jbridges – Page 2

by jbridges on June 2, 2023

Are Your Entertainment Services Greater Than Your Savings Goals?

It starts with a free 2 month trial and it ends with “how many services am I signed up for?”.

The chains of habit are too weak to be felt until they are too strong to be broken. By Samuel Johnson

Companies make it easy to sign-up for a service. Many have subscription fees that are so low you barely think about it. They might be marketed as “less than $1 a day” or “Not even 50 cents a day”.

The service might have a show that everyone at work is talking about or maybe they unlock one feature that you just have to have. Today we explore entertainment services and how they might be impacting your future savings goals.

Before we get too far rest assured we will not make you unsubscribe from all of your services. What we are going to ask you today is to understand how much you are spending on these services. After you know the number then you can determine if your future self will thank you or wish that you had cancelled.

Entertainment Services That Many Have and The Costs…They Really do Add Up

Let’s look at some common services that many have and see what the monthly cost is going to be. For each service we outline the basic entry price to be a part of the platform as well as the upgraded version.

If there were multiple versions, such as with Netflix, we chose the highest price plan available as the upgraded version. For plans like Amazon price we converted the annual payment into a monthly to make the comparison easier.

Service	Basic	Upgraded
Disney +	$6.99	$12.99
Netflix	$8.99	$17.99
Spotify	$0	$9.99
Apple +	$4.99
CBS All Access	$5.99	$9.99
Amazon Prime	$8.99	$9.91
Total Monthly	$35.95	$60.87
Annual	$431.40	$730.44

At first glance all of the numbers are relatively small. In some cases you can’t get a fast food meal for what the monthly subscription fee costs. This is exactly how these companies make their services attractive.

Today isn’t about reducing costs to a minimum it’s about understanding how much these services cost. In a survey conducted by Statista nearly 70% of Americans don’t have $1,000 in savings. When you don’t have an emergency fund every cost matters and it’s important to look at all expenses.

Before we go too much farther look at the chart and see where you are on the savings chart.

Do you have money saved if you were out of work for 1,3, or 6 months?

Write that number down. Even if that number is zero that’s ok just write it down and let’s take a look at the cost of these services from a different perspective.

Before you consider investing we recommend having money saved for an emergency. In the next section we are going to look at the value of these services should you decide to invest.

Putting Some of Your Entertainment Funds Into Investing

You might be saying to yourself “Nobody has all of those services”. It’s quite easy to see how someone, maybe someone you know, could easily spend $61 a month on streaming services.

As we do around here it’s not about giving up on technology or refusing to ever go out to coffee. It’s about choices and understanding the impact of the choices.

Let’s use the example of two individuals and see how this works itself out.

Tommy decides that he wants all the services we listed and he wants the premium version of each. He decides that it’s “only $61” so he buys all of them.

Billy decided that, while he likes entertainment, he really likes Disney+ and bought the upgraded version because it had additional content he enjoyed. He also loves his music and so he decided to purchase Spotify premium. He decides he is going to invest the difference.

Individual	Services	Investments	Annual Service Cost	Annual Investment
Tommy	$61.00	$0.00	$732.00	$0.00
Billy	$22.98	$38.02	$275.76	$456.24

In the first year, as we can see from the chart above, Tommy ends up with $0 in investment dollars and Billy has $456. Tommy isn’t concerned as he is having a good time watching lots of movies.

Billy decides to put his investing dollars into an S&P Index fund and he has forecasted an 8% annual return (well below the historic 10%) however he knows times are changing. Billy is investing $38 a month and in 36 months has $1,541. He now has savings greater than man in America.

Individual	24 Months	36 Months	48 Months	72 Months
Tommy	$0.00	$0.00	$0.00	$0.00
Billy	$985.98	$1,541.16	$2,142.42	$4,498.80

It’s all about choices. Billy gets to enjoy his streaming. He also has additional investments years later. In Billy’s view he has the best of both worlds. He has investment dollars and entertainment dollars.

What Choices Are You Going to Make?

The choices you make with your hard earned dollars can have a lasting impact. We encourage you to look at the services that you subscribe to and if you are getting the true value of these services.

