Latest / Beyond the Green Bibs / Ep 15 Saving and Investing

Transcript

Ep 15 Saving and Investing · Beyond the Green Bibs

• 0:11
  SPEAKER_00: Hi and welcome to Beyond the Green Bibs.
• 0:14
  SPEAKER_00: I am Annie, a cattle vet, farmer, mama two boys, and business owner with passions involving agriculture and personal finance.
• 0:21
  SPEAKER_00: I am on a mission to inspire and encourage women who want to be involved in large animal medicine and also be a mom and so much more.
• 0:28
  SPEAKER_00: I believe we as women can create a community to provide support to other women as we build a life filled with gratitude and purpose.
• 0:35
  SPEAKER_00: So whether you are in the vet truck on your way to a farm call, a mom running the kids to school, a gal that loves animal agriculture, or heck, all of the above.
• 0:44
  SPEAKER_00: Thanks for joining me.
• 0:45
  SPEAKER_00: And let's roll on with today's conversation.
• 0:47
  SPEAKER_00: Hello and welcome back to another episode of Beyond the Green Bibs.
• 0:51
  SPEAKER_00: I'm your host, Annie.
• 0:54
  SPEAKER_00: And today I thought we would go into one of the personal finance topics, just to split things up a little bit.
• 1:01
  SPEAKER_00: Um, we do have more interviews coming.
• 1:04
  SPEAKER_00: So if personal finance isn't your uh favorite topic, just skip this one.
• 1:09
  SPEAKER_00: There'll be more coming of the interviews with those wonderful, wonderful women that are out practicing the hard general medicine.
• 1:16
  SPEAKER_00: But today's topic is saving and investing.
• 1:20
  SPEAKER_00: And it's just been coming up a lot for me.
• 1:22
  SPEAKER_00: So I figured today would be a good day to go ahead and go over that.
• 1:26
  SPEAKER_00: So one of the first things that I want to talk about before we even get into saving and investing is what happens when we become a veterinarian and then we actually have an income.
• 1:40
  SPEAKER_00: So once we take our job, we have this huge, for the most part, huge salary jump, we actually are making money versus probably living on our student loans.
• 1:55
  SPEAKER_00: And that can pose some challenges.
• 1:59
  SPEAKER_00: And so this is just a reminder that when we get that increase in income, the bonus, the jump in our salary, this is a time to kind of rehash our budget.
• 2:18
  SPEAKER_00: And we can fall into this lifestyle creep, which I'm guilty of it too.
• 2:25
  SPEAKER_00: So I'm I'm talking to myself on this as well.
• 2:29
  SPEAKER_00: That we need to pay attention where our money is actually going.
• 2:34
  SPEAKER_00: Um, when there's more money in the checking account, usually it finds a place to go.
• 2:38
  SPEAKER_00: And maybe it's not the best place for it to go.
• 2:42
  SPEAKER_00: We could maybe do some smarter things with it.
• 2:45
  SPEAKER_00: So try to keep that in mind when we have a nice increase in our in our pay.
• 2:54
  SPEAKER_00: We don't necessarily have to jump on the oop, I'm gonna go start looking for a house.
• 3:00
  SPEAKER_00: If I don't have one already, I'm gonna go look to purchase a new vehicle, find something super fun to go spend my money on.
• 3:07
  SPEAKER_00: Those are all fine and good things to do.
• 3:10
  SPEAKER_00: Just make sure we've put some thought behind this.
• 3:14
  SPEAKER_00: It's not a I'm just gonna go do it.
• 3:17
  SPEAKER_00: Um, make sure we we've thought about this and thought about how we want to spend our money.
• 3:23
  SPEAKER_00: I mean, that our our income is what is gonna help us to fuel our way to becoming financially free and financially independent.
• 3:35
  SPEAKER_00: And the equation to becoming wealthy is not really determined by how much money you make, it's created by that gap that you create between your income and your expenses.
• 3:52
  SPEAKER_00: And so if you can keep your expenses down and have that larger gap and have more money available to save, invest, utilize for retirement, utilize for different savings goals that you have.
