Transcript
00:00:01 TONYA: This class is for education, and we won’t talk about specific investments or specific situations because every situation is different. Plus, this class is for a wide variety of potential new investors.
00:00:11 [music]
00:00:20 TONYA: Hello, and welcome to another exciting, informative financial wellness session. Let’s get started. I’m Tonya Rapley. Welcome to a new series from State Farm and Let’s Start Today. This is where you’ll find the tools, support and education you need to take control of your finances today and reach your goals for tomorrow.
These helpful courses are inspired by an ever-evolving learning lab known as Next Door State Farm. And speaking of “Next Door”, I’m here today with Dan, who is a financial coach at Next Door State Farm, and Earl who is a State Farm Agent. Thank you, guys, for joining me.
00:00:54 DAN: Thank you, Tonya.
00:00:55 EARL: Thanks for having me.
00:00:56 TONYA: Thank you. So today’s session is called “Just the Facts: Investing.” Are you guys ready to talk about some eye-opening stuff?
00:01:04 EARL: Absolutely. We’re ready to go.
00:01:06 DAN: Let’s do it.
00:01:06 TONYA: Okay. So before we dig in, I wanted to go over what we’re gonna discuss. And today we’ll be discussing: determining if you’re ready to begin investing, why it’s important to start early, establishing risk vs. reward, identifying your time horizon and how that factors into your investment strategy, then the common investments you should consider, the diversification of your portfolio and building that portfolio. You guys ready to dig in?
00:01:33 EARL: Yes, we are.
00:01:34 DAN: We got a lot to do.
00:01:35 TONYA: Alright. So, let’s start with that question that everybody has: When am I ready to start investing? And am I ready to begin investing?
00:01:41 DAN: I think it’s a great question. When I run into it, there’s a lot of kind of fear around investing. And I understand that. And so we’ll kind of talk through some of that stuff. There’s also the “Am I ready to start investing?” And I think the big two things for me about whether you’re ready to start investing is: having that emergency fund and having your debt managed. It doesn’t necessarily mean having all of your debt paid off, but it means having it managed.
00:02:05 TONYA: Absolutely. Absolutely.
00:02:07 EARL: So, you’re not necessarily talking about all your debt and you’re not necessarily talking about paying it all off. You just want to get to a point where you can pay off the unproductive part, or the counterproductive parts of your debt like your high credit card debt and things like that. And then just manage the rest of it within your budget, I think you’ll be okay.
00:02:26 TONYA: Absolutely.
00:02:27 DAN: I think “unproductive” is a good word for it, where it’s things that are really high-interest like credit cards, maybe private loans or collections, things like that, where you honestly may be paying more in interest than you would earn on an investment anyway.
00:02:40 TONYA: Yeah. It’s counterproductive.
00:02:41 DAN: So get that paid off. If you have things like a mortgage or a student loan, I think that’s okay. You gotta be making your payments.
00:02:49 EARL: You gotta be making those payments all along, but you want to get really down to the point where you are getting your financial house in order. You’re getting rid of the debt and getting rid of some spending habits and things like that. And when you get to that point, you can really focus on what you’re trying to do from an investment standpoint. And it actually gives you a better chance of having success.
00:03:11 TONYA: Absolutely. And I say make sure you’re up-to-date on all of your finances as well. Your investment portfolio is not there to save you now. It’s there to help you down the line. And I think some people make the mistake of saying, “Okay, well, while I don’t have my entire financial house together, I’ve started investing and that’s good enough.” And no, it’s not good enough because you want to make sure you’re making the right decisions today and tomorrow.
00:03:31 DAN: Well that’s why I think the emergency fund’s so important. A lot of people think, “Hey. Maybe I have my debt in order. I’ll start investing.” Well what happens if an emergency comes up, right? What if we have to go back into that unproductive debt or what if we need to sell our investments at an inopportune time because of that emergency that happened? So I think part of that house in order is having that kind of fund set aside for, “Oh no, the wheels fell off my car, but I can handle that.”
00:03:56 EARL: Right. I get this question all the time about how much do I need in terms of emergency funds. Well, you know, that’s kind of up to you, but a rule of thumb would be six to nine months of essential emergency funds so that you can stay alive, so to speak, in terms of until you can get your house back in order, so I would say six to nine months of essential emergency funds to be able to meet your requirements there.
00:04:22 TONYA: Yeah. So, it looks like your investments are an important part of your financial puzzle, per se, but you want to make sure that you have all the pieces fitting together. And some of those pieces need to be put together before you begin investing. So if you’re trying to decide if you’re ready to begin investing, look at the other components of your financial puzzle to make sure you have those.
00:04:40 EARL: Yeah. It makes absolutely no sense to start investing before you have your house in order.
00:04:47 TONYA: Exactly
00:04:48 EARL: It just doesn’t because it’s not leading to your best efforts in terms of making an investing decision or commitment.
00:04:54 TONYA: Exactly. So, investments are important, but you want to make sure you have your bases covered before you start investing. Okay, So I think we have a better understanding of whether or not we’re ready to begin investing. Let’s have a look at what we’ve learned.
00:05:05
(Music / Chapter 1 Ends with Key Takeaways slide)
