Investing doesn’t have to be a big mystery. Erin Lowry, author of the Broke Millennial series, walks through how you can get started. (Spoilers: this is a fun one, y’all!)

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INTRO: [00:00:00] Hello. And welcome to the Young Scrappy Money podcast. I’m your host, Michelle Waymire. And each week, I’ll be bringing you tips and tricks to help you take control of your finances as well as interviews with people who made big financial changes in their own lives. So join us. And we’ll help you get your financial s**t together.

MICHELLE: Hello, everybody. Welcome to another episode of the Young Scrappy Money podcast. Today, I’m pretty pumped because we are talking about one of my very favorite money nerd topics. And that is investing. Now, I feel like when most of us think of investing, obviously we think of retirement. We kind of know that it’s something that we should be doing. We know it’s a good way to build wealth.

But when it comes to getting started, this is straight up one of the most intimidating topics that I think there is out there. It’s pretty easy to get yourself a budget. We can kind of suss out how credit scores work. But investing is like this crazy black box, and we’re just not even sure what’s going on there.

So I’m very fortunate today to have Erin Lowry with me. She is the author of a couple of books. So her first book was Broke Millennial: Stop Scraping By and Get Your Financial Life Together, which perfect, perfect alignment with the target audience for this podcast. She has a new book out as well, Broke Millennial Takes On Investing: A Beginner’s Guide to Leveling Up Your Money.

That first book was named by MarketWatch as one of the best money books of 2017. She’s got such a great writing style. She’s been on CBS Sunday Morning, CNBC. She’s been in Cosmopolitan, Refinery29, Fast Company. She’s spoken all over the country.

So she knows her stuff. And so I’m very, very excited to have her here so that we, as broke millennials or hopefully moderate income millennials, wherever you’re at in your journey, we can start talking about investing together. So welcome, Erin. I’m so excited to have you.

ERIN: I’m excited to be here.

MICHELLE: I think we kind of know that investing is useful. But walk us through a little bit more specifically why this is such an important topic for millennials and for, you know, young people in general.

ERIN: I mean, the number one thing is that, to me, investing is the great wealth equalizer opportunity in the sense that it is something that almost anyone can do to start actually building wealth for themself and in that sense also take back control. But a key component of that is starting young and being consistent. And that’s why it’s incredibly important to start talking about this when we’re in our 20s or our early 30s. And that’s not to demoralize anyone who is beyond those ages, of course, but just to say that it does make your life easier.

But the problem is when we’re in our 20s, our 30s, it can really be easy to just put it on the backburner because you have so many other financial priorities that you’re juggling. And I totally get that. And that’s part of the reason that I wanted to write this book was to kind of get the message out there of, it’s not as intimidating and as difficult as we perceive it to be. Unfortunately, a lot of the language that gets used makes it feel unaccessible. But you can do it.

MICHELLE: Yeah. I love that. And I love the advice about starting young. I mean, the more time you have for that money to grow, the better it’s gonna be. So if you’re listening, and you’re young, and you haven’t started, hopefully this’ll be the time for that tide to turn, as it were.

So I like that you mention competing priorities. Because I think this is a big, big thing. And so I get a lot of folks who ask me this question of like, well, am I actually ready to get started investing? So given that we’ve got a lot of stuff going on, you know, like the collective we as people, how do you know if you’re ready to get started with investing?

ERIN: That’s such a great question and one of the very first things I actually address in the book. And there was one of the experts that I interviewed. His name’s Douglas Boneparth, who gave a really great quote that I loved. And he calls it “earning the right to invest.”

And in the book, I call it “putting on your financial oxygen mask.” And I detail it as a checklist that you have to go through in order to know that you’re ready to take on investing. Now, I’m going to put one huge caveat out there before I start running down the checklist quickly and say, if you have the opportunity to be putting money into a 401(k) or a 403(b), so a retirement plan that has a company match, please take advantage of it. Because that’s free money on the table.

But besides that, if you wanna start investing, a few things that you need to be doing, first is really easy but also the hardest step. And that’s setting your goals. Because it’s really hard to know how to invest, how to create a plan, what to invest in if you don’t know your why— why you’re investing, what you’re investing for.

So you have to set goals for your money. What do you wanna be using this money for? What do you want your life to look like in 10, 20, 30, 50 years? And that takes some thinking.