• 4:12
  SPEAKER_00: You know, I want to buy this practice.
• 4:14
  SPEAKER_00: Okay, then let's start saving money to put towards it.
• 4:18
  SPEAKER_00: I want to buy um myself and in private practice.
• 4:23
  SPEAKER_00: I'm looking hopefully here soon to buy an ultrasound so that I can do palpation with an ultrasound instead of vental palpation and help farmers out to know that their cows are pregnant earlier and and save them save them some money.
• 4:42
  SPEAKER_00: Um, and so that is a savings bucket that I'm I'm working on.
• 4:46
  SPEAKER_00: Um I know there's like sales coming out with Black Friday and all of the holiday things, and it's very tempting.
• 4:56
  SPEAKER_00: But um make sure, make sure you sit down and crunch your numbers and think about can I make this work right now?
• 5:04
  SPEAKER_00: Maybe I need to just sit tight and continue doing the the boring thing of saving money.
• 5:10
  SPEAKER_00: So there, off my soapbox.
• 5:13
  SPEAKER_00: Let's get into the topic of talking about savings.
• 5:17
  SPEAKER_00: When we talk about savings, there's a few different different savings accounts that you can put your money into.
• 5:26
  SPEAKER_00: So at a bank, whether it's brick and mortar or online, you can have your standard savings account.
• 5:34
  SPEAKER_00: The interest rate is very low and it's very low risk, like if the money is there right now, but your reward from interest is pretty dismal.
• 5:48
  SPEAKER_00: Uh, it's very, very small.
• 5:50
  SPEAKER_00: So if you are needing money right now and you need to move something around, it's a good place to just have it sit temporarily.
• 6:00
  SPEAKER_00: But if you're actually wanting to save for a goal, um, something you know, like a trip or a house down payment or an upgrade to something, that's really not a great place to put your money.
• 6:14
  SPEAKER_00: So you want to look into some other options of savings accounts.
• 6:18
  SPEAKER_00: And the probably newest one that's around is the one I'm gonna talk about first because I think that's my favorite.
• 6:26
  SPEAKER_00: And it's called a high yield savings account, and they are just like they say, high yield savings.
• 6:32
  SPEAKER_00: Their interest rates are much better than your standard savings account.
• 6:37
  SPEAKER_00: The probably, if we're gonna do pros and cons, the con to the high yield savings accounts is I don't believe very many brick and mortar banks have them available.
• 6:50
  SPEAKER_00: Most of the time, they are an online bank, which isn't the end of the world.
• 6:54
  SPEAKER_00: You can still get your money sent to you, you know, while you're more or less, relatively quickly within a day or two.
• 7:04
  SPEAKER_00: It's it's not a long time frame that you have to wait, but it's not there immediately for you to use typically.
• 7:12
  SPEAKER_00: But you can have interest rates anywhere from like three to four to even four plus percent.
• 7:19
  SPEAKER_00: And that's pretty awesome for a savings account.
• 7:23
  SPEAKER_00: And so if you're looking at saving for something that might be six months, one year away, something like that, a short-term savings account, a high yield savings account is where I would totally suggest that you that you put it in.
• 7:40
  SPEAKER_00: And there's a lot of different ones online.
• 7:42
  SPEAKER_00: I actually have three different high yield savings accounts online, um, just to, I guess, diversify myself so that um I've got money in several different locations.
• 7:57
  SPEAKER_00: And while we're on the topic of high yield savings accounts, one of the places, this would be the place I would put your emergency fund.
• 8:06
  SPEAKER_00: And I'm pretty sure I touched on that in the budgeting episode.
• 8:11
  SPEAKER_00: But with your emergency fund, that is something if you don't have one in place, you really need to start one.
• 8:19
  SPEAKER_00: And it's for exactly that emergencies.
• 8:22
  SPEAKER_00: It's for when the car breaks down, when the dishwasher takes a dump, when the washer machine just quits.
• 8:32
  SPEAKER_00: Um, those types of emergencies that you need to fix right away to continue on with your day-to-day.
• 8:42
  SPEAKER_00: You don't want to have to be scrambling or try to put it on a credit card with high interest rate there.
