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Archives for April 2023

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3 Steps to Opening Your First Investment Account

The Hardest Part Can be Taking the First Step

You might be the first one in your family to talk about investing. You might be the first one among your friends or co-workers who talks about finances.

We understand, we support you, and we want to help you take that first step.

The first step can be the hardest. We understand as we were there one time and it can seem daunting. Today we are going to walk you through a few steps to help you get started. Our goal is to make it as easy as possible.

Step 1 – How Much Do You Want to Start With?

Most folks start with “where should I invest?”. We want you to start with how much. We want you to start with an amount that you won’t miss. An amount that you can do on a regular basis without making dramatic changes in your life.

Why?

It’s the first step and we want to make sure you keep going. Think about if you went to the gym and in the first workout the trainer made you do 1,000 push ups, 1,000 situps, 2 hours of cardio, 2 hours of weight lifting….after you told them you hadn’t ever worked out.

You might never go back to the gym. We want to help you create a habit that lasts a lifetime.

A few starter amounts that we recommend people get started with are listed below. Could you do more?

Absolutely! 

Our only goal with the options below is to help you get started. So for the first step write down, put a note in your phone, or commit to memory a number from the list below.

  • $25
  • $50
  • $75
  • $100
  • $125

Step 2 – What is the Goal for the Money?

This is a key part of taking the first step and it can be overwhelming. One of the other ways to look at it is to say how long can I live without this money?

Let’s look at a few common goals or options for investment dollars that we have had folks ask us in the past.

  • Home Purchase
  • Investment Property Purchase
  • Retirement
  • College Savings
  • More Options in the Future

For today let’s just say you want to have more options. You aren’t sure what you would like to do with your funds, you just want to make sure that you have additional funds available.

Step 3 – Choosing a Place to Start

We hope by now you have an amount to get started with and a goal. The next step is selecting a place to get started.

This is where many individuals get hung up. There are commercials on TV, hundreds of companies running magazine ads, and don’t get us started with the 3 billion search results that show up on Google with you type “financial companies”.

For taking the first step we are going to recommend a few things:

  • You want a company that has a solid financial background
  • You want a company that has accounts that you can get open with $0 
  • You want a company that offers a broad range of services and products that you can grow with over time

A few companies that fit the bill:

  • Fidelity
  • Schwab
  • Etrade
  • TD Ameritrade

A few questions that come up when we provide this list to individuals:

  • Why don’t you list Vanguard? You guys are always talking about Vanguard! Vanguard has minimums that may not make it a great place to start. Minimums at Vanguard start at $1,000 and we want to help people get started whether they have $25, $50 a month or $1,000 to open an account.
  • Why don’t you list apps/companies like RobinHood? They are a newer company and have fewer options, today, that can allow you to grow with. We don’t have an issue with them 🙂 it’s just not on our current recommended list.

Most of all we hope you take the first step. What we promise is that once you start you will never look at money the same. You will start to look at every expense differently. You will question whether you need something now or you want to invest for the future.

Twins Rules for Financial Success

As with all of our content here we want to encourage you to follow three core rules :

  • Have an Emergency Fund/Squirrel Funds
  • Invest for the Long Term
  • Invest Automatically & Consistently

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Enjoy a Night Out and You Can Still Save

When one hears the word “discipline” it is not usually associated with “fun” or “enjoyment”.  By adding “finance” into the mix then surely that must not be fun.  Of course we all know that mastering financial discipline is a journey and not a destination.  One of the reasons that many people give up on the journey of achieving their utmost financial freedom is because they associate the success with finances as only sacrifice instead of an on-going compromise to maximize the journey.

An aspect of finances that is often a budget killer is that of going out to eat.  Especially as income increases one of the most common ways to enjoy that additional income on a regular basis is going out to eat but that can also be a sure fire way to prevent you from maximizing your best financial goals.  We aren’t going to suggest that you give up going out to eat because we feel that won’t allow you to stick with your overall budget and financial planning.  Consider the following methods to enjoy a night out and still help you to keep on track with your financial goals.

Appetizer Night

This is one that we have each enjoyed with our spouses.  When you go out with the goal of having appetizers you can bring your overall bill down dramatically and even capitalize on happy hour specials.  This method gives you the opportunity to enjoy going out and likely even try a few items on the menu that you might not otherwise (afterall you don’t have to get just a single appetizer). 

Sharing a Meal

Meal portions over the years have grown substantially.  One study on food portions done a number of years ago showed that hamburgers had increased by 23%, Mexican food increased by 27% and those were just a few of the items cited.  With portions having increased take the opportunity to share a meal with your significant other.  

By sharing a meal you get the following benefits:

  • Save some calories: Most of us are trying to save calories and splitting a main course gives an opportunity for calorie savings.  Of course in any given relationship it can be tough to agree on one meal so you might need to offer up that one person gets to pick one time and the other person gets to pick the next time.
  • Save on expense: This is certainly the biggest financial aspect as instead of 2 meals at $16-$20 a piece you only are purchasing one and that adds up if you go out to eat 3-4 times a month.

