EP77 How to Create an Investment Plan to Start Investing NOW

It's time that the Latino Community learns how to invest and build wealth. But many don't know how to create an investment plan to start investing. Well I'm changing that! In this episode I am giving you the chisme on:

• Importance of understanding your "why" in investing 
• How to do a gap analysis of where you want to be and where you are now
• Investment options available 
• Why you should invest in building your financial literacy
• Caution against the volatility of cryptocurrency 
• Strategies for automating investments 
• and my lessons learned

Mentioned in the show:

PEW Research Study 

Chapters

• 0:00 Latinos are behind in Investing
• 4:42 Identify Your Investment Goals
• 10:41 Assess Your Current Finances
• 15:09 Investment Options for Beginners
• 24:18 Building Wealth Through Diversified Investments
• 26:33 Automate Your Investments
• 30:50 Investment Tips for Beginners
• 34:50 Investing for Future Security

Transcript

Violeta: 0:00

Latinos do not know how to invest their money. They don't know how to create an investment plan. It's no wonder that we are so behind on the racial wealth gap. Hola, mi gente, welcome to the Money Chisme Podcast, where we spill the real chisme on building wealth without the bullshit. Whether you're trying to invest, grow that side hustle finally, get your money right or my favorite, buy rental properties, you're in the right place. I'm your host, violeta, a first-gen Mexican immigrant, real estate investor, entrepreneur and your financial hype woman. Get ready for tips, tricks and expert advice straight from nuestra comunidad, porque el dinero es power and we're here to claim it. Don't forget, you can always find helpful resources down in the show notes and in descriptions, so make sure you check that out. Hola, hola, welcome to another episode, mira. Today we are going to talk about creating an investment plan, because mire un reporte that I'll talk about in a second, about how the Latinos we don't know how to create investment plans, we don't know how to invest or anything like that don't know how to create investment plans. We don't know how to invest or anything like that. And, pues la verdad, it explains why we are behind on the racial wealth gap, and so I kind of want to help change that, and so today we are going to talk about some steps that you can take to create your own investment plan so you could start going out there and investing your money, growing your money and building wealth. Primero, let's talk about this study and this was a study from Pew Research and this was back in 2022. And the findings was that only 22% of Latinos felt confident enough that they knew how to create an investment plan and only 28% invested in the stock market, and that's a lot of people in our comunidad that are not investing their money. They don't know how, they don't have a plan if they are investing. So we really need to get our head in the game, learn how to invest, and one way to get started is to figure out you know how you're going to invest and create your plan, because the last thing you want to do is to just go out there. You know, because a veces, we see things that we need to get done y nomas vamos y lo hacemos and we don't have a plan.

Violeta: 2:51

And te digo de experiencia that I did that. I was like, okay, I need to start investing. Y, I just started sending money. Y no se no sabia lo que estaba haciendo. And so for years my money was going nowhere because I did not know that I had to allot it to certain you know accounts to actually invest it. So Nomás, you know, was sitting there, and then, when I did realize that I put it in the wrong fund that wasn't growing anything. That wasn't growing anything, and so I wasted time and perdí dinero because, you know, it was just sitting there in the wrong type of account. So I want to talk about that today and help our community create an investment plan so we can start building this wealth.

Violeta: 3:41

And our community deals with a lot of obstacles. You know, we don't have as high financial literacy, we also have the pay gap, and so a lot of our community deals with stories similar to mine. You know, it happened to my parents, happened to me I'm sure there's other people out there that the first time you hear about investing in, like the stock market, is when you finally get that uh, good job that has a 401k. And then you're like okay, well, 401k, they told me to, it's an investment thing I'm gonna send. And that's how my mom was no le explicaron nada. They're just like here's 401k, sign up for it, whatever. And so then, once I figured out my situation, I was able to help her out. Pero gasto tiempo, right, and that's what I don't want our community to continue doing.

