Ask an Advisor – College Edition is back by popular demand! In the second episode of this series, Josh and Austin are joined by Mackenzie Murphy, a fourth-year student at The Ohio State University. The three of them discuss how to make a budget, the breakdown of Roth IRAs, Robo-Advisors, credit scores, and much more. This is one you don’t want to miss – listen in now! 

Main Talking Points

[3:35] – How Do You Make a Budget? 

[8:51] – Where Should You Be Saving Your Money? 

[11:04] – When Should You Start Investing? 

[13:14] – What is a Roth IRA? 

[15:36] – How Do You Know What to Invest In? 

[17:53] – When Do You Get a Financial Advisor? 

[19:55] – Robo-Advisors 

[21:55] – Should You Max Out Your Roth IRA? 

[23:44] – What Benefits Should You Look for from a Future Employer? 

[26:29] – “Mackenzie” Joke of the Week 

[27:47] – Credit Scores 

[30:28] – What is an Inquiry? 

[33:00] – How Many Credit Cards Should You Have? 

[35:41] – How to Not Feel Guilty About Spending Money 

[41:35] – Mackenzie’s Parting Piece of Advice 

Links & Resources

Invest With Us – The Invested Dads

Free Guide: 8 Timeless Principles of Investing

ETFs vs Mutual Funds – The Invested Dads

Are Credit Cards Evil? – The Invested Dads

Social Media

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Twitter

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YouTube

Full Transcript

Intro:

Welcome to the Invested Dads Podcast, simplifying financial topics so that you can take action and make your financial situation better. Helping you to understand the current world of financial planning and investments. Here are your hosts, Josh Robb and Austin Wilson.

 

Austin Wilson:

All right. Hey. Hey. Hey, welcome back to The Invested Dads Podcast, the podcast where we take you on a journey to better your financial future. Today, we are talking with another college student because we did that once before and it worked out pretty well. So she will get a chance to ask any question she wants, anything.

 

Josh Robb:

Anything she wants? That’s-

 

Austin Wilson:

Wait. That’s on Reddit, AMA ask me anything.

 

Josh Robb:

Oh, is that another Reddit thing.

 

Austin Wilson:

I know.

 

Josh Robb:

This place is pretty cool I’ll have to check it out.

 

Austin Wilson:

Got to check it out.

 

Josh Robb:

So this is kind of a déjà vu, we’ve done this once and we got really good response from it. So we wanted to ask a new college student-

 

Austin Wilson:

Dave Javu. Yeah, I went to school with him.

 

Josh Robb:

Dave Javu. Like Ja Rule.

 

Austin Wilson:

Ja Rule… So here we are.

 

Josh Robb:

Do you know who that is by the way?

 

Mackenzie Murphy:

No. No idea.

 

Austin Wilson:

Oh man. So we’re sitting here-

 

Josh Robb:

These college students are so young.

 

Austin Wilson:

We’re sitting here with Mackenzie. You are… You want to go full name, Mackenzie Murphy. She’s here, she’s present. She’s going to rock and roll. She is our marketing intern, who is one of the key contributors behind the scenes on getting The Invested Dads Podcast out every single Thursday. So welcome to the show.

 

Mackenzie Murphy:

Thank you.

 

Austin Wilson:

We’re excited to have you.

 

Mackenzie Murphy:

Thank you.

 

Austin Wilson:

And we literally have no clue what your questions are –

 

Josh Robb:

But we’re ready.

 

Austin Wilson:

So this could go completely on topic or completely off topic. Let’s see what’s going to happen. So anyway, give us just a little couple of seconds about who you are, what you’re doing, what you’re doing in school and what you’re studying, and your favorite thing about The Invested Dads Podcast.

 

Mackenzie Murphy:

Okay. So, I’m Mackenzie Murphy. I’m a senior at The Ohio State University-

 

Josh Robb:

The Ohio State University.

 

Mackenzie Murphy:

The Ohio State University.

 

Austin Wilson:

The, capital.

 

Josh Robb:

Copyright.

 

Mackenzie Murphy:

I am double majoring in marketing and strategic communications. And so I ended up at Hixon Zuercher as their marketing intern. And my favorite thing about The Invested Dads Podcast is editing it because I think they’re really funny and there’s a lot of bloopers.

 

Austin Wilson:

You hear the things that did not make the cut.

 

Mackenzie Murphy:

Yes.

 

Josh Robb:

She takes what’s a big train wreck and cleans it as much as possible to make it as close to-

 

Austin Wilson:

You can polish a turd.

 

Josh Robb:

Yes.

 

Austin Wilson:

And that’s what happens.

 

Josh Robb:

They did that on MythBusters by the way.

 

Austin Wilson:

Really?

 

Josh Robb:

Yeah. Episode check it out.

 

Austin Wilson:

It’s so gross, I don’t want to check that out, man. So, I guess this is really your show.

 

Mackenzie Murphy:

That’s a lot of pressure.

 

Austin Wilson:

So, you came prepared with a lot of questions that we have no idea what you’re going to ask. These may or may not be all finance-related. So, we’re prepared for anything. So why don’t you start us off when you get to about the halfway point, we’ll do a nice dad joke for you.

 

Mackenzie Murphy:

Okay.

 

Austin Wilson:

She’s counting to see how many she’s got before the break.

 

Josh Robb:

In finance terms, that’s the median. That’s the median.

 

Austin Wilson:

About 18 questions in we’ll take a break.

 

Mackenzie Murphy:

I don’t have 18 questions. Okay. First question. What is your guys’ middle names?

 

Josh Robb:

Good question. So, my middle name is William, I was named after my grandpa. And so that’s where that came from.

 

Mackenzie Murphy:

Aw, I like it.

 

Josh Robb:

So yeah, it’s a good name.

 

Austin Wilson:

It’s cute, Josh.

 

Josh Robb:

Yeah, it’s cute.

 

Austin Wilson:

Mine is Allen.

 

Mackenzie Murphy:

Okay.

 

Austin Wilson:

Austin Allen and I’m a third-generation Allen. So, my grandpa was Ronald Allen, my dad is Joel Allen and I’m Austin Allen.

 

Josh Robb:

There you go.

 

Mackenzie Murphy:

How do you spell it?

 

Austin Wilson:

A-L-L-E-N.

 

Josh Robb:

There you go.

 

Austin Wilson:

What about you? Oh, we can flip these around too.