Coupons…Yes Coupons

For many, using a coupon isn’t difficult. We aren’t sure why but as we have discussed finances with people we have found that, in particular as income increases, there is a lack of desire for coupons. The reality is that company’s wouldn’t create coupons if they didn’t want you to use them.

Now you likely won’t get a coupon to your fine dining locations such as Ruth’s Chris; however, you will find that coupons are readily available to great locations such as Buffalo Wild Wings, Rubios, TGI Friday’s and much more. Whether you save the coupons that often get mailed to your house or you hunt on the internet, taking a little bit of time to find coupons can have you enjoying a great night out for much less than you’d expect.

To keep moving forward on your financial goals we encourage you to keep up habits such as going out…we think making a small adjustment in how you do that though will have you reaching your goals and still enjoying the process.

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Book Review: The Little Book of Common Sense Investing

Looking for more investing knowledge? Do a search for “best investing books” on Google and one of the books you are likely to see is The Little Book of Common Sense Investing.

The quote on the cover is from legendary investor Warren Buffet. The author, John C Bogle, is an investing legend himself.

Just because someone is a legendary investor doesn’t make them a great author. In Bogle’s case this book is amazing. 

In our book review series our goal is to give you highlights of the book. We will provide you with a little bit about the author, lessons from the book as well as reasons to read it if you so choose.

Who is John C Bogle?

John C Bogle invented the Index Mutual Fund. He set out to create a way for investors to get their fair share of market returns.

He founded Vanguard in 1974. It is the largest issuer of mutual funds in the world and the second largest issuer of ETF’s according to investopedia. They are continually focused on delivering low cost mutual funds. Many of their mutual funds charge 94% less than the rest of the industry and some are the lowest in the industry.

The company he built and led from 1974 to 1996 was built on putting investors first. It is a company that is owned by the investors. Along the way he also wrote 10+ books and has been praised by such investing legends as Warren Buffet for his strategies.

Core Lessons from The Little Book of Common Sense Investing

This book, while it has Little in the title, packs a ton of information. Mr. Bogle lays out the case how investors are not getting their fair share of the market. He outlines how costs need to be watched. Bogle details how the majority will not beat the market so it’s better to get your maximum share of the market gains. 

Let’s dig deeper into a few core lessons from the book.

Costs Matter…More Than Many Investors Care to Admit

Costs are how mutual fund companies make money. It affects the investors return. Bogle is clear in that he believes investors should look after themselves. 

Bogle uses the example for both active and passive index funds. Active funds are where a manager tries to beat the market. Passive funds follow the market with little manager involvement.

Comparing passive or index funds where one fund charges .03% and the other charges .44% is a .41% difference in favor of the mutual fund company. While this may seem like a small amount of money it adds up over time. Bogle has charts, graphs, and data to show that the smart investor is giving up money for no reason.

You will learn to look at what your mutual fund company is charging you and to make sure that you know what you are paying and why.

Reversion to the Mean…Understanding this is Key to Fund Selection

This was a new concept that we hadn’t learned before. It’s always nice to learn something new. Reversion to the mean is the theory, which Bogle proves in the book, that mutual funds will eventually go back toward the mean.  In this case the mean is the average of the S&P 500 average as a whole.

Trying to outsmart the market is difficult. As Bogle points out very few have done it for a consistent period of time. Even the legendary Warren Buffet, often quoted in the book, has said after his passing he wants the majority of his wife’s estate put in an index fund.

Simply put many managers are beneficiaries of good timing, luck, and the cost for their services don’t pay out in the long term.

Taxes Matter & They Need to Be Minimized

I don’t think I have ever heard anyone seriously state “I want to pay more taxes!”. Bogle is quick to point out that actively managed funds, as a result of strategy, can increase the taxes owed to an investor. As a result this needs to be calculated prior to making an investment decision.

Start Early, Be Consistent, & Don’t Stop

It’s often been said that retiring with a large nest egg is simple, however not easy. Bogle makes the case that the best investors should start early and consistently invest. Selecting a low cost market index fund and a low cost bond fund is a simple yet proven strategy.

Don’t Buy the Mutual Fund Industry Hype

Bogle is very practical. He outlines a fund created in the .com hype of 2000 that was created by Merrill Lynch. It raised just over $1.1 billion dollars. Unfortunately less than two year later investors had lost 71.6% of their money.

History can repeat itself if you fail to study. As Bogle points out, an investor who had kept their money in a S&P Index fund would not have suffered the same fate. 

Who should read this book?

This book is a great read for the investor who isn’t sure if mutual funds should be a part of their portfolio. If you were on the fence of whether you should invest in mutual funds this book will have you chanting…low fees…low fees…low fees. 

You may also come away from reading this book that a S&P Index Fund or a Total market fund should be the core of your portfolio. It’s something we believe here at Bridges Twins and we hope you will adopt it as well. Your future self will thank you.