Violeta: 4:42

And so how do you start? Well, similar to anything that you want to accomplish, you have to start with your why and your goals. It may be, you know, otra vez, like tempting to like jump right in and si has hecho eso, that's okay. You know, just kind of like retrace your steps, pull back a little bit, not saying to like pull back your money, but just take a step back and take time to figure out why you want to invest, like what's, what are you trying to accomplish? Are you trying to like save up for retirement? Are you trying to invest to, for example, with my daughter, to invest so that way I have money for her college, making sure that you have retirement money and you're good for retirement.

Violeta: 5:32

So you want to make sure that you figure out your goals and your why, because you want to make sure that you're putting your money, investing your money, in the right type of investment. You're putting your money, investing your money in the right type of investment and when you're creating these goals, make sure that you're using the smart method, where you're creating specific, measurable, achievable, relevant and time-bound goals. And if you're not too familiar with the smart method, there's a lot of resources out there on Google and stuff like that that shows you how to create smart goals. And you want to set short term, midterm and long term goals. So, for example, if you want to save 5000 in the next year, you know your smart goal will be like okay, I'm going to save 5000 by next year, so it's time. Okay, I'm going to save $5,000 by next year, so it's time bound. I'm going to achieve this by saving $416 a month for the next year, and so that's how I'll get the $5,000.

Violeta: 6:38

A midterm goal can be like I want to own three rental properties by three years. And so you can say something similar to like okay, I'm going to buy a property in my first year, I'm going to save up X amount of cash plus reinvest the cash flow, so save up the cash flow as well, and buy another rental property in year two and another one in year three, and so then by three years, I have bought one property each year and have those three rental properties. An example for a long-term goal would be a million dollars to be able to retire at age 55 based on my expenses, and so if I want to accomplish that, in my case with rental properties, I need roughly about 15 rental properties that are cash flowing. So I need to focus my investments for that and create a plan of like hey, you know what? I'm going to buy X amount of rental properties per year until I reach the age of 55 or built enough of the cash flow. The point is that figure out what is is that you want to accomplish. And so, por ejemplo, again using myself, not only do I want to retire by a certain age let's say 55, to continue the example but I also want to make sure that I have money to pay college for my daughter and that I set her up for the future. So part of my investment plan is going to include investing for her so that way I could accumulate funds for her college. So one of the things I have to to think about, like what is available to me that can help me accomplish that goal, what is available to me to help me accomplish reaching retirement age at 55?

Violeta: 8:57

And this required me to figure out my financial independence number meaning uh, what number do I have to have in my account to be able to retire and still cover my expenses? For you know, it depends if you want to include your current expenses, uh, just the bare minimum, which would be like lean five or your fat five, which is like you want to live bougie, a luxury lifestyle. So the way to calculate that would be whatever your yearly salary, I guess you would need to cover all those expenses times 25. And the idea is that you have that money and you are able to still, you know, take out your, your yearly expenses and still be okay. And so, for example, let's say my expenses are 10,000 a month, which means that I need about 120,000 a year. Multiply that by 25 gives me 3 million. So I need 3 million in investments and savings or whatever to be able to retire by age 55 to, you know, cover my expenses and I could be financially free. And so you want to calculate that as part of setting your financial goals or whatever amount. Or you know, some people want to have a certain net worth, things like that. Whatever it is, take some time and set your financial goals.

Violeta: 10:41

The next step is now that you know where you want to be where you need to be or whatever your goals are now. You have to do a gap analysis of where you are now and where you want to be and really start understanding your financial situation. And I get it with trying to do this. You know, sometimes you can deal with some financial anxiety or trauma because it can be triggering to, especially when you kind of know that you're not in a, you know, as financial uh stable as you would like to, or you made mistakes or whatever. Like looking at your finances, as I says, you know it triggers that, but just you. It's something that you have to do. Put some music or something when you're doing your finances, something that like keeps you motivated and keeps you from going into a negative headspace and remember to give yourself grace. And you're doing something about it now and you know, forgive yourself, I've had to deal with it, my husband has had to deal with it, he still struggles with it and but in order to move forward, we have to look at our finances every month and you know, adjust some uh things that you want to.