 

Mackenzie Murphy:

My middle name is Grace. Mackenzie Grace Murphy.

 

Josh Robb:

There you go.

 

Austin Wilson:

So I’m going to expect lots of grace for these edits that we’re going to be giving you for this episode.

 

Mackenzie Murphy:

No. No edits. It seems perfect.

 

Josh Robb:

Yes, that’s right. No mess ups at all.

 

Austin Wilson:

That’s right. That’s right. One take. One take.

 

[3:35] – How Do You Make a Budget?

 

Mackenzie Murphy:

So my first real question, I feel like when you get to college, everybody says you need to have a budget. How do you make a budget? Nobody ever tells you how they just tell you, you have to have one.

 

Josh Robb:

So that’s a great question, and I would agree. A budget is really just tracking and planning your expenses, right. So the first thing you should do is to actually, we were just talking about this the other day with a group of people, is what I call spying on your money, is you don’t change anything you just watch where it’s going naturally. So, “Where am I already spending money?” So that’s your starting point. And then at the end of that time, if you take it for a couple of months, it’s good to do it over a little time because some just pop up every once in a while, some of your expenses aren’t all the time.

Once you do that for a couple months, you look at that and that’s going to be your starting point for your budget because you’re already… You’re going to have some utilities, maybe rent. You’ll have some fixed costs. You’re going to have some food costs. So you’re going to already see, “Okay, I’m already spending this amount per month or per pay period or whatever time.” So that’s going to be the start of your budget. And then from there you’re going to then fine-tune it because there may be extra you’re spending in a spot you want to cut down or you want to add something to it.

So first start by saying, “Where am I automatically spending my money?” And then you’re going to take that and build that out. So you may say, “Okay. Every month I have $1,000 that comes in from working and I spend out 700 of that because I have rent and I have food and all this stuff, car payments and gas and everything. Okay, what do I want to do with that extra 300?” Or you say, “I have a $1,000 coming in and I’m spending $1,100-”

 

Austin Wilson:

That’s not good. We don’t want it to be that way.

 

Josh Robb:

“… I’m losing money.” Sometimes, just with everything going on, college is expensive, then you don’t make a lot of money in those jobs while you’re there, usually. You then have to say, “Where can I cut back? Which things aren’t essential?” So, the easiest thing to do is just look at what you’re doing already and then adjusting from there. And so, then that’s where your goals come in. You say, “Okay, what goals am I trying to accomplish? So, I’ll need to put some money aside for those. And what expenses do I see coming?” Maybe I know I’m going to need new tires on my car and that’s going to be $400, so I need to start saving for that.

So, your budget can and will change monthly or every couple of months, you’re going to need to adjust it for whatever’s going on. But the easiest way to start with is just say, especially if you use a credit card, we’ve talked about this in the past. Credit cards are fine, if you pay them off. That’s a good way to tell your expenses, just at the end of the month, pull out that statement and say, “Okay, where did everything go?” A lot of times, even on some of the credit card websites, it’ll group them by category say, “You spent this much on food.” Great way. That’s your start of your budget right there. You kind of know where you are at.

 

Austin Wilson:

Yeah. And I think that when you’re in college, you’re in that transition period of pretty much high school and your expenses are relatively low, it’s likely. You’re pretty much not taking care of a lot of those things, but there’s colleges that period where you’re taking on some of it, you might still be getting help for some of it as well. So that even through college is going to continue and be more your financial burden over time. And so that pretty much, by the time you’re done with school, in most instances, you’re pretty much financially independent.

So that’s a four-year transition from being a dependent to being independent. And like Josh said, that’s going to change every single, at least every year. Yeah. And incomes are very irregular and maybe you’re making a lot of money in the summer and not a lot of money during the school year. So, the money you made during the summer has to last you through the school year. So, you know how much per month you can spend really getting the money coming in to match or ideally even be a couple of bucks more than the money going out is where we should be there.

 

Mackenzie Murphy:

Right

 

Josh Robb:

And it’s, it really comes down to, especially in college, when we talked about budgeting in the past in an episode, we said the 50, 30, 20 was the frame line. 50% your fixed expenses, things you have to do. 30% is your discretionary spending and 20 is your savings, that’s the ratio. In college is not going to be that. You’re not going to have a lot of those fixed expenses. If you’re staying on campus, a lot of that’s built into your tuition and all that. If you’re staying off-campus, you will, but you’re not going to have really opportunities save much. You may be able to get some short-term goals.

So I would say, just look at your planned expenses and how much you think you have or how much you have saved from your summer job and spread that out. The bigger issue is more, “As I leave college and get that first kind of big-time job. And my salary goes way up compared to college,” that’s when you really got to fine-tune, don’t start spending all of it, that’s where you’re going to transition and really want to build your budget out from there.

 

Austin Wilson:

Yeah, that saving component, that 20%, is especially hard in college. Some do work towards, that’s kind of the goal.

 

Josh Robb:

Yeah. I wouldn’t make that a priority.

 

Austin Wilson:

That’s kind of the goal is to work towards that for when you get a real job after school.

 

Josh Robb:

But I will say an emergency fund in college would be really nice just in case something pops up and you need some money. So, setting a little bit aside to build up, maybe $1,000 or $2,000 just in case, would be good.

 

[8:51] – Where Should You Be Saving Your Money?

 

Mackenzie Murphy:

Okay. So my follow-up question on that is where should I save that money? So, if I’m making an emergency fund, where do I put that money?

 

Austin Wilson:

Ooh. Great question.

 

Josh Robb:

Great question. So emergency funds need to be accessible. So if you do have an emergency, you can get to them.

 

Austin Wilson:

Also known as… liquidity.

 

Josh Robb:

Liquidity. That’s a good finance term, it’s liquid and it’s available. So for us right now, the best bang for your buck are online savings accounts. And so they’re banks that don’t have physical locations you can go to. So they save money because they don’t have that store, that storefront, that building you walk into, they’re not paying tellers and people to work there. So you get a higher interest rate.

 

Austin Wilson:

Well, higher.

 

Josh Robb:

Yeah, you’re talking a half a percent right now.

 

Austin Wilson:

You’ll get a high interest rate.

 

Josh Robb:

But that’s probably the best spot to park it because you can link it to a local bank, if you have one, a checking account. You can move money back and forth, easy. There should be no cost associated, it should be free to open, there should be no fees along the way.

