), a certified financial planner at Betterment, recommended a few sources for the beginner. She suggested The Financial Diet: A Total Beginner’s Guide to Getting Good with Money, the website Mr. Money Mustache, and the book The Simple Path to Wealth: Your Road Map to Financial Independence and a Rich, Free Life to learn the basics of investing, retirement and financial freedom.

Chloe McKenzie
Chloe McKenzie (left), founder and CEO of non-profit Blackfem recommended a book with a focus on empowerment, The Unbanking of America: How the New Middle Class Survives. “It opens your eyes to how difficult it can be for certain people to get a bank account, the black-white wealth gap and other eye-opening things about the banking industry,” said McKenzie.

2. You will make mistakes and that’s okay

Amy OuletteAmy Oulette (left), director of retirement services at Betterment said that mistakes happen and that’s okay. She said her big mistake was co-signing a motorcycle with a former boyfriend before taking her current profession. “I ended up paying 99 percent of that loan with a high interest,” said Blackwell. That early mistake inspired her to be a Certified Financial Planner.

McKenzie said the biggest mistake one can make is comparing your financial experience to somebody else’s. “Comparing myself to other people’s experiences is a big mistake I made.” She said the fear of missing out and keeping up with the Joneses is not something you should do because every person’s financial circumstances are unique.

Monahan said she had planned her entire life to a tee when she was making a career change to become a financial planner, but unexpected healthcare costs threw her budget off. In the case of Blackwell, she said her number one mistake was getting a dog without pet insurance. Her dog fell ill and had to go through several unexpected surgeries which drained her emergency savings and more.

The best way to prepare for unexpected life events is to build an emergency savings buffer and know that no matter how much you plan your life, there will always be surprises, so be ready for them.

3. Where to go for financial advice

Oulette said if you’re looking for personalized advice to seek a fiduciary financial advisor. “I wouldn’t trust my money with who’s not a fiduciary,” said Oulette. A fiduciary is entrusted with managing assets on behalf of a person in good faith and is bound ethically to act in such person’s best interests under the law. A non-fiduciary financial advisor can offer services and products that may not be in a client’s best interest to hit sales numbers and earn commissions. “[Being a fiduciary] takes away conflicts of interest,” said Oulette.

4. Your first step to start investing

“Don’t let fear hold you back from starting,” said Betterment’s Oulette. She said a first step to take is to open a brokerage account and consider a robo-advisor account. Robo-advisors provide automated, algorithm-driven financial planning and are a good option for first time investors because it does the work for you. You learn how to diversify and which types of stocks and funds to invest in by watching and learning what it does.

Another way to start investing is to purchase exchange traded funds, or ETFs, in a brokerage account, said Oulette and Blackwell. “I would not do single stocks,” said Oulette. An ETF is a basket of assets that tracks a stock index, or a commodity, bonds, or other assets. Instead of buying a stock and being tied to that company’s performance, ETFs will track a segment of the market you like, like the technology sector, pharmaceuticals or automotives, for example. It has a very small fee per ETF called the expense ratio, but ETFs are known to have some of the lowest fees in the markets. They are highly liquid because they trade like common stock so you can sell them anytime, and because they are a basket of many stocks or commodities, etc., their prices fluctuate less than individual stocks.

Blackwell said ETFs are good for beginner investors because they can learn how markets behave and build a stomach, familiarity and courage to step further into investing in the markets. Oulette said to keep in mind your time horizon before investing.

5. Diversity in finances too

“The word diversity is overdone, but diversification is a risk management tool,” said McKenzie. She said diversifying your assets is like building a basketball team. “Who are you going to scout for your team? The best attackers like LeBron, Curry, Kobe? But who’s playing defense? Oh no, we’re going to lose because we have no defense,” said McKenzie. She said you must diversify your assets like you diversify your teams. That means an appropriate percentage of your investments going into stocks (offense), bonds (defense), commodities (point guard), cash products (shooting guard) like money markets and other assets. That way if stocks are doing badly, at least the portfolio is offset by other assets that behave differently than stocks.

— Maylan Studart

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