[00:04:56] Another huge, critical component is you have to have an emergency savings fund. I know that is dry, boring advice. But it’s so critical. Because things are gonna go wrong. We all know that. Something is going to go sideways at some point in your life. Or, if you have pets, or if you have kids, it’s gonna go sideways for them. And you’re gonna have to pay for it.

So it is really important to make sure that you have money. I like to say at minimum three months’ worth of living expenses. And keep in mind that’s your barebones budget. That’s not your current lifestyle. That is lights are on, rent or mortgage is paid, if you have a car note making sure that that’s paid, food on the table, all of your bills and any of your debts are paid. Now, beyond that as well, we’ve also gotta be thinking about the fact that you have to have— I know people hate the B word— a budget.


ERIN: I know.


ERIN: But I’m gonna rebrand.


ERIN: I’m gonna rebrand it for you. Cashflow, it just sounds so much sexier.

MICHELLE: Oh, yeah.

ERIN: You have to know how much money is coming in, how much money is going out. And the reason you have to know this is you do not have control of your money without knowing that information. And therefore, you can’t put money in the market without that information.

And one other thing I also want you to be saving for is your short-term financial goals. So I just moved the other month. Moving is so expensive. And that is something that my husband and I had to save as a short-term goal. We knew it was coming up. And if that money had been invested in the market, and we had to go through the process of trying to sell investments— and what if the market was taking a dip when it was happening?

So if you know that there’s something that’s happening in the next one to two years, don’t be putting risk on that money. But do be putting it in a high-interest savings account. And by that, I mean if your savings account is getting 0.01% interest rate, which is incredibly common in the US, please move that money to a higher interest rate. You can get 2%-plus at a lot of internet-only banks now.

MICHELLE: Yes. I love it. So something else that I think kind of dovetails nicely into this, this is like arguably the biggest pushback I hear from somebody— even if they have an emergency fund, even if they’ve kind of got their short-term goals in line, and even if they have a good sense of what their cashflow looks like. What about student loans? What happens if you have a bunch of student loans? Should you be investing?

ERIN: It is such a complicated question. And this is the most infuriating answer. But as any financial professional, of which I am not— but if a financial professional will tell you, it depends.

MICHELLE: Oh, yes. That is one of my very favorite phrases. Let’s unpack that.

ERIN: Favorite phrases. So and I’m gonna— I will dig into that. And I will give a little bit of prescriptive advice. And there is an entire chapter of Broke Millennial Takes On Investing that is dedicated to this question. Because it was one of the number one questions I got asked when I was researching this book— in the sense of I would crowdsource with people like, hey, what do you want to know about investing? And always, that was one of the questions.

So here is what the experts told me. I interviewed a lot of people for this book. And I also feel it’s important to say the reason I interviewed so many people is I am not an investing expert. I like to consider myself a translator. I went out and interviewed a ton of very smart, far more experienced people— also, notably, people who are older than I am.

I’m gonna be 30 in May. And, listen, the market’s been pretty solid for me as an investor. I haven’t really experienced anything too traumatic with my money actually in the market. And it’s important to talk to people who have experienced the bubbles, who have experienced the dips, who have experienced a recession.

And I’m giving you all this context because when you talk to people who have experienced the ups and downs, they tend to be a tad more conservative. I’m not saying super conservative. But they do have a little bit of “well I know what it can do” mentality about the market.

So with all that said, any time I posed the question of, “Should you be investing when you have student loan debt?” generally the response I got was, “Well, it depends on your interest rate on your student loans.” And the magic number that I was given was 5%. So what does that mean?

That means that if you have a student loan with a 5% interest rate, most of the experts I spoke to would advise that if it’s 5% or higher, you wanna focus on getting rid of those student loans. But if it’s under 5%, and you still wanna be investing, you can balance some investing in. And it probably mathematically will work out in your favor. But that’s not a guarantee.

And no one ever regretted paying off student loans quickly. So most of them kind of said, hey, if you absolutely want to be investing in tandem, fine, it needs to be under 5%. If it’s 5% or higher, just pay off the student loans. Again, coming back to the big caveat of still be putting money into your retirement plan regardless.

[00:09:53] If the decision is money in your retirement account or paying your student loan bill, of course you wanna be paying off your student loans. Otherwise, it’s gonna trash your credit if you’re not making those payments. But if you can put at least a couple percent into your retirement plan while also paying off your student loans, it’s very important to be doing both at the same time.