 

Austin Wilson:

FDIC insured.

 

Josh Robb:

Insured. So if something would happen to the bank, your money is safe. So there’s a lot out there just, if you google online bank, online savings account, you should find them. Look for a FDIC-insured and a bank that you recognize.

 

Mackenzie Murphy:

Okay.

 

Austin Wilson:

Yeah. I mean, I personally use a bank called Marcus, which is a Goldman Sachs branch, not a recommendation to use that, but I’ve found it very simple. And like Josh said, super easy to access, take money out, add money too. And you get, like Josh said, right now, a half a percent, that’s great. It’s really bad. But that’s great.

 

Josh Robb:

And now I’ve noticed a lot of credit card companies are offering this because they’re seeing that. So if you have a credit card check with them because convenience-wise too, you have already a log in probably, you already have a spot you go, you can see your credit card, then you can see your emergency fund. Same thing. So yeah, whatever’s easiest for you, but yeah, that would be a good spot to park an emergency fund.

 

Mackenzie Murphy:

I’ve never even heard of an online savings account before. Okay. So another question I have, one of my friends actually is in, now I can’t think of the name of it, but it’s like a club where he learns about the stock market.

 

Austin Wilson:

An investment club?

 

Mackenzie Murphy:

An investment club. That’s not what it’s called though.

 

Josh Robb:

I’m sure they have their own investment club.

 

Austin Wilson:

It’s The investment club.

 

Josh Robb:

Yeah, because that’s Ohio State. It’s at Ohio State.

 

[11:04] – When Should You Start Investing?

 

Mackenzie Murphy:

So when should you start investing? So you’re supposed to be saving. You should also probably be investing, from what I’ve learned at my month at Hixon Zuercher.

 

Josh Robb:

That’s right.

 

Mackenzie Murphy:

When do you start doing that? How do you learn about stocks, all of that?

 

Josh Robb:

Good question. I would say you should start saving when the money you have will not be needed in the short term. So in other words, if I have some extra money and I’m not going to need it in the next, let’s say three to five years, that’s when that money could be invested. Because we’ve talked about the stock market goes up and down. There’s a lot of volatility, which is just the up and down movement of the stock market. Because if it’s a short term, the chances of that volatility impacting your withdrawal amount is higher than long-term.

So in other words, next year, who knows what the stock market’s going to be. In the next two years, who knows what the stock market is going to be. But statistically, if you have five years, 10 years, 15 years, the longer you have to invest that money, the less chance that volatility will have an impact on the overall growth. And so the dollar amount is not as relevant anymore because there’s a lot of options to invest in now that even with $10, you can open up an account and start investing. It’s more the timeframe that you have to worry about.

 

Austin Wilson:

Yeah. And something that’s very key is, I mean, probably to oversimplify the answer is when you can and you feel like you should, you’re in a position where you should, earlier is better-

 

Josh Robb:

Earlier is better.

 

Austin Wilson:

… because as we’ve talked about multiple times on this show, the cost of waiting is enormous. And if you can even do something at a young age, in your early 20s or whatever, you’re going to be miles ahead of most people and all of that money has 30 or 40 or more years potentially to compound and compound interest.

 

Josh Robb:

That’s the best.

 

Austin Wilson:

It is my jam.

 

Josh Robb:

So emergency fund would be the priority number one, making sure you have something set aside just in case something pops up that you need some cash. Once that’s established, that would be where possibly investing would make sense.

 

[13:14] – What is a Roth IRA?

 

Mackenzie Murphy:

Okay. So is that the same as opening a Roth IRA?

 

Josh Robb:

Yeah. So a Roth IRA is just a bucket that you can invest in. So there’s different account types and these account types each have different rules. A Roth IRA is one of those. Again, pretty much anywhere you go free to open, free to set up and establish. You have to have earned income. So you have to have some sort of income that you’re earning, so a job of some sort.

And so if you have earned income, you can put money into a Roth IRA. Now there’s limits, if you earn a certain amount. Now most college kids should hopefully, I mean, that’d be awesome if you were making over $140,000, but there are some max income that you can’t contribute more. But again, for what you’re talking about, college kids, usually as long as you have earned income, you can put some money into a Roth IRA up to $6,000 a year, or as much as you’ve earned, whichever one is lower. But that’s a good spot because that money will then grow tax-free for as long as it’s in there.

 

Austin Wilson:

Because it’s after-tax money. So it’s money you’ve already paid taxes on, taxes already came out of your paycheck. And you put the money in that account after taxes and you’d never pay taxes on that again. And you pull it out after 59 and a half, you don’t pay tax on it.

 

Josh Robb:

Yep. And so that’s the one thing to keep in mind though because I talked about that long-term horizon. Money that goes into a Roth IRA, whatever amount grows from that you cannot take out until you’re 59 and a half years old without paying an extra tax penalty.

 

Mackenzie Murphy:

Okay.

 

Austin Wilson:

It’s a 10%.

 

Josh Robb:

Now it’s a 10% penalty on top of whatever tax you’d owe.

 

Mackenzie Murphy:

Why 59 and a half?

 

Josh Robb:

That’s a great question.

 

Austin Wilson:

Because the government loves to confuse people with half years.

 

Josh Robb:

Yeah. I mean, way back in the day 60 was kind of that starting point for a lot of pensions. And so that was just kind of their way of saying you could access this money right before your pensions kicked in. There’s really no rhyme or reason. And they’ve been moving some of those numbers around, maybe at some point, they’ll adjust that to a nice even number, but 59 and a half is what they settled on.

 

Mackenzie Murphy:

Interesting.

 

Josh Robb:

But you can always take your contributions out. Meaning if you put in $100 and it grows to be $500, that $100 you put in, you can always take out and there’s no tax or penalty because you’ve already been taxed on it. But that $400 that grew that’s that piece that has to stay in there till 59 and a half or else you pay taxes and penalties.

So there’s some restrictions, but if you’re saying I’m just trying to get started investing, that’s probably the best account to put it into.

 

[15:36] – How Do You Know What to Invest In?

 

Austin Wilson:

And another side of your question is, “How do I know what to invest in?” is kind of what you asked too. Well that, I would say start simple is my advice. So if you’re in your early 20s and you don’t have a lot of experience in the industry or knowing what stocks and bonds and mutual funds and ETFs and whatever they are, you probably don’t. So what do you do? I would say start simple. And what I would start with is, again, it’s different for every single person based on their risk tolerance, but at this point in your life, you may be able to have more tolerance for risks. So you’d probably lean more into the stock side of the investing equation than bonds.