Violeta: 12:07

You know, think about is like you know, how much money do you have coming in? How much debt do you have how much money is going out, like, what are your expenses and what can you live without? And I'm not talking about living frugal, like you know, like even you know, or something you know. Like I'm talking about like, uh, auditing your finances and seeing, like, do I really use uh, I don't know what's all another one like paramount or peacock or this random subscription, or you know, maybe I'm not going to the gym, yeah, but yeah, I'm like two months or maybe, instead of spending that money at a gym thing, I could just walk around and everything like depending on your goals, right, or I don't need to eat out every weekend, whatever it is like just you know we're going with grace and without you know like robbing you of some joy. What options do you have to decrease spending and debt? Like, is there something that you could start paying off and do you have any options to increase you know money coming in, like income, like maybe you're good at something that you can sell, maybe on the you have extra time on the weekend, mean, nothing isn't, you know, not a cassette or whatever, and maybe you could babysit or whatever, or I don't know something, some side hustle in the meantime to help you accomplish your goal.

Violeta: 13:41

The idea is that it's not necessarily especially we like some of these side hustles to uh be kind of a long term unless you could turn it into a business uh but at least to help you reach your goal or get you started or at least pay down some debt, so that way then you have extra cash to invest. Now if you do have some debt, uh, like that doesn't necessarily mean that you can't start, you know, investing, like even if it's like 50 a month or whatever, but you have like debt or like student debt or whatever. So I was getting, like, you know, um, balance it out depending on, like the interest. Now, if you have like a high interest debt, then, uh, sometimes you want to just like go go and focus on that before you get started into investing. But a veces, like, I feel like I don't want you to lose out and I want you to get into the habit. So if, even if you had debt, y tienes algo to put into, like five, ten dollars, at least get started, get into the habit and, you know, do what you can do. Okay, don't get overwhelmed like lo que no puedes hacer, like, oh man, I can't put like a thousand dollars every month, or three hundred dollars. So pa' que lo hago, you know like it's not worth it, like, no, yes, every little bit counts, so do what you can do, okay.

Violeta: 15:09

The next step is, before you start investing, figure out your investment options. There's so much out there than so many ways to invest, even with, like, stocks. There's so many different types of ways to invest in that that you want to think about what you want to start. So first, what I would do is to make sure that if you do have like some type of 401k or retirement investment account from your job, do that one first, take care of that one first. Figure out you know your contributions, like how much you could spend on that to to max it out. If you max it out, like there was a long time that I could not max it out, I still don't even max it out because of the other, I invest in real estate. So it depends on your goals, because that's my goals, to also invest in real estate. So I don't max out my whole account but don't feel like you have to because you'll see it on social media or whatever, of like, oh man, I maxed out my account, my investment account and blah, blah, blah, like otra vez, like I'm going to repeat it again. Like it, you know, stays in your head like do what you you can. And so I would start with the retirement accounts that you have at your job. Make sure that's good, that you have it going to a good fund, depending on your risk tolerance.

Violeta: 16:43

If you are younger and want to take more risk and you don't have as much of you know debt liabilities, then go for it. You have plenty of time to recover for you know debt liabilities, then go for it. You have plenty of time to recover for any. You know market, you know like coming down or whatever. If you're a little bit older or you can't take in a lot of risk because you know you have family, you're taking care of this or that, entonces, you know, play a little bit, uh, safer options, but whatever it is, start with that and make sure that, uh, if your company is matching your, your contributions, cause that's an extra plus. So always, you know, check your work, uh, retirement accounts first, retirement accounts first.

Violeta: 17:38

The next is that you could go to a different types of investing in stocks or mutual funds, and I'm going to avoid going too deep into these because I'm not a you know, a a super expert on like, hey, invest in this stock or whatever. There's lots of resources out there and down in the description I'll put, uh, great resources, especially for stocks. There's one called wealth warrior. That's really good and really breaks down each of these. Uh, so check that one out. If not, you know, I'll find some podcasts to put on there that will go more in detail.

