This shall be a rare post.
Normally this is a gaming blog, but occasionally I've got life stuff to talk about and this has been on my mind in these uncertain times. So here goes something.
Yes. I am so far away from the stock moguls of this universe and the next. I am not a broker, I'm barely a trader, and I am certainly not an entity that possesses the enormous capital required to swell my own ranks in a successful portfolio on the grand stage.
...Which, I think, makes me more qualified to talk about this.
I'm not rich. Far from it.
Meaning, if you're reading this, you'll know exactly what I'm talking about. :)
Jumping into stocks and bonds and putting money away, especially in TINY increments - just scrimping and saving literal change at a time - is hard. You'll try to educate yourself here and there, and though you might pick up a few hints and tricks, a lot of the advice I read first involved investing numbers that there was no way I could achieve in the time frame they suggested.
It still boggles my mind to think that people would just have $10K to throw around, like it was no big deal. Maybe, some day, I could get to that point...but I'm in the wrong career and I'd have to be REALLY lucky.
But my focus here isn't to get rich, it's to have something left over, and that's going to be very important moving forward.
I don't want to devote 90% of my day to stocks...I actually have fun things to do. This needs to be easy, and I want it to work better than a savings account with terrible interest.
What I Use and Why
I've always had a good "math brain." I like crunching numbers, budgeting, and messing around with theoretical quantities. It's helped me in game design, in money management, and now, it serves me in assessing the level of Control vs Peace Of Mind that I want when I put money away for the future.
I utilize (currently) four "assets", in addition to a savings account. I say currently, because I'm testing one out for a year. If I don't like it, I get to withdraw and re-invest into one of the remaining three. I didn't start things this way. I added each new pursuit as I discovered the shortcomings of my previous pursuits, and experienced the truth of some of their main draws, and then clarified their real power. ... That was super vague. Let's get into it.
I like Acorns.com. At the time I joined up, it was my first and only foray into stocks and bonds, and it's all automated. This has certain benefits, with some revealing detriments that are only bad if you're like me and you want more "control." The main idea here is "as long as you have at least $5, you can start investing," and that mission remains true beginning to end. The minimum deposit is $5; you can automate this or not from a funding source, and there are one-time deposit options.
1) Set deposit with a funding source; as long as that source is healthy, then you're consistently putting money away in general stocks.
2) You select 1 of 5 options for a portfolio, based on your level of risk and your time frame. Got a while and not a lot to deposit each time? Go Conservative. It'll grow.
3) Adjusting your deposits, portfolio, and other details is super easy and clear. The UI makes you feel sunny and confident.
4) Low subscription fee of $1-3. As long as you're putting in at least $5 a month, even if they take $3, you're still coming out with more in the account. The arguments against this product about diminishing returns have little weight, because you have to deposit at least $5 (that's the minimum), so you'll always come out with more, and most folks will set it at $10-25 per month to start themselves off, so that gap gets bigger fast. And you're paying for the convenience, with a minuscule fee.
5) There's an Acorns Later option for building up retirement (which is lovely).
1) Round-Ups, the main advertising draw, are, in my experience and execution, a complete joke. But not a deal breaker (in fact, a lot of these robo-traders have this feature; I go into detail about my qualms with it below in a separate section).
2) You don't choose what stocks you're investing in. You want to invest in Amazon specifically? Not going to happen. But maybe that's okay for you.
My main draw: Acorns.com is a "set it and forget it" investment tool. You're not meant to watch this account like a hawk each day; check it once a week maybe - make adjustments when you want. Be sure to set your budget clearly, and if you have extra cash to put away, you have a one-time investment option. I don't recommend the Round-Up option, but again, that was never my draw in the first place.
If Acorns is the set it and forget it, Robinhood is the hawk. Now, originally, I was thinking about using E-Trade, but I'm just not a fan. They're too big and I don't trust them. Robinhood's mobile option is lovely, and it's intuitive and easy to set things up. Their website is amazing. I enjoy how easy it is to organize my portfolio almost like a professional, whether I want to look at things by price, gain, loss, etc.
