Latest / The SmallBizChat with Melinda Emerson / How to Take Calculated Risks and Build Long-Term Wealth with Teri Ijeoma

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How to Take Calculated Risks and Build Long-Term Wealth with Teri Ijeoma · The SmallBizChat with Melinda Emerson

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Three, 2, 1, 0.
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Ignition.
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Lift off.
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Ending small business failure.
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Welcome to the Small Biz Chat podcast with the number one small business expert, Melinda
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Emerson.
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Melinda's goal is to end small business failure, and she'll give you the information
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you need to succeed and live the life you dream of.
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Now here's your host, the small biz chat lady herself, Melinda Emerson.
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Have you subscribed to the Small Biz Chat podcast?
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Well, it's time.
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Every Wednesday, we offer listeners bite sized actionable tips to start and grow a successful
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small business.
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In just twenty minutes or so a week, you can get a ton of insight and resources to propel
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your business forward.
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Be sure to subscribe to the Small Biz Chat podcast today.
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Hi there, everyone.
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Welcome to the Small Biz Chat podcast.
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I'm Melinda Emerson, your host, America's number one small business expert, and you know
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they call me the small biz lady.
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Now the Small Biz Chat podcast is your go to destination for entrepreneurs who wanna build
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profitable businesses that create freedom, wealth, and lasting impact.
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Every week, you'll hear inspiring conversations with industry leaders, business experts, and
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successful entrepreneurs who share practical, real world advice you can put into action
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immediately.
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We're gonna be talking about the fact that financial freedom isn't just about making more
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money, it's about creating more choices.
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But before we get started, if you are a fan of the Small Bitch Chat podcast, please leave us a
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review on Apple Podcasts, Spotify, or wherever you listen to your favorite podcast.
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Your support helps us reach more entrepreneurs and continue bringing you expert advice every
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week.
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Now as always, please do not send me any hate mail.
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If you don't like my show, please don't get on there dog meat, that's not nice.
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Now, let me welcome today's guest.
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Her name is Teri Ijeoma and she is a renowned financial educator training expert, founder of
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trade and travel, and the author of the new book, The Risk Worth Taking.
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She is a graduate of MIT and she has helped thousands of people learn how to invest,
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supplement their income, and build the lifestyle centered around freedom rather than
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fear.
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She's inspiring the next generation to think differently about wealth risk and opportunity.
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And today she's here to teach all of us how to create the life we really want.
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Welcome, Terri.
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Hi, Melinda.
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How are you?
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Oh, I'm good.
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I'm good.
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I'm so excited to finally have you here.
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So let's just
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get into it.
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Right now, the economy is a little sketchy.
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Yes, it is.
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What's going on?
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We got we got, you know, we got all
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kind of stuff going on.
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We got the economy.
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We got inflation.
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We got market volatility.
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You know, we got folk losing good folks losing good middle middle middle manager jobs.
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Like we're the six week folks losing jobs.
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So what are the biggest financial mistakes that you're seeing people make right now?
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Melinda, you're so right.
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I actually had my best friend just yesterday call me, and she had gotten a call from her job
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that her job had been eliminated.
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And she is a great...
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Like, she's brilliant.
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She's top of her job.
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She's been working in her industry for twenty years.
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So this is not, like, some slug.
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No, she is amazing.
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And yet they still called her to eliminate her job.
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So you're right.
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But here's what I wish she knew.
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Right now, they told her that they're going to give her a severance package for five months.
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And in my head, I was thinking, she's gonna need more time than that just to, like, get her
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her nervous system in check.
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Like, instead of her having to immediately rush to find a new job, I wish she knew how to make
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that severance package work for her.
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What if she could take that money and make it grow so that she could spend some time abroad
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or, you know, decide to really search for her passions?
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But they don't teach that in school.
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They teach you how to get the job, how to make sure that you can do the the work, but they
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don't teach you how to make your money grow so that when you do need more time, it can work
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hard for you instead of you having to do all the hard work.
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And honestly, I wouldn't even tell her to go look for another job.
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I would honestly tell her to take that severance package, look at what money she could
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scoop out of her four zero one ks, and I tell her to go buy a business or buy a franchise and
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make 10 times what she was making work for somebody else.
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That's what I would tell her if she was my friend.
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So tell her to call me Teri.
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Anyway, now- I will, I will.
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Listen.
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Listen.
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So people how to make stretch...
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I mean, you work for somebody twenty years and they give you five months of salary is crap
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anyway.
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Like, that's ridiculous.
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But we know that kind of stuff is happening.
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People are getting even less security than that.
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Now, I know that you've taught thousands of people to invest.
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What are the biggest mental barriers that keep beginners from getting started when they know
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that investing is probably the best way to go?
