Updated: 30 December 2019 - Changelog at bottom
Disclosure: No affiliate links below
I've had many people come to me and ask "what stocks should I buy?" "what financial service should I use?" and "could you have a look at this? should I see a doctor?" This post is for them.
Get Your Money Under Control
My absolute, number one recommendation is to sign up for Personal Capital. They're a free financial account aggregation site (mobile and web) that will tell you exactly where you are with your money. Add in your checking, savings, investments, and your credit card accounts here and you'll see every transaction and every investment account in one location. It's the second app I install on new phones and it's the first thing I look at every morning.
The referral link below gives us both $20 when you sign up, but is completely optional.
Monitor Your Credit
Credit Karma is a free site that will show you where you are with all your credit accounts. If you're not constantly monitoring your credit, you should. Credit Karma makes this an incredibly easy process.
You can also submit your taxes for free with them every April. Do not pay for TurboTax or similar products when tax season comes around. In fact, read this article about how shady TurboTax is when it comes to filing taxes for free.
Earn Easy Money with High Yield Savings
If you have money just sitting in an account somewhere, you need to put it to good use. High yield savings accounts will give you a ~2% return and it requires zero effort.
Make a note that due to federal requirements, all savings accounts have a maximum of six withdrawals per month - with penalties for each withdrawal over. RobinHood does not fall under the same limitation as they offer a checking account instead.
Also worth noting is that high yield savings accounts are becoming popular. For example Wealthfront, a popular robo-investing company, just announced a savings account.
Get 2% Cash Back on all Purchases
CitiCards "Double Cash" credit card will earn you 2% on every purchase with no restrictions or maximum. This is perfect for those that don't want to keep a chart for credit card purchases.
Also, do yourself a favor and never use a debit card. With a credit card, your maximum loss on any transactions you report as fraud is $50; with a debit card, that protection only extends for within two days of the unauthorized transaction. After that, the maximum consumer liability can increase to $500 within 60 days, and to an unlimited amount after 60 days.
When you're ready to invest, RobinHood is by far the best place to start. Financial institutions like Fidelity and Schwab have a transaction fee for every stock trade. They will charge you coming and going at $7 for purchase and sale. RobinHood does not.
Opening an account with the referral link below gives us both a free random stock. If you don't use the link below, please do yourself a favor and use anyone's referral. It's free money. Don't pass that up.
What Should I Invest In?
Avoid purchasing individual stocks and go with ETFs. An ETF is like a mutual fund, but with none of the heavy fees. If you continue reading, I'll assume you pinky swear never to invest in a mutual fund.
An ETF is a collection of stocks centered around a particular theme (additional reading). For example, they can be a collection of tech, real estate, dividend-based stocks, or emerging markets. Each ETF has a management cost measured in %, but are often very low.
ETFs.com is a great place to start your search, but avoid anything above 0.05%. ETFs are for long term ownership that will give you a return when the market does well.
These are the ETFs I suggest beginners start with:
- US Broad Market - SCHB, VTI, VOO
- Foreign Markets - SCHF, VEA
- Dividend - SCHD, VIG
- Emerging Markets - VWO, IEMG
- Misc - VDE, VTEB, VTV, VOE, VBR, MUB, BNDX, EMB, AGG, VTIP
Aim for a portfolio concentration that looks like this:
If you began investing five years ago with, let's say $100,000, and followed the above methodology, you would have earned $27,645.69 + dividends (as of 1Aug2019). Not all ETFs go up, but over time they tend to do very well. Do yourself a favor and start investing as soon as you're able to. A 27% increase over five years is certainly not worth ignoring.
Feel free to make a copy of the sheet and play around with the weights / investment numbers.
Check Your Phone Bill
Cable and mobile phone bills are typically the two largest drains on everyone's wallet. If you're spending over $100/mo. for your phone because it has 'unlimited everything', you could certainly be doing better.
Google Fi released new non-contract mobile phone plans that include "unlimited" (up to 22GB/mo.) and "flexible." If you don't need 22GB/mo., Google Fi charges $20 + $10/GB. For example, if you only use 2GB in a month, you pay $40. If you use 3GB the next month, you pay $50.
There are certainly many options available, like T-Mobile for $40/mo. or AT&T for $40/mo., but I'm a huge fan of simple. With Google Fi, it's clear what you're paying for and doesn't have hidden nonsense fees.
If you shop on Amazon, installing Keepa is a must. They provide "detailed price history for over 800 million Amazon products [...] and send price alerts when a product has dropped below your desired price." I have saved a considerable amount of money using this tool.
For example, the following shows up directly under Amazon products when you have the browser extension installed. In this case, I would set my price alert for ~$300 and wait for them to notify me. Waiting a little bit longer for this product would easily return a 10% discount.
Changelog - Click to Expand
- 30 December 2019: Ally % down
- 12 December 2019: Updated Savings account APY %
- 25 November 2019: Added debit v. credit card details
- 23 November 2019: Ally savings account % dropped
- 10 October 2019: Barclays, Ally, and Marcus down 0.1% (again). Added RobinHood
- 05 October 2019: Added Keepa suggestion
- 21 September 2019: Wealthfront lowered their savings from 2.32% > 2.07%
- 18 September 2019: Added Phone Bill suggestions
- 05 September 2019: Barclays and Marcus lowered their savings APY again!!
- 01 August 2019: Added 5 year historical investment chart
- 28 July 2019: Added pretty pictures
- 15 July 2019: Barclays lowered their 60-month CD from 3.1% to 2.85%
- 11 July 2019: All high yield savings accounts lowered their APY -0.1%
- 22 April 2019: Added link for TurboTax shadiness.