Updated: 18 December 2020 - Changelog at bottom
Disclosure: The only affiliate link is a RobinHood suggestion
I've had many people come to me and ask "what stocks should I buy?", "what bank do you use?", and "what credit card is best?" This post is for them. Suggestions are in order of importance.
#1). 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.
#2). Earn Easy Money with High Yield Savings
If you have money just sitting in a checking account somewhere, you need to put it to good use. High yield savings accounts will give you a return and it requires zero effort.
Barclays, Marcus, and Ally are all great options with a high market "APY". Barclays also has 60-month CDs, but I just stick with their savings because it's easy and I don't have to think about it.
If you have a look at this page's changelog, you'll notice that savings accounts have changed drastically over the last two years. Once they were offering more than 3.0%, but they've since dropped significantly into the 0.5% range.
#3). 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.
#4a). Stock Investing
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.
#4b). 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 (more info). 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. They are for long term, set it and forget it ownership, that will give you a return when the market does well. ETFs.com is a great place to start your search.
These are what 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 $32,107.43 + dividends (as of August 2019). Updated for 2020, you would have earned $60,999.61 + dividends over the previous six years.
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 61% increase over six years is certainly not worth ignoring.
Feel free to make a copy of the sheet and play around with the weights / investment numbers.
#5). 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.
Rule #1: Don't sign up with a contract.
Paying for mobile service month to month will save you a ton of money and will allow you to switch carriers on the fly. There are many options available, like T-Mobile for $40/mo., Google Fi's $30 +$10/per GB, and AT&T for $40/mo. I'm a huge fan of simple so I stick with Google Fi. It's clear what you're paying for and they don't have hidden nonsense fees.
Rule #2: Buy your phone. Don't pay for it with a contract.
A new, sensibly priced, phone will run ~$400-$600. If you get a contract and pay for it over the next couple years, the price of the phone skyrockets. Back when I did that with new iPhones, I ended up spending $2,400 for a $650 phone over the course of two years. It's simply not worth it.
#6). Use Keepa.com
If you shop on Amazon, installing the Keepa Chrome / Firefox extension 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. 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
- 18 December 2020: Updated & removed savings accounts that weren't worthwhile. Updated ETF investing results for 2020. Removed credit monitoring suggestions as there are no good places to do so. Updated phone with Rule 1 and 2.
- 28 May 2020: All savings accounts lowered their APY.
- 09 March 2020: All savings accounts lowered their APY. Re-ordered list based on combination of instituation and APY %
- 25 February 2020: Removed Credit Karma as a recommendation
- 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.