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The biggest thing is fear.
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So there's a couple ones, but the first one I'd start with is fear.
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So you're right.
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I've taught over 40,000 people how to invest in the stock market.
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They come into my trade and travel class.
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They are great students.
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They take all the notes, but then I find out that they never actually take a real trade.
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They stay in the paper account because they're just too afraid.
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So the first thing is getting over the fear and and showing your mindset that actually
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investing is a smart risk.
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Many times we think, oh, investing is too risky.
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It's a gamble, and then we stop.
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Especially, it was definitely black women.
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We don't like to take a risk, but I think it's everybody.
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We get we get nervous, and then we decide that, oh, the stock market is too risky.
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And And that's why I wrote the book, The Risk Worth Taking, because, no, the first mindset is
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this is a risk.
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Yes.
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However, it's worth taking.
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So we've got to step over our our fear and go for courage.
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But then the next thing is people think, oh, man, it's too hard to get started.
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I don't know what buttons to press.
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The market's just too intimidating.
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And actually, guys, it's actually really simple.
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Even if you wanted to invest in just the overall market like the S and P five hundred,
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you could invest in an ETF that's called an exchange traded fund.
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And one of the ones I like is SPY.
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It covers the overall S and P five hundred, and you can buy a share of that.
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And now you have, like, now you have exposure to all of the stocks.
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So it's not that tough.
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You press a few buttons, and now you're in.
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So that
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I'm telling you.
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You know what got me investing?
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Like, I used to just let my financial adviser tell me whatever, you know, stocks to put stuff
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in.
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And when I went to graduate school, I learned how to read 10 k's and really understand what
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was in them.
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And then I took over my own account and started handling my own trades after that.
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I ain't need him anymore.
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So I think that it's about we can't be afraid to learn information.
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And one of the things I'll say about a 10 k is check out the balance sheet.
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That's when you find out what a company really cares about is by looking at their balance
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sheet.
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But I know what you mean about the fear or just like kinda letting your four zero one ks ride
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whatever they tell you to put it in and like kinda not even checking it.
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And so
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Paying attention.
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Yes.
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That's dangerous too.
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Right?
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So for those of us that, know, if you have a company that has a four zero one k and they're
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matching, you need to match the match.
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Right?
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Yes.
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You can do individual retirement accounts as well and self directed retirement accounts.
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So you can actually make sure that you're a bit more active.
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You're seeing when things are growing.
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You're adding money when stocks come down.
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I like being an active investor because sometimes you can beat the returns that you get
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from just letting them buy and hold and sit.
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Right.
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Right.
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Right.
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Right.
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I know that as an entrepreneur, people are a little bit afraid sometimes to lock up all
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their money in investments like this because sometimes you gotta be a little liquid.
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When you have a situation where you need cash because you need to invest in your business or
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you're waiting on a big payment from someone and you got payroll to make another.
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So I know that sometimes I do have a solo four zero one k for myself, for my business, but I
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know that sometimes there's other vehicles I put money into, things like insurance and stuff
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like that that I can borrow against without penalty.
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And I actually like investing in the stock market for this very reason.
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When I was first thinking about investing, I actually was investing in real estate, and I
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was gonna have to put, like, $35,000 down down payment, you know, to get the building that I
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wanted.
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But then getting the rent, the rent was only, like, $1,000, and half of that had to go
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towards expenses.
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So I only would have been making a small margin every month trying to pay down this big down
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payment versus if I put 35,000 in the stock market, I still had access to the full 35,000
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and a little bit extra every month because it was making interest.
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And that was good when I was trying to figure out, okay.
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How do I make...
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You know, how do I use this money sometimes, or how do I make my business work?
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I had access to it.
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Mhmm.
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Now when someone has never invested before, let's go back to these folks that are just
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like...
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They've been like, they wanna put their toe in, but they're scared.
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What are the three steps that people should take when they are beginning to get started
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putting stuff in the in the stock market?
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First, get some education.
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I think because it's so easy to just open a brokerage account and press some buttons,
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everybody thinks they can figure it out themselves and they can learn how to invest.
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So first, get some education.
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And, of course, I say that because I was in education for about ten years before I started
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trading full time, so get some education.
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I teach trade and travel or the book, the risk worth taking, just get some education.
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Two, the next step is open up a brokerage account.
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Any brokerage account is fine.
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Nowadays, most of them have $0 to place a trade.
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You don't have to pay commissions.
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Some of the ones I like are E Trade, Fidelity, Charles Schwab.
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Any of those are good, but make sure that the broker that you use has good charting because
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that's going to come into play down the line when you're a really sophisticated trader.
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So I just want you to get one that actually has some extra tools and bells and whistles.
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After you open...
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Oh, go ahead.
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No.
