Young Scrappy Money Podcast Ep. 013: Investing Tips from a Self-Taught Investor with Sandy Yong

We’re getting back on our investing kick with an interview with Sandy Yong, a Canadian author, speaker, and DIY investor. Sandy explains how she taught herself to invest after getting screwed over during a bad mutual fund experience, then shares her own tips for getting started with investing.

Resources from this episode:

• SandyYong.com, the home of Sandy’s work as an author, as well as her recent book, The Money Master. Don’t forget to sign up for her newsletter to get your free digital copy!
• Find Sandy on Facebook, Instagram @themoneymasterbook, and Twitter @moneymasterbook.
• Examples of companies that will let you trade as a self-directed investor: TD Ameritrade, E*TRADE, and Robinhood
• Examples of robo-advisors that can help take the stress out of investing: Betterment, Wealthfront, and Wealthsimple
• Some awesome, classic personal finance books: Robert Kiyosaki’s Rich Dad Poor Dad and T. Harv Eker’s Secrets of the Millionaire Mind
• A great compound interest calculator from the SEC’s Investor.gov website
• The Centre of Addiction and Mental Health in Canada–$2 from each sale of Sandy’s book will benefit their awesome mission!
• The Young Scrappy Money Academy Digital Subscription Service
• Young + Scrappy, home to Michelle’s work as a financial advisor and financial coach

Full transcript:

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. I am super pumped to be here. I feel like I say that every single time. But the truth of the matter is I’m always super pumped to be here because I love talking about money nerd stuff with you.

It’s gonna be a good one because today with me I have a very special guest who literally flew down from Toronto, Canada, to Atlanta, Georgia, where I am recording this podcast live with her, which is always a special treat. I do a lot of these via Skype. And, you know, it’s not nearly as fun as being in the same room with somebody. So I’m pretty pumped about this.

I am here with Sandy Yong. She is an investor, speaker. She’s the author of The Money Master. She has been an avid DIY investor for the last 10 years because she lost a bunch of money in mutual funds at a big bank and was like, nope, heck this. I’m taking financial matters into my own hands.

So she became this self-taught investor both in the financial markets as well as in real estate. So she has successfully created a six-figure portfolio and owns several income properties with her husband— who you can’t see, but he’s filming us right now. Hello. And hello to you too.

Um, let’s go ahead and get started, Sandy. I’ll kick it off with kind of an important first question. When should somebody choose to DIY it versus not DIY it when it comes to investing? Because you’re big on the do-it-yourself train.

SANDY: Mm-hmm.

MICHELLE: How do you know whether that’s right for you?

SANDY: Right. Thank you, Michelle, for the lovely introduction. So I would say that, when it comes to investing, you have three main options. The first option would be DIY, do-it-yourself, which in the real terminology is self-directed investing.

This is really great for those individuals who are willing to take the time to educate themselves and learn the fundamentals about investing. These are people who want to be hands-on with their investments. And this is great because it’s the low-cost way of managing your portfolio. This also is great for people who want to take control of their finances. A couple of examples of going the self-directed route would be TD Ameritrade and E*TRADE as well.

MICHELLE: Yeah. So if you’re online, and if you’ve ever seen any of these sites, if you’ve got a TD account— Robinhood is another favorite because of its low-cost nature. So if you’re actually the one getting in there and choosing investments, that’s basically the DIY approach.

SANDY: Right.

MICHELLE: So what are— what are the other two? You mentioned there were like two more options there.

SANDY: The other option I would recommend is going with a robo-advisor. This is wonderful for people who may be feeling a little bit lazy. But they are technology savvy. And they can go with a robo-advisor, which is an online automated management portfolio service. And this combines the high tech with the high touch.

This is generally a more affordable option than going with a financial advisor. And this is great if you want to have more of a hands-off approach. A couple of examples of robo-advisors would be Betterment, Wealthfront, and Wealthsimple.

Lastly, you can go with a financial advisor. For those of you who may have a complicated financial situation, or if you have received a large inheritance, then you may want to go have the personalized service with a financial advisor. Because they can customize and hold your hand if you need that to really make sure that you’re on the right path. They are able to guide you through the process.

