Welcome to Better Have My Money, my Monday night newsletter about stocks for clueless newbies.
I’m battling a head cold. After napping all afternoon, I heated up a bowl of frozen lentil soup I cooked last month, and thanked past Amber for her foresight and suggested to my boyfriend that maybe I should write my newsletter about how cooking the soup was like an investment in my future, rather like buying stocks, except that the soup remained the same size and didn’t grow and he was like “hmmm, maybe you should go to bed.”
Instead, today I’ll just let other people do the thinking and use their words.
I’ve been reading Broke Millennial Takes On Investing, a book written by Erin Lowry, whose built a whole personal finance advice empire called Broke Millennial.
This is her second book, focused specifically on investing, answering questions like what are the basics of actually buying and selling stocks, should you invest if you’re paying off student debt, should you pay someone to manage your investments etc.
I liked it because it’s all the actual basic information you need which I find too tedious to write, so I’m going to recommend it to everyone who emails me asking if they should max out their retirement accounts before investing. Cause my answer is like “sure, why not, I have three 401ks and keep forgetting to figure out what to do with them, thanks for this reminder, buy some stocks, investing is fun!”
Lowry definitely advocates more for index stocks and not looking at your investment accounts regularly in case they go down. Personally, I adore checking mine daily because I don’t take the losses to heart (usually) but any win fuels me smugly for hours, but the focus I like is her long-term one.
In one part of the book, she writes a “love letter to you, from the stock market” (yep it’s cheesy, but just go with me here for a second):
My dearest millennial, you are in the unique position of having what every investor craves: time. Time is exactly what will make you the next Warren Buffett. (Well, that’s a lie. Time can help but few people can make me their bitch quite like Buffett. Time is important because it helps you grow your wealth while surviving future drops in the market. Time alleviates the pressure to quickly amass money in the later years of your life so you can retire. In fact, you can retire earlier if you learn how to master investing in your twenties instead of your late thirties, or heaven forbid, your forties.
First of all, shout out to my readers in their 40s, 50s, and beyond (hi mum), because it’s definitely never too late to start investing.
But I appreciated Lowry’s attention to how much money adds up over time, so it’s better to start investing small amounts while you’re younger thanks to compound interest (I’ve delved more into the glories of compound interest before), inflation and time.
Confusing term of the week: “inflation” — how things such as goods and services get more expensive over time, impacting how much a dollar is actually worth, and impacts how much money you need. So $1 in 1919 is worth $14.69 now. Inflation is around 2%. That means you need your money and investments to increase more than 2% every year, otherwise your money is going backwards. Most savings accounts are just keeping up with the rise in inflation, not actually increasing your savings.
Young ppl specific finances and issues are also on my mind because Bhakthi Puvanenthiran, managing editor at Crikey and one of my absolute dearest pals, appeared last night on ABC’s Q&A (the most powerful political panel show on Australian TV) as the only millennial on a panel.
Also, the only person of colour. And one of only two women. And the woman was dressed in bright pink flowers. She is the baddest bish in the game.
Bhakthi pointed out how political policies have direct implications on financial decisions and the economic future of young people, and that current policies aren’t addressing our needs.
(I’m not going into negative gearing and Frankin credits now — which were two Australian political and financial policies they were discussing — but negative gearing is about people purchasing rental properties to use as a tax break and Franking credits is a type of tax break predominately used in stock investments by retirees.)
“The difference between your generation and the issues that the current generation face.. is that the size of the deposit is just insurmountable for most people,” said Bhakthi.
It’s interesting to me that we spent a lot of time talking about Franking credits and even this issue [negative gearing] but there are lots of issues that young people care about that neither major party is speaking to. Whether it’s climate change, whether it’s health care which is also deeply unaffordable, whether it’s rental housing — because that’s where the majority of young people have been pushed into. Those issues aren’t on the table. It’s about, to be fair, baby boomers.
To be clear, she was telling this directly to the Minister for Communication and the Shadow Treasurer.
Millennials! Speaking truth to power and demanding better financial policies for young people. Now we just need time to make that money grow.
I suggest donating this week to Express Media, a media organization for young people that Bhakthi has long worked with.
Have a bright week,
Better Have My Money is on Twitter @bhavemymoney, so please tweet nice things (aka the link to our sign up page) and tag us. Got a mate who is also a millennial? Forward this onto them and tell them to subscribe. If you sign up to Acorns, use my sign up code to join and we both get $5.
As always, if you've got any questions about stocks, this is a shame free zone. Just reply and ask away.