 

Josh Robb:

Yep.

 

Austin Wilson:

So I would say start with something simple and affordable from an expense ratio standpoint, which is the money that you’re paying the manager to manage it for you, and do something passive like an S&P 500 ETF. That is where I would start. And if you want to know the difference between ETF and mutual funds, we have an episode about that, we’ll link that in the show notes. But ETFs are great.

 

Josh Robb:

Oh yeah.

 

Austin Wilson:

They’re cheap. I mean, you pay hardly anything, some of them nothing for someone to manage it because you’re essentially mirroring an index in this case.

 

Josh Robb:

I think Fidelity rolled out a bunch of free, no expense ratio ones. So that’s it, and I think they missed their opportunity, that should be a ticker, simple like… That’s an easy go. But-

 

Austin Wilson:

I also would say don’t be afraid to look at something like Total World Stock Market Index to see if you can get some exposure outside the US too. But stick with something simple. Look at some very high-level index mirroring cheap vehicles to start. And then as your comfortability and your experience in the market becomes more, you can then be able to more know where you can pick and choose and work, or work with an advisor to do it all for you, that’s always an option as well.

 

Josh Robb:

And the reason he said that is, if you had $20 or $100 to invest, buying an ETF like that, like the S&P 500, you just bought a little bit of 500 companies instead of just buying one and hoping that one worked out. So what he’s talking about is spreading out that risk a little bit, making it a little less volatile by owning more than just one individual company because picking the right individual company is a lot of work. And for most college kids, they’ve got other things to do with their time and they don’t want to do that.

 

Austin Wilson:

Yep. And yeah, you’ll get the market return.

 

Josh Robb:

Yeah, in the long run it’s been great.

 

Austin Wilson:

Yeah, in the long run it’s been fine.

 

[17:53] – When Do You Get a Financial Advisor?

 

Mackenzie Murphy:

That’s right. Okay. So you said that a financial advisor can help you figure all that out. When do you get a financial advisor? When should you start looking into that and how does that process start?

 

Austin Wilson:

That’s a good question. So, first of all, I would say, this is a great opportunity to talk to your parents too because your parents may already have one and you may be able to kind of ride their coattails and go to some meetings and understand how things work with maybe their advisor or get an idea of the situation first, they may have some contacts.

But first of all, a financial advisor is something you pay for. It is someone who is trained and certified to do their job, to provide good sound, financial advice in your best interest. So it’s a good thing if you can afford it. I think it’s a great thing. I would say it would be not totally super common for someone, that to be the starting point when they’re 20 or whatever in college. But it’d be great – you might have a better idea than this, but it’d be a great thing if you want to. It’s not maybe super common either.

 

Josh Robb:

Yeah. And there’s a couple options, I would agree with Austin. The first step would be ask your parents because most advisors would love to work with the family members of their current clients, help them out. I mean, we get in this industry to help people. So that’s never an inconvenience if a client of ours calls and says, “Hey, can I bring one of my kids in, they’re interested in investing?” that’s an exciting meeting. So don’t be afraid to ask your parents, “Hey, is there someone I could talk to that you know, that would be able to help me out with this?”

Then the second there’s a lot of new kind of technology coming out, they’re called robo-advisors. It’s a cheaper way of getting some advice and some help through different platforms. And so they kind of do this questionnaire and get your tolerance, “How much can I tolerate?” And then they build for you kind of a plan or platform for you to invest on. So there’s a lot out there like that. So robo-advisors would be another, it’s an easier way to get into there if you don’t quite meet what maybe an advisor needs to make you a good client for them.

 

Austin Wilson:

And a lot cheaper.

 

Josh Robb:

It’s a lot cheaper, yep. So these are just some options.

 

[19:55] – Robo-Advisors

 

Mackenzie Murphy:

All right. Obviously, this doesn’t pertain to right now in my 20s, but do people ever do both, they have a robo-advisor and a financial advisor?

 

Josh Robb:

Yeah. Some people will do that. A lot of times, what we’ll see is they’ll manage some of their own money and have an advisor manage some. So the robo-advisor, the advice it’s part of an algorithm, so it’s customed by how you respond and then it puts you in some preset exposure to something. So if they’re stepping out of that and having an advisor, most of the time, they’ll give it all to the advisor because at that point you take a human’s ability and response and you can communicate with them over a computer.

But a lot of times what you’ll see is, let’s say you’re working at that point and you have a 401(k), most advisors can’t actively manage that, but they can help you with it, but you may do it yourself and be playing around with that piece. So a lot of people like to have fun. I mean, investing is fun. And so a lot of clients will have an account that’s like a play account, where they get to do their own stuff on. And the advisor manages another piece of it.

 

Austin Wilson:

I would say the more unique your situation becomes, which generally happens later on in your career and where you need more active planning, that’s really where your advisor will earn their keep. Early on, most people, not everyone, but most people have very similar goals. I want to be able to retire when I’m 60 or 65 or 70 or whatever that is. So it’s really just chuck a bunch of money in the stock market and keep checking in and never touch it, when you’re young. Now, as you get closer to retirement, that’s where there’s a lot of tax situations to talk about, you’ve got a estate planning, you’ve got actual retirement income to plan for. And that is where it is really helpful to have someone who knows the in-depth of your financial situation, as opposed to a computer robot which is like, “Oh yeah. Now we’re going to trim your stocks down to 60%,” or whatever.

 

Josh Robb:

Yeah. And pretty much if you don’t have the time, the desire, or the expertise, that’s where an advisor would be helpful to you.

 

[21:55] – Should You Max Out Your Roth IRA?

 

Mackenzie Murphy:

Makes sense. This is kind of circling back because we just touched on Roth IRAs a little bit. But should I max out my Roth IRA every year, or what do you think?

 

Josh Robb:

So there’s-

 

Austin Wilson:

It’s like a waterfall.

 

Josh Robb:

Yeah.

 

Austin Wilson:

We love it.

 

Josh Robb:

Yeah. So really, if you’re in college and you have the ability to save long-term, a Roth IRA, like we said, is a great spot. The only other thing above that, would be if you have a retirement plan with wherever you’re working and they offer a match, meaning the company is putting some money in. You want to at least put in that amount to get that full match because that’s free money that they’re offering you, but you have to participate to get it. Once you’re getting that match, again, it’s unique to each person’s situation, but most likely the Roth IRA is the spot you’d want to go and max that out before you invest anywhere else.