And if you’re not sure where to look for an advisor, go out and ask your friends for their own experience and ask for a testimonial. A great way is to ask the financial advisor what their investment philosophy is or even being able to know how they charge for their service. Are they fee-based, or do they charge a percentage of your portfolio?

And a wonderful advisor will not overpromise their performance and say, I’m going to give you better than the market returns. And they would actually be realistic about the risk and the rewards of investing into the stock market.

[00:05:00] MICHELLE: Awesome. So I feel like those are great topics for another podcast for sure. I really should do one on like robo-advisors and choosing a financial advisor. Because those are useful. But if you are listening today, we’re about to get into that very first option, which is the DIY.

So you obviously went the DIY route yourself, which is awesome. Before we get into the mechanics of how this works, I’m wondering if you could actually take a step back and tell us a little bit more about your background. So how did you get into DIY investing.

SANDY: Mm-hmm, right. I went to university, and I studied business. And I graduated in 2009 during the economic recession that we had. I was fortunate enough to land a job in the hospitality industry planning conferences. And I quickly paid off my tuition.

Then, I mapped out what kind of financial goals that I wanted to achieve throughout my life. I put down how much I wanted to save for my wedding and when I wanted to get married to saving up for a car, a condo, and eventually retirement. Like most people, I went to one of the big banks. And I was told to buy high-risk, high-fee mutual funds.

It sounded like a great idea at the time. After a couple months, it seemed to be doing well. But shortly after that, I lost thousands of dollars. And I was really upset and frustrated.

From that moment on, I decided to take matters into my own hands and learn how to invest myself. I started reading personal finance books from Rich Dad Poor Dad and The Secrets of the Millionaire Mind. And it opened up my eyes to the opportunities of the investment world.

Now, when talking to my friends and my colleagues, I would hear such sad stories about people living from paycheck to paycheck or struggling to save for retirement. And it really broke my heart. Because I felt that, with my successful track record of creating a six-figure portfolio at the age of 27, that I could help other people become empowered and become financially independent. That is why I decided to write my upcoming book, The Money Master, so that I can combine my professional speaking skills and my passion for personal finance to educate working professionals on financial literacy.

MICHELLE: Wow. That’s awesome. So I’m really grateful that you’re here today because now that we know a little bit about your background as a DIY investor, I’m excited for you to share some of those lessons with people who are listening.

So I think to kick us off, let’s say somebody’s listening. They decide they want to get started. What process would they then follow? Just give us an overview to start.

SANDY: Mm-hmm. First, I would recommend that listeners should take time to sit and reflect on what financial goals they want to achieve, whether they’re short-term, midterm, and long-term. I know for most people, just like myself, would want to save up for their dream wedding, or a down payment on a property, and ultimately retirement. For creating a goal, as we learned in school, that you need to create a S.M.A.R.T. goal. Basically, you need to figure out what your goal is and how much money will you need in order to achieve that.

How much time do you need? And how much money do you need to save every week, every month, or every year to get there? And this will help give you an idea of how much annual interest you need to earn in order to achieve your goals even sooner. I recommend that the easiest way to search online is to look for a compound interest calculator. And that way, you can figure out the numbers.

MICHELLE: Oh, that’s awesome. So I’ll actually make sure to put a link to a compound interest calculator in the show notes so that you have a resource to play with if you are interested in getting started. So let’s say you kind of get a sense of what your goals are. I know that one of the important aspects of investing or saving particular goals is figuring out your risk tolerance. So how do you figure out your risk tolerance as an investor?

SANDY: In order to figure out your risk tolerance, I would say that you could fall under one of three categories. Either you have low risk tolerance, medium risk tolerance, or high risk tolerance. When you think about the bull market, and your portfolio is growing, it feels amazing.

But when you reflect on even the past six months of 2018 up until now, or even back into the 2008, 2009 recession, when people were losing money, what did you do? Did you let fear get in the way and sell all of your funds? Or, did you hold on tight and ride out the wave of the stock market? Even better, did some of you look at the stock market as being on sale and picked up some funds?

[00:10:12] Ultimately, you want to be able to know how you’re going to react when times get tough and when the stock market is going through a recession or even a depression. Ask yourself, how much experience do you have with investing? For those of you who are a novice investor, I recommend that you test the waters first and not put all of your eggs in one basket.