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What is Your Finance Mindset?

Understanding Your Financial Mindset Can Help You to Achieve New Levels of Growth

When it comes to achieving one’s goals in investing we have found that people can get trapped with common roadblocks.  In fact, over the years we have found there are a myriad of reasons why people either:

  1. Don’t invest
  2. Invest only minimally
  3. Don’t stick with their investment plan

While the individual answers on why someone lands in one of the above three tend to vary we have found there are common themes that keep people trapped into one of the above scenarios.  Especially if you have never tried investing, it is essential to understand your financial mindset to help you achieve long-term success.

Those Who Don’t Invest

Not investing is the hardest hurdle to overcome…because you haven’t started!  And sadly, no a savings account isn’t investing.  We of course are not putting down a savings account, we are big believers in having a traditional savings account; however, with the interest rates that are paid by traditional banks (or even online banks) they aren’t really investments.  Savings accounts are merely ways to keep money on hand in case of an emergency, but we won’t digress.  Those who don’t divest generally identify in one of the following areas:

Investing is a Punishment

Investing, for many, isn’t viewed as fun.  If something isn’t fun then it probably isn’t good…right?  We can’t tell you exactly why many look at investing as punishment, but we tend to think it comes from early childhood where people are told “put some away for a rainy day”.  A rainy day isn’t looked at fondly and if you are only saving/investing for a rainy day then you won’t stick with it for long as you will feel you would no day could be quite that rainy.

Scared of Losing Money

More often than not people who don’t invest in the markets (stocks, mutual funds, alternative investments, etc.) are scared of losing their capital investment.  This is a natural fear and one that is more understandable because it can often take quite some time to save up enough for that first investment…and you don’t want to think of that $3,000 going to $0!  To help you overcome this fear we invite you to consider the following:

  • When you go on vacation and spend $3,000, do you get a monetary return on that investment?
  • If you invested in a Vanguard Fund or major stock (i.e. MSFT, WMT, etc.) what are the odds it would actually go to $0 / per share?

Of course vacations don’t give you a monetary return, but somehow everyone is ok with that “investment” because you can have some fun.  If you can think of investing as fun then it will be easy to get started.  In regards to a major cap stock going to $0 or a Vanguard fund doing the same, you have better odds of getting struck by lightning.  Most of the fears around not investing aren’t well founded and the adage of “scared money never made money” certainly holds true…you just need to jump in and start.

Investing Only Minimally

Investing is very similar to working out…the more you put in the more you get out. When we have spoken to those who want to grow their financial futures and we look at their overall budgets we have found that those who invest minimally fall into one of two common categories of investing.

Thinking of Your Investments as Bill

When you invest minimally the thought process is that the investment is a bill. It is understood that it is something one “should do” but just like not wanting to pay too much for electricity they tend to do just enough to be in the market, but not necessarily enough (as a % of their net income) to experience real growth. Bills, for the most part, aren’t a positive outlook on investing and we would challenge you to avoid thinking of investing as a bill, but rather as an opportunity for a different life/lifestyle or even something that can provide a different opportunity for generations to come.

Goals aren’t big enough

Goal setting for finances are great; however, if your goals aren’t big enough then your investing strategy will only rise to the minimal goal level. For example if you wanted to invest in the market to save for a down payment on a car and your down payment goal was $5,000 but you gave yourself 5 years to achieve that goal then your monthly commitment would be $83.33 a month…and that is without any potential gain in the value of your investment. Setting practical and achievable goals is great; however, if the goal isn’t big enough then you might divert funds into more wasteful activities which could impact your longer term ability for greater financial freedom.

Take the time to really evaluate your goals, make sure they are big enough…to the point where you might not even be sure you can achieve them in a given time period as that will help you to evaluate investments that will really help you to your goal vs. having to do it all on your own through pure savings.

Don’t stick with their investment plan

Investing for greater financial freedom truly takes sticking to a plan, just like a diet or an exercise regimen. For over 8 years Joe and I have had an annual goal of “3,000 miles”. This goal is our annual accountability of running/cycling/swimming at least 3,000 miles in a calendar year and we have a tracking sheet that we fill out daily/weekly/monthly to see how we are progressing on our annual goal. Some years we have barely made it (it still counts when you are riding on December 31) and other years we have missed (broke my collarbone one year which really hampered the miles). While that example is related to working out we have found the themes of sticking with an investment plan are strikingly similar.