Unless you have shorter term goals like a down payment on a house, things like that. That’s where you’d want it to be in an account that’s taxed, not that tax-free Roth because a taxed account, which is an individual account or a taxable account brokerage account, there’s not a lot of names for it, but that account has no restrictions on it. There’s no penalties or anything like that. So you can put money in and pull it out at any point in time. So short-term goals, that’s where that would be used for long-term goals.

 

Mackenzie Murphy:

Okay.

 

Austin Wilson:

Even your high-interest savings account online, that’s what that will tell technically be as well. It’s taxable.

 

Josh Robb:

Yes, technically that’s kind of it. It’s an individual taxable account.

 

Austin Wilson:

Yeah, exactly. Yeah, the waterfall that we like to talk about is obviously, if you have a job where you can get free money in some sort of match, that’s the no-brainer do it to get your match, then before you go any more on that, max out that Roth. Then if you still have money to invest after that, good for you, go ahead and work on your 401(k) until the max of that. After that it’s level three. And then after that, you’re pretty much in taxable world.

 

Josh Robb:

Yep. Yep.

 

Mackenzie Murphy:

Okay. Learning a lot today.

 

Austin Wilson:

That’s what we’re trying to do here.

 

[23:44] – What Benefits Should You Look for from a Future Employer?

 

Mackenzie Murphy:

I really am. So you’re talking about a match. One of my questions was what benefits should I look for in my new job? Is a match considered a benefit even?

 

Austin Wilson:

Oh yeah.

 

Josh Robb:

Oh yeah.

 

Mackenzie Murphy:

Okay.

 

Austin Wilson:

It’s a great… I mean, you look at your total package is what I would start with. There’s more than just the retirement savings side of things, but that’s a huge chunk of it. There’s also the healthcare side of things. So you need to understand… those are, I would say, the two main ones, there’s little other pieces as well. But the main one, look at your retirement offering at your new employer and see whether that be a 401(k), it’s unlikely it’s a pension at this time, but maybe it is, who knows.

See what you have to put in to get your company, to give you some sort of percentage match on your 401(k) money. See if they have a Roth 401(k) option, that is a bonus as well, which is a great vehicle that you can use on the retirement side of things, I’d start there. And then health insurance is a huge thing. Look at your health insurance, the one that the company is offering, does it have great coverage? Is it affordable? Does it meet all your needs? What does it look like to add dependents down the road? All these sorts of things. And then there’s other things such as disability, insurance, and… name a couple of more. Time off is huge.

 

Josh Robb:

Life insurance. Disability insurance. You have your vacation package. Some of them will actually contribute into an HSA, so that’s a health savings account for you. So if they’re actually going to put some money and that’s what you would use to get to your deductible. And so if they’re adding money each month, then that’s less money you’ll be spending out-of-pocket. So the other benefits are, are there discounts or things you can get because you work there? And so, even down to cell phone companies sometimes offer a discount, if you work at certain employers.

And then in the future, I’m thinking like if you’re a teacher, STRS, which is their retirement system actually gives you discounts or they pay for certain benefits in retirement.

 

Mackenzie Murphy:

That’s cool.

 

Josh Robb:

And so see what the full package is and compare. Don’t just look at the salary because sometimes the higher salary offer, they’re offering higher salary because they know their benefits aren’t as competitive. So look at the whole package together.

 

Austin Wilson:

And another thing that’s becoming more of a discussion in terms of benefits now is flexibility in terms of working conditions, whether you can work hours working from home, traveling, those look a lot different now in 2021 than they did pre-COVID. So there’s a lot of companies that have a lot of flexibility in their jobs. So that is part of the package as well.

 

Josh Robb:

Yeah, travel. Is there travel involved? Do I use my own car? Is there a company car? Do I get reimbursed? All that fun stuff. So yeah, depending on what industry you’re getting into, there may be some unique pieces to those. Am I part of a union? Are these things negotiated for me or do I negotiate it myself? All those fun stuff.

 

[26:29] – “Mackenzie” Joke of the Week

 

Mackenzie Murphy:

All right. Are you guys ready for the dad joke of the week?

 

Josh Robb:

I am. I can’t wait.

 

Austin Wilson:

I was born ready, especially because I told you where to get it.

 

Mackenzie Murphy:

Go to Reddit for all your dad jokes.

 

Austin Wilson:

That’s right.

 

Mackenzie Murphy:

Okay. Where do bad rainbows go?

 

Austin Wilson:

Where do bad rainbows go? I don’t know.

 

Mackenzie Murphy:

Have you heard this one already?

 

Austin Wilson:

No.

 

Josh Robb:

No. I’m excited, I haven’t heard this one.

 

Mackenzie Murphy:

I was nervous that I was going to pick one you’ve already done.

 

Josh Robb:

No.

 

Mackenzie Murphy:

A prism. It’s a light sentence.

 

Josh Robb:

Light sentence. Prism.

 

Mackenzie Murphy:

That’s such a fake laugh.

 

Josh Robb:

I like it. No, I like it.

 

Austin Wilson:

It’s a thinker. That’s what that is.

 

Josh Robb:

It’s a double though. So they go to a prism, which is like a prison, but it’s not. And it’s a light sentence.

 

Austin Wilson:

It’s a double rainbow, that’s where I thought you were going with that.

 

Josh Robb:

I love it. No, it’s a double joke. I love it. Oh, double rainbow. Do you know what we’re talking about?

 

Mackenzie Murphy:

Yeah. Wasn’t it a Vine?

 

Josh Robb:

Yeah, that was probably what it was.

 

Austin Wilson:

Yeah, Vine, YouTube. I don’t know. Back when you were in elementary school.

 

Mackenzie Murphy:

It was a long time ago. I do know what you’re talking about, at least.

 

Austin Wilson:

That’s good. That’s good.

 

Mackenzie Murphy:

Yeah, we’re on the same page.

 

Josh Robb:

That’s a good joke, I like that one.

 

Austin Wilson:

It came around the time, Charlie Bit My Finger.

 

Mackenzie Murphy:

Okay. I know that one

 

Josh Robb:

Those kids are grown up now, so that was a long time ago.

 

Austin Wilson:

They sold it as an NFT. They did.