But you probably shouldn’t be investing in non-retirement accounts while trying to pay down student loans. It’s better to be aggressive about those loans. But if you’re at 2%, 3%, well, all right, you can balance it in. And some of it also comes down to risk and debt tolerance. It’s totally OK if debt makes you queasy and keeps you up at night to just get aggressive about paying it down.

MICHELLE: Yeah. I love that. I think, you know, the depends rule is always very good. But I think the 5% rule of thumb is super interesting. So that’s great.

So one other thing that I think gets in the way of people getting started with investing— and you kind of, you know, nodded at this earlier in our conversation— is that there’s just a lot of jargon that comes with investing. There’s just a lot of new words. So if you were to give yourself a little bit of a list, you know— we don’t have time to go through everything today, unfortunately— what are the top five words that you think a new investor should learn before getting started?

ERIN: Oh, narrowing it down to five is so painful.

MICHELLE: I know. I’m sorry. It’s like asking you to pick your favorite kids. Tell me about your favorite family members, and they’re the very best five.

ERIN: Oh, no. Well, I would say the big heavy hitter is understanding the concept of compound interest. And the reason I say that is because I think that really motivates you then to start investing. At its very root, compound interest is earning interest on your interest, which means that the snowball effect works for you.

And I like to position it actually from a debt angle to explain it because I think a lot of people have contended with either student loans or credit card debt. And that feeling when you’re trying to pay down one of those debts, and it feels like even though you’re paying a lot of money every month, that principal balance, that amount that you owe, just never seems to go down. Or, it’s just taking so long to go down.

Well, that’s because compound interest is working against you. It’s making your debt compound and grow and get bigger. But on the flip side, you can make it work for you. And that’s what you can do with investing.

And one of the other quotes that I absolutely love in the book came from Jill Schlesinger, who basically said— and I’m paraphrasing here— but that when you invest, your money does some of the heavy lifting for you. If you don’t wanna invest, if it keeps you up at night, if it makes you feel queasy, that’s fine. But you’re gonna have to save so much more money in order to reach the same goal. So let your money do some of the work.

MICHELLE: I love that explanation. That’s great.

ERIN: So love it. So compound interest, for me, would be number one thing you’ve gotta understand because hopefully that’s part of what helps encourage you to get into the market. Another big thing to understand is this idea of risk. Because that is one of the huge barriers for people is it feels like a risky proposition to be putting your money in the market.

And part of what’s gonna have you— or what’s gonna help you navigate the ups and downs— because, listen, there will be times that the market goes down when you’re an investor. Understanding your emotional relationship to risk, as well as how much risk you should be putting on your money based on when you want access to that money, really helps you create a portfolio. So it helps you create your investments in a way that aligns with how you’re emotionally feeling and also when you need to get your money.

So hopefully when the market goes down, even though we still are emotional creatures and will have some sort of reaction to it, hopefully you can rest easy in the fact of, I’m invested in a way that aligns with how I feel, how much I was comfortable taking, how much risk I was comfortable taking. So it’s gonna be OK. So risk tolerance is a big one.

It’s not easy to just be able to figure out immediately like, oh, I’m an aggressive investor. I’m a moderate investor. But there are a lot of online tools and calculators and quizzes that you can take to play around and kind of assess what your risk tolerance might be.

Another huge one is diversification. And it’s most easily summed up as the cliche, don’t put all your eggs in one basket. And that’s absolutely what you need to be doing. As an investor, you have to be diversifying your investments. So what that means is not only do you wanna make sure you own more than one company, you also wanna own different types of companies.

I’m gonna give an example using real-life companies because I think it makes it easier. I am not giving you investing advice when I use the names of these companies. I always have to throw out that disclaimer.

MICHELLE: Yeah, totally.

[00:14:52] ERIN: So let’s say that you bought five shares of Amazon. Amazon is a tech company. You know what that company is. But right now, you are only invested in Amazon, which means you have terrible diversification because it’s one company and one what we call sector of the stock market.

So tech is a sector. It’s bundles of companies that all are in technology. All right. But now tomorrow, you went out. And you bought shares of Apple. So you have Amazon and Apple, two different companies— so, great, you’ve diversified a little bit because at least you’re in two different companies. But you’re still exclusively in the tech sector.

