Rich Bitch Step 10: Make It Grow, Baby, Grow

Catch up here: Part 1. Part 2. Part 3. Part 4. Part 5. Part 6. Part 7. Part 8. Part 9.


Rich Bitch
Rich Bitch by Nicole Lapin

Surprise, there’s more to money than just saving! This is shocking to me considering I’m still struggling to save money every month, but I’m working on it with the help of this book. After setting up the aforementioned savings/emergency fund, paying off debt, and starting a retirement fund, the next step is to invest your money.

Step 10: Making investments for the long term. 

There’s a stigma for women that they are not as likely to invest money, but even making micro investments through Acorns has boosted my money confidence significantly, so I say, if you’re in a position to do it, go for it. Here’s Lapin’s test to figure it out:

  • Do you have an emergency fund set up?
  • Do you have all your credit cards paid off in full?
  • Are you paying other debt on time and think it’s manageable?
  • Do you have a retirement system set up?
  • Do you have money saved to invest ($500-$2500)
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If the answers to all the questions were yes, then apparently your responsible with money and you can level-up to investing! But there are so many options when it comes to investments. Firstly, Figuring out if you want to go through a Discount Brokerage (Fidelity, E*Trade, Scottrade, etc.) or Full-Service Brokerage. And secondly, what kind of investor are you–aggressive, conservative, or somewhere in between? How much are you investing and willing to lose potentially?

And there are different types of Investments.

“Own” Investments: Stock or share of a company, bragging rights to say you “own” part of a company. The return on investment is usually 10%, as seen through dividends, a portion of the profit of the company you invested in. I’ve seen a few dividends on my investments through Acorns, but the way Acorns is set up, the portfolio is diversified (stocks from large and small companies, bonds, real estate) and it doesn’t tell me which companies I’m getting dividends from. Still cool to see that I’m getting some return on my investments by rounding up my change! “Own Investments” have a higher return because they compound over time, whereas “Loan Investments” do not.

“Loan” Investments:  In the form of bonds, the government or company will issue these as a sort of IOU, maturing the value over time, increasing the interest and overall maturity with all the interest paid back to you. I have bonds that my grandparents sent to me for my birthday up until I was 18, and the fully matured bond is worth way more than the amount on the bond. It’s a more stable way to invest and still get a return, about 5%.

Like my Acorns account (only using it as an example here so much is because it’s taught me a lot about investing, but also, it’s the one of the only forms of investing I’ve personally interacted with),  Lapin suggests investing in both “Own Investments” and “Loan Investments” so that if one fails, the other will still be there to salvage the investments you’ve made. There are so many types of investments/ portfolios that can be created with various amounts of money depending on the type of investor, it’s hard to write about this chapter because there are so many variables. The bottom line, invest when you’re ready, do your research about what types of investments make the most sense for you, and don’t be afraid of the stock market. It can definitely work for you.

 

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