The interface is also quite transparent. You know precisely how many shares are in what and where, how much they're worth, how much of your portfolio they make up, and your total return or loss over the lifespan of owning the share.
1) FRACTIONAL SHARES - this is HUGE. Most people I would wager simply don't have the capital needed to invest in many of the big companies (like Amazon or Apple). Fractional Shares are, well, fractions. You can choose to put a $1 into Apple, giving you a fraction of a share. Slowly work up to owning half a share, or whatever you like. It lowers the barrier of entry for new investors, and was my big selling point for this asset. It also allows you, if you're like me, to better budget or "wipe" your buying power if you have a few bucks left over that would normally just sit there (put that extra in your target stock and keep building toward the next complete share).
2) Full control over what I'm investing in and how much (exactly what I wanted when I jumped into this).
3) Easy to get started. Transparent and clear.
4) Just for joining, they award you a free share in a random stock, so you have something to work with right away. This stock can be anywhere from $1 - $500. It's a free gamble, and it feels neat to get something (even if you decide to sell it later!).
1) You have full control, so you have to take full responsibility. You might be thinking, "well, duh," but this is where personal research and education will start to show its value. You need to look up the stocks you want to invest in... thankfully, a quick search on terms will take care of most - but YOU have to do it. And if you're wrong, you might end up losing some money. I don't know if this is a "true" con and not more of a reality check.
2) Transfers to get buying power are fast at first, during a grace period, but if you want your cash right away you'll have to sign up for Robinhood Gold, which has a monthly fee. Annoying, considering they give you a taste right away without telling you it's temporary...but it's still a small fee.
My main draw: I truly appreciate knowing exactly where every cent is going. I have supreme control over what goes where, and when. Want to invest in Disney? You can! That's what I wanted all along! ...may not have been the best choice, but at least I had the choice! And it feels SO GREAT to do your research, act on it, and then reap your rewards (even if those rewards are lessons for next time). I'm just grateful for the opportunity to jump in and try.
There's a lot of learning involved in this, and by giving myself a (VERY) limited monthly budget, I know I've always got some buying power available to me - ESPECIALLY with Fractional Shares - and appreciate having access to all of the resources I would need to know what the heck I'm doing. Real success needs experience, but I'm gaining that, and it's a lot of fun to cultivate my portfolio on MY TERMS.
Stash Investments I put here because I can best describe it as the "bridge" between Acorns and Robinhood.
Where Acorns has little say, and Robinhood has all the say, Stash splits down the middle.
Yes, you can invest in individual companies OR in cultivated "mixes" from the program's robo-advisor. They get cool catchy names and nice Dividend spreads, they're (mostly) informative about which companies or funds are included in the mix, and they're pretty up front about what you're getting without having to use a lot of jargon. This approach, I think, has a benefit and a small detriment.
It's beneficial because it feels more accessible. Language and terms are simplified so you get enough information so you can make a decision, but you have to dig to know everything going in. It requires a level of trust in the company that they know what they're doing with each mix. BUT, if you don't trust that, you can always invest in individual companies anyway, they just don't recommend it as readily. Stash is intended for complete beginners.
1) Mixes feel safe without feeling flat. You have a lot of say in what kinds of companies you buy stock in, and, just like Robinhood, if you don't like it, you can sell the mix and get some cash to invest elsewhere.
2) You set up your portfolio of mixes, companies, whatever as a monthly schedule with deposits of varying set amounts into each stock or stock pool. This is a more specific "Set It and Forget It." It can be exciting to check it out and see where you want to make any adjustments, or leave it alone and let it grow. Like an "upgraded Acorns."
3) Though it's not explicit, Stash also uses fractional shares, hence why the Mixes work. Better for your budget plan.
