This is a follow-up to my post a couple weeks ago about investing in crypto. I’ll start this article the way I ended that one: Open an IRA first 👍

Day trading has been popularized by apps like Robinhood, which offers $0 trades and no minimum account balances for its entry-level offering. I love that it gets more people interested in investing and taking their money lives into their own hands! But after doing more research into the pros and cons, I’m pretty fired up about the injustice of Robinhood.

Before I get to the fiery stuff, let me address the brass tacks: people should be investing in retirement. I can’t overstate this: you should invest for the long-term. If you have extra cash after maxing out your retirement accounts, great! But most people don’t. I’ve run through Verdi’s retirement needs calculator with a bunch of clients and so far only two of them felt good about their standing. These were people who had been contributing regularly to retirement since their 20s and are now 50+.

If you’re in your early 30s and you make about $80k and want to live a lifestyle spending 25% less than you currently do, you’ll have to save just under $1.9 million dollars between now and your 70th birthday. Moreover, retirement accounts are tax-advantaged whereas day trading stock accounts are not.

Maybe the strongest argument against day trading is that an algorithm that runs a mutual fund or exchange-traded fund (ETF) statistically always yields a higher return than a human - even most highly specialized traders with years of experience. This means, according to the studies, investing in retirement accounts will earn you more money than day trading.

The drawback of investing only in retirement funds is that it’s very hard - nay, impossible - to reach that $1.9 million when you don’t have a 401k and can only invest $6,000 a year in your Roth/Traditional IRAs. So if that’s you, check out SEP IRA options and ETFs from respected institutions (Vanguard, Ellevest, TDAmeritrade, even E*Trade) and leave your money there for at least eight years (want to learn how to do this? Join the VMC!).

So now the injustice.

The big thing is that, although the trades are free, they’re not always the best prices - and they’re not exactly free. Robinhood uses payment for order flow (or PFOF) as one of its revenue streams. If you want to know more about how this works, check out this article, but basically they sometimes give their customers a higher price than what’s available in order to bring in more money for the company. This goes against their fiduciary duty to the consumer and lines the pockets far more thickly of the already-rich than the prospectively-rich - the exact opposite of its purported mission. The educational side of the app leaves people in the dark and the gamification (hello, confetti graphic for each trade) encourages people to make frequent trades and raise their risk on a subject that merits careful thought.

Not to mention it has 1.15 stars (out of 5) from the Better Business Bureau due to sorely lacking customer service, people being blocked from accessing funds, and thin safeguards on sensitive personal info.

The idea of passive income is exciting, and I believe everybody should have access to it - that’s a big part of why I do this job. If clients want to dig into stocks and have a hands-on experience, I support them in that. But there are far safer, less exploitative ways to grow your money than by using Robinhood.

This was a lot, but there’s so much more to talk about! We get into it in the Verdi Money Club, but if you have a question or comment for me, I’d love to hear from you.

XOXO

More and more clients have been asking me about investing in cryptocurrency - many know someone who bought crypto at the right time and is now sitting on a stack of money - and they want to know how they can be like that friend.

For better or worse, the advice I have about crypto is the same boring advice as for most investments: do your research.

But what does that look like?

First, it’s important to know your risk tolerance. Do you have a large margin of wealth (do you have wealth?) that you can afford to lose? Does the appeal of making a lot of money outweigh the possibility of losing it? 

Second, Warren Buffet’s advice to invest in something because you believe in it applies to crypto as well as individual stocks and businesses. Many early adopters of bitcoin invested because they believed in a decentralized economy. For some of those pioneers, a loss would have been offset by the knowledge that they were putting money into an idea that felt right to them. 

Third, the advice “buy low, sell high” is very simple but rarely easy, and maybe the hardest element to research. The basic principle of buying something for cheap so you can sell it at a much higher price means you have to have some measure of certainty that it will be worth more in the future. 

But how can we know that? Which crypto will be the next hit?

If I had the answer to that question, I would be one of the aforementioned people sitting on a huge pile of money, but I can point to a couple of questions that everyone considering a high-risk investment should probably investigate. 

1. How do other people feel about the cryptocurrencies that exist or will be developed? If people are feeling good about it, it will gain more value because a large group of people will decide it has value (the true mind#### of money). 