Take Action Today

Today we want you to ask yourself a few questions:

Are you investing regularly?
Are the services you subscribe to preventing you from investing?
Have you thought about what the future version of you would say about the choices you are making today?

We always want to remind you to:

Invest Consistently
Develop Your Squirrel Funds
Manage your fear and you WILL succeed

by jbridges on June 1, 2023

How to Create a Financial Lifestyle that Will Make You Happy, Build Wealth, and Keep You On Track For Your Future

We haven’t met anyone, yet anyway, who said they love diets. We have met plenty of people who have adopted new lifestyles and couldn’t be happier!

Your finances are just like what you put into your body. Short term fads will fade however if you choose to adopt a new lifestyle you will find more freedom than you ever thought possible.

Quick Story of Why a Lifestyle Change Works

Years ago a friend of ours brought up that we had adopted triathlon training as a way of life. We realized they were correct. We had started out training for events, found joy in the training, and just had integrated it into our lives.

We have done the same thing with regular contributions to mutual funds. For the last 7+ years we have contributed monthly to buying funds at Vanguard.

The monthly contributions have continued for two primary reasons:

We have made a commitment to it
We prioritize the monthly purchase of mutual funds over other purchases

Developing a Financial Lifestyle that Will Work For You and Your Situation

We are confident you have seen a post, somewhere on the Internet, of someone who ate nothing but Ramen for 18 months, made 100% of their meals, and purchased all of their clothes second hand.

While that will work for some it can be a very difficult and drastic step to take. What we are going to walk you through today is how to develop a lifestyle that will work for the long haul.

Will you have to change things?

Yes!

Will it be easy?

That depends on your goals however we want to put you on a path where your lifestyle will begin to change for the better. Let’s dig in!

Looking at Last Months Statement & Putting Everything in Two Distinct Categories: Needs or Wants

We realize this isn’t fun however it’s a key component to building a new lifestyle. You have to determine which of your purchases are needed and which ones are wanted.

When you look at your bank or credit card statement the initial reaction will be “I needed that” so it helps to define things up front so we have some parameters.

Need: this is required in order to fuel your body, keep you safe, or make sure you can get to work.
- For example you might need a car to get to work however do you need a Ferrari? No one needs one but they are really cool.
Want: An item or purchase that might bring joy to your life but not something that will cause you harm if you don’t purchase it.
- For example you might want a new jacket from the North Face (for some reason we love buying jackets even though one of us lives in Southern California and doesn’t need them 11 months out of the year). You may already have a jacket it just might not be as new or in a color you are longing for.

We find this step easiest to do if you can print out your statements. You can then make notes on the statement to determine what was needed and what was a want.

One that might be hard to tell, without the receipt, is your grocery bill. This is a place where it’s easy to buy wants.

For example one of us really likes Oreos. We don’t need Oreos so that is a definite want and turns into a treat.

After you have put everything in one of the categories total it up. You should have two numbers that are how much you are spending monthly on needs and wants.

We would recommend seeing if you could cut your wants by 50%. It’s an aggressive number however we select it for a reason.

50% reduction requires some deep soul searching and really looking at what you are using.

What should you do with the 50% savings?

If you have credit card debt we recommend using the savings to pay that off. If you don’t have an emergency fund we recommend building one until you have at least 1 month of expenses to start.

Are You Paying For Items or Services That You Aren’t Even Using?

If you aren’t using something there shouldn’t be any pain in giving it up. In today’s world with multiple subscription services you may be paying for services that you aren’t even using.

A few items we encourage you to look at:

Subscription services for movies or audio services
Gym membership (if you use it great however if the last time you were there was 7 months ago and you have been meaning to go…it’s time to make a call at least in the short term to cancel the service)
Do you belong to a wine of the month club? Maybe you signed up when you were on a wine tour in Napa and now you have wine just piling up.

We encourage you to find at least one service that you can cancel or at the very least lower how much you pay on it monthly.

Continuing Your New Found Lifestyle

Once you have done the above what’s next? The very next step is to repeat it monthly. Monthly revisit and see what was bought and which category the purchase fell into.