So maybe the next day you go out, and you buy Ford. So now, you’re in Amazon, Apple, and Ford. You’ve diversified a couple more companies. So you’re in three different companies. And you’re now not exclusively in the tech sector. You’re also in transportation.

So that helps a little bit. But the easiest way to do this is to just do index funds, mutual funds, ETFs instead of individual stock picking. I really don’t advocate for individual stock picking. But I just like to use it as an example.

So I would say diversification is the number one next thing is to understand you need to, in order to mitigate your risks, spread your money around different companies, different sectors, even different countries. So not exclusively investing in the United States market and going into other countries as well can help diversify your risk a little bit. So what is that? We have compound interest, risk tolerance, diversification.

I also love to talk about asset class because those are— assets are the types of investments that you can be investing in. So different asset classes that you’re going to hear about include things like stocks, equities, shares, pretty much the same word for— essentially, it has the same meaning. They’re a little bit different.

But I think it’s just easier to say they kind of mean the same thing. Bonds, real estate’s an investing class. And then you’re also gonna hear about things that are untested asset classes. Like cryptocurrency or cannabis I think are good examples of those.

MICHELLE: All the fun, sexy asset classes.

ERIN: All the fun ones.

MICHELLE: Not boring like stocks and bonds.

ERIN: It’s so true. And what do I want to be— I feel like it’s always hard to pick my absolute final one. This is going to kind of go outside baseball a little bit, but vesting would be my final thing that I want you to understand. Because most of us— well, I used to have an employer-matched 401(k). Now I’m self-employed, so it’s just my own.

But for people who are traditionally employed, who have a retirement plan with your employer, vesting is a really important concept to understand. It essentially means, when do you have access to the money your employer is putting into your retirement account? So you, as the employee, if you contribute to a 401(k), you always get to walk away with the money that you put in. So don’t stress about that. If you’re putting money into your 401(k), you get to keep that money.

But your employer, the money that your employer puts in, which often is referred to as an employer match or employer contribution, you don’t necessarily get to leave with that money. It has to what’s known as vest. Three different types of vesting schedules— immediate, graded, and cliff. Immediate, pretty self-explanatory. If your employer put the money in today, and you leave the company tomorrow, you can take that money with you.

Graded, a little bit trickier. Every year, a little bit more of it vests. So maybe it’s 20% in year one, 40% in year two, 60% in year three. You get it. So if you left at the end of year three, you would only get to take 60% of your employer contributions.

And the final one, the worst one, is cliff. So you have to stay a certain period of time until it vests 100%. Oftentimes, that number’s something like five years. So if you leave before year five, you don’t get to take any of your employer contributions.

MICHELLE: Yeah. That’s great. What a good set of five words. Fantastic job picking those.

ERIN: Thank you.

MICHELLE: I like it.

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MICHELLE: So let’s get technical now. Let’s say, you know, somebody has decided investing is important. I think I’m ready to get started. I’m willing to learn the jargon. If you’ve kind of considered all of that stuff, and you’re still down to put money in the market, what does the process look like? How do you actually go about doing that?

ERIN: I wish it were super cut-and-dry. But it’s not. And the reason it’s not is because there’s still more language that you have to learn. And one of the first things that you have to do is go to a brokerage. Just like now, I said a word that still some people feel like, what the heck does that mean?

[00:19:55] And a brokerage is essentially the company that you need to go through to get to the stock market. I think that’s sort of the easiest way to understand it. You right now— like me, as Erin Lowry, cannot really just call up the New York Stock Exchange and say, five shares of insert company here, please. I have to go through a company in order to get access to that.

And I’m just gonna name some names. I think it helps contextualize it— again, not endorsing, not recommending, just giving you some context. And for example, Vanguard, Fidelity, Charles Schwab are all examples of brokerage firms.

Then you also have robo-advisor options. You’ve got your Betterment, your Wealthsimple, your Wealthfront, those guys, which also help you get invested in the market. And what I mean by that is you can log on to one of these portals. And that’s where you place your buy. You transact and are able to own shares of, let’s say, the S&P 500 Index Fund.

Or, you can buy shares of insert company here if you wanna do individual stock picking, although not all brokerages offer individual stock picking. It does depend. So you have to go through an actual brokerage firm in order to get access.