Lack of Accountability

Accountability in sticking with an investment plan is a tough one for many because people find it difficult to talk about finances (that’s one of the reasons we started this podcast!). People don’t want to talk about money with their peers and may not feel ready for a financial planner but that doesn’t mean you have to give up on accountability all together. Accountability can be gained through creating a report and talking about your progress with your parents or even a successful relative. Share with them that you have the goal of greater financial freedom and most will be more than happy to look over your investments on a quarterly or annual basis to become a sounding board. And if you can’t find someone you are comfortable with that you know you can always share your goals with Joe and I as we have been through ups and downs and can help provide guidance and thoughts as you progress on your financial journey

Investments are No Longer “Fun”

The same mindset that grenades fitness progress is one that can deter financial progress as well. Investing money each month in mutual funds and stocks can often get mundane (even when you are making money) and when you lose enthusiasm then you might deter funds away to items that won’t help you achieve true financial freedom. If your current investment plan isn’t “fun” anymore we would challenge you to try an alternative investment as that can be an exciting way to try something entirely new and keep your finances headed in the right direction.

No matter where you fall in the financial mindset model the key part is to truly be honest with yourself.  Ask yourself if you truly are investing as much as you can for your bigger goals…look at your goals and make sure they are big enough too!  As twins we get lucky enough to bounce our ideas off of each other and if you are listening/reading to us then we would be happy to hear where you feel you are in your financial mindset to help you continue your growth.

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If You’ve Never Tried Investing in Stocks, Consider these 5 Strategies to Start

For many, having a savings account is natural and a stock account is considered “too risky”.  Afterall, for most opening a checking account is a right of passage and along with a checking account one is generally offered a savings account…which means you have likely had a savings account for quite some time.  Even in today’s era of online banks dominating, whether that be the likes of Ally, Axos, Simple, or anyone of the myriad of new fintechs out there competing for your business, they lead with a checking account and inevitably try to offer a savings account.  Of course we are proponents of savings accounts but it is tough to truly get ahead with a savings account.  Growing your net worth isn’t going to come just because a bank is offering 1.1% on their savings account vs. the traditional .1% that the “big banks” are offering.

We believe many avoid investing in the stock market due to the perception of risk.  Savings accounts eliminate the risk component by providing a guaranteed, FDIC insured, rate of return.  Yes you are certainly guaranteed a return, but that return isn’t necessarily going to help you grow your resources in the manner that you might be thinking.  While the stock market doesn’t provide the safety of a guaranteed return there are many companies in which you can invest that have such a long track record of returns you might even consider your yield guaranteed.  If you haven’t yet got into the stock market, consider a few key strategies to help you start, grow your portfolio, and stay for the long haul.

Strategy 1: Invest What You are Prepared to Lose

You might be thinking, I thought they just said “it could nearly be considered guaranteed”?  While there are companies with 100 years of dividend history most people don’t start because they fear losing the money; which is why we suggest starting with a nominal amount.  For example if you have ever gone to Las Vegas and lost $100 gambling, start with a $100 in a stock account.  Or maybe you have spent $200 on a night out of drinking (literally drinking your money away), so you could start with $200.

Most of us have some event where we spent a few hundred dollars trying something and it might not have gone how we planned; use that as your anchor point to start in the stock market.  Once you start you will see it is incredibly unlikely your investment would go to $0 (more on that later) and you will have overcome the biggest hurdle…starting!

Strategy 2: Look for Companies with a Dividend

Much like a savings account provides an interest rate, a dividend is the rate of annualized return that a stock will provide its shareholders via quarterly payments (i.e. dividends).  To help you overcome your fear of starting, consider stocks that have a dividend as those stocks will pay you, much like a savings account pays you.  While a savings account will pay you interest monthly a publicly traded company will pay you quarterly.  Each quarter you will see money deposited into your account or most platforms will even allow you to re-invest your dividends to additional shares (or fractional shares) of the same stock.

Investing in companies that have a dividend will help you to see that the market isn’t as risky as you might have imagined and the yields can be 4-7%+ where most savings accounts are .1-1%.  To help you have confidence that the dividend will get paid, try investing in companies that have a long history of paying dividends (you can be uber conservative and see the list of companies that have paid dividends for 100 years to really get started with ease).

Strategy 3: Understand Why You Are Buying

We are not referring to your big financial goal, rather we are referring to what specific plan you have for the specific stock purchase you are making.  Investing in individual stocks is different than investing in mutual funds.  Individual stocks provide for greater volatility (both upside and downside) and with that volatility you can identify a goal for each purchase you make.  We invite you to select one of the following principles of why you are investing in a particular stock:

  • Investing for Growth – For stocks that don’t have a dividend (i.e think many of the tech stocks) what gain are you targeting?  Are you looking for a 40% growth and then you will exit?  Decide ahead of time what gain you are happy with and wait for that moment.
  • Investing for Yield – For stocks with a history of dividends they can be as solid as a savings account.  Buying them at the right price can give you a consistent strong yield and that generally means you will hold them for a period of time to have a consistent flow of dividends.  With these stocks you can even choose to reinvest your dividends into additional shares.

Strategy 4: Avoid the Penny Stocks…to Start

Penny stocks don’t necessarily sell for a penny (but they can be close).  Penny stocks are those stocks that trade <$1 and are characterized by having a high volatility.  Those who are new to stock investing are often attracted to them because you could get 100 shares for your $100 and that appears to be a great opportunity but the high risk nature means that you also have a greater chance to go to $0 which could discourage you from investing in stocks for the long term.