• 8:48
  SPEAKER_00: Have an emergency fund that just is hanging out.
• 8:53
  SPEAKER_00: And financial professionals will say things like, oh, a thousand dollars in your emergency fund is a good, a good amount.
• 9:03
  SPEAKER_00: Well, it's a good starter amount for things today.
• 9:08
  SPEAKER_00: It's it's not enough.
• 9:09
  SPEAKER_00: It's definitely not enough to cover a lot of the expenses that we can run into as emergencies.
• 9:15
  SPEAKER_00: And so a better recommendation, and many financial professionals will then build upon and say, oh, if we're if we're looking for more of a long-term emergency fund, which yeah, we want to have one in place that it's there and we don't have to worry about it until we need to use it and then it's there.
• 9:33
  SPEAKER_00: And that would be to cover three to six months of your expenses.
• 9:38
  SPEAKER_00: Some people say three to six months of income, however, you want to slice it.
• 9:44
  SPEAKER_00: Whatever you feel comfortable with, if you're doing some type of budgeting, you'll know approximately what your monthly expenses are.
• 9:53
  SPEAKER_00: You'll know your monthly income.
• 9:56
  SPEAKER_00: You can do some rough math to figure out what you would need to fill that three to six months of expenses or income, however.
• 10:05
  SPEAKER_00: Um, people who are a little bit more on the scarcity mindset, which tends to be me on most things, we usually go towards that six months and maybe even a little bit more to cover ourselves for an emergency.
• 10:23
  SPEAKER_00: But storing it in a high yield savings account is a great place, it's pretty accessible, and you're actually making a little money on it, so that's that's pretty cool.
• 10:33
  SPEAKER_00: Another option for savings accounts are money market accounts, so you may see them called MMAs, and they are probably like the middle child of their they're a good choice, they're the maybe the like not so hot, not so cold, somewhere in the middle option.
• 10:55
  SPEAKER_00: They have typically much better interest rates compared to your traditional savings account, so you've got a better reward.
• 11:04
  SPEAKER_00: Um, and many brick and mortar places actually are beginning to offer.
• 11:11
  SPEAKER_00: I I've been seeing them more as an option at brick and mortar banks to have that as an option if that's something that you want to do.
• 11:20
  SPEAKER_00: It's also a good place for your emergency fund if you wanted to have it in that type of account.
• 11:26
  SPEAKER_00: And then again, it's gonna be more towards your short-term goals.
• 11:31
  SPEAKER_00: So six months, a year, something like that is a good place for your money to be at.
• 11:37
  SPEAKER_00: When we start thinking about long-term savings, that starts to get a little bit more shades of gray.
• 11:46
  SPEAKER_00: Um, because our long-term savings is really going to depend on your individual idea of risk, how much risk you're willing to take on.
• 11:57
  SPEAKER_00: So when you've got long-term savings, you could choose to save in a savings account that contains CDs or certificates of deposit.
• 12:09
  SPEAKER_00: You could also save within bonds, or you could invest in other things such as the stock market, real estate, businesses, myself in investing in cattle and farmland, um, things you're passionate about.
• 12:32
  SPEAKER_00: Um when when it's when it's a long, a long-term plan, um, those are your those are your a bunch of your options.
• 12:41
  SPEAKER_00: Um crypto, Bitcoin, all those things would also be, I mean, they're an investment, uh, but they would would be more on the typically long-term plan.
• 12:55
  SPEAKER_00: So if you're gonna do something like a CD, they do have, I mean, most of the most banks will have varying length of times that um a CD will be in place.
• 13:07
  SPEAKER_00: Um, there's six-month CDs, there's five-year CDs.
• 13:11
  SPEAKER_00: Um there's a whole whole set of different options within those.
• 13:19
  SPEAKER_00: You put money into the CD, it hangs out there for whatever the time frame that you selected.
• 13:25
  SPEAKER_00: It is at a pretty much set interest rate, and then at the maturation date, so the end of that time frame, that money is deposited along with the interest you earn to your savings account, your high-yield savings account, wherever you want it to transfer to, and you could utilize it, or you could put it into another's CD.