The one reason I think that this can be kind of complicated is some of them have not updated their websites and their user experiences in a very long time. So even if you’re ready, and you wanna get started, sometimes you do need to pick up the phone— I know as millennials we cringe— and actually have to walk through step by step with someone on the other end how to do it, or if you have a parent or a friend or a sibling who does invest and might be able to help you out.

I gotta say a lot of the interfaces are not incredibly intuitive. So it is really OK, and you absolutely should be reaching out and asking people for help with that part of the process. And no question you’re asking about this is stupid. Because, again, it really is not an intuitive process. You have to learn. And it’s totally OK to reach out for a helping hand.

MICHELLE: Yeah. That’s great. And honestly, I also think about this in terms of, you know, if you wanna open a bank account, you first have to choose the bank. I think if you wanna open up an investing account, you first have to choose the company there as well. So it’s a very similar process.

ERIN: It is. And one thing too I will say about that process— because I do think it’s where some people also have that whole paradox of choice and then almost paralysis because there are so many options. You know, do you go with a brokerage firm? Do you go with a full-service wealth management company, although a lot of us can’t afford to in the beginning? Do you go with a robo-advisor? Do you hire a financial planner.

That part of the process is also really stressful. And one thing you can do is date around. That was some of the advice that was given in my book that I really liked, where one woman, Kelly Lannan, actually said, you know, you should vet them like you’re gonna date them. You need to be trying them out, talking to people, seeing what feels best for you, what’s gonna work best for your situation.

And one thing I always recommend, especially with the brokerages, take their customer service for a test drive. You should be calling them up and talking to somebody. Because you should know, when you inevitably need some customer service help, what that experience is gonna be like.

So play around on their websites. Test drive customer service. See how you feel about it. Because that really might help make the choice for you.

MICHELLE: Yeah. That’s a great idea.

ERIN: And fees, I gotta talk about fees.


ERIN: Because I know I didn’t throw expense ratio in when I was listing my terms, which I should’ve. But fees are incredibly important. For example, a robo-advisor is going to charge a little bit more than if you use what’s known as a discount brokerage, which is an absolutely terrible term because it sounds super shady. It is not.

It’s basically do-it-yourself investing, which means you’re picking the stocks. And you’re picking the funds. And you’re picking anything else you’re investing in, as opposed to a professional necessarily handling it for you. Very oversimplified explanation, but it all comes down to value.

So if you’re paying a fee— let’s say you decide you go with a robo-advisor. Totally fine, charges you a little bit more money. Now, that does mean that there’s less money in there compounding for future you. You gotta always evaluate it that way. But they really might be providing a service for you that you otherwise would not be doing for yourself.

But on the flip side, if you know that you’re not gonna get as much value out of that because you’re really hands-on as an investor, and you like the do-it-yourself route, or you wanna work with a financial planner, that’s fine. Just always be evaluating the fees, and making sure that you’re getting a true value out of that money that you’re paying, and also looking at the fees on the actual investments that you’re purchasing to make sure that you’re getting good value on those too and comparing them.

MICHELLE: Yeah. So once you’ve kind of picked out the brokerage firm, you’ve got your account opened, what happens next?

ERIN: Well, you put your money in. (LAUGHING) So once you know where you wanna be investing, you’ve selected— you know, the big part now is you have to be selecting your actual investment plan. So you have to— going back to the idea of goal setting, you have to know what you’re investing for. And that’s going to probably help you decide which type of investments you wanna invest in.

[00:25:07] And a lot of that has to do with this fancy term of time horizon, which is just an overly sophisticated way of saying, when do you want your money? And for people who— let’s say you’re 30 and investing for retirement, and retirement in your mind is at 65 or 70, well, you got 30, 35 years. So you can put more risk on your money now.

But if you’re thinking, oh, maybe I wanna buy a house in the next seven to 10 years, well, first you have to decide if you wanna put any risk on that money. And then if you do, well, maybe you’re not gonna be quite as aggressive because you have a closer timeline that you’re working with. So those things are always gonna play factors in how you’re gonna build out your portfolio.

MICHELLE: Yeah. That makes total sense. And I’ve actually, you know, met people who didn’t necessarily realize that you have to do something with the money once it’s in the account. Like I’ve seen people who, you know, start an IRA. They’re super proud of themselves. They’re saving for retirement for the first time. They put cash in.