Violeta: 18:15

But I don't want to like send you in the wrong direction because I'm not an expert in that. I just know what I invest in based on my goals and the way I invest as well is that? So I was getting like I do not have time to sit here and track all these stocks for like things like day trading, where, like you're trying to buy a stock at a low price and as soon as it hits at a certain amount or whatever, like lo vendes and everything like that, I don't have the time or effort. So I like to invest in index funds and you know you can as well, and I use right now I use M1 finance. It's basically a robo advisor, so it does everything for me. I send a certain amount of money to it and I have. They break down the the funds into like pies, and so it's a say I send two hundred dollars, it breaks up those two hundred dollars into the smaller portions based on the percentage of how much I wanted. So those two hundred dollars, let's say one pie is 10 percent in freaking Amazon or whatever, and then five percent in Costco or whatever, and then this is going to automatically do that for me amazon or whatever, and then five percent in costco or whatever, and entonces it's gonna automatically do that for me and each cycle is going to automatically readjust my portfolio. It's going to automatically sell for me, it's going to automatically buy for me, depending on how I want my portfolio, because I want my portfolio at certain percentages and stuff. And the good part is that because the robo advisor does everything, you don't even have to calculate the percentages. Like I just copied I um, I think it was the Berkshire one that I have Hathaway. I just copied their pies and it's been making me money and and so, like I'm, como digo, I'm a floja investor, anything where I can invest and make it easy for me, that's what I'm going to do. So definitely figure out what options you have. But stocks and mutual funds. Those can help you do that as well. Find, you know, a broker that you like that has low fees and stuff like that. I'll put the link to the one that I use if you're interested. But again, there's so many ways and better ones, like Vanguard and stuff like that, but I don't have those. I just have M1 Finance at the moment.

Violeta: 20:52

Other than that, you can also think about investing in real estate, because you know that's my passion. I, you know, buy real estate, which is one of the reasons I don't max out my TSP, which is the military side of kind of like 401k, of kind of like 401k, because I want to use some of my funds to start building the cash flow now so I could reinvest that money and continue buying rental properties. And so, if that's something that you're interested in, you know, create your plan, figure it out. You know I have an episode episode 72, talking about, you know, real estate investing, how to get started. You could check out that episode if it's something that you want to add to your portfolio.

Violeta: 21:42

But there's other things that you can invest in, and I want to take the time right here to talk about cryptocurrency, because with me I don't waste my time? Well, I wouldn't say waste my time because you know, some people you know make money, but I feel like it's basically a gamble. It doesn't have a long history, like real estate and uh stocks, and I feel like for the beginner, I like for the beginner to kind of stay away from that, because it gets really complicated with, like, how it works and the different types of coins and all that stuff that you can get taken advantage of right and scammed. I mean there's a lot of scams out there with cryptocurrency and there's a lot of uh. I feel like it's almost like a cult with cryptocurrency and I mean I, I could tell you stories with, like how cool like they can become. Um, I'll take, I'll tell you a quick little story. Is they like?

Violeta: 22:52

When we went to florida a few weeks, a few weeks ago, my husband uh for work wanted to go since we were in the area go meet up with an investor that's for the startup company that he works for and that guy owns a kind of like crypto business type deal, like it's a club, like a cryptocurrency club thing, and he had asked me to go and I'm like, yeah, no way, because I know the type of people that tend to be in those spaces and when he came back, he's like, yeah, you're right. And so, uh, yeah, he told me, okay, it's exactly what I said. It's like all these bros talking cryptocurrency and you know all this stuff, and like it can become kind of like a trend and so you want to be careful. Not saying that you can't, but If you do want to, you know, invest in the ones that have been there for a while, like Bitcoin and stuff. Avoid all these meme coins, these random ones, because, like Dogecoin, that a lot of people lost money. So I don't invest in it because it's too volatile for me, it doesn't have enough history, like it's not regulated and all that stuff. So like I don't want to mess with it.