• 13:56
  SPEAKER_00: And currently, I've got a few CDs open with the high interest rates that are happening at this time.
• 14:06
  SPEAKER_00: There are some CDs available for like four percent, which is pretty much just as good as a high-yield savings account currently.
• 14:16
  SPEAKER_00: So I have a few CDs in there and they're varying time frames.
• 14:20
  SPEAKER_00: Um, I think one is a 90-day, one is a year, one is 18 months.
• 14:24
  SPEAKER_00: Um, just kind of depends.
• 14:26
  SPEAKER_00: But if you have a set amount of money that you know you're not gonna need, or you're pretty confident you don't need uh in that time frame, you could put it in a CD and earn a little a little extra on the interest side of things.
• 14:42
  SPEAKER_00: The downside of having a CD is if you all of a sudden run into something and you need that money, you will not get the interest that you earn.
• 14:55
  SPEAKER_00: And sometimes they're a little bit cranky about giving you the entire balance, you will get it eventually, but um it may be a little extra work, but you for sure will not get that interest that you've been letting sit and patiently waiting for.
• 15:12
  SPEAKER_00: Um, and so that's that's a bummer.
• 15:15
  SPEAKER_00: And then talking about bonds, it's pretty similar that those are typically set for a long time frame.
• 15:21
  SPEAKER_00: I mean, they can be five years, ten years, twenty years, and the interest rates are better than your traditional savings account, not as great as a high yield savings account, probably closer to that middle child of the money market account on your interest rate.
• 15:42
  SPEAKER_00: And again, this is something that you're you're not gonna touch for an extended period of time.
• 15:51
  SPEAKER_00: So it's it's a good option, it's low risk, and I would say moderate reward.
• 15:57
  SPEAKER_00: And so that's that that's another option.
• 15:59
  SPEAKER_00: And the the science or whatever you want to call brains behind the whole reason of why why are these even options is the bank is going to pay you interest for you letting letting them more or less borrow money for that time frame on the CD or the bond.
• 16:26
  SPEAKER_00: So nine months, a year, five years.
• 16:30
  SPEAKER_00: And so it is a it is a good a good option if it's something you're not gonna need.
• 16:37
  SPEAKER_00: And so that pretty much wraps up your your different types of savings accounts just under the umbrella of saving.
• 16:46
  SPEAKER_00: So I'm gonna touch a little bit into investing, um, and that's gonna open up a whole can of worms into retirement accounts, which we'll go into on a different episode.
• 16:59
  SPEAKER_00: But investing is a is a great option, especially for long-term savings.
• 17:08
  SPEAKER_00: So investing in, for example, I had already mentioned stocks and bonds, the stock market.
• 17:15
  SPEAKER_00: Um, we are able to do that by utilizing a brokerage account, which is taxed, just so you know, but it's good for long-term savings goals, additional retirement money beyond your 401k, your IRAs.
• 17:35
  SPEAKER_00: Um currently, people are starting to receive information um on student loans about paying their tax bomb.
• 17:46
  SPEAKER_00: We will see what happens.
• 17:48
  SPEAKER_00: That's a very political thing.
• 17:50
  SPEAKER_00: So we will see what's gonna play out on that.
• 17:53
  SPEAKER_00: But for the time being, it is a a brokerage account, it is a great place to save money for the student loan tax bomb.
• 18:01
  SPEAKER_00: And if you're wondering what the tax bomb is, the tax bomb is when you're paying for your student loans and you're paying under an income-driven repayment plan, an income-based repayment plan, one of one of those options, you will be paying a percentage of your income.
• 18:23
  SPEAKER_00: And at the end of the term, which is typically 20, potentially 30 years on this income-driven repayment plan, if you have a balance remaining, which people probably will because student loans just keep going up, and we are gaining interest over time.
• 18:44
  SPEAKER_00: So probably going to still have a balance at the end of the term, that balance is considered income on that final year of your paying, and so it could be something pretty large, and then you will be taxed that that particular year you made an extra hundred thousand dollars.