What you will discover is that eventually you will start to identify which items are wants and which are needs.

If possible we recommend having an accountability partner. Someone who will tell you when you are starting to classify things as needs when they are wants. Having someone who is on the journey with you will make it easier to build the new lifestyle together.

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

by jbridges on May 31, 2023

Find a Company You Believe in & Manages Money in a Way That Serves You The Investor

Vanguard is a company that we believe in here. One of the reasons we continue to invest in Vanguard is that they put the investor first. You might be asking, “Don’t all companies say that?”. It’s true that’s what other companies will tell you however we believe no where is it more clear than at Vanguard.

Vanguard is not a publicly traded company. They are owned by the investors. In other words they don’t focus on a share price they focus on the investors.

We get it, you still might be saying, so what does it matter. Let’s look at a few Vanguard facts from our friends over at investopedia.

“The average expense ratio of Vanguard’s funds is .10% vs the mutual fund industry average of .63%.”

A Quick Summary of Why Fees Matter

.53% might not seem like much however it adds up big over the long haul. Let’s say you invested $10,000. One fund returned 8% and one returned 7.5%. This is the approximate difference in the fees you are paying. Over 20 years that is $4,659 of your hard earned money.

Vanguard is about reducing the fees to the investor.

Why Fees Matter

We cover fees in detail in other posts but that’s one of the reasons we love Vanguard.

James has said from time to time that you end up loving the funds you own. You root for them to succeed. You check on your Vanguard app and see how they have done for you recently, over the last 6 months, and even over the last several years.

So what else is there to like about Vanguard? Let’s take a look.

John C Bogle Was a Pioneer That Others Ended up Copying

We are big fans of index funds. We have them thanks to John C Bogle. Why are we fans of these types of funds? Simply put they end up following the market.

It takes a very devoted, smart, and forward thinking money manager to beat the market. Very few in fact have beat the market on a consistent basis. When you look at the long term investors who have beat the market they are names like Warren Buffet and Peter Lynch. If you look up the top 11 investors of all time you will find Bogle on the list.

The pioneer of index funds was Bogle. He created the first fund that tracked the S&P 500. We believe that everyone should have a portion of their portfolio in an index fund. By building a fund that tracked the index there was no active management. Without the active management the cost to maintain the fund could be reduced.

It was, and still is in many cases, common for mutual funds to have a 1% fee. While this seems small it adds up to a large sum over the life of an investment. Bogle wanted to make sure investors had the best chance for investment success and that is the mission of Vanguard to this day.

Vanguard Provides The Investor Options

Vanguard is the second largest mutual fund company in the world second to only Blackrock. As a result of their size they have options to provide to investors. You can have everything from 401Ks to IRAs to Mutual funds to College Savings accounts. They can be your one stop should you desire.

Is Vanguard Right for You?

This is a question that only you can answer. For the new investor some of Vanguard’s funds require minimum opening balances between $1,000 to $3,000. For the new investor this means one must have at least $1,000 to open an account while other firms might allow you to start with as little as $25.

We ultimately believe that you should investigate Vanguard and determine if they are right for your investment dollars.

by jbridges on May 30, 2023

3 Questions to Determine if Investing in Real Estate is Right For You

Maybe you were watching TV (or YouTube) at 1:37 AM on a Tuesday night and you saw a video that went something like this….

“You can invest in real estate with $0 down. You don’t need experience, a real estate license, or any knowledge. The only thing you need is a desire and to pay $39.95 for my course and you too can be retired by 26 years old”

We aren’t saying it isn’t possible however what we want to encourage you to do is to dig into the details and make sure that real estate is for you.

Before we go further we love real estate. We owned our first home at 24 years old (it took 3 of us to afford it) and owned our first investment property at 26 years old (again two of us buying it).

There is something about owning real estate. It’s a physical thing. You can go up to it, touch it, walk in it, and it’s real and not just numbers on a screen.

With that disclosure out of the way let’s dig into some questions you should ask before you start investing in real estate. For today we are going to talk about owning physical real estate and not a real estate mutual fund that does the buying of the real estate.