For those of you who are seasoned investors, then you’ve probably experienced the ups and downs. And once you get a hang of it, you will be able to know how much risk you can take on. And that way, you can find out how much you can achieve for your rate of return to reach your financial goals.

MICHELLE: Yeah. That’s great. So basically if you are, you know— if the thought of losing money is really scary, you need to be in something pretty conservative. And if you’re like, oh, yeah, stocks are on sale when the market drops, I love that. Because I think you’re totally right. Sometimes even just looking at what we’ve done in the past, exactly like you said, that past behavior can be a really good indicator for— even if we think we’re aggressive investors, we might not actually be in reality, which is super interesting.

SANDY: Mm-hmm.

MICHELLE: So let’s say at this point, right, you’ve kind of figured out your goals. You’ve kind of figured out your risk tolerance. And so how do you combine those things to figure out in general like the broad strokes? Or, I guess, you know, the technical term would be asset allocation. How do you figure out the general parameters of what you need to be investing in?

SANDY: That’s a great question. With your portfolio, when you are putting it together, generally most people will have a combination of stocks and bonds. And that combination is determined by your target rate of return, how much interest you want to gain annually, as well as your risk tolerance that we just talked about. You want to be able to take some risks. But you don’t want to take on more than you need to.

Historically speaking, bonds generate between 2% to 3% interest, whereas stocks could generate between 6% to 8% interest. And that’s from the past. And we know that in the future, it may or may not go that way. But within the past few decades, that’s how it’s been.

You will also want to figure out what your portfolio fees are. For example, when we look at exchange-traded funds, which are ETFs, and index funds, they can range anywhere between 0.25% to 0.75% on average, whereas mutual funds could range between 2% to 3%. Now, most people may ask, well, why should I care about fees and management expense ratios?

Well, in reality, these small percentages will affect your portfolio performance over the long term. And ideally, you want to keep your fees low so that you can keep the majority of your profits and gains so that that money can compound for you. And let’s just throw out an example out there with Joe.

And Joe starts off with $100,000 that he saved by age 35. And every month, he saves $450. If he has a target rate of return of about 6%, he can actually retire by the age of 65 with one million dollars.

MICHELLE: That’s super neat. So in that compound interest calculator I mentioned, by the way, hopefully y’all do get a chance to play with this. Because I think that, for a lot of us, investing and compound interest and general portfolio stuff is super nebulous. Like we don’t know a lot about it. We’re not really taught this in school.

But playing with numbers, exactly like the example that you brought up, I think can be a really useful way of learning. I wanna take a step back. If you don’t mind, can you give a brief overview, if somebody’s listening, and they’re really, really new to investing, what is a stock? And what is a bond?

SANDY: Yes. With a stock, you can buy a stock with a company. Let’s say your favorite company is Coca-Cola since we’re here in Atlanta. So you can buy a share of a company. And you would be a part owner or investor of the company. If you buy a share for $10 of Coca-Cola, and they gain 6% interest, you would generate $10.60 after a year.

And they also— typically, big corporations will have dividends. So on top of the annual interest that you get, you will get dividends. But you would have to check with each individual corporation.

[00:15:05] MICHELLE: I will point out real quick, um, because I think this is a terminology difference here in the United States, when you— when the stock price goes up, um, we refer to that here as capital gains. So technically, like interest rate is totally the right word. But I think this is just a terminology difference.

SANDY: Right.

MICHELLE: Yeah. That dividends and then capital gains.

SANDY: In terms of bonds, you could go with a government bond or a corporate bond. These are more safer investment vehicles. And generally speaking, investors, especially millennials, could say, well, bonds don’t generate as much interest. Why do I need it in my portfolio?

Well, when the stock market is going up, of course you want all stocks and have great capital gains. But you want to protect yourself when the stock market is going down. And the bonds will help be able to create that safety net so that you don’t lose as much when it comes to a bear market.

MICHELLE: OK. Awesome. So in general, if you’re thinking about risk tolerance, stocks are the more aggressive stuff. And bonds are the safer stuff. So a conservative investor would have more bonds in their portfolio. And an aggressive investor would have more stocks. Is that right?

SANDY: Yes, exactly.

MICHELLE: OK. Awesome.