1) Customer Support... I ran into an issue with scheduled deposits into my Cash Flow. The interface for scheduling this isn't as transparent as it needs to be. It's better to clarify and be redundant than be vague when you're dealing with someone's money. I get it; english can be hard sometimes. So I contacted customer support. And then I contacted them again. And again. And again. ...To this day, 6 months later, no one has responded to my question. I ended up solving the problem myself, and once I was more careful with the interface, everything was hunky dorey. ...But seriously? No one? It boggles my mind. ---Now, they have a pretty extensive FAQ section, but nothing surrounding my issue AT ALL, so when I reached out to a person and got NOTHING, I nearly withdrew everything on the spot. I hope it's gotten better, but I don't know.
2) In case you haven't guessed, this is the one on trial. Trust goes a long way in this gig, and that initial experience of being ignored with my problem did not help. They've got another 6 months; we'll see. There's a lot of potential in the rest of the service, so I'm being optimistic.
My main draw: Though the initial reception was lukewarm, Stash has grown on me. I like knowing where my money is going, but I don't have to shift it around or watch it like a hawk. It takes less spell slots to maintain this portfolio, and I like that I could draft a few companies and mixes, and then walk away and trust that I'm putting away a set amount every month that will work for me.
A Word On Dividends (Imma drop some math on you)
The term Dividend is what drew me to the Stock Market in the first place.
In very simple terms, a Dividend is a payout from a company to an investor; you get a certain percentage yield per share that you own, which is cash. It's income for owning the stock. Yields are represented by a value, often with a decimal, but it translates directly to a percentage. So, if you see something with a "0.8", it is literally "0.8%", not 80%. That also means, for that specific example, that a single share of $10 will yield $0.08. I know, that's not a lot, but that's PER SHARE. So if you have 100 shares, your yield becomes $8. 1000 shares, $80. 10K? $800.
Some dividend yields look REALLY HIGH. Like 75% kind of high. So for even a $1 share, you'd get $0.75. Start multiplying, and this starts getting intense. 100 shares becomes $75, 10,000 becomes $7500. But it's not that simple. These are common among REITs, which are Real Estate stocks. They have high volatility, and IF they pay out, it's real nice, but it's never a guarantee. So, from experience, let me drop some knowledge.
Dividends come in many levels, but a safe yield is considered around 2-4%, sometimes 5%. I know that sounds boring, especially with the above example, but if you're going toward consistent dividends like me (because I want this to be passive money that is working FOR me), then sticking to about 3-5% will help get you there. The reason is that companies don't HAVE to pay out Dividends. If they don't pay their investors too often, though, they're in deep trouble and risk losing their capital all together. But the payout happens if the company decides they can afford to do it - and 80% is a lot harder to justify consistently than 5%. That's why Hasbro (HAS) is fantastic, by the way. They've stayed at a consistent 4.5%, even through the pandemic, and have a long history of paying consistent dividends to their backers. I highly recommend them, even if only for a fraction of a share.
Now, even after all of my research and lessons on this topic... I still have shares in certain companies with high yields. I have redistributed and restructured my portfolio to have more shares in that 3-5% range for stability, but I admit there's something very exciting about seeing that high percentage. The real reason, though, that I've kept a few of these...is trust. Despite those alarming high yields, there have been a few companies that have consistently paid me those high dividends - much to my surprise. There are still others that keep cancelling, despite having comparatively lower yields and higher profit (businesses are weird).
But if a company is paying out their Dividends to me, even if it's just a couple cents to start, it begins to build "trust fund" for me. I keep a personal log of the companies that follow through with their promises - and I'll share my current top 5 and why I like em so much!
1) Hasbro (HAS) - approx. $75 /share, at 4.5% Dividend (payout quarterly)
2) Washington Prime Group (WPG) - approx. $1 /share, at roughly 50% Dividend Yield (payout quarterly)
3) Coca-Cola (KO) - approx. $50 /share, at 3.5% Dividend (payout quarterly)
4) Alpine Global (AWP) - approx. $5 /share, at 10% Dividend (payout MONTHLY so far)
5) Tie between two similars: Western Assets (WEA + HIO) $13 + $5 /share, at 5.5% + 8% Dividend (payout Monthly so far)
And when, realistically, you're only supposed to focus on 30 stocks max...I went a little overboard with 65. Oooooooops.