The questions today are also directly related to owning real estate as an investment not as a primary residence.

Do you know the real estate market that you are buying in?

When we say do you know the market a few questions we believe every real estate investor should know.

What is the average rent in the market?
How long, on average, does it take to find a renter?
What do renters expect in the market?
What % of the neighborhood is owner occupied vs non owner occupied?
What is the average % of increase in rents on an annual basis?
What are the primary industries that support the market?
When real estate has fallen in value how far did it fall?
When real estate has fallen in value how long did it take to return to previous levels?

These are just a handful of questions that we believe a real estate investor should know. When you purchase real estate it’s likely that $10’s of thousands of dollars will be invested. Whether that’s your money or investors’ money it’s real money and you need to make sure that you have the answers to the tough questions.

When you are a real estate investor you need to be an expert in what you are buying. We aren’t saying you need to get a real estate license. We recommend studying as much as you can about the area. It doesn’t mean you won’t consult those who are in real estate full time it just means to do your homework.

Have you physically been to the home/property and walked the neighborhood?

It only takes a few searches on the Internet to find someone who bought a property, site unseen, out of state, only to realize it was a disaster.

Before you put an offer on a property have you seen the neighborhood? Have you driven around or better yet walked around the area.

We hear all the time:

I am busy
I have seen pictures on the Internet
I have a friend in the area who tells me what’s going on

Before you invest in real estate we firmly believe you should see the property yourself. You should know the area. The good parts, the bad parts, and what the future of the neighborhood is going to be.

Real estate is a long term investment unless you are an experienced home flipper (it’s never as easy as the TV shows lead you to believe).

Do you have your finances in order & are you prepared for repairs?

Real estate costs real money. We aren’t talking about the value meal at McDonalds. We are talking about a nice steak dinner for repairs. Something that may look “easy” or “cheap” can quickly turn into thousands

Before you dive into real estate we recommend having both cash and credit available. A $5,000 repair could turn into $10,000 quickly and your contractors will need to be paid.

A few financial rules for real estate that we recommend:

Have a minimum of 3 months mortgage for the investment property in the bank. If the average time on market to get a property rented is longer (like 6 months) we recommended having at least that amount in the bank.
Have money for repairs in the bank. Ask a local contractor costs of items such drywall repair or broken window repair.
Keep money in the bank or credit for appliances. They will break and they will break when you least want them to. Make sure you know how old the appliances are and what a replacement will cost.

We aren’t trying to scare you away from real estate. As we mentioned at the beginning we love real estate. What we want to do is to make sure your real estate investment experience is a positive one. We want you to be as prepared as possible so you are a long term real estate investor.

What questions do you have about real estate investment?

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

by jbridges on May 15, 2023

Having a Plan For Your Money on a Regular Basis Virtually Guarantees That You Will Have More Money in the Future

There is a famous saying about planning attributed to Benjamin Franklin:

“If you fail to plan you plan to fail”

The same goes with money. If you don’t have a plan for your money you have great odds of “failing”.

In this case we will define failing as “not having sufficient reserves and not increasing your financial worth to the value it could have been should you have a plan.

Some call it a budget, others call it a spending plan, today we are just going to ask you to have a plan for what you do with a portion of your money.

The Planner vs the Leftover

Over the years we have discovered, in regards to finance, there tends to be two groups of people:

I put investing first and I pay myself first
I save/invest with what’s left over when I have it

One of our goals here at Bridges Twins is to get you to be part of the group that puts yourself first. We want you to pay yourself before you pay for anything else. This will help put you ahead in the future. It may not sound exciting however we think it can be.

Today we want you to look at two individuals.

