Invested Development with Amanda Holden
I think of financial health as having a number of pieces to the puzzle that all come together to make us financially healthy people. The primary pieces, or the outline of the puzzle, include budgeting, expense management, saving, credit management, debt management, investing, insurance or risk management, and income management.
At the Financial Gym, we help our clients figure out all of these pieces and where they fit into the puzzle, and, while I think they’re all equally important, I think the investing piece is typically the last one people figure out. Either they haven’t gotten to a point where they’re saving enough to make investing a priority, they’re afraid to start, or they don’t know where to go to learn more about it. That’s why I’m excited to have Amanda from the Dumpster Dog Blog and Invested Development, to talk more about investing and the amazing resource she’s created to help you get started, or get more comfortable with, the investing piece of your financial health puzzle.
What Are We Drinking?
Amanda — Spicy Margarita
Shannon — Schweppes Grapefruit Sparkling Water with Tito’s Vodka
- When Amanda graduated from college she needed a job, so she started working for an investment management firm in San Francisco. She started there at the beginning of 2008, right at as the financial crash was happening.
- She had a front row seat to the rollercoaster, and it was a wild time to be there because the success of the firm was so tied to the stock market in general. About 70 percent of her department was laid off, just a few months after she started working there.
- Amanda managed to not get laid off, and she made it through the financial crisis with that company. She ended up working as an investment counselor and worked directly with their high net worth clients. She did that for about three or four years.
- She was the point person working directly with the clients, so she was the one on the phone or meeting with them.
- Amanda would keep them apprised of portfolio strategy or answer questions about the market, and she would get to know their personal financial situations. It was basically letting old, rich white guys complain about their money to her all day.
- It was a great job and she learned a lot. The learning curve was very steep. She was thrust into this position.
- When Amanda was an associate, one of the guys from the investment counselor department came down and told her to work for them. She was the youngest woman in the department.
- She wouldn’t be able to do what she does now without that experience. It would have been hard to learn what she did without that front line experience, but helping rich men get richer was not going to be it for her.
- Amanda spent eight months saving up all of her money and that was the genesis of her nickname, Dumpster Dog, which is the name of her blog. She got super scrappy about saving money.
- She quit that job to travel. While traveling she thought that her work with investments wasn’t done, and she started thinking of ways she could get the information back to the demographic she cares most about, which is young women, or anybody who has felt left out of these conversations.
- These conversations are typically reserved for people who are already wealthy.
- Amanda ended up back in her hometown, Portland, Oregon, and that is where she has been for the last couple of years, getting her business off the ground.
- Her business, Invested Development, is essentially investment seminars, writing, and an online course.
- Amanda said that wealthy people do not necessarily know more than those without money.
- In the aftermath of 2008, Amanda’s job was to assure her clients that the situation was bad, but it is just a normal part of the cycle. She was mostly begging them not to do something that would ultimately hurt them in the long run, like go to cash or sell their investments at a loss.
- The amount of reminders it took was unbelievable. Most of the people Amanda worked with did not acquire their money through investing, it was mostly through their family or through a business.
- It is an advantage to smaller investors to just jump in and get your feet wet with small amounts. It would feel crushing to do something wrong with $100, but it would feel worse to do that with $10 million.
- Shannon also had that misconception that people with wealth had more investment knowledge. Part of her training as a financial advisor was to do role playing. In one of those sessions, she had to explain an investment portfolio that she was trying to sell. Shannon started talking about asset allocation the way she does now, with a pie analogy.
- Shannon’s mentor told her that the pie analogy might work with a small mom and pop investor, but when you are working with a sophisticated investor she needed up her game.
- After talking to clients, they actually did appreciate the analogy, because they never understood what their advisor was talking about.
- Amanda does her investment seminars for universities, sororities, in corporate settings, and for women’s groups.
- One of the hardest seminars she did was at a high powered law firm where the women in the room had these incredible jobs, but she got the sense that they were almost competitive with one other and nobody was vulnerable enough to ask a question or show that they didn’t understand something.
- Amanda loves going into the sororities, because they don’t think they should already know this stuff, so they are laughing, asking questions, and not caring about looking dumb.
- Shannon did an Investment 101 seminar at the Financial Gym one night, and there was a woman who raised her hand and asked Shannon to explain what the markets are. Everyone kept telling this woman she needed to invest in the markets and she didn’t know what that meant.
- You cannot just assume that people know what it means to invest in the market. If you’ve never taken a financial class, how should you know what that means.
- The things you take for granted for knowing are the things that tons of people don’t know.
- These are not naturally occurring things that we have intuition around, this is not something that is imbedded into us. We’ve created this crazy system and it really takes sitting down and familiarizing yourself with it if you want to learn about it.
- It is a whole new language and there is no reason why anyone should know it. It is just like any language, there are degrees of how much you should immerse yourself in it.
- At the end of the day, there is not a lot that you need to know about it. There are some high-level things you should get comfortable with. On the other end, you could get into the weeds, but the general population doesn’t need more than the high level ideas and concepts.
