Day 4: Making Our Money Work

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Young Money Plans

Investing 101: How to build your wealth as you sleep.

Everyone seems to have a different idea of investing (index funds, day-trading, Wall Street, real estate). Those all count!

As a definition, investing is simply putting money into an asset (stocks, bonds, real estate, cash) and expecting a return.

This next bit is going to get a bit technical, but we know that you're ready for it.

Step 1: Beginners Start with Index Funds

We like index funds even for veteran investors because they are (1) low fee and (2) diversified. But we especially recommend them for beginners because it's easy as 🍰to get started.

Step 2: Manage Your Portfolio of Investments

If you're a beginner entirely in S&P index funds, managing your portfolio will be quick. But as you grow and learn, try to understand important principles like diversification and risk vs. reward.

This not only helps you feel less intimidated, but also prevents you from falling for common scams or trading strategies that don't make sense. There's a lot of loud people on the internet trying to tell you what to do; fact check everyone! 🙄

Investing Portfolio Lessons

Investment Portfolio Types

Step 3: Understand Stocks and Bonds

Stocks, bonds and other "securities" are the underlying assets in every index fund. Your S&P 500 Index fund is a bundle of the top 500 stocks (by size) in the U.S. and once you start looking for other index funds, you'll start to see other stocks too. You can invest in real estate through funds called REITs or energy through an energy index fund. Stocks 101 | Bonds 101

The options are endless but can be overwhelming. That's why we recommend doing this last. We think understanding the fundamentals of risk vs. return is far more important than picking one stock in the long run.

Investing 101 Resources


Investing Books

  1. Vanguard founder’s book for passive investing
  2. Joel Greenblatt’s book on value investing (cheesy title aside, a favorite for active investors)

Digital Reading


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