Individual 1. They want to pay themselves first. They have made a commitment to their future self. They are willing to have maybe 1 or 2 less trips to Starbucks. They don’t buy the top end car but they still buy the car they want. It just may have a few less features. They don’t keep up in the latest fashions annually but enjoy having nice clothes that they can find on sale or on outlets. They don’t track every penny as they want to live. They want a better future for themselves. They participate in the retirement plan at their job however they want to have additional funds so they can either buy more real estate down the road or improve their current home.
Individual 2. They figure it’s all going to work out. They want to live for today. They can’t be bothered with tracking expenses even in the least. Often they are out of money with a few days left in the month. They often borrow from their emergency fund for non emergencies. They enjoy going out on a regular basis. They look at opportunities to save as beneath them. They grew up having to cut corners and vowed they wouldn’t do that when they grew up. They are willing to invest but only after they have had fun and if there is something left over.

In our example today each individual looks at their monthly expenses and decides the following:

Person A. They make a commitment to $175 a month. They will do this regardless of bills. They put this bill first and work around this. The bill is a non negotiable amount
Person B. Since they are only saving what’s left over they rarely have more than $50 left at the end of the month. They decide that $50 is all they can do and sure if they somehow get a raise or some money comes up they will invest it but won’t promise anything.

How does this play out?

In the example below they both put the funds in a low cost index fund. They estimate that future returns will be less than the S&P 500 historical average of 10% and have used a conservative 8% return.

Planner vs. Leftover

In 3 years the difference is already nearly $5K in favor of person A. Since person A has made a steady habit their advantage continues to grow over time.

Over 20 years their advantage is over $70K.

They have sacrificed very little on a monthly basis in the grand scheme of things. Over that time they only went out to eat 1 less time monthly and gave up a couple of runs to Starbucks. Over the 20 years they have reaped the rewards of a steady habit.

Person B, while they enjoyed a few more luxuries, has few options in the future.

Which future do you want? Do you want more options? Do you want to be able to make moves? Because of compounding and time small inputs today can make a very large impact on your future finances.

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

by jbridges on May 13, 2023

What is 1 habit you could change or adapt?

Habits are a funny thing. You can have good habits that propel you to greater health, success, happiness or you can have habits that hamper your health, cause you to struggle financially, and even contribute to depression. As we are focused on financial wellness we thought it best to address habits that can help you achieve greater success financially.

Now before you think that this is going to be a post about cutting coupons or eliminating your favorite coffee don’t worry. Habits differ for each person and our objective in sharing about different habits is to give you a way of looking at your habits and adjusting them to help you enjoy the financial success you have envisioned.

Spending Oriented Habits

Spending oriented habits are those activities where you spend on a regular basis. Now this is not to be confused with spending that is mandatory such as gas or food, this is referring to those spending activities which are optional.

Take for example one of the most common habits that has been addressed online, on podcasts, mocked on memes…the Starbucks habit. Now the popular advice would be to simply ditch your purchases at Starbucks. Afterall, the logic goes, if you are spending ~$2+ dollars a day, x5 times a week then you could be saving $50+ dollars a month. Do that for an entire year and you can be $600+ in the positive…sounds great, right?

While eliminating a spending habit such as Starbucks sounds like a great way to save the reality is that you are unlikely to stick with it. We would say that when you look at your spending oriented habits it is unrealistic to think that you are going to eliminate them entirely. Instead of trying to eliminate the spending habit, try making an adjustment that allows you to keep up the enjoyment but realize savings. For example if you love Starbucks consider the following adjustments:

Starbucks 2x a week: $2+ each visit
At home Keurig Starbucks 3x a week: .63-.71 a serving

While this might be a small change you can still end up realizing $10-$15 a month in savings that can contribute to your goal of finding at least $50 a month in savings.

Automated Investing to Create a Savings Habit

Starting a savings habit is one of the more difficult for those new to financial wellness to start. Of course when it comes to creating a savings habit there is nothing finer than setting up a habit that allows you to be successful…even if you forget. If you have struggled with building up your savings then we invite you to consider setting up an automated savings plan. If you are just getting going with automated investing the amount isn’t important, it is more important to simply start.

For many people starting an automated investing plan seems foreign but oddly it seems perfectly normal to have Netflix, Apple Music, Disney+, etc. hit your card. When you have the psychology that investing is a form of reward (to your future self) then it will be much easier to start and continue an automated investing plan.

