Dec 30

Quick and Dirty Personal Finance Primer

I love talking with friends about managing their spending, saving, and investing. In doing exactly that recently, I wrote down some notes as a follow-up to help some friends get started. Look for more posts to replace as I elaborate on each topic.

  1. Read the FIRE FAQ on Reddit
    1. Watch my Finance Primer playlist on YouTube
    2. Google or watch YouTube videos about terms you don’t understand
  2. Start with a $100 investment in an easy to use Brokerage, like Robinhood or WeBull
    1. Using my referral link above I get a free stock and so do you when you sign up
    2. I actually really like the desktop browser trading experience at WeBull, but Robinhood is probably easy enough for newbies using their mobile device
    3. Having accounts at Vanguard and Fidelity gets you access to funds that they created, such as VTSAX and FZROX, which might not be available at other brokerages
    4. You can find any number of other brokerages, but some popular ones are:
      1. Ally
      2. M1 Finance
      3. TD*Ameritrade
      4. eTrade
  3. Invest in some stocks and/or index funds
    1. You should watch the performance of individual stocks more frequently to ensure you are not losing too much value or to capture gains
    2. With index funds or other types of mutual funds, however, you don’t have to watch or manage them day-to-day; just check-in on your investments a few times a year to make sure you are reinvesting dividends or capital returns
    3. Contribute and keep buying as you can
    4. Popular index funds to consider:
      1. FZROX – no fees and no minimum, but not all brokerages allow you to purchase it (might have to have an account at Fidelity)
      2. VTSAX – low fees with $3000 minimum initial investment; Vanguard claims to be the most focused on giving capital back to their customers…Jack Bogel was founder or CEO and was the inventor of index funds or something
    5. There are other strategies for investing in dividend stocks, managed mutual funds, diversifying across industries or globally, etc., but you can explore that later
  4. Follow the FIRE flowchart from Reddit to manage all your money
    1. This will help you prioritize how to spend your money from basic subsistence to investing for retirement
  5. Make an inventory of your accounts/money and how are you saving, spending, and investing
    1. Personal Capital is used by almost every person I know who is trying to become financially independent because the free level allows you to consolidate all your info into one place (budgets, spending, investments, etc.)
  6. Additional resources for ideas/research, tracking, advice, and encouragement
    1. ChooseFI is a web site, podcast, email newsletter, and group/community on Facebook. I recommend them all. The podcast is interesting, the newsletter has timely tips, and the Facebook group is where you can interact with others trying to become financially independent.
    2. Yahoo! Finance is a quick, free, comprehensive summary of most investments and current news; it includes some information from MorningStar, a good resource for research (can also be used and bought separately)
    3. Reddit’s Financial Independence subreddit is surprisingly comprehensive with good info; also check out Fire (similarly named, but separate), Personal Finance, fatFIRE, and coastFIRE/ 
    4. JL Collins is an author and has a quick and useful summary of what he owns–simple, right?
    5. Track Your Dividends helps me calculate my actual return on cost (how much I personally received in dividends or increased value) based on what I actually bought and when (free sites without knowledge of your portfolio just give you a theoretical return rate based on the price at the beginning of the year, quarter, month, etc.)