I've scaled back! I promise!
The best option here is the least complicated. They're bonds. Plain and simple.
Worthy is a bond and loan service that supports small businesses, so you feel good about yourself. Plus, each bond is liquid (so you can just withdraw it whenever you want), but last three years before they close it and open up a new stack. Each stack earns 5% DAILY INTEREST. I'm not joking. It's so freaking baller.
Why do I think that's so amazing? Because I'VE EXPERIENCED TERRIBLE INTEREST IN SAVINGS ACCOUNTS. It's tragic.
So this way I can set an easy monthly schedule, and watch the interest roll in. It's compounded interest, too, so every cent you earn from interest counts toward the total amount, so that number gets bigger, which gets more interest, which then gets bigger... You get the idea. I hope. :)
1) Simple and clean. Buy bonds. Get great interest.
2) Withdraw whenever you want, even if the 3 years aren't up.
3) Safe and secure.
1?) The cash you put in takes 4-6 days to clear usually. I don't think this is a big problem, because it's definitively a security measure.
My Main Draw: out of these 4 assets, Worthy is my favorite. It's simple and straightforward with the most consistent returns. And it kicks the crud out of most standard savings accounts. Easy choice.
A Word About "Round-Ups"
The primary marketing strategy with 3/4 of these companies is using a "round-up" mechanic to augment your investments. How they say it works is that you link a card to your account and it tracks your purchases, "rounding" them up to the nearest dollar. The difference from the rounding is then set aside into a separate pool. Once that pool reaches $5, it is automatically deposited into your account.
Now, upon originally seeing this as a main draw, especially considering the frequency at which each company pushes this agenda, I tried it out. The way I imagined it would work would be the following scenario:
I purchase a coffee for $1.62 on my credit card.
My card is actually charged $2.00, and that $0.38 is put into a separate pool.
I make other purchases here and there, and my card is charged the "rounded up" amounts, siphoning the difference into the pool.
I did this for a little while, excited and totally cool with the idea that I would be seeing "whole values" on my credit expenditures and that my balance would have had some incremental gain. Upon checking both of these things... Neither was true.
In reality, this is actually what happens.
I purchase a coffee for $1.62 on my credit card.
My card is actually charged $1.62, and that $0.38 is just a number, put on a list in my account.
I make other purchases here and there, and more arbitrary "differences" are put on that list.
I then must sign in to my account and go through that list, checking box after box of these "differences" until I crest at least $5. That amount of money is then withdrawn not from my credit card, but from my funding source. To which, I ask, why didn't I just deposit an extra $5 as a One-Time deposit?
The Round-Up system uses the rounded differences as arbitrary values to collect in a list that you must then pick and choose which ones to "use" to add up to $5. Like a game. A really dumb, boring game that adds extra work to something I could more easily automate using the features I already have.
Hmm. Maybe others enjoy it, but it seemed so pointless once I experienced it. So, though they'll recommend that you sync a card every time you login, in my experience it's worthless. The way it is presented and worded gives the impression that the extra deposit comes from your credit card...but it doesn't. You're just collecting numbers so can do a "bonus" deposit...which you can do anyway, and do better by setting a budget and a schedule. Duh.
So. As with most little upstarts, there's a great referral perk program. If any of these seem valuable to you, I highly recommend jumping in through a referral. It's a nice bonus for the one giving and the new recruit.
Acorns gives an extra $5 when you sign up. You get 5, I get 5 if you click here.
Robinhood gives free stock to me and you - here ya go, friend!
Stash gives each of us $20 to invest in stuff, if you're down.
Worthy gives each of us a free bond (they're $10 bonds).
Thank you for jumping on to my weird life math lesson.
Puppies and kitties with swords and sorcery are next (Mau!)
See you at the table.
Professional Game Master musician, music teacher, game designer, amateur bartender, and aspiring fiction author.
1st Saturday: Lore Drop
2nd Saturday: Monster
3rd Saturday: GM's Corner
4th Saturday: REST DAY