Savings from Spending

Changing your habits can be a challenge and we understand that. What if, instead of changing a spending habit, that you could save while you continue to spend? While we certainly would recommend looking at your spending there are apps that allow you to start the journey of saving or even investing while you spend. Consider a few of the following apps to help transform your spending habit into one that gets you closer to financial freedom.

Acorn – https://www.acorns.com/pricing/ – While acorn does have a checking account as an option the focus of their app is that of investment. Instead of some applications that are free Acorn starts at $1 per month for their platform. The unique aspect about Acorn is that it focuses on investments from your spare change which gives you a greater chance to grow as you spend.
Guac – https://www.guacapp.com/ – Guac is an app that gets tied to your checking account and helps you save a set percentage of your spending for specific goals. For example you could set your savings percentage at 10% and you spend $100 then it would send $10 to your Guac account. Being able to set a goal and a % is a great way to build up savings.
BofA – Keep the Change – We started with BofA prior to going to USC and have kept them to this day. One program they have, that is tied to your Debit Card, is called Keep the Change. The Keep the Change program rounds up to the nearest dollar on transactions from your Debit Card and puts it into your savings account. If you are accustomed to using your debit card on a regular basis this is a great way to start building up your savings.

Whether you change your spending habit, start automated investing, or even start saving with your existing spending the key is to start. It can be tough to start, but select a strategy that works best for you and stick with it.

by jbridges on May 9, 2023

Investing in the Companies that You Buy From on a Monthly, Weekly, or Daily Basis – Part 2

We continue our series where you evaluate your everyday interactions from the point of an investor. As an investor it’s important to be aware of the opportunity that surrounds you. You might be missing out on a future gold mine!

If you missed part 1 of the series you can check it out and determine if the watch you wear or the cell phone service you use are opportunities for your investing dollars.

Today we are going to evaluate an automaker and an insurance company. If you drive a car then you have insurance. In theory every driver could also be an investor in the very company that they drive daily.

Is Your Car Insurance Company An Opportunity For Your Investment Dollars

Insurance companies have long been considered a safe haven for investors. Why? They are built to handle what could be large costs for an individual yet small for a large company. When managed well these companies can provide investors with a steady dividend and security.

All insurance companies are not created equal so it’s important to dig into the financials of each company, determine where they are in the market, and if they are worthy of your investing dollars.

Today we look at Mercury General (MCY).

Mercury may not be well knowing to everyone depending on what part of the country you live in. For us here at Bridges Twins, while we don’t currently own the stock, we have been long time customers.

A few highlights of the company:¹

The dividend yield is at 4.74% which is greater than 90% of companies in the space
Their operating margin is 8.02% which is better than 61% f their peers
Their debt to equity ratio is .2 and overall they have used debt less aggressively than 70% of their peers in growth
Institutional ownership is 42%

What does all of this mean? If you are looking for a company that is less aggressive with debt and conservative this just might be your jam.

Why does institutional ownership matter? Large groups like retirement funds for workers can’t afford to take big risks. They have many people depending on them. They invest in companies that are established and have less risk. Institutional ownership, while not an exact measurement of risk, provides you insight into how large groups, who need safety, view the stock.

Should You Own Stock In the Maker of Your Car or Truck?

If you travel to work in a car or truck it’s likely a publicly traded company made that vehicle. It takes large economies of scale to produce automobiles and that tends to mean they are publicly traded.

Let’s say you drive to work in the #1 selling truck in America. That would mean you would be driving an F-series pickup from Ford (F). More than likely you are driving an F150. They sell roughly 600K+ of this truck on an annual basis.

A few neat facts about Ford before we get into some of the financials.

Ford was founded in 1903
They gained fame for creating one of the first truly affordable vehicles made on an assembly line (although Henry Ford did not invent the assembly line)
They have consistently made the #1 selling truck in America for years with the F150

Do these facts mean you should invest in Ford? A great history doesn’t necessarily mean the company is worthy of your hard earned investing dollars.²

Ford’s debt to equity is 4.75X and they have used debt more aggressive than 96% of their peers
Their gross margin is 5.54% which is less than 71% of their peers
Institutional ownership sits at 50.81%
Ford has suspended their dividend during the pandemic of 2020 to save cash that would be needed for operations

Lately Ford stock has seen an uptick in demand. This is related to the new Bronco and the new electric Mustang that are slated to come out in the current year.

