investing-fundamentals

yxzhang·Jul 29, 2020

Posted in:Advice Favors Diversity, Equity & Inclusion Resources Show Elpha Startups Money

Hey Elpha community,On August 8th, I'll be launching a personal investing course for people in their 20s and 30s. The goal is to empower those earlier in their careers to build wealth and financial independence sooner:https://oyf.teachable.com/p/investing-fundamentalsBuilding this course was fueled by the disparities I was seeing-- in who invests (not surprisingly, it's not enough young people, not enough women, and not enough people of color), and the wealth gap that exists:1. I was surprised to learn a smaller percentage of 19-35 year-olds are invested now (through 401(k)s, IRAs, and other investing accounts), compared to 2008 - that means our generation isn't participating in the economic gains created.2. Ellevest has published great research on the wealth gap--I was shocked to learn women have .32 cents on the dollar compared to men, and as you can imagine for women of color it's much worse (pennies on the dollar compared to men). It's way more severe than the pay gap. It's led to more questions on my part, and I'd love to get your perspectives:-What do you think are the biggest challenges preventing professional women and recent grads from getting invested?-Traditionally, there was the dynamic of many women managing household budgets, but leaving the investing to their partners - do you find this is still true?-How do we get women to see investing and handling their own money as a privilege, not a chore? It wasn't that long ago that women couldn't even have credit cards and bank accounts without a male co-signer.---------Building this course was also fueled by my personal experiences. I graduated in the 2008 Recession - at the time I was worried about jobs, finances, what my future would look like...I was also worried my worry was going to cause an ulcer...Learning to invest helped me break out of that paralysis, but it still took me years of 📚 and research to figure out how to invest the right way. It shouldn't be that hard to learn something that's so essential to your well-being, yet most schools and colleges don't teach it. And a lot of people who are first generation college-students and Americans don't have family to turn to for their investing questions. My goal was to build the course I wish I'd had back then--for others, today. I'd love for anyone in this community to take the course, or share it with those in your circles that would benefit from it. You can sign up at:https://oyf.teachable.com/p/investing-fundamentals10% of all proceeds will go to an educational non-profit I've supported for the past 13 years that has a 50+ year track record of providing world-class college prep and career opportunities to students of color. 🙏 Thanks for any perspectives and ideas.with gratitude,Yaya

Mafalda149·Jul 29, 2020

I think a big part of the answer is that "the average student loan debt for members of the Class of 2018 is $29,200." (Forbes) Right now, especially, people are worried about just keeping their jobs; who has the energy or the money to dedicate to long-term financial planning right now except people who are already rich? I handle our investing to the extent that we have any -- 401k and IRA and so on -- I hate it. It feels like taking a particularly stupid gamble. Our accounts lost 30% of their value when the COVID market crash hit earlier this year. That could happen again at any time, or worse. And we have no choice but to play the game because otherwise we'll die homeless at age 70.

yxzhang·Jul 30, 2020

Thanks for sharing your thoughts. I totally hear you that student debt is a huge burden and people are undergoing tremendous financial stress because of COVID. I understand it can be extremely frustrating to see your portfolio go down 30%. At the same time, in 2008, many people saw their portfolio fall 50% and those that stayed the course then had their investments recover and go to all time highs. While none of us can predict the future, you raise the good point that investing is something people get involved in if they want to beat inflation and have their money work for them.I think the positive piece in all of this is that young people have a lot of time for their money to compound if they start early and even by investing very small amounts at first (e.g. to their workplace 401(k), taking advantage of an employer match if it's available, etc).

KatieDoran·Jul 29, 2020

I LOVE PERSONAL FINANCE!It is super cool that you're launching this. I love seeing more women enter the Personal Finance and, especially, the Investing space! Congratulations on the upcoming launch of your course! Some thoughts on the questions you pose:-What do you think are the biggest challenges preventing professional women and recent grads from getting invested?I think women are often left out of the conversation on investing. Certainly any person coming from a household with financial struggles is unlikely to get a solid financial education from their parents, that's true regardless of gender. On top of that - women seem to have been more socialized to not talk about finances with each other. When I'm with groups of male friends, money is a common topic and investments in particular...with groups of women the topic seems to be much more taboo. This leaves women without a clear entry point to personal finance conversations - their parents/friends don't mention it, so it becomes a sort of 'you don't know what you don't know' problem. Even women who overcome that and start looking into Personal Finance will find a space largely dominated by male voices and extreme voices (Dave Ramsey, Mr. Money Mustache, etc.) and that can make it intimidating and/or off putting - it is hard to just get beginner personal finance content unless you know what to look for, instead you're flooded with a bunch of shaming, frugality to the max messaging that may not resonate. I know, for me, it took some grit and perseverance to find the content and community I wanted to be a part of in the PF world. Since my early days just looking into the space, I've gone on to attend a womxn's PF conference and it was *so cool* and *so weird* to be in a room of womxn all talking openly about money! -Traditionally, there was the dynamic of many women managing household budgets, but leaving the investing to their partners - do you find this is still true?My partner and I have not entangled our finances, so definitely not true for me...but I think this is still the case in many households. I've even had conversations with women about their retirement savings where the general vibe is "oh, but I plan to get married so I'm just going to wait for my husband to do that," which totally unleashes my sermon on the magic of compounding interest! On the flip side - I know a grown man with a family who still has his father manage all his investments! I think investing feels scary to a lot of people, regardless of gender, due to lack of clear, beginner-friendly content and that makes everyone want to defer responsibility to someone else. That's part of why courses like yours can be so powerful! This kind of content takes The Dark Arts of Investing and makes it as approachable as your day to day budget! -How do we get women to see investing and handling their own money as a privilege, not a chore? It wasn't that long ago that women couldn't even have credit cards and bank accounts without a male co-signer.I've found some of the more feminist voices in the Personal Finance space help to make this really clear (Amanda Holden of Dumpster Dog, Tori Dunlap of herfirst100k, Berna Anat of Hey Berna). They all consistently reinforce the concept that money really is power - men are in positions of power in part through the accumulation of wealth, so for women to focus on accumulating wealth is a super empowering and deeply feminist act. Also talking about end of life care can be really powerful - as a whole, women earn less, invest less, and live longer. Women are way more likely to end their life below the poverty line than men. That's SCARY and avoidable and I think talking about it can light a fire under women about the possibility of controlling that part of their future, not being a burden on their grown kiddos, etc.

yxzhang·Jul 30, 2020

@KatieDoran thanks so much for your thoughtful response. Lots of good ideas--glad you're passing along the power of compounding to your friends :)

teresaman·Jul 29, 2020

-What do you think are the biggest challenges preventing professional women and recent grads from getting invested?For myself, I find the challenge mainly associated with lack of knowledge and therefore intimidated by the topic and feeling like there is a ton of research needed to vet my options. As an example, some weeks ago I came across Linus when I was looking up high interesting savings account, was baffled by the 4% APY rate and then upon a _quick_ search found that it's quite volatile, not FDIC insured, and have quite a few associated risks... then my research stopped, as did my efforts in looking into investment options.TLDR; I'd say it's between nothing have enough time, and either an information overload or not having enough information to make an informed decision.

yxzhang·Jul 30, 2020

@teresaman thanks for your thoughts. I totally hear you when it comes to information overload. It's so time consuming to research things and then to filter through good and bad information.I hope you'll check out the course. I tried building it in a way that addressed the very concern you shared - by distilling 300+ hours of research and content into a 3-hour course, broken down into 10-15 episodes so people can learn quickly and take action. Thanks again for your ideas.