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MICHELLE: So then let’s say you kind of know these parameters, right? You’ve figured out your risk tolerance. You’ve decided, I want in general this many stocks or this many bonds, whatever that looks like. There are a ton of ways to invest, specifically in stocks and bonds. So I’m wondering if you could talk about what some of those options are as well.

SANDY: Yes. And I’d also want to mention that if you’re not sure about what combination to choose from with stocks and bonds, another recommended strategy is to take your age and subtract it from 100. And this, you can determine what percentage of stocks you should have. For example, if you are 40 years old, all you have to do is take 100, subtract 40. And you’re left with 60, which is 60% stocks and 40% bonds.

Ultimately, everyone has a different situation. And they have different goals— hence, why we call it personal finance. So it’s really up to you to decide what you’re most comfortable with.

MICHELLE: Yeah.

SANDY: Your other question was how listeners can know what types of funds that they should choose. I would suggest that— in order to keep things simple, I would recommend that you create a portfolio that has between three to six plain, low-cost, what they call vanilla index funds or exchange-traded funds, which these could be really boring and unsexy type funds. But they are classic investments that will hold through the test of time.

Also, you want to be able to diversify your investments. And you don’t put all your eggs into one basket. Because if you do put all your eggs into one basket, let’s say marijuana stocks, then really you’re putting yourself at high risk of losing everything.

So a sample, model portfolio could be a mix of US stocks, some Canadian stocks, international stocks. And then you could have some real estate and bonds. And that way, you’re covering your— all the bases in different industries and having an international portfolio.

MICHELLE: Yeah. That’s great. Um, can you talk a little bit more about the diversification and why it is specifically an ETF might be a good option there?

SANDY: Yes. I am a big fan of ETFs, exchange-traded funds, because they are generally low-cost. They can take more of a passive investing approach, meaning that they can track particular sectors or track parts of the stock market. With ETFs and index funds, they are— they have low expense ratios compared to mutual funds or those that are actively managed funds.

[00:19:52] What I love about ETFs is that they don’t have any investment minimums. And they have low MERs (Michelle’s note: these are basically management fees here in the U.S.). And ETFs can be traded like a stock, where they can be bought and sold throughout the trading day, and are based on supply and demand.

Whereas index funds, they are like mutual funds. And they mimic the performance of a particular index, such as the S&P 500 or the Russell 2000. However, they could require an initial investment minimum as high as a few thousand dollars.

Lastly, a tip is that a typical trade could cost you about $10. And so you want to be able to be strategic with how much you’re investing. So let’s say a minimum of $1,000 to buy your index fund or your ETF. And then that way, you’re not having these trading costs adding up.

MICHELLE: Yeah. That’s a great point about trading costs. Because I think, in a lot of ways, fees are one of the few things that we have control over as investors. I mean, we can’t control what the stock market does. I certainly can’t control what the stock market does. I don’t know about you.

SANDY: Same here.

MICHELLE: Um, but at the very least, we can do a bit of research and figure out what we’re paying and whether it’s worth paying that. So that’s a great point. One of the other questions that I frequently get from folks is about account types. So I know there are so many account types out there. I’m wondering if you can at least give a brief overview of kind of what those options are and how you would go about choosing them.

SANDY: Yeah. So for the listeners here based in the US, you can open up a traditional or a Roth IRA and a 401(k) (Michelle’s note: individuals cannot open 401(k)s unless they are small business owners. 401(k) accounts are through your employer here in the U.S.). And you can go with an online brokerage, such as TD Ameritrade, Fidelity, or E*TRADE. Just a disclaimer, I’m not affiliated with any of these companies. So I recommend that you go online, do your research. And there’s tons of comparisons and will tell you what the best brokerage firm is for you and that’s suitable to your situation.

Once you’ve set an online brokerage account, all you have to do is take your money from an existing bank account and transfer that over. And once you have your money in your Roth IRA or 401(k), you can choose which investment vehicle is right for you, such as your stocks or bonds, GICs, mutual funds, index funds, and so on. Once you’ve chosen your investment vehicles, then you know you’ve been able to factor in your financial goals, how much risk you can take, and your timeline horizon. And that way, you can build a really solid investment portfolio that’s right for you.

