All Things Investing - Getting Started
episode
DIY Money | Personal Finance, Budgeting, Debt, Savings, Investing
24 min
3 speakers
5 chapters
transcribed 1 month ago
Transcript
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Transcript generated automatically by AI and may contain errors.
What is the main topic discussed in this episode?
Hey, this is Allie, and thanks for listening to the show. Give us a five-star review where you listen and share this episode with someone who might need to hear it. Now, enjoy the show. Welcome back, ladies and gentlemen. Listen to another edition of DIY Money. DIY Money. All right, Logan, we're going to go right into it because this is episode two of our series on investing. Allie did a magnificent job breaking down various taxes. Very dry, terrible subject matter. So, I mean, but she did a great job trying to lighten it up and make it fun. As fun as you can make taxes. So we appreciate that. Allie's great. Let's venture in now and talk a little bit more about investing as a whole. So you mentioned to me before we were cutting the show that a lot of times people will say, you know, I'm investing my 401k or I'm investing my Roth or whatever it might be.
Talk to me a little bit about the nuance behind why that terminology is not very accurate.
Yeah. Yeah, I think a lot of people, they think, okay, I buy my Roth or I buy my 401k. But remember, these are just buckets. All the things Allie just talked about on the last episode, your 401k, your Roth IRA, your brokerage account, whatever it is, that's a bucket that houses investments. So the investments are inside of that bucket. So if you have a 401k, you have a lineup, a list of investments that you can put inside of that bucket and you can buy with the cash or the money that you put in there every paycheck.
I think it's like the analogy she talked about with the tax brackets. Yeah. It's the seven layer dip. And I think it might be worthwhile to talk to people about at the base of almost all investments. are either stocks, which are shares in publicly traded companies. It's ownership. Ownership. So those are companies like Microsoft or Apple or Nike or whatever, companies that you know. They have shares. And when I say at the base, I mean when you go drill down 401K and the mutual fund and all these things, at the base are stocks or... Now, for today's episode, we'll stop there. There could be commodities like gold or silver. There could be currencies. There could be a lot of other things as a base. But for most people, you're going to be looking at stocks or bonds.
Now, that's the base layer. But above those layers could be what? Mutual funds ETFs. I want you to explain that a little bit. And then above that layer could be the account or the bucket that you're talking about.
Know what I love?
What does it mean when people say 'I'm investing my 401(k)'?
I love buckets.
So break down those things a little bit.
Yeah. So let's kind of go layer by layer. So when we're talking about stocks versus bonds, which again, you're perfectly accurate. That's the base level of what you're buying. So stocks, ownership and companies. Bonds is the debt of maybe companies or governments that they are issuing debt out there. They have to pay that back over time and they pay you interest in order to get that. It's basically the flip side of a mortgage.
And why this is so important to understand the base layer is I've heard people say things like, well, I don't like the stock market, so I just buy mutual funds. And I go, what? Like, huh? That makes no sense. So if you own a mutual fund, more than likely, it owns stocks. That's right. Or they're like, well, I don't like to be too aggressive in the market, so I just buy mutual funds. And I'm like... Have you seen some of these mutual funds? Like, what? So there's this confusion. And what they're being confused on, I think, and we won't get there right now, we'll get there in a minute, is diversification. Yes. So, but again, base, and we'll get there, base layer, stocks versus bonds, but then they're packaged differently.
Yeah. So then you got your packages. So you have mutual funds and ETFs are really the two routes that you go. Now, there's a lot of subcategories of those. So you have mutual funds that are index-based. And an index is basically taking a lineup of different companies. There's millions of them now. A lineup of different companies and packaging them into one bucket.
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Chapters
5 chapters
1
What is the main topic discussed in this episode?
0:01–2:52
2
What does it mean when people say 'I'm investing my 401(k)'?
2:52–6:43
3
What are the base asset classes investors should know (stocks vs bonds)?
6:43–10:16
4
How do mutual funds and ETFs package stocks and bonds for investors?
10:16–15:59
5
Which major stock indexes should beginners understand (Dow, S&P 500, Total Market)?
15:59–24:25