• 19:12
  SPEAKER_00: You didn't really, it was a hundred thousand dollars of student loans that you are having forgiven, which I'm doing in air quotes, that you no longer have to pay for, but you are paying a tax on them.
• 19:25
  SPEAKER_00: And so that tax bill could be relatively substantial.
• 19:29
  SPEAKER_00: And so having an investment account to save money for that is a very wise idea.
• 19:36
  SPEAKER_00: By the time people that are like currently getting in the start of this plan, this income-based type of plan, uh, there may not be a student loan tax bomb by that, by the time it gets to the end of your term.
• 19:54
  SPEAKER_00: But we should still prepare, just like we have our emergency fund.
• 20:00
  SPEAKER_00: And the hope would be that if they do away with this tax bomb, you then will have a really nice little cushion of money saved for future spending that you want to do later in life, or when you find out you don't have to pay the tax bomb, you can go on a dream trip that you've wanted to do, and um, you can you know spend it as you truly want.
• 20:27
  SPEAKER_00: And so when you are investing in a brokerage account, you are buying stocks and bonds, and you want to buy funds that are diversified.
• 20:42
  SPEAKER_00: So there are many like index funds and things that contain many different stocks within them, and so you don't have to pick individual things.
• 20:53
  SPEAKER_00: Uh, so that's really nice, and it again diversifies that portfolio you have.
• 20:59
  SPEAKER_00: So if some of the stocks do super great one year, others maybe didn't, it more or less helps balance out things so that you don't have all your eggs in one basket.
• 21:11
  SPEAKER_00: And you can do this on your own, but don't be afraid to talk to a financial advisor to get yourself set up.
• 21:23
  SPEAKER_00: And the value in that account is going to go up, you're contributing to it, but it will potentially go down as the market does its up and down thing.
• 21:35
  SPEAKER_00: So don't check it every day, don't check it every month.
• 21:40
  SPEAKER_00: I like to check mine quarterly just to kind of see how we're doing.
• 21:47
  SPEAKER_00: Um, I'm not changing anything at the moment.
• 21:50
  SPEAKER_00: Um, if you're working with a financial advisor, they will guide you with maybe you want to sell certain things.
• 22:01
  SPEAKER_00: To be more tax advantaged, purchase different types of funds for more tax advantaged um perks.
• 22:09
  SPEAKER_00: But that, yeah, that's gonna be them, and they can be very, very helpful on that.
• 22:14
  SPEAKER_00: So don't be afraid to work with an advisor.
• 22:20
  SPEAKER_00: One thing to remember with these brokerage accounts as you're investing, this is additional money you're investing.
• 22:28
  SPEAKER_00: It's not tax-free, like our some of our retirement accounts.
• 22:32
  SPEAKER_00: So you will be taxed when you are withdrawing from them.
• 22:39
  SPEAKER_00: It's just part of having these additional investment accounts.
• 22:46
  SPEAKER_00: When we talk about retirement, I'll go into this more, but for the most tax advantage options, you want to max out your retirement accounts and your tax-free accounts, for example, like a health savings account.
• 23:06
  SPEAKER_00: So just bear that in mind.
• 23:08
  SPEAKER_00: It's not the end of the world.
• 23:11
  SPEAKER_00: The tax is the tax, it's part of adulting, I guess is how I put it.
• 23:16
  SPEAKER_00: But when you withdraw money out of that brokerage account, just be prepared that there is going to be a tax that you will pay.
• 23:29
  SPEAKER_00: Other things, as I mentioned, that you can invest in are things like real estate, land, bitcoin, crypto, um, small businesses, startup businesses, that kind of stuff.
• 23:41
  SPEAKER_00: Um, there are definitely opportunities to utilize those as investment accounts.
• 23:48
  SPEAKER_00: The one thing I will say is make sure you're truly passionate about whatever you're getting into.
• 23:54
  SPEAKER_00: If you like the idea of owning additional real estates, having Airbnbs or um owning rental properties, that that's great, but make sure you really do your homework that you you truly are passionate about the rental, because there can be a lot of headaches going in to do to do, especially on real estate, with um having it in a you know different location than where you're at, if something you know breaks, or you know, again, dishwasher goes out there, renter is super messy, and you're not there to actually witness to say get out because this is not gonna work for us.