MICHELLE: Awesome. So I know that, as somebody who has done this for a while, you probably have maybe some other advice. If somebody’s listening, and they’re a DIY hopeful, um, any parting words of wisdom for our listeners?

SANDY: I have three tips to share. My first tip is that don’t worry about timing at the market. I often hear from friends and colleagues. They’re like, Sandy, I just want to wait because there might be a recession. And then I will buy some stocks when it’s on sale.

And I mean, you have a point.

But really it’s not about timing the market. It’s about time in the market. Investors should have a long-term vision. Especially for millennials, you may have 30 or 40 years ahead of you. So when you have a long-term vision, it doesn’t matter about what’s going on today or what’s going to happen next month. Because over time, we know that the stock market tends to go upwards.

My second tip is to remember to ignore all the noise that’s out there. You may be addicted to watching what’s on television, and those talking heads predicting whether the stock market’s going up or down, and all of the bear markets and bull markets. But really it’s just distraction. And you don’t need to listen to any of it.

Investing requires patience and practice. But once you get the hang of it, and you know the investment basics, you’ll start seeing your portfolio grow. And you’ll see those rewards happening.

Lastly, I would suggest that the time to take action is now. If you haven’t already started investing, you are losing out on the wonders of compounding interest. Because with compounding interest, this is where money can grow and make more money for you. And the earlier you start, the better it is for your financial future.

MICHELLE: I love it. One of my favorite quotes about investing, I guess sort of about investing, tangentially about investing, “The best time to plant a tree is 80 years ago. But the second best time to plant a tree is today.” Um, I love— I love that concept.

[00:25:04] SANDY: Amazing.

MICHELLE: Um, cool. So now that we have a little bit of an overview on DIY investing from you, tell us about your book, The Money Master. What’s going on there?

SANDY: Yes. I am so excited to share about my book, The Money Master. It really focuses on three pillars. First, it talks about creating your own financial portfolio, which we discussed about today.

It covers real estate investing as well as entrepreneurship for those who are interested in starting their own side hustle. I discuss these three methods for people to start earning multiple streams of income and building their wealth. I’m so excited that the book will be published by June of this year with my book publisher, Black Card Books.

As well, when I was writing this book, I conducted interviews with industry experts, such as Ellen Roseman from The Toronto Star, Mark Noble from Horizons ETFs, and Gloria Yeung, who is the number one real estate agent with condos.ca. In addition, I am so honored to be partnering with CAMH, The Centre of Addiction and Mental Health, which is a wonderful and huge organization in Canada where they are spearheading mental health research and helping those families who are impacted by mental health. $2 of each book sold will be donated to this charity.

MICHELLE: Oh, that’s awesome.

SANDY: Yeah. And ultimately, my vision is to help people feel comfortable talking about money and mental health. Because these two subjects tend to be very touchy. Yet it impacts people’s lives on a daily basis. So as a proud female author and investor and entrepreneur, I want to be able to help women and millennials and young professionals to become empowered to become financially independent.

MICHELLE: Awesome. And we’ll also make sure this makes it into the show notes as well, a link to buy the book and find it online. In the event that somebody else wants to contact you online, how can listeners find you?

SANDY: For those who want to continue following my authorship journey and to learn more about financial investing tips, you can actually get a special free digital copy of my book by signing up at my newsletter at sandyyong.com, which is spelled S-A-N-D-Y-Y-O-N-G.com. And you can follow me on social media. I am on Facebook and Instagram @themoneymasterbook and Twitter @moneymasterbook.

MICHELLE: Awesome. Sandy, thank you so much. I know you did not make the trip down to Atlanta for this podcast. But I’m so very grateful that you did. And I’m glad that you stopped by to share your wisdom and insights with our listeners.

SANDY: Great. Thank you, Michelle, for having me here today. And I’m so excited to be here in Atlanta with you.

MICHELLE: Awesome. And, y’all, if you are listening, I cannot express this enough, my gratitude for you for checking out our podcast and for telling your friends about it. So if you liked what you listened to today, please, please, please tell people that you know. Give us a love. Give us the likes, and the comments, and the shares, and all of those good, good social vibes.

Other than that, I will let Sandy go. I will let you, my dear listener, go. And I hope you have a wonderful day.

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 www.youngandscrappy.com. That’s www.youngandscrappy.com. Thanks again for listening.