Violeta: 24:18

At the moment I my focus is real estate and stocks. So that's my little caveat with cryptocurrency. Do with it what you will, si quieres, you know. Just don't put all your life savings in it. You know you could play around with it a little bit, but it's not worth it to me. I don't have no soy rica para andar throwing money or risking that much money away on something that's not a sure thing like real estate and stocks.

Violeta: 24:49

So, yeah, figure out what you want to invest in. Okay, that was a little bit long-winded, but the next step is to reduce your risk by having a diversified portfolio. So, again, once you figure out what you want to invest in, I would say start off with one or two Zs, right, like, okay, okay, 401k. Even with your 401k, make sure it's kind of diversified. Uh, if you want to do like your, uh, regular stocks, um entonces también. You know, don't go out there and buy like three thousand dollars worth of freaking I don't know, uh, tesla or something I don't know. Like, don't put all your money. If you have $3,000, spread it out Ponle 500 acá, 500 over there or 300 here, whatever. So that way your risk is spread out and then one stock covers whenever this stock goes down, or whatever, right. And then try different types of investments. So like, for example, again me stocks, diversified in itself on the types of companies, and then I invest in real estate. So I don't put all my money just in stocks, I also have it in real estate. And then, even with real estate, I'm going to diversify because I'm not going to be in the same market, I'm moving. I already have three in one market, I'm going to shift to another market. That way, you know, my risk is also spread out, and so you want to do that with all your investments.

Violeta: 26:33

The next step is to automate and track your investments. Like I like to say, yes, set it and forget it, but not necessarily forget it forever. Just forget it for a few weeks or whatever, like I check on it on my accounts, like monthly or quarterly. You know, because if you start, especially with stocks, like the market goes up and down and up and down, like depending on what happens, depending on who says what. Sometimes if, like, elon says one thing, then all the the bros are out there buying this or that and then all of a sudden it drops. Uh, so I don't like to follow it too much. You see, it drops, don't get too scared, you only lose. Well, you confirm your loss by selling that stock. Eventually it'll come back up, it'll recover. It's the I would say. It might take longer. I would say, it's right, you know, very next day or that same day or whatever.

Violeta: 27:37

But you know, the best way to make sure that you are consistently investing is automate everything. I send a certain amount from my paycheck. It's already automated. I don't ever see it, it's already invested. And then I have another fun account the one for m1 finance that I just send uh two hundred dollars and I, just, like you know, use that just for funsies, and you know it does everything for me también. So find something that you pick out your portfolio, mandas el dinero and it does everything automatically and then track it monthly, quarterly, however often. That is not going to cause you anxiety, but it's still. You know, you're still being responsible and making sure that you know what, like sabes que I don't want to have this stock anymore. I I'm going to sell it or I want to readjust my portfolio or whatever, because a veces things change right, and so definitely make sure that. And then the last step is investing in yourself.

Violeta: 28:47

Knowledge is power, wealth is power, money is power, pero también knowledge. You know we heard it growing up en la escuela Like knowledge is power is power. But also knowledge you know we heard it growing up in the school like knowledge is power. And it's the truth. Like start learning. Uh, there's so many ways to uh learn now that you can take like courses, you can take workshops a lot of them are free. You can read books, audible, este podcast, uh, youtube, todo like.

Violeta: 29:18

Find the method that works for you, for your lifestyle. I know a veces estamos bien ocupados or whatever, but I find it best in my commute to always listen to audible or to a podcast, porque once I get home estoy ocupada con la bebé, I got things to do, I got manichisme to do and so it's harder to like read or listen to anything. So at work, a veces if it's like a slow day at work, that's the perfect time that I'll just put podcasts in. And driving to and from, I got 30 minutes to drive este I used to have an hour and I used to knock out podcasts and books like left and right porque tenía una hora and I all I had to do was listen to that. Pero it's a little bit harder now that I have a shorter drive, which is good, but also it's harder to know. Finish these things. So find what works for you.