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No.
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Go ahead.
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I'm sorry.
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Well, I was gonna say after you open your brokerage account, they'll probably have
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something called a watch list inside where you can add companies to the watch list and start
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paying attention to how their stock is moving.
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Another good tool for that is CNBC.
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I love cnbc.com, or you can put that app on your phone.
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Just start adding companies you like to the watch list.
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And then when there's news on them, like we were just talking about earnings reports or,
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you know, the balance sheets, four times a year, the company tells you how they're doing.
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That app will actually give you a notification and tell you what's happening with the stocks
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you like.
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And if they say, oh, man, you know, we feel really good about the future, we think that
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things are gonna go well, then that's one that you can consider investing in.
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Now let's talk about folks that have experienced financial setbacks, whether it's a
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failed business, job loss, significant credit card debt, lord.
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Okay.
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What are some of the strategies that can help people recover and move forward?
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Melinda, so I had quit my job as assistant principal and went to Thailand.
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And I thought, oh, I'm about to do this.
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I'm trading full time.
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Girl, I had my biggest loss ever in Thailand.
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I lost $26,000 overnight.
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Yes.
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Because I had invested in 8,000 shares of Pandora stock.
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You know, the radio station?
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The radio station, don't nobody use no more of that one?
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Exactly.
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And at the time, I thought this is the best company ever.
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It's going into cars.
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It's going on to TVs.
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So that was my biggest learned lesson, and here's what I got from it.
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First of all, your quantity size.
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One of the best things you can do to protest...
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Protect your risk in trading is manage how many shares you're actually investing.
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Sometimes we just get so excited about our company that we just, oh, I'm a get a million
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shares.
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No, baby, hon.
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There's formulas to help you calculate how many shares that...
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You know, to maintain your risk.
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Another thing is calculating in advance reward to risk ratio.
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I do this using stock charts, but I like to invest when I think the reward on a trade is
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three times my risk.
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And, again, you can look at a stock chart and say, okay.
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If this stock falls, how how far down could it potentially go?
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And then if it goes up, how how far up?
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Make sure you're calculating those numbers in advance.
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And then third, the way you protect your risk on the downside when I said, okay, well, far
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down can it go?
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You can enter a trade called a stop loss.
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It's an order type, but it just says, if the stock comes down to this point, take me out of
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the trade.
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And that immediately manages your risk because you you know that, like, now you know exactly,
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okay.
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I'm not gonna lose more than a thousand dollars.
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My risk tolerance on this is $500.
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So if this stock goes down to here, I'm getting out.
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So entering a stop loss.
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Those are three ways to protect your risk when you're investing.
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I love that.
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That's really, really good advice.
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Now I think that a lot of entrepreneurs invest
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everything
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in their business.
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I mean, they don't even take salary, any any, you know, any profits, they gotta push it back
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in because they gotta survive another month or two months, you know.
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What do you think about how they should be balancing investing in their company versus
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investing for their personal financial future?
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That's a great question.
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A trader, I trade stocks, but then I also own a company, the online course, and it was number
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one in the world for about three years.
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And I ended up having like 42 staff members.
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And this was a question that I had too.
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Like, how much do it go towards the business versus how much should go towards investing?
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Honestly, guys, I think it's a personal decision, but you should think about the return
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on both sides.
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If you put the money into your company, how much will it make for you in three months, six
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months, when you put that money into your company?
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If you put that money into your account and you're actively investing, you can do the same
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calculations.
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How much money could you potentially make in three months, six months?
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I know when you're first starting to invest those numbers might be small.
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You might say, you know what?
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I can only make about eight to 10% as I become a better investor.
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Maybe I can make a little bit more.
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So maybe in the beginning your amount that you put towards investing is a bit smaller because
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you can make a bigger return in your business.
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But then there might get to a point where your business isn't doing as well.
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I've had some times where, you know, AI came in online courses, and we were getting less sales.
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And so putting more money towards ads or the business didn't have as good a return.
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But at the same time, the stock market stock market was going like crazy.
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It was at all time highs.
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It was, you know, hitting new records every day.
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So the reward on the investing side would have been higher.
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So then I shifted.
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So I think it's gonna be a consistent shift as you think about your personal goals.
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Now I know that you're all about risk management.
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And so what are some of the practical rules that you give everyday investors that they need
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so that they can protect themselves, but still kind of more focused on long term growth?
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Yeah.
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Well, I will say I am an active trader, so I don't think you always have to be long term.
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It could be short.
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And that, especially in our current economy, has been working well for some people.
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Like thinking about, you know what?
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I actually need to, in a business, you might have something where I need to pay for this
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office space, or I need to pay for this storage, and this storage is $300 So how can I
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invest for three months to just pay for that?