They’re like, hell, yeah, I’m an investor. But then they— because they didn’t actually go in and like choose mutual funds or choose ETFs to invest in, their money is like in a glorified, fancy savings account. Because it’s not actually being put to work.

ERIN: It’s so true. And I have heard so many what I originally thought were urban legends, but actual examples of that happening to people, when I was doing interviews for this book, where one woman had a client call in who was approaching retirement age. And the client said, oh, how much do I have in my 401(k)? And the woman pulls it up. And the client has just been putting it in cash for years, decades.


ERIN: Yeah. And there was a nice chunk of change in there, but not at all the amount of money that you need in order to retire. One thing that I will say to that— and this is a bit of a controversial opinion, and I will get to why in a second. But if you’re just starting, and you’re— most people, your first entrance into the stock market is retirement. And we say save for retirement. You are not saving for retirement.

You are investing for retirement. So you are an investor. But you’re only an investor if you actually put the money in the market. And one of the easiest ways to do that is to look at what’s known as a target date fund, sometimes called a lifecycle fund or an all-in-one fund.

And the reason I like to bring them up is because I have such a vivid memory of trying to open my first 401(k). I was so proud of myself. I’m filling out the form— you know, address, Social Security number, beneficiary, all that stuff.

And then I get to the page where you actually pick your investments. And I’m just seeing this huge list of words that I do not understand. And I just clicked X and closed the browser. Because I got really overwhelmed, and I didn’t know what to do.

One of the options is to put your money in a target date fund. And what that’s going to do is it’s tied to an approximate year that you’re going to retire. Usually, they’re in increments of five years. But let’s say you’re gonna retire in 2065. So it would be Target Date Fund 2065. It usually has the year next to it.

And what that’s gonna do is automatically invest your money at first probably in a more aggressive portfolio. And that means more stocks. And then over the years, it’s gonna go to more moderate. And then as you approach retirement, it’s going to get more conservative.

So it’s going to ensure that it’s doing that for you. It’s gonna make sure that your money’s invested. You don’t have to actually be picking any of the investments. But on the flip side, and the reason this is a bit of a controversial opinion, is not everyone loves target date funds. And reason being the fees are a little bit higher because it is an actively managed fund.

And by that, I mean a real human is in there picking your investments, which means it costs a little bit more money than if it was known as passively managed. And it’s also an all-size-fits-all solution. And that’s not necessarily what’s best for you and your financial life. Because it’s not tailored to your unique financial situation.

But the reason I like to bring them up is because at least it gets you started. It ensures that your money is invested. It takes the stress out of the original part of setting up an IRA, or a 401(k), or a 403(b). And you can always go back in and change it. There is no rule that says, if you start with a target date fund, you forever will have a target date fund. So as you become more confident as an investor— perhaps you hire someone to help you out— you can always go back and retweak that.

MICHELLE: Yeah. I love that. And I— you know, honestly, I’m pretty much on team no shame in the target fund game for the most part as well. I mean, certainly do your research. And I think fees are really important. But if it’s between a target date fund and you just like freaking out and hanging out in cash, that’s— to me, that’s kind of a no-brainer.

ERIN: Agreed.

MICHELLE: So I’m glad you brought that up for sure. So you mentioned robo-advisors, which I like. Are there any other tools that you can recommend or, you know, offer up as options that might help make this process easier? So either like specific robo-advisor names to kind of be aware of or apps that you think are cool?

[00:30:06] ERIN: So in terms of actual robo-advisor names, really ones that are kind of tried and true right now, have stood the test of time thus far, would be Betterment, Wealthsimple, Wealthfront. There certainly are more. Ellevest is one. That you can go in and check out and see which one feels like the best fit for you if you’re interested in doing a robo-advisor.

A couple things I wanna touch on with that, there’s a lot of misconceptions about what robo-advisors are and do. It’s not a robot, first of all. So the name’s a little bit of a misnomer. I actually interviewed someone from Betterment who said he really wishes they would rebrand to online financial advisor. He feels it’s more accurate.

Because sometimes when the market, for instance, takes a little bit of a dip, he said they always get frantic emails. It’s like, I thought your algorithms prepared for this and defended against it. And he’s like, well, we haven’t solved the stock market. So it’s not like—


ERIN: It still will go up and down. He was like, if we had figured out how to beat the market, this would be an entirely different conversation and ballgame. So I think it’s important to know that humans are involved in the process. You can always speak to a human if you use a robo-advisor. It’s not just you and an algorithm, and that’s it.