Strategy 5: Buy in What You Know

The adage made famous by Warren Buffet still remains true today.  With 1,000’s of companies to choose from, endless charts, countless hours of shows talking about stocks, the simple truth is you can truly buy in what you know and if you are prepared to hold the stock long enough (generally 3+ years) then you will be in good shape.

Don’t overcomplicate this rule, it really means “buy what you are familiar with”.  That means if you have a passion for yoga and you purchase Lululemon clothes, then purchase shares of the stock (LULU).  If you drive a Toyota then purchase their stock (TM) as you literally have already invested in the success of the company through your car purchase.

The best time to start investing in stocks is today.  Don’t overthink your investment, just get started today to start seeing how you can grow your financial wealth through stocks.  

Platforms to start investing in stocks:

  • E*TRADE
  • SOFI
  • RobinHood
  • TD Ameritrade

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Get More Results from Your Testimonials

When people are looking to try a new product or service, one of the most common things they will do is to look at the testimonials of others who have taken the plunge before them.  Having testimonials on your website is a way of lowering someone’s fear that they naturally have of “I wonder what it’s like to do business with them”.  The more testimonials that you have on your website the greater opportunity you have to lower someone’s fear because there are many hesitations people can have when engaging a “total stranger” to helping them with a purchase.

Of course, any decent marketer will only put up positive testimonials. So how do you get your testimonials to do more for you than just provide some affirmation?

Use Audio

There are many different programs out there that allow you to share audio testimonials so it really doesn’t matter which one you use, as long as you use one.  Using audio testimonials allows the common written word to really come to life.  I am not saying to ditch your written testimonials just compliment them with audio versions as well.

The different voices from your customers will provide realism to your testimonials allowing your next prospect to truly connect.  Put up a variety of your customer base so people can hear someone that they can relate to.  It takes just a little bit of time and the benefits will be there every single month.

Use  Video

There is no doubt that video testimonials are one of the most powerful ways to give you credibility with your online marketing efforts.  While you might be thinking you can ask people to record a video on their phone and send it to you for your YouTube channel (that would be ok too) there are specialized platforms such as Widewail, Trustmary, Vocal Video and more that makes it easy for customers to record their videos and for you to share on your website.

Make Them Specific

A good testimonial is not a generic “they were great and I would use them again” speech.  A good testimonial is specific, addresses a problem, and demonstrates how you (or your product) were the solution to the problem.  If the testimonials aren’t this specific, ask your raving fan customers if you could script out their testimonial for them so they can hit the good points.  They will be happy to do so because they love you and want to share the good news about you!

Reference Testimonials Throughout Your Website

One of the biggest drawbacks that many people make is that they only put up a testimonial page and never reference it anywhere else in their site.   For example if you have a real estate website and you have neighborhood pages, reference a testimonial of someone you helped in that neighborhood.  This provides an immediate impact to someone who is searching as they are not just reading about the neighborhood, but they can see that you have actually helped people in that neighborhood.

Add Pictures

Getting massive results from your testimonials means taking the steps that aren’t always easy.  If you have audio testimonials (or written testimonials), get your clients to provide you with a picture that you can post online along with their testimonial.  Adding pictures enhances the validity of the information you are putting on your website.  Many people are wary of information posted online, so putting up pictures eliminates some of the doubt that may be lingering at the back of their minds.

Gather Testimonials on Third Party Platforms

While you know that you are legitimately gathering testimonials, a total stranger could still be skeptical about your video, written, and audio testimonials on your website.  To help assuage any doubt considering building testimonials on third party platforms such as Google Business, Yelp, and TrustPilot.  With users needing to have a profile in order to leave a testimonial in these locations it adds an additional layer of validity to help your next customer have additional confidence in engaging your services.

Powerful testimonials that compel users to take action on your website will take some time, but those testimonials will be working for you 24 hours a day for as long as you want.  Keep your testimonials fresh by setting a simple goal of adding one new testimonial each month and pretty soon you will have many raving fans on your site speaking on your behalf.  Each customer that you help will have different emotions on leaving a testimonial (some may love you and use you again but just won’t leave a testimonial) which means giving people options on how they can give you a referral is a great way to build a base of testimonials that can help the next customer gain additional confidence.

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Real Estate Buyers – Give Them What They Crave

Doing lead generation online gives you the opportunity to get the type of business that you really want. Yes, you can have a pool of buyers to work with, in the neighborhoods you know best, all year long.  Keep in mind there are many companies out there that will sell you “real estate leads” and even some that break it down into buyer leads and seller leads, but shouldn’t you be able to do it on your own as well?

Absolutely!

The nice part about the many different tools and systems available online is that it allows anyone to do their own marketing for their real estate business.  With a few simple steps, an understanding of what the market needs, and some motivation you can be on your way to generating the leads you have always wanted.