 

Mackenzie Murphy:

I remember that in the Teams chat.

 

Josh Robb:

That’s right.

 

Austin Wilson:

Yes, that’s right.

 

Mackenzie Murphy:

I pay attention.

 

Austin Wilson:

That’s right. You pay attention at work, which is good. We appreciate that.

 

[27:47] – Credit Scores

 

Mackenzie Murphy:

Okay. So back to this discussion, one of my last questions was I have a card, actually I have two credit cards now, but my credit score obviously went down when I opened the second one because length of… I don’t know.

 

Austin Wilson:

Length of credit history.

 

Mackenzie Murphy:

Length of credit history.

 

Josh Robb:

And you have more credit out there.

 

Austin Wilson:

Inquiries.

 

Josh Robb:

Well, so each credit card has a limit you can spend. When you add a second one, they increased your overall debt allowable amount went up. And so your credit score will go down because if you max both those out, that’s a lot less available cashflow for you.

 

Mackenzie Murphy:

Okay. So my credit score has plateaued. What do I do? How do I fix that?

 

Josh Robb:

So part of it will be time. The longer it goes, having a couple of credit cards, isn’t a bad thing, especially if you’re able to pay them off every month. They can offer different benefits and be useful in different situations. So keep that longest one open because that’s your length of time because if you close that one, you’re going to shorten your time back up again.

 

Mackenzie Murphy:

Right.

 

Josh Robb:

So keep that open. But over time, after I think, was it 12 months or so, those credit inquiries go away. And so those will be removed from your score that’s hurting you right now. So it actually will go back up after a little while.

 

Austin Wilson:

Yeah. When you get new accounts, typically, there will be some sort of a couple point dip or whatever, and those are super temporary and it’s not such a big deal at all. Really, as long as you are not missing payments or making late payments or doing whatever, and as long as you’re not closing accounts, those are the big things that can hurt you or making a bunch of inquiries all at once, because that makes lenders think you’re desperate for money. So if you don’t do those three things, it’ll be fine. Make your payments on time. Set it up to do what? Automatic pay.

 

Josh Robb:

Yes.

 

Austin Wilson:

Both cards, automatic pay. Raise your right hand.

 

Mackenzie Murphy:

I don’t like it.

 

Austin Wilson:

“I, Mackenzie Murphy will set both my accounts up for automatic pay.”

 

Mackenzie Murphy:

I will think about it.

 

Josh Robb:

Yeah. You don’t have to, but just don’t ever miss one.

 

Mackenzie Murphy:

I have a reminder on my phone.

 

Josh Robb:

That’s good. There you go.

 

Mackenzie Murphy:

I’m just nervous.

 

Josh Robb:

Give yourself some cushion, yeah.

 

Austin Wilson:

Yeah. That the automatic won’t automatically work?

 

Mackenzie Murphy:

Right, exactly.

 

Josh Robb:

Yeah. Or just, there’s not the money there when you need it. But yeah, just don’t miss a payment. Keep the longest one open. And try not to have any new inquiries until these go away and that’ll help.

 

Austin Wilson:

And don’t use the full allowable limit. Even if you can pay it off, try not to use the full allowable limit on either card because that’s obviously the debt to the available limit ratio would be really high, which would probably drag you down for a couple months as well.

 

Josh Robb:

And then again, as you exit college and your income changes, that’ll impact it too because if they look at your available debt and then they have your salary piece plugged in, it’ll give you some more flexibility, you’ll see that start moving back up again.

 

[30:28] – What is an Inquiry?

 

Mackenzie Murphy:

So what’s an inquiry?

 

Josh Robb:

Good question. So from a credit standpoint, what they’re doing is someone checked your credit score. So if you go to buy a car and you might be financing that car, they’re going to check your credit score.

 

Mackenzie Murphy:

Oh…

 

Josh Robb:

If you go to buy a house, the bank will check your credit score. If you’re living off-campus and you’re renting, they may check your credit score. And so those would be the inquiries. Meaning somebody went to those three big credit places, what is that? I always forget. Go ahead.

 

Austin Wilson:

TransUnion.

 

Josh Robb:

TransUnion.

 

Austin Wilson:

Equifax.

 

Josh Robb:

Equifax. And I don’t remember the third one. It starts with P, I think. But anyway, somebody asked them what’s your credit score. And then they report to the other two, whoever they asked. So they all know what happened. And that inquiry just means somebody, a reputable place was checking your credit score.

 

Austin Wilson:

Obviously any formal loan application will also be an inquiry as well. So if you apply online for a new credit card, that will be a loan as well.

 

Josh Robb:

Yep. And I’m not sure how student loans work, how those get in there because I don’t know how much they look at that score at all, or even go into it, I’m not familiar with that. You checking your own score does not count as inquiry. So keep that in mind. Everybody’s allowed to once a year, reach out and ask each of those places for their credit score. Now, a lot of times, if you have credit cards or banks, they may offer that service as well. Shouldn’t cost you anything. It should be free. Don’t pay for any kind of credit access because you can get it yourself. But those don’t count. So don’t ever be afraid to check your credit score because you’re not going to hurt it by looking.

 

Austin Wilson:

And it’s also a good thing that you are looking at it. It’s not something to be obsessed about, but it is good that you are looking at it and kind of know where you stand because as you exit college, there is a likelihood that you will, whether that be for a house or a car or whatever that may be down the road, you may need a good credit score. The better your credit score, the better your terms.

 

Josh Robb:

Yep. And you’re also checking for fraud because that’s where you’ll see it. If you noticed your credit score moving, maybe somebody was trying to open an account or something that you didn’t want.

 

Mackenzie Murphy:

That makes sense.

 

Josh Robb:

So keeping an eye on things… check it, at least once a year, just check your credit score make sure it all makes sense. If you look through the list, it should show you all your credit accounts open, make sure those all line up with what you have because sometimes if you cancel something, it may not get all to the places it needs to go. And you may still have a credit open that you didn’t realize. So checking it is good once a year, it helps look for fraud and all that fun stuff.

 

[33:00] – How Many Credit Cards Should You Have?

 

Mackenzie Murphy:

Okay. So how many credit cards would you recommend somebody, obviously not in college, you don’t need a million, but once you’re out of college and you’re making these big transactions and you have a salary, a job, how many credit cards is normal?