Violeta: 30:17

Again, abajo te voy a poner like libros. I have a list of the books I've read and that I like. It's, you know, on my Amazon storefront. Si quieres, if you are interested in any of the books you know and you want to help support money, cheese, may use. Use that link, I get a little small uh kickback not a lot, but every little thing counts. Um, but take the time to invest in yourself, build your knowledge and keep growing.

Violeta: 30:50

And just some final thoughts and, you know, tips for our community. We have to change our mindset when it comes to investing, because a veces we're just like I'm just going to work safe and you know, you know trabajar duro and I'll be fine, and we think of investment as know them, not us, pero investing es para todos, is for us, and we need to learn how to get into the game, especially with everything going on. That should be a sign enough that wealth is power, porque a lot of these things you know wealth is helping them achieve and have gained this type of power. So we have to learn how to make our dinero, make us more dinero, without, you know, breaking our backs. Our community likes to. We have.

Violeta: 31:54

We take a lot of pride in working hard, but, yes, that's nice, but also at the cost sometimes, of our mental health, our physical health. As a matter of fact, again, kind of going on a side tangent, real quick, like this morning I was talking to my mom and we had this conversation of how you know, working hard and everything like that. She's like because we were talking about anxiety. She's like me. My dad said, like you know, anxiety was just laziness porque, you know, if you're busy working, you you're too tired. You go to sleep to even think about anxiety and it's like. Uh, mom, your dad also had a stroke at a like 60 or something. Ya ni me acuerdo when he had it, but it's been years. He had a stroke y ahora esta like, you know, um, que no puede caminar on his own and everything like that was like. So you know things like that.

Violeta: 32:50

We don't have to break our backs so much like. We need to change that mindset it. Also, we have to get comfortable. Risk with risk and uh, los da miedo. Risking our money, los gusta las cosas, seguro, right, and investing sounds very risky because our parents, most of our, some of our community, uh doesn't understand like the stock market and stuff like that and stay so they're scared to do it right. So we have to um face it head on, learn about it, educate ourselves and start taking action and, you know, find resources.

Violeta: 33:34

Tenemos bastantes. One good thing let me tell you que we are in a good position right now because tenemos bastantes de nuestra comunidad that are so educated and tengo muchas amigas like. I've met so many people on instagram. Si quieres saber, like, just look at who I follow on my Instagram. Tengo bastantes que if you want to learn about bookkeeping, about business brand stock investing, all that stuff, ahí tengo personas. I know somebody que te puede enseñar to teach you from our own comunidad that does it in Spanish too. So, like, find your resources. You just gotta do a little bit of work to find the one that you can relate to. You know to learn from.

Violeta: 34:22

And again, last time that I drive this home is start small. Lo que puedes hacer? Like, don't get lost in the sauce con esta gente que are investing. Even you know, like, comparing ourselves con esta persona que, like, oh, esta tiene, you know, a big investment account. Like I'm never gonna get there because I don't have enough money o tanto per paycheck to put no, empieza con poquito, poco a poco, paso a paso. Like, you're gonna get there.

Violeta: 34:50

Something is better than nothing. Like piensa like, okay, esto 50 can in the future when you retire, like maybe no, it's not enough to retire like fully right, maybe it's not enough to like have this big house or whatever, but sabes que it might be enough to pay for the light bill, for your food, for the month, every month, like it could be something to pay the water, your mortgage, if you still have some. Like imagine you know you're investing now, when you're 60 years old or whatever. No te tienes que preocupar de like para el mandado for your groceries, for food, for, like, travel gas, whatever you know. Like, just think of it that way. Something is better than nothing for your future self. So that's it. I'm gonna stop rambling. Before I make this an hour, let me know, uh, your thoughts. You could always send me a message. There's a link down below that sends me a text message. You could email me, hit me up on instagram what your thoughts and, you know, check down below again for resources. Pero I will see y'all in the next episode. Bye.