Let’s look at how you can start generating your own real estate buyer leads:

  • Content that buyers crave – Home buyers are searching every minute of the day for information on real estate in specific neighborhoods.  Write up information on the neighborhoods that you operate in every day and let them know what it’s like to live there.  Don’t borrow canned information; write up your own perspective of the neighborhoods and streets.  When you take the time to share information about your area from your perspective your readers will feel your passion and feel compelled to contact you.  You will want to attack your real estate content with the aspect that when someone starts to go through your content they will be thinking “wow, this person knows EVERYTHING about the area”.  Create a balanced set of content from written content, videos and even audio (i.e. maybe a podcast) that speaks to the unique offerings of your market.  Think about all the conversations you have had with buyers over the years in your car and start documenting your expertise.
  • Buyer tools – As buyers are enjoying your niche neighborhood content, they will want to be able to learn even more.  Their need for more information will lead them to need a way to search for listings and to find out how much their new home will cost.  Provide an MLS search tool on your website so they can easily find the real estate in the neighborhood that they have fallen in love with.  Let them see what their mortgage would cost by providing them with mortgage calculator tools.  Even as you provide these tools on your website, we all know that the multitude of apps (i.e. Zillow, Redfin, Realtor) make it incredibly easy to see what is available on the market which means your content needs to be so robust that they know there is far more to buying a home than just a simple listing.
  • Buyer focused ads – Getting targeted buyer leads means having ads focused on their needs.  Create pay per click ads (on Google, Facebook, and MSN) that gives the buyers an opportunity to discover more about the neighborhoods and search for properties.  You can keep the cost of your ads down by focusing on smaller neighborhoods, rather than bigger cities (and this is a great way to bring people deeper into your website).  The big benefit here is you will also get buyers who are looking in a small area and generally purchase much faster.

Generating real estate buyer leads does take an investment in time and a small amount of money.  When you consider that after you create a page about a neighborhood that the page will live on for as long as you have your website, it’s really not too much time at all.  

If you want to generate 100’s of buyer leads each and every month, you can simply keep creating more content and creating more pay per click ads while keeping track of which lead sources are leading to the greatest volume of appointments and transactions.   Taking this approach will prevent you from ever having to purchase real estate leads from a service, because now you know how to do it yourself!

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Buying on the Way Down: The Real Time Story Of Our Investment into PLAY (aka Dave and Busters)

Everyone loves the story of you buy a stock, you use your last $1,000, and 3 years later you end up with millions because you happened to buy Tesla or you put it all into Bitcoin before Bitcoin was cool.

The reality is that is not the majority of investing. Investing your hard earned dollars requires research, selecting companies that have a competitive advantage, and ones you feel are set to dominate their industry to provide you above average returns.

As always our belief here is to build your portfolio around low cost index funds. After you have done that and you want to explore individual stocks do it!

Today we are going to outline our investment in Dave and Busters. 

Why did we invest in Dave and Busters?

We started our investment in PLAY in June of 2019. There were a couple of reasons we selected Dave and Busters and we will outline them below:

  • They had taken advantage of the real estate down turn of the 2008-2011 time frame to get leases on properties that were in their favor
  • The new store openings were in smaller footprints and delivering on what the customer wanted
  • They had a dividend and solid balance sheet
  • We were also customers of Dave & Busters because who doesn’t love the ability to play the claw. It is a magical machine that is tons of fun.

To summarize we believed they had a market leading position and we were customers of the company on a frequent basis.

When we made our initial investment it was June of 2019 and the stock price was $40.36.

What Action Did We Take Next

Our next step was what we do with our purchases on a regular basis. We did nothing. We of course monitored the news, reviewed the quarterly performance as it came in, and we collected our dividends that were automatically reinvested into the stock.

The Ides of March and a Changing Economy

2020 was some kind of special year. In February the stock had reached $46 per share and we were up 14% on our original investment. We were in this for the long haul so this was icing on the cake.

As lockdowns began to take place across the country the company had to close stores. In their business that means not a reduction in revenue but no revenue. We watched the stock go from $46 in February to $14 in March (chart below).

Warren Buffet has said (paraphrased) if you liked a stock at the price you purchased it then you should like it on at a more affordable price. 

These were unprecedented times and we didn’t know what was going to happen long term. We did know that many other companies were about to face the same thing.

We also knew that prior to the lockdowns an activist hedge fund had been acquiring shares in PLAY and that was good news for us since they had far more to lose then we did should things not work out.

Dave & Busters

As you can see in the chart above things got dicey real fast. We decided that since we liked the company at $40 that we also would like it at $14.

When it Keeps Dropping You Have a Choice to Make….Do You Buy More or Ride it Out

When we purchased again at $14 we believed that the company was in a good position and this was a good buy. Today we look correct however at the time we still believed that the company would continue to navigate the waters, which they did.