In full disclosure Ford is a stock that we have liked here at BridgesTwins before it became popular. We had believed that it was undervalued when it was at $9 per share and when it hit a 52 week low we invested additional dollars as we felt the stock was “on sale”.

Does this mean you should invest in Ford?

This really depends on where you see Ford going in the future. They continue to focus on producing trucks and electric vehicles. We continue to see Ford with a positive view however ultimately it’s up to you!

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

^{Information in this section from research done via etrade. We recommend all investors independently complete their own research and evaluation}
²Information in the bullets comes from research on eTrade

by jbridges on May 8, 2023

Investing in the Companies that You Buy From on a Monthly, Weekly, or Daily Basis

Once you start investing you start to see every transaction differently. Let’s look at a quick example.

You might drive daily to the coffee shop to get…you guessed it a cup of coffee.

A simple act of heading to the coffee shop can involve you interacting with several publicly traded companies. Let’s outline a simple trip to the coffee shop and see how you might be interacting with publicly traded companies.

If you drove to the coffee shop in a Camry that’s made by Toyota (TM)
On your Toyota you may have been riding on a set of Goodyear tires (GT)
Ordering coffee from iPhone which is made by Apple
You ordered from Starbucks
Your cellular service was provided by AT&T

In the above example you have interacted with no less than 5 publicly traded companies. We didn’t even discuss the clothes you might be wearing or the insurance that covers your car. Your clothes might be made by Nike and your insurance by Mercury Insurance.

Every time you spend money with these companies you are contributing to their revenue. That revenue contributes to their bottom line which helps to drive growth so the stock price can go up.

Today our goal is we would like you to start to look at your interactions in the world from the point of an investor. Our hope is that you will look at the different industries below and you might find one that is more interesting. That interest will lead you to do some investigation and you might find a stock that you want to put your hard earned money to work.

Look at the Watch On Your Wrist, If You Wear One, and See Who Makes It

There is a chance if you wear a watch it’s made by Apple. The Apple Watch has become the number one selling watch in the world. At a record of 31 million watches sold in 2019 the volume of this wearable tech continues to climb.

Does this mean you should own Apple stock? It might. Apple is an extremely popular stock and if you own an S&P Index Fund as we have suggested in the past you will have shares of Apple as a part of that fund.

You might have an iPhone and AirPods and that would make you more heavily invested in Apple as a consumer. You might want to look at how you can own Apple Stock directly as part of your portfolio to beat the market. They have a wide variety of products, have a loyal consumer base, and continue to innovate in the market.

While Apple is the #1 selling watch company in the world there are other companies that make watches. You might be into cycling or running, like we do here, and want a watch or cycling computer built for the task. In that case you might look at Garmin (GRMN).

Garmin is a diversified technology company that many have not heard of. They make devices from smart watches to cycling computers to marine and aviation equipment. They are worth looking at in your evaluation should you desire to invest in this sector.

What Services Do You Use Daily That You Can’t Imagine Living Without

There are probably two services that most feel they can’t live without. Those would be cell and Internet services. It used to be that you had two separate companies that provided these services to you. Consolidation within the industry now allows customers to get cell and Internet from one company.

AT&T – A company with a long history of paying dividends and a stock price that is affordable and usually in the high $20’s to $30’s range. Dividend yield at the time of this writing is well above 6%. They aren’t just in the business of providing Internet and cell phone they are also in the content providing business with their purchase of Warner Brothers. If you like HBO that’s good because they own that as well. You get a diversified media company with AT&T.
Comcast – is another company. You might have their xfinity cable service however Comcast owns NBC, Xfinity, Telemundo, Dreamworks and even Universal Orlando Resort. With Comcast you are getting a provider of access to the Internet as well as content.