 

Austin Wilson:

It depends. That’s what we would say. And we actually, I think, had a whole episode about credit cards and we’ve both gone back and forth a couple of different approaches throughout our adult lives. Personally speaking, I’ve done everything from 100% debit for a long time. So I was only paying-

 

Josh Robb:

No credit cards.

 

Austin Wilson:

No credit cards. I was paying with my checking account essentially for everything. That’s one way to do it. And it’s fine. Some people like that. I’ve also done the, I want to max my cashback. So I had five different cards and each card had higher cashback in different categories. And I would use that card at that place. So my gas would be different than my grocery, that would be different than my online whatever. That was one way to do it, but that became a headache personally for me, because to remember which card and all these different payments going out all the times during the month. So I’ve gone to just one card that I use for everything.

 

Josh Robb:

Yeah. It really just depends on what your goals are and what the credit cards offer to help you as long as you can keep track of each of them and when they’re due and how much, and you’re not overspending because if, let’s say you have a monthly budget of $2,000, tracking that on one credit card’s easy, you can see the balance. But if you have multiple credit cards, because sometimes keeping track of what your overall spending is, you could lose that real easy. So don’t have too many that it makes it harder for you to keep within your budget and keep everything in your forefront of your mind of where everything’s going.

That being said, if you want to go down a really weird rabbit trail online, there are people who max out efficient use of credit cards by opening and closing them. They know how long it takes before that inquiry goes off. They’ll open accounts, get all the bonuses, wait until that timeframe is up, close that account, move to a new one. And there’s constantly rolling credit cards. Check it out. It’s crazy. Don’t suggest you do that.

 

Austin Wilson:

It sounds like a lot of work.

 

Josh Robb:

It’s like a full-time job that these people do.

 

Mackenzie Murphy:

That’s an interesting hobby.

 

Austin Wilson:

Yeah, but I bet they’d be great at it.

 

Josh Robb:

Oh, and when they do it right, they get free trips because their airline doesn’t cost anything, all these crazy things. But I mean, if you mess that up, you’re going to be in a lot of trouble. You’re doing a lot of… there’s a lot of moving parts to that. So all that to say is the number of credit cards is not as important as, “Can I track my spending? Can I efficiently manage my budget with what I have?” So you may have a couple that have different purposes. You may have one, you may have zero because it just is hard for you to comprehend paying later by putting it on a card. It really just depends on where you’re at.

 

Austin Wilson:

Great. Great answer.

 

[35:41] – How to Not Feel Guilty About Spending Money

 

Mackenzie Murphy:

Makes sense. Okay. Last question.

 

Josh Robb:

Oh boy, I’m ready.

 

Austin Wilson:

You got a doozy for us?

 

Mackenzie Murphy:

Maybe. We’ll see. So I just finished editing the Monetary Moments, the last episode in the series.

 

Josh Robb:

The 70s plus one?

 

Mackenzie Murphy:

So your 70s plus. And you’re talking about how you have to tell people not to feel guilty about spending the money that they’ve saved in retirement. How do you not feel guilty about spending money that you aren’t saving that you’re just spending?

 

Josh Robb:

That’s a great question.

 

Austin Wilson:

Yeah. Like when you’re young?

 

Mackenzie Murphy:

Like, “Yeah. We’re going out to dinner tonight.”

 

Josh Robb:

So you feel bad now about it, right?

 

Austin Wilson:

Well, that’s just it. So the dollar truth of it is that if you could spend zero on paper, you should spend zero. But the truth of the matter is that you also, throughout your life, have to live. And my wife and I talk about this all the time because on paper, of course, saving money is always better on paper. But you also have to have a balance of a great quality of life. You have to have fun with your kids when they’re young. You have to do yada yada, yada, yada, yada. These things are real. So it’s different for everyone.

So you have to find that balance of where you know you’re saving enough to meet your goals. So that’s where it would work really well to have an advisor, to tell you what those goals should be, how to get to your goals. But to also say, “I have this money leftover and I don’t need to invest it this month. I can go take a trip.” That is a very acceptable way to look at it. So as long as you’re on track to meet your goals, it’s okay to live.

 

Josh Robb:

Yeah. It comes down to moderation. You’re balancing your life out, right. And so the future is not guaranteed. We don’t know how long we’re going to live. We don’t know if we’ll ever get to a point to enjoy that money we’re saving. And so you have to balance between being prudent and saving for future needs like retirement and also enjoying your current situation. You’re only going to be in college once. Well, I mean, you could go back, whatever. But this, your 20s, you’re only going to be in your 20s once.

 

Mackenzie Murphy:

Correct.

 

Josh Robb:

Right, and less attachments, less obligations, you have the ability to enjoy things. So you have to give yourself permission that, “I’m being responsible. I’m doing the things I need to do, but I also am setting aside some money to enjoy now.” So you’ve got to balance those two out. The other side is there really is… you hear more about people talking about protecting from overspending, right, “I don’t want to spend too much.” Well, you can over-save because you can get to the point where your habits are so much saving that you miss out on those opportunities that you’ll never have again. And so it really comes down to having a plan and say, “Okay, part of my plan involves enjoying things now.” And so, you can live a life where you’re a great saver and be miserable and that’s not a good life.

 

Mackenzie Murphy:

Sounds terrible.

 

Josh Robb:

It’s not. Yeah, it’s not a good life. But you can also be on the other end and be a great spender and you’re going to be miserable because you didn’t set the things aside as something’s going to happen. All right. And so you got to find that balance between the two and you have to give yourself permission to enjoy it. And it really just comes to your mindset is people are just predispositioned to either be a spender or a saver. And you have to build from that starting point and just make sure you’re leaning enough towards the other side, whichever one that is that you’re least enabling, that you don’t miss out on something.

So if you tend to be a spender, you need to make sure you’re setting aside some money for the future because you’re going to take care of yourself now because that’s your starting point. If you’re a saver, you need to lean towards making sure you leave some money now to enjoy because you could miss out and always be looking for that, “Well, I need it for this. I need it for that.” Well, by the time you get there, you’ve missed out on all these opportunities of enjoyments, making memories, friends, all that stuff. So it’s a balance.

 

Austin Wilson:

This is where you hear those stories about the FIRE people. I’m like-

 

Josh Robb:

Wait, what’s FIRE?

 

Austin Wilson:

Well, I know the last two are retire early-

 

Josh Robb:

Financially independent.

 

Austin Wilson:

Okay. I just read those the other day.