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Or maybe there's a staff member you're trying to pay for.
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Like, I actually invested Melinda recently for my new CEO.
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She told me her salary and I said, oh, baby, that's high.
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I need to make sure I invest for this.
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Let me invest in some Palantir shares or add some meta for this.
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And I told her, said, if I can trade for this, I'll hire you on.
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But it might need to be a short stint versus a longer stint in this economy.
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So for example, recently in I know this is going to come out a little later in the fall.
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But just think, earlier in the year, we had a time where some of the AI companies were all
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going down.
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And we saw that because of Claude, there was you know, this worry that AI would cup...
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Would fall apart.
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So all those really great software companies were coming coming down in stock price.
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That was a great opportunity.
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Now that the the summer has come or the fall has come, those companies You're have back.
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Right back.
17:26
You're right.
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Nvidia's back on top of oh, yeah.
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Oh, yeah.
17:29
Oh, absolutely.
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Exactly.
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So you might want to take some profit off the table.
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So to answer your question, I think that one way to protect your risk might actually be
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being more active and investing a bit more short term.
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And I know that's an uncommon example or uncommon advice, but it's something to consider
17:49
if you have If
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you can handle it, I mean, I try not to look at it, like whether it's up or down, like when I
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hear like I say, 700 down, I'm like, I'm not opening up, I'm not gonna look at it because I
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don't wanna do anything reactionary, that's not what I do.
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But I know that you talk about how financial independence means different things to
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different people.
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How do you define it and what habits do you think consistently move people closer to
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actually achieving it?
18:18
Yes.
18:19
And Melinda, can I add in one thing real quick on what we just talked about with how to take
18:24
care of your risk?
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Another important thing is having a trading plan in advance.
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So I take seven steps every time I take a trade.
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It includes how do I pick healthy companies?
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How do I protect my risk, which we talked about?
18:36
How do I look at charts to find the best time to enter a trade and the best price to sell?
18:41
All of those steps are in my trade and travel trading plan.
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Having a plan will also help protect your risk because then you won't be so emotional like,
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oh, I heard at the barbershop that this is a good stock.
18:53
No.
18:54
We're looking at a plan.
18:56
We run everything through that trading plan.
18:59
That's important.
19:00
So I just wanted to add that in.
19:01
No, I think that was a very, very good add.
19:06
But just walk me through what consistent habits people need to do to really having financial
19:13
independence.
19:14
Yes.
19:16
So in order to have independence for me, that means choosing my who, what, when, where.
19:21
Who I work with, what I work on, when I work, and then where I work from.
19:26
Because I love to travel.
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So I want to be on a beach somewhere with my phone or my laptop and not chained to a desk.
19:33
Right?
19:33
I think that's why we do entrepreneurship for that kind of freedom.
19:37
The habits that are important for that is one, you got to have really strong discipline,
19:42
especially as an investor.
19:44
Me sticking to that trading plan is discipline.
19:48
You also have to have patience, making sure that you're waiting for stocks to come to your
19:52
price versus just having FOMO and chasing.
19:55
And that's even in life too, waiting for the right opportunities, right?
19:59
Waiting for the right partnerships instead of just trying to make things happen yourself.
20:03
I'm a Bible girl too, so waiting on God.
20:06
Sometimes you have to just pray about it and then let him handle it.
20:10
Right?
20:11
So those are some of the practices.
20:13
You asked me for three.
20:14
I can go on.
20:15
I'm a preacher, so I'll stop there.
20:18
Alright.
20:18
Alright.
20:19
So if you wanted every listener to commit to taking one meaningful financial action over the
20:26
next thirty days, what would you challenge them to do?
20:30
Buy my book, The Risk Worth Taking, of course.
20:33
But then other thing, go into CNBC and at least start listening to financial news.
20:40
Being more active and just understanding the words and the terms are important.
20:46
I really like listening to Marketplace every day on NPR as well.
20:49
That's another great place to get good information.
20:52
Alright.
20:52
Last question for you.
20:53
What is the best business advice you've ever received?
20:58
Don't be...
20:58
Don't compare yourself to other people.
21:01
Your journey is your journey.
21:04
I love it.
21:05
Thank you so much, Terri.
21:06
And I can't wait to hear more.
21:08
And your book, I I think is...
21:10
I can't wait to read it.
21:11
Alright.
21:12
Thank you so much for being here with me.
21:14
Thank you.
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Thanks for listening to the Small Biz Chat podcast with Melinda Emerson.
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Subscribe to this podcast wherever you listen to podcasts, and join us next Wednesday for
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more fantastic information and interviews.
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You can find more sources and small business success strategies by visiting Melinda's
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website, succeedasyourownboss.com.
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Thanks again for listening, and we'll see you next week.