The stock continued to drop over the next several days and with the news we were reading about the company we believed they would make it back out of it. We made additional purchases at $12,$8, and $7.68.

The stock reached a low of around $7. While in the chart above it looks like we were able to time things and buy at the bottom at the time we were not sure it was the bottom. What we believed was a few core items:

  • The company was going to be able to navigate the situation
  • They had a competitive advantage over competitors based on their balance sheet
  • They continued to work to acquire credit lines and access to additional capital
  • They had navigated the real estate crisis well and knew how to prepare

When you invest your money in a company you have to be confident in their competitive advantage and the individuals running the company.

It’s easy to look at the chart above and say “well I would have bought at $7.68”. We told many of our friends at the time that we were invested in this stock prior to the drop and at the drop and most thought it was too risky.

Was there risk? Absolutely!

Had you purchased at the bottom for this stock you would be up just over 5x today. 

What is the Take Away From This?

When you purchase stock in an individual company ask yourself if you would buy more if the stock dropped. Look at their balance sheet and determine if they can survive a reduction in profits. Have they handled this situation before? These are important questions to consider when you invest your money in a company.

Twins Rules for Financial Success

As with all of our content here we want to encourage you to follow three core rules :

  • Have an Emergency Fund/Squirrel Funds
  • Invest for the Long Term
  • Invest Automatically & Consistently

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The Psychology of Saving vs. Investing

There is an age old adage that the longest journey starts with just a single step.  The same could certainly be applied to saving or investing…but it might start with just a single dollar instead of a step.  Whether your financial wellness path is going the direction of saving or investing we have found that the mental aspects of sticking with your financial goal setting and plan are often more important than the plan itself.  Find out more about the psychology of saving and investing to see what could be preventing you from reaching your best financial future.

Psychology of Saving

When many people start saving they often think of it as a punishment.  It could be that they haven’t done it before (or it could be years since they last saved) and for whatever reason it is nearly like starting a diet after years of being overweight…it just seems like a big task to tackle.

The act of starting to save is generally combined with the following emotions and thoughts:

  • Wow, this is slow, I’m not seeing much growth after X months…maybe it’s not working
  • Saving for a “Insert big purchase goal” is going to take “forever”
  • Is there a better way to do this?
  • Why am I even doing this?

When you start to think in the above manner it usually means that you won’t stick with saving too long and that can hurt your overall financial wellness.

To help you continue on your path of saving please keep in mind that the very act of saving is generally characterized by the following:

  • Safe – It should be no surprise that “save” and “safe” are so close in spelling.  Saving is a safe activity as part of your financial wellness.  Saving is generally done in no risk financial products such as a savings account, CD, or money market. 
  • Slow – Unless you have an incredibly high income (and the discipline to save a huge portion of that) it is going to be slow going.  A first goal for anyone, as part of having a sound financial plan is to build up a savings amount (6 months to 12 months of expenses) and that will take some time.

By understanding that the very act of saving is key to your financial wellness and it will be a slow process you can forge ahead when the questions of doubt enter your mind.

Psychology of Investing

Investing is a big leap for many.  For those that have mastered the art of consistently saving it is often a struggle to grow even more financially sound through investing.  Even the best outlined financial plan won’t be successful if it isn’t executed.  For those that are struggle with maintaining their path on investing we have found the following are some of the most common challenges they raise:

  • What if I lose it all?
  • My mutual funds are negative this month…I knew this wouldn’t work
  • How can I beat the market like the infomercials I see on TV?
  • I’ll never become a billionaire this way so what is the point?
  • Is there any way to speed this up?

Moving from the safety of saving to the perceived risk of investing is one of the biggest stumbling blocks that people face.  Those who embrace the fear of losing money will cite examples of the stock market crash (any of them from the great depression to the 1980’s and more) or disasters such as Enron.  The fear of losing it all is truly misplaced when you take an investment strategy focused more on Index Funds as they naturally mitigate the risk for you and position you to capitalize on market returns (historically 8% or more).  To help your mind manage the fear of losing try to avoid individual stocks (to start) and focus more on Index Funds and Mutual Funds as they will put you in a position for long-term success.

Many of the comments/questions people have around investing are around the aspect of time (one month it’s negative, trying to beat the market, faster/higher returns, etc.) and the reality is that building wealth through a sound investment plan is going to take time.  One must embrace the aspect that while the compound effect will work in your favor it is one that takes time (unless you start with a large sum to start 🙂 ).  Understanding that success in investing will take time will help you to embrace the ups and downs and avoid taking unnecessary risks with your portfolio.

Whether you are struggling with maintaining your savings plan or investing plan it is essential to understand why you are struggling.  Maybe you have asked yourself the same questions we shared here or maybe it is something different but the key part is to understand why you might be struggling to stick with your plan because having financial success requires on-going discipline to reach the financial future you so richly deserve.