 

Josh Robb:

Yeah. Financially independent retire early, F-I-R-E.

 

Mackenzie Murphy:

I thought you were talking about firefighters for a second.

 

Josh Robb:

No. Those firefighters they’re crazy.

 

Mackenzie Murphy:

I was like, “Wow.”

 

Austin Wilson:

No. So what these people do-

 

Josh Robb:

So it’s an acronym.

 

Mackenzie Murphy:

Okay.

 

Austin Wilson:

Yeah, they usually start right out of college being extremely cautious about their spending, minimalistic, live as cheaply as possible to what I would say would be uncomfortable. And then-

 

Josh Robb:

And in a sense, they try to save around half of their salary-

 

Austin Wilson:

Or more.

 

Josh Robb:

So 50% savings. So if they make $50,000, their goal is to save $25,000 a year, and live on the other half.

 

Mackenzie Murphy:

Okay.

 

Austin Wilson:

So it’s aggressive saving. And their goal is to retire in their 30s or 40s. And a lot of people do it, but what I’ve never really been able to get my mind around is the not being able to do X, Y, Z up to that point. Because they make big sacrifices to go there. So I think that’s where it comes back to moderation. I think there’s okay a little bit more moderation than that. Not that that’s a bad thing, it works out for some people.

 

Josh Robb:

It works for some, but it’s a mindset, “From 20 to 40, I’m going 110% working multiple jobs, saving every penny I can. And then I’m going enjoy my life at 40.” Well, some of those people hurt themselves physically by working that hard, at 40 it’s just-

 

Austin Wilson:

Surviving.

 

Josh Robb:

Yeah. But again, moderation is in my opinion the better way.

 

Austin Wilson:

Absolutely.

 

Josh Robb:

Yeah. And those firefighters, you got to watch out for that.

 

Austin Wilson:

You’ve got to watch out for them.

 

Mackenzie Murphy:

I was like, “What is he talking about right now?”

 

Austin Wilson:

Mackenzie, any closing thoughts or questions. You have a captive Invested Dads audience.

 

Mackenzie Murphy:

What’s your favorite number?

 

Austin Wilson:

Seven.

 

Mackenzie Murphy:

Why?

 

Austin Wilson:

It was my number in high school football.

 

Mackenzie Murphy:

Okay. What’s your favorite number?

 

Josh Robb:

59 and a half.

 

Mackenzie Murphy:

Really?

 

Josh Robb:

No, I don’t know if I have a favorite number.

 

Mackenzie Murphy:

I feel like 59 and a half is a good one.

 

Josh Robb:

I’m going to stick with that one.

 

Austin Wilson:

If you’ve got a race car, it would have 59 and a half on the side.

 

Josh Robb:

59 and a half, that is what it would be. Yeah. I got a question for you.

 

Mackenzie Murphy:

Okay.

 

[41:35] – Mackenzie’s Parting Piece of Advice

 

Josh Robb:

All right. What is one thing that you hope that you can teach other people? So you’ve been doing this for a little bit, have you heard something, you’re like, “Ooh, my friends need to know this”? Is there something there that stuck?

 

Austin Wilson:

And it can’t be a dad joke.

 

Mackenzie Murphy:

I think that just… Yeah, a little bit. I’ve been here for a month-ish, but I would say that the one thing that I’ve taken away from this just generally, it’s be invested in your finances at a young age. I- thank goodness my parents helped me open a Roth IRA, I got my foot in the door. And I have an internship at a financial management firm, so that kind of helps. But just to keep track of what you’re doing and what you are spending and what you’re saving because it’ll set you up for success in the long run.

 

Austin Wilson:

We didn’t even prompt her.

 

Josh Robb:

Look at that. That was a good answer.

 

Austin Wilson:

That was off the cuff.

 

Josh Robb:

Yeah.

 

Mackenzie Murphy:

It’s pretty good. I’m not going to lie.

 

Austin Wilson:

Great job. Great job.

 

Josh Robb:

That was a great answer.

 

Mackenzie Murphy:

Thank you.

 

Austin Wilson:

Well, Mackenzie, thank you for being here. Thank you for having some great questions. We hope that we can continue these question series and get more people to ask questions over time and hopefully you enjoyed it. Two reminders today. It is not too late to enter our second-half stock draft competition. If you join now, you might be ahead of some people.

 

Josh Robb:

You will be ahead of me, for sure. I’m in last place.

 

Austin Wilson:

But it’s not too late, all the way through the end of the year. So I would say give it a shot. All the details are on our social media or our website of how you can join that. So it’s not too late, all the way through the end of the year, check it out. And as always check out our free gift to you, it is a brief list of eight principles of timeless investing. These are overarching investment themes, they’re meant to keep you on track to meet your long-term goals. We may talk about some of the things we talked about today in there. So check that out, it’s free on our website. Josh, how can people help us grow this podcast?

 

Josh Robb:

Make sure you subscribe, that way every Thursday you get our most recent episode downloaded directly to your listening device. Leave us a review on apple podcasts. If you have any questions or want any follow-up to the questions asked today, shoot us an email.

 

Austin Wilson:

Send them to Mackenzie Murphy.

 

Josh Robb:

Yes. Shoot us an email at hello@theinvesteddads. She’ll see it.

 

Austin Wilson:

That’s right.

 

Josh Robb:

And she will let us know. But we would love to answer any of those questions and make sure you share this episode with those college people that you know, or any other friends or family that these questions would be helpful for.

 

Austin Wilson:

All right, until next Thursday, have a great week.

 

Josh Robb:

All right, talk to you later.

 

Mackenzie Murphy:

Bye.

 

Austin Wilson:

Bye.

 

Outro:

Thank you for listening to The Invested Dads Podcast. This episode has ended, but your journey towards a better financial future, doesn’t have to. Head over to theinvesteddads.com to access all the links and resources mentioned in today’s show. If you enjoyed this episode and we had a positive impact on your life, leave us a review, click subscribe, and don’t miss the next episode. Josh Robb and Austin Wilson work for Hixon Zuercher Capital Management. All opinions expressed by Josh, Austin or any podcast guests are solely their own opinions and do not reflect the opinions of Hixon Zuercher Capital Management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Hixon Zuercher Capital Management may maintain positions in the securities discussed in this podcast. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses, which would reduce returns. Securities investing involves risk, including the potential for loss of principle. There is no assurance that any investment plan or strategy will be successful.