• 24:39
  SPEAKER_00: Um, it can be really challenging.
• 24:41
  SPEAKER_00: So make sure like you are that kind of person that wants to get into it.
• 24:46
  SPEAKER_00: Um, there's a lot of different options on investing in land.
• 24:50
  SPEAKER_00: Like I had said, I am investing in farmland and cattle, that is what I am passionate about, and so it's a long-term investment, and it's probably not going to be the most wealth-building investment, but it is a very purposeful investment for myself and my children.
• 25:15
  SPEAKER_00: So um there's not lots of different avenues that that you can go down.
• 25:20
  SPEAKER_00: I'm not gonna go in on Bitcoin and crypto.
• 25:24
  SPEAKER_00: Those are things that yes, we can invest in, but again, know what you're getting into.
• 25:29
  SPEAKER_00: And there's nothing wrong with those types of investments, just be prepared.
• 25:34
  SPEAKER_00: And then as we wrap up this episode on saving our money and investing our money, I mean, we're we're making our goals, we're we're building our dreams, and then these types of accounts are going to help us achieve those things.
• 25:51
  SPEAKER_00: What we need to do is to make sure that we are contributing to those types of accounts, and it doesn't really matter how much money you put in there in the long run, yes, of course.
• 26:07
  SPEAKER_00: But even if you start with, hey, I'm going to take$50 a pay period and I am going to put it in a high-held savings account to really bolster my emergency fund.
• 26:22
  SPEAKER_00: Automate that on your account.
• 26:26
  SPEAKER_00: Um, you can set that up pretty easily to just automatically have it pull the$50 and move it over.
• 26:32
  SPEAKER_00: And before you know it, you're not even gonna notice that that$50 is gone.
• 26:38
  SPEAKER_00: And you um have a bonus, or you have a really great month, and you you've got extra income, you can make a one-time deposit.
• 26:50
  SPEAKER_00: You could increase the$50 to something more.
• 26:56
  SPEAKER_00: And saving and investing is really this like boring long game, it's the marathon, and and so being consistent with contributing and then allowing yourself the time, especially on more of these long-term savings goals, that is far more important than you saving or investing per month.
• 27:24
  SPEAKER_00: Um, and especially if you're trying to do it yourself, try to have it automated because that just makes it very passive and you don't have to worry about it.
• 27:34
  SPEAKER_00: We have enough things to worry about as doctors and probably families and just life in general.
• 27:42
  SPEAKER_00: Like try to try to make your life as easy as possible by automating it.
• 27:47
  SPEAKER_00: And like I said, you're not in in some time, you're not gonna notice that that money just didn't show up in your checking account.
• 27:56
  SPEAKER_00: When money shows up in the checking account, it usually finds a place to go.
• 28:00
  SPEAKER_00: So if you already take it out and it's going towards uh a goal you have, that is just chef's kiss.
• 28:09
  SPEAKER_00: So that is what I have today for you on saving and investing from my angle.
• 28:16
  SPEAKER_00: Please let me know what you think of this episode, and we will catch you next time.
• 28:20
  SPEAKER_00: Thanks for listening.
• 28:28
  SPEAKER_00: That's all for this episode.
• 28:30
  SPEAKER_00: Thanks again for spending your valuable time with me.
• 28:33
  SPEAKER_00: I appreciate it.
• 28:34
  SPEAKER_00: Just a reminder: this podcast is not intended to provide medical advice.
• 28:38
  SPEAKER_00: Please contact your local veterinarian to establish and maintain a valid VCPR veterinary client-patient relationship.
• 28:44
  SPEAKER_00: If you liked what you heard on this episode, please rate and review this podcast and share it with a friend.
• 28:50
  SPEAKER_00: If you have questions or comments about this podcast or topics covered or ideas for topics, you can reach me at beyond the greenbibs at gmail.com or on Facebook and Instagram at Beyond the Green Bibs.
• 29:03
  SPEAKER_00: Have a great day, and we'll catch you next time.