So I do think it’s important to recognize and acknowledge that. Also know that a lot of these sites, whether it’s brokerages or robo-advisors or apps, have online learning platforms that generally you do not need to be a customer in order to use. So that’s another big part of this whole equation is you have to keep educating yourself.

You have to keep learning. And a lot of these resources are free. And so that’s a really kind of helpful thing to go in and to keep learning and to play around with tools— you know, risk tolerance, compound interest calculators, all that kind of stuff.

With the apps specifically, I think that they can be a really great way to either get started playing around, get your knowledge up a little bit, or kind of be in addition to other investing that you’re doing. The one thing that I always like to caution about with the apps is because they’re usually known as micro-investing apps— to name a couple names, Acorns, Stash, and Robinhood. Those are really kind of three of the really big players a lot of people know.

But it is important to recognize that most of them kind of come at this, well, you can start with just $5 a month or $10 a month, or invest your spare change. And while it’s great market speak, you need to be doing more than that in order to get value out. Because none of these companies are nonprofit institutions. They are looking to make money. I have no problem with the fact that they wanna make money.

But again, coming back to the fees, with the apps, a lot of them charge at the baseline a dollar a month, which sounds like nothing. I live in New York City. I cannot do a load of laundry for a dollar. So to be able to invest for a dollar sounds like a great deal. But if you’re only investing a couple of bucks a month, that $1 fee is eating away all of your returns, possibly even then some.

So it is really important to make sure that you’re doing more than $5, $10. The rule of thumb I came up with was minimum $25 a month, preferably at least $50 a month, in order to start seeing some actual returns and some actual value on the fee that you’re paying. You can do more, and that would be great. But if you’re gonna dabble in micro-investing, kind of either just for fun or to get to learning a little bit or just to feel like you’re doing something extra, please make sure you’re doing more than just a couple of bucks a month.

MICHELLE: Yeah. You also mentioned like resources that are maybe free good learning tools. Do you have any specific ones that you like for somebody who maybe wants to dive a little bit more into the world of investing?

ERIN: Oh, man, a lot of them. So first, I will also say Investopedia is like hands-down one of my favorite learning resources. But it can get a little jargon heavy at times. So just kind of bear with it, I would say. But if there are certain terms you wanna learn, Investopedia does a really great job.

And they also have videos that help break it down. And it’s all free. is also really a good one to be using because they compare all of— and they rate different products from different brokerages. So it’s usually a five-star— I think it’s five, four, five, pretty sure it’s five-star— scale.

And let’s say that you’re deciding between, you know, an index fund at brokerage A compared to an index fund at brokerage B. You could go to Morningstar and see the difference in their fees. You could see the difference in their performance. So that’s a really great resource too. Again, can be a bit jargon heavy, but it’s a good way to start learning.

Fidelity has a good free resource called MyMoney that people can get on and check out. Vanguard also has a good portal that you can get in and play around. Certainly, Betterment and Wealthsimple do too and a lot of the apps, so Stash and Acorns. Grow by Acorns has tons of free articles, and resources, and tools.

[00:35:02] Stash has also got a lot of— they’re kind of just online blogs that you can go and read. But, you know, you feel like they’re a little bit more vetted because they’re coming out of investing companies. So you can always go and be learning and reading there as well. And if you actually decide to use a brokerage, or perhaps you already have one because of where your 401(k) is invested, see what the tools and options are through that particular company as well.

MICHELLE: Yeah. That’s awesome. And if you’re listening to this, and you’re sort of like hyperventilating and frantically trying to write everything down, on the show notes for this podcast, I will make sure to link out to everything here that’s been listed so that you have a good sort of little miniature resource library to help you get started.

ERIN: And I do wanna plug one more. Because we talked about compound interest in the beginning. And I have— and we’ll make sure it’s plugged in the show notes. My absolute favorite compound interest calculator is on, which is owned by the US Securities and Exchange Commission, so the SEC, which is the people who regulate all the things when it comes to investing. And they have a really, really simple compound interest calculator.

I actually used this particular calculator for all of the calculations that I did for my book. It is incredibly intuitive and easy to use. And I always recommend, when you’re trying to figure out whether or not you wanna be investing, go play around with this calculator and decide, hey, if I wanna have a million dollars in 30 years, how much am I going to have to save per month in order to reach that goal? Or, you can play around with the compound interest calculator and see how much can you invest a month in order to reach the same goal.