2. Do you believe in it, whether philosophically or purely financially?

3. Can you afford it?

4. Can you see an inherent and unique value in it? What does it do that no other currency does?

One big way crypto investments can vary from individual stock investments is that the former offers mining as a way of earning a portion of the currency, but that in itself is a complex process that may or may not be accessible to you, dear reader, and that I don’t have space to write about here (yet)! So, if you’re interested in mining, I’ll refer you to the top of this post by lovingly saying, do your research.

And open an IRA first 😊

XOXO

NOTE:  If you’re feeling the need for more regular money tips and discussion, now is a great time to follow me on instagram! I’m regularly posting (like always), but am upping my tips and resources game. Follow me @verdidaily. 

This is a time of uncertainty for all of us, but there are varying levels of what that looks like. For some people, their income hasn’t changed at all, but their lifestyle and concerns have. For others, they have been laid off or lost their clients and no longer are bringing in any income. I’m somewhere in the middle. I don’t yet know what this time will mean for my business, but I do know that it is too soon to tell. My husband, on the other hand, is in the film industry and there are currently no productions moving forward in L.A.. The show he was about to start, which would have lasted about 8 or 9 months, is delayed at least until the end of next month, but probably longer. I say this in part because I believe that my transparency is crucial in my ability to share and teach about money, but also because I think it is important that you know that this is an uncertain and potentially scary money time for me too. I’m in this with you! 

Below are a few things that we can all do to take care of ourselves and our financial well-being right now. Please read to the end of the newsletter for a few more opportunities to learn and engage on a more one-on-one level!

1. Take care of yourself by making sure your household's immediate needs are met (groceries, household goods, medications), but don't hoard because this hurts our community as a whole. For most people being prepared means making sure you have enough food to be home for at least a week at a time. For some it also will mean having prescriptions filled and plans set for specific appointments or work that absolutely must be done in person. 

2. For those of you whose work is not impacted (i.e. you are still making about the same as before), make sure to up your savings game right now! You probably won’t be spending as much in certain categories (bars, events, clothing) and can divert that money to savings instead. 

3. For those of you who are financially able, make sure to help the organizations and/or people in need as it fits your values. There are a lot of opportunities for helping people directly (reach out to Ashley at DTDT) if that’s your thing. Or think about organizations and small businesses in your community that you especially love or appreciate. P.S. Small businesses LOVE gift cards! These are basically interest free love loans from clients.

4. For those of you whose work is impacted, take a deep breath. This time will pass and there are things in the works at the city, state, and federal governments that should help. I'm working on compiling this info to share as details come out (check the insta!). This is a good time to think through how you want work to look like in the future -- do you want to make changes to be able to weather bigger storms? Do you want to diversify your income? Do you want a different type of work? Talk to me if you're feeling stressed.

5. I’m going to be coming out with a LOT more on this one soon, but here are a few tips for if you don’t have an emergency savings fund, but could really use one right now: 

   1. Call all of the companies that you have regular bills (including your landlord or mortgage company!) with and explain that your financial situation has changed. Ask them if they can either give you an extension or a discount. 

   2. Now is the time to not feel bad about using a credit card. Check out your score on Credit Karma and see if they recommend any cards for you that have a 0% interest signing bonus. If they do and you are rated highly likely to get approved, that’s great! Use that card for the time being. 

   3. Go through your last month of spending and look for subscriptions that you can cancel (you probably don’t need that monthly clothing rental or that gym membership)

   4. Lower your regular contributions to things like retirement, transit or investments. 

   5. File your taxes (if you’ll get a refund!). 

6. If you were already looking to invest in the market or real estate this is a great time! Prices are low on the market and interest rates are basically 0. 

7. You will likely have more introspective time than you usually do. This is a great time to take care of some "housekeeping" things like your taxes (although you can now file in July without fees), your money in general (need help? ask me!), cleaning out that closet you've been avoiding, getting really clear on what you actually need and value vs. what you feel like you are supposed to have, journaling, drawing, cooking...

I know some of that will feel relevant and some probably won't. I want to hear from you so I can be as specific as possible! Please email me or DM me with questions. 

XOXO