- A lot of people don’t invest because they don’t understand it, and they are missing out.
- If you are scared of investing because you are scared of losing money and your money is sitting in a bank account, your worst fears are happening, because you are losing money every day.
- One of the greatest things about investing, at least from what we’ve seen historically, is that taking these extremely simple strategy steps and doing a very set it and forget it and not getting in there and trying to get cute and have this complicated portfolio is actually the best way to invest.
- Doing something that is completely automated, where you think about it maybe an hour a year, has actually performed the best historically.
- When picking stocks, it is all over the place and you cannot predict what is going to happen. A simple strategy is best.
- Stock picking can be such a fool’s errand for so many reasons. Shannon has recommended picking two ETFs and calling it a day.
- Stock prices aren’t moving on fundamentals, they are moving on sentiment. They are moving on buyers and sellers buying and selling.
- It can take years or decades for stocks to balance out.
- There are different types of markets: stock market (also called equities), bond market (fixed income), cryptocurrency market, real estate market, commodities market (oil, gas, gold, silver).
- There are different types of markets that represent different types of assets. When you hear asset allocation, it is about having different types of those things and representation of different markets.
- The boring, plain vanilla markets you need to worry about are stocks and bonds.
- If you turn on any minute-by-minute financial news programming, they will lead you to believe the most important decision is should you own Apple stock or should you own Microsoft stock.
- In reality, the most important decision you are going to make is should you be invested in stocks, bonds, or cash. The big overarching asset allocation is the most important decision you need to make. What stock should you invest in should fall to the very bottom of an inverted pyramid of important decisions.
- If you are making a decision about how to invest your portfolio, start with the big picture decision first: should I invest in stocks, bonds, and what combination of the two. Take a step back and set your goal. When do you need this money and why are you investing at all.
- First you need to set your goal. What is the money for? What do you have coming up in your life journey? You need to know what is already in movement and where you want to go.
- If someone has an idea of what you should do with your money, without knowing your financial situation or your goals, they are probably going to get paid if you do what they say.
- You can really only invest with a goal in mind and with an understanding of the different asset allocation classes, and then you need to puzzle piece together what makes the most sense, given what we know about these different asset classes.
- One of Amanda’s pet peeves is when people work with a financial advisor, or a robo advisor, and the first question they ask is what is your risk tolerance. This is a good question and we need to talk about it, but it means nothing.
- Robo advisors are only as good as the information they receive.
- Bridget was Shannon’s first employee and she started as a client. In her first session, Shannon learned that Bridget had an investment portfolio at Betterment in a Traditional IRA. She also had a 401(k) at her current company, so she wasn’t going to get the tax benefit of the Traditional IRA. Her money should have been in a Roth IRA. Luckily, she hadn’t filed her taxes, so she could change it to a Roth IRA.
- Bridget had a house goal that was five years away and her asset allocation for that was the same as her retirement asset allocation (90% stocks/10% bonds). They ended up starting a new portfolio that was more conservative to balance out the aggressive house fund. They shouldn’t be the same. A house goal in five years should be different than retirement in 50 years. The robo advisor applied the same allocation to all of her life goals.
- If you are feeling a little bit clueless about how to put information into one of these sites, you need to take a step back and understand some of the basics of investing.
- One of the biggest things Amanda does is help people understand their options between robo advisor, DIY, and picking individual stocks. If you go with a robo advisor, fingers crossed, it is going to be fine, but you should also know exactly what service they are providing you.
- Be wary of some of the robo advisors, because there are so many of them.
- Shannon liked Swell Investing because they do more socially conscious investing. She heard them present and thought they were great, and she just heard last week that they are shutting down. When that happens, you need to sell your portfolio and you need to deal with tax issues. Look at some of the bigger firms.
- If you are going to work with someone who is going to give you financial advice, they should absolutely be a fiduciary. A fiduciary is somebody that is required to work in your best interest and make recommendations in your best interest.
- The conversation of fiduciaries comes in when somebody is actually going to invest your money on your behalf. The Financial Gym is not a fiduciary, because they are not actually going to invest your money.
- A large majority of investors do not need to follow this standard. Not everybody is a fiduciary.
- You should want to know and understand everything yourself. Be empowered in what you are investing in. Even if they are a fiduciary, you should be very knowledgeable about what is happening. It is your wealth and your life.
- Amanda doesn’t make recommendations on investing. The whole point of her business is to get you in a position where you can confidently make decisions on your own. If that means you go with some sort of a wealth advisor, so be it, but she finds that most people who come through her course are not going to go that path.
- Investing is something that is within our capacity to learn. It is not rocket science, but it does take someone sitting you down and explaining things you should know in a way that makes sense.
- In Amanda’s course, she compares everything to dating, which makes it interesting and fun and totally relatable. The idea is to get you in a place where you walk away feeling like this is something you can do on your own, at least as a beginner.