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5 Stock Investing Tips we Have Adopted

As with any skill, learning the intricacies takes time.  While we are certainly no Warren Buffet or Peter Lynch we have had our learning moments while investing in stock that we feel could help you in your financial journey.  Take a moment to explore five key steps that we have experienced through our adventures in stock investing.

If You Liked it on the Way Up, You’ll Like it on the Way Down

This is one of the harder lessons to embrace and one that really tests your mental fortitude.  We learned this lesson when we invested in Pacific Gas & Electric (PCG).  We had originally purchased shares north of $30 as it had a long history of performance and was at a low point that made it an attractive purchase.

Shortly after we purchased the stock a series of wildfires that were attributed to PCG sent the stock plummeting to in the $5 range as the litigation potential and property damage was in the millions.  After suffering such a dramatic fall in a short period we didn’t increase our position enough (we did purchase some additional shares) as we were concerned the company could declare bankruptcy.  We needed to have the vision that this company would remain solvent, even during this tumultuous period and increased our position dramatically (afterall we did buy it north of $30).  Had we purchased a larger set of shares near $5 we could have enjoyed the gains that brought it to trading over $10 a share only months later.

Bottom line is that if you believe in the fundamentals of a company and it takes an unexpected dive consider more aggressively adding to your position to enjoy a lower cost per share and to give yourself the opportunity to reap the rewards as it grows.

Give Yourself Enough Shares For Riding it to the Moon

This is one lesson we have learned the hard way in that we missed out on opportunity.  In our blog post about penny stock opportunities we shared how we invested in the stock of OCGN at .50 and sold 500 shares at $2.80 and another block of 500 shares at just over $3.00.  With 1,000 shares as the entire position that ended the opportunity for additional upside growth…of course that also did limit any loss potential.

As of 2/8/2021, OCGN moved to $15 a share!  With no shares left in our position we missed out on another 5x more gain!  At the end of the day we had exceeded our original target of a 2x gain, but we didn’t leave any opportunity to ride the shares to the moon.  When you are investing in penny stocks there is minimal cost to hold shares for additional massive upside opportunity.  Give yourself an opportunity for massive gains by holding on to a set of shares after you have sold shares at your original target sale price.

Auto-Reinvest Dividends

When you are investing in stocks for the long-haul (which we would encourage for the larger portion of your portfolio) we would encourage you to auto-reinvest the dividends.  Regardless of the dividend yield of the individual stock by reinvesting the dividends you are enacting the laws of compounding in your favor.  This is a particularly advantageous strategy when you have a long horizon as it allows you to build up additional shares as your quarterly dividends are paid.  

An exception to this rule is if you are near retirement or even retired.  If you are retired then it would likely benefit you to turn-off the auto-reinvest method and take the dividends as income.  This allows you to benefit from your stock in smaller increments without being taxed with a short term or long term gain from a sell event.

Set Stock Alerts

For the majority of us trading stocks is not our profession.  We have day jobs, families, hobbies, etc. which means we can’t pay attention to our portfolios every second of the day.  Depending on the stocks that you select there could be a great deal of volatility within your portfolio which means you could experience large swings up or down depending on quarterly information or even news events.  To help protect you in the event of either direction of movement of the stock set alerts based on your goals.  A few alerts that we set for stocks we are tracking or that are within our portfolios are as follows:

  • % Gain – The general rule we follow is 20% swing in price on a day.  When you consider that the S&P Index has traditionally performed around 10% a year then for a stock to move 20% on a given day is a big move.  We set the % gain alert for 20% in a day to see if a stock has moved down closer to our target price and/or moved higher closer to our target sell price.  We don’t just look at the gain we try to investigate the “why” of the movement to see if we should actually make a move or merely hold on to our position.
  • Low Price/High Price – These alerts aren’t necessarily stop loss or limit orders rather they are alerts to help us track pricing goals.  Generally we set low price targets to help us purchase stocks at a low point and a high price target to see if it is time to sell.  While this might sound simplistic remember it doesn’t have to be complex for it to work.

Keep a Positive Attitude

Why is this last?  Well when investing in individual stocks the swings can be a bit more challenging (in the short run) than mutual funds.  When you see your stocks go down you can start to say things (even if they are in your head) like “I am down $X/%X…did I pick the wrong stock?”.  This is a natural tendency for those new to stocks, but in reality remember you haven’t lost anything until you sell which means give yourself patience and allow time for your stock to perform.

In the moments when you invest in a stock and you take a loss (it will happen) don’t beat yourself up about it.  Even with great analysis, planning, and understanding of fundamentals losing money is going to happen.  Even the greatest investors of all time don’t win all the time; no one is batting 1,000 when it comes to stocks or professional sports for that matter.  As long as you have a sound approach to investment you will win far more often than you lose.

As you continue to grow your stock portfolio your rules may grow; however, we encourage you to keep these five in mind regardless of how big your portfolio becomes.  While we certainly believe that with each level comes a different devil to beat these principles will help you to have consistent growth over the long haul.