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

by jbridges on April 15, 2023

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.

by jbridges on March 30, 2023

How Creating Multiple Accounts or Savings Allocation Can Provide You with Funds When You Need Them

Our bet is you have never heard the term squirrel account. A buddy of ours once commented that we seemed to have funds for different reasons. He dubbed them “squirrel accounts” and it is a term that we have used ever since.

Now before you think we have gone off the reservation let’s outline a few challenges that have happened to us in the past and situations that have happened to those we know.

You had an unexpected car repair bill for $323
The garbage disposal at the house went out and you need $175 for a new one plus maybe a few extra bucks to have someone install it
Your pet needs to go to the vet and your pet insurance will not cover 100%
It’s now winter and you realize that the coat from last year has holes in it and is beyond repair

We think you get where we are going here. In life there are unexpected expenses that come up. This can greatly impact your monthly spending. You might have to decide if you are going to eat Ramen for 3 months or put the unexpected expense on a credit card.

We invite you to the magic of squirrel funds! These precious little funds provide you with funds when you need them while you store money (nuts) away in them on a regular basis.

If this sounds somewhat familiar we covered “how to hide money from yourself” in a different post. Today we are going to take it to the extreme and outline in even greater detail how to make this system work for you.

Why Should I Have Squirrel Piles Can’t I Just Have One Backup Fund for All Expenses

This is a common question we get when someone finds out about our squirrel pile methodology. Squirrel piles help with more than just unplanned expenses. They empower you to have money when you need it for items that you might not think about on a daily basis.

When you have all of your money in one account you might not be saving enough for say car repairs or you might not realize you have money set aside for clothes as it’s blended together with your pet emergency fund.

This methodology is designed to provide you freedom to spend money not to leave you a prisoner of a bucket of money in reserve that you can’t touch as you fear you won’t have enough to help with expenses should you or a loved one lose a job.

Decide How Many Squirrel Funds You are Going to Have

Now that we have you on board with the squirrel pile methodology let’s start breaking it down.

Step one in the new world of setting up your squirrel piles is to decide how many you are going to have. Let’s look at squirrel funds that we have either had ourselves or that we have encouraged others to adopt.

Bike
Clothes
Car Repair
Car Mods
Fun Money
Out of Work or Reduced Hours
Gift Fund
Medical Bills
Appliance Repair or New Appliance
Backyard Furniture
Golf Clubs
Pet Care
Car Insurance

Looking at this list you might be thinking “wow these two have totally lost it” or “this sounds insane”. We understand this might not be for everyone however what this method provides is having funds when you need them for expenses that you might not have planned for in advance. It’s especially helpful for unexpected expenses that happen on an infrequent basis.

Before going to the next step look at the list above one more time and select 2 or 3 that you might have encountered in the last 12 months where you had to either dig into an emergency fund or put onto a credit card.

Allocating Funds To Your Squirrel Accounts…You Are Now Like a Squirrel Always Preparing For Winter

Part of the magic of the squirrel accounts is that you are perpetually putting nuts away for winter. This might seem crazy however if you can stay with us for just a little bit longer we promise this will make sense.

Let’s look at how you might allocate funds to these accounts.

Squirrel Fund	Monthly Amount	Year One Squirrel Fund	Year Two Squirrel Fund
Gift	$25	$300	$600
Car Repair	$35	$420	$840
Appliances	$20	$240	$480
Pet Care	$12	$144	$288
Furniture	$25	$300	$600

Another beauty of the squirrel account allocation system is it’s made up of smaller amounts of money on a monthly basis. Each contribution is about the same amount as one would spend on eating lunch for two or a week’s worth of Starbucks (we promise we love Starbucks and we don’t pick on them).

Over time these smaller amounts of money really add up. In the chart above you can see that after two years you start to amass larger amounts of funds that can really help you tackle larger purchases with much greater ease.

There are online banks that allow you to accomplish this kind of saving set-up quite easily. One of the banks that we have used to do this is SoFi where they have a feature called “Vaults” and you can set-up all sorts of squirrel accounts. Who knows maybe one day a bank will set up a feature called “squirrel accounts”