- What does that mean? Open up a Roth IRA or start contributing to your 401(k). Buy one, two, or three index funds, which is essentially a mutual fund or exchange traded fund (a big basket of some other type of investment).
- The most popular index fund in the world is the S&P 500 Index Fund. This essentially invests you in the 500 leading companies in the United States. Within your Roth IRA or 401(k), which is just the account, buy a low cost, diversified index fund and call it a day.
- The words sound very overwhelming if you are not familiar with them, but anybody can learn this information.
- You can stay really high level and still feel in control of your situation. You don’t need to get into the weeds and know everything.
- When you have someone managing your account, it can cost at least one percent. Over time, you want to earn six to eight percent on your account. Do you really want to give over 20 percent of your investment to fees?
- If Amanda was going to recommend that someone use a financial advisor, it would be for accountability. This would be to get everything set up and to start contributing to your account, and hopefully for some education.
- When you relate one percent with shopping, it isn’t a big deal. If you went to happy hour and your spicy margarita is one percent off, that is an insult.
- In the world of investing, one percent is so much. The stock market will only give us what it gives us and maybe that is six percent or eight percent a year, which is an average. If one percent is paid in fees, that is 20 percent of your returns right now. With compounding, this ends up being an even higher percent of your potential returns over time.
- If a financial advisor is just managing your portfolio, and not doing any other financial planning, you are overpaying.
- Invested Development is the name of Amanda’s business. It started out with Amanda just doing live seminars, and she still does those.
- She loves going into corporations and businesses that have some sort of women’s leadership channel or inclusivity group and doing a happy hour or lunch and learn where she does a really fast Investing 101 that is one to two hours, just to get everybody up to speed.
- For companies that don’t offer a retirement fund yet, she educates employees how to do that on their own.
- She also does independent seminars and she offers a virtual course. The virtual course is live and is taught by Amanda. She usually does two months on and one month off. She just finished a course in July and she is taking August off. She will have a course in September and October. They are four classes long, each class is an hour and a half, plus as much Q&A until everyone has their questions answered. It is six hours of instruction and her goal is to get everyone confident in their investing knowledge, so they can turn around and make decisions about opening accounts and investing within those accounts on their own.
- In the course, she covers the account types, all the different ways to invest, asset classes, socially responsible investing, etc.
- Amanda has been doing this for about a year now and she has had almost 200 people come through her class.
- This type of financial education product is needed in the world today. The course costs $249.
- If you are not investing, because you don’t feel confident, you are going to make more than that in your investment returns and saving on fees.
- People should be investing in their financial health in different ways, whether it is investment knowledge or budgeting knowledge.
- Seventy six percent of Americans are living paycheck to paycheck. We have big financial health issues in this country, and there is no formal financial health education.
- You need to invest in it. The mistakes you avoid will be more than the investment in the course. You are likely spending $250 in other ways.
- Shannon put $11,000 into Betterment a year ago and there were times where it was $10,500, but now it is $11,609. She hasn’t done anything with it and it is up $600 in a year.
- It is like taking your money off the sofa and putting it on the treadmill. We work so hard for our money and we should want to maximize it. For each dollar we make it is one less dollar we need to earn.
- There are two ways to make money, (1) exchange your time for money, or (2) have your money make you money.
- If you just invest money over a period of time, that could equal a year you don’t need to work.
- There are so many fundamentals of the stock market that still make it a good time to invest. There are so many companies that have a ton of cash and are still going to grow.
- Earlier this year Uber, Pinterest, and Lyft were not public companies. There are always new entrants to the market that will help it grow and give you growth too.
- We are due for some sort of significant correction, which is greater than 20 percent. Until that happens, there are still a lot of positive things to say about investing.
- You cannot time the market and when the next bear market will occur, which is a dip that is 20 percent or more, so what is the point of trying.
- If we go through a dip, it is not that big of a deal. That is a normal and natural part of investing. If you have a long time to make your money grow, a dip in the market doesn’t really matter. If you are savvy about it, a dip is a good time to buy.
- Remove all emotion from your decisions about investing in the market and invest every month, no matter what is going on. We all wish we were investing in March 2009.
TAKEAWAY: My biggest takeaway is that there are so many resources available to help you get more comfortable with investing. If you haven’t found the right one yet, don’t be afraid to invest in one. Better investing practices truly pay dividends over time.
Random Three Questions
- What’s the best investment advice you’ve ever received?
- What is a show you like to binge watch?
- If this was your last night on earth, what is your final meal?
Connect with Amanda
Blog: Dumpster Dog
If you’d like to talk to my team at the Financial Gym to help you put together the pieces of your financial health puzzle, I hope you’ll reach out to us at the Financial Gym. My trainers love helping clients put together the puzzle, especially when it seems like the pieces don’t fit. The great news is that Martinis and Your Money listeners get 15% off Financial Gym services. So head over to, or send friends to, financialgym.com to get signed up today.