MICHELLE: Yeah. That’s awesome. One final question for you that’s sort of investment related before we close out, one of the other big questions that I get from folks is, what about impact investing? So how do you start, you know, not just investing in whatever generic stuff is out there, but are there any good resources you might recommend for investments that have particular emphasis on, you know, socially responsible governance, or green energy, any of those— any of those types of causes?

ERIN: There are a lot more options now for us, especially as technology continues to make it easier to get access. And I also think that people have become more vocal. And companies are starting to listen. And that’s really encouraging.

So keep in mind that if you have something you’re passionate about, and you can get other investors to rally with you, part of investing means that you have ownership in companies. So, one, you might be able to make a change with a specific company. Or, two, it might be with a brokerage. And I always think it’s important to know that you collectively can speak out and ask for things.

I remember a couple years ago, there were people who got together to try to get a gun manufacturer removed from a particular index fund at a brokerage. And they were responsive to that. So just keep in mind that if there’s something you don’t wanna be investing in, don’t feel like all hope is lost.

You do have a voice. So that’s one thing. But specifically to your question about where to go, there are— it’s known as ESG, which stands for environmental social governance.


ERIN: So many acronyms.


ERIN: And then SRI, which is socially responsible investing, are kind of two different ways to look at funds. And then you have impact investing as well. So it’s kind of stricter regulations along the way, depending on how you wanna be investing.

One good resource to turn to to look at impact investing would be Swell. That’s somebody I interviewed, the CEO, for my book. He talked a lot about the nitty-gritty about impact investing— how to vet things, how to look at things, the different rating systems that they have, how to decode those different rating systems.

And, you know, I think it’s important for you to just look under the hood of anything you’re gonna be investing in. Because one of the downsides of a fund is if you’re investing in, let’s just say, the S&P 500 Index Fund, hundreds of companies in there. And there easily could be a company in there that does not align with your own moral, ethical, religious, what have you belief system. And that then might mean you have to eliminate that particular fund from your portfolio.

So it is important that you understand where you’re drawing your line in the sand, what’s important to you. And that can be a directive for how you invest. But there are also ways around it. Like there are funds that are focused on different things.

Stash is also a great option in terms of apps that does really vet funds kind of based on different areas of interest. And they have like kind of cutesy nicknames that you can get in and check them out and see what’s actually in those funds as well. That can be a good way to get started.

[00:39:51] Oh, and one other thing is, especially from the religious aspects, there are certain especially robo-advisors that are building funds that are compliant for religious specifications. So Wealthsimple, for example, has a Halal Fund. So I believe that removes alcohol, pork, and gambling companies. So companies that profit from any of those things are removed from those funds.

MICHELLE: Yeah. That’s super interesting. Awesome. So I think we’ve covered a lot of good stuff. I definitely wanna plug Erin’s book one more time. I mean, this is an awesome, well-researched good starter book that’s going to still give you a lot of robust information. And I’ll definitely make sure that there’s a link to that in the show notes as well. But Erin, other than buying your book, how can people find you online or get in touch with you?

ERIN: I am wildly active on social media. So definitely feel free to reach out to me. I am very responsive. So if you have a question, please feel free to ask. So on Instagram, it’s @brokemillennialblog. On Twitter, it’s @brokemillennial.

You can also find my site, And that contact button at the top goes straight to my inbox. So feel free to reach out to me that way as well.

MICHELLE: Aw, yay. Thank you so much. This has been so, so informative. And hopefully, for folks who are listening who were kind of on the fence about investing, hopefully this was like the thing that causes them to go out and kick down the door and say, heck, yeah, let’s get some compound interest.

ERIN: Yes. Please do. Have your money work for you.

MICHELLE: Yes. Sweet. All right. Thank so much again, everybody, for listening. Feel free to find us on the web as well. All of our good podcast content can be found on iTunes, on Stitcher, all over the web. So if you’re enjoying this podcast, your comments, your likes, your ratings, all of those things are so, so deeply appreciated so that we can continue to spread that good money nerd love.

END CREDITS: I hope you enjoyed this episode of the Young Scrappy Money podcast. If you want to read about my work as a financial advisor and financial coach, you can do so at That’s Thanks again for listening.

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