Broke Millennial Takes On Investing: A Beginner's Guide to Leveling Up Your Money

Broke Millennial Takes On Investing: A Beginner's Guide to Leveling Up Your Money

by Erin Lowry
Broke Millennial Takes On Investing: A Beginner's Guide to Leveling Up Your Money

Broke Millennial Takes On Investing: A Beginner's Guide to Leveling Up Your Money

by Erin Lowry


$13.49  $15.00 Save 10% Current price is $13.49, Original price is $15. You Save 10%.
    Qualifies for Free Shipping
    Check Availability at Nearby Stores

Related collections and offers


A guide to investing basics by the author of Broke Millennial, for anyone who feels like they aren't ready (or rich enough) to get into the market

Millennials want to learn how to start investing. The problem is that most have no idea where to begin. There's a significant lack of information out there catering to the concerns of new millennial investors, such as:

  *  Should I invest while paying down student loans?
  *  How do I invest in a socially responsible way?
  *  What about robo-advisors and apps—are any of them any good?
  *  Where can I look online for investment advice?

In this second book in the Broke Millennial series, Erin Lowry answers those questions and delivers all of the investment basics in one easy-to-digest package. Tackling topics ranging from common terminology to how to handle your anxiety to retirement savings and even how to actually buy and sell a stock, this hands-on guide will help any investment newbie become a confident player in the market on their way to building wealth.

Product Details

ISBN-13: 9780143133643
Publisher: Penguin Publishing Group
Publication date: 04/09/2019
Series: Broke Millennial Series
Pages: 256
Sales rank: 130,544
Product dimensions: 5.40(w) x 8.20(h) x 0.70(d)

About the Author

ERIN LOWRY is the author of Broke Millennial: Stop Scraping By and Get Your Financial Life Together and Broke Millennial Takes On Investing: A Beginner's Guide to Leveling Up Your Money. Her first book was named by MarketWatch as one of the best money books of 2017 and her style is often described as refreshing and conversational. Erin's appeared on CBS Sunday Morning, CNBC and Fox & Friends. She has written for Fast Company, Cosmopolitan Magazine and Refinery29 and regularly speaks at universities and conferences around the country. Erin spent most of her childhood living in Asia, but now settled in New York City with her husband.

Read an Excerpt

I’m hoping you opened this book because you have at least a vague interest in investing, but like so many investors before you, including myself, you just have absolutely no clue how to start.

Here’s your first step. Quiet the inner voice that’s telling you some version of these excuses:

“You’re too young to worry about investing. That’s a grown-up thing. Like married with a house and a yard and a dog and a kid kinda grown-up.”

“You’re not smart enough to figure this out.”

“You’re too broke to be able to invest in the first place.”

You are grown up enough. You are smart enough. And we’ll get to whether it’s the right financial move for you to start investing now.

The fastest way to silence that inner critic is to clap back with why you need to be investing.


The simplest reason is this: it’s an efficient way to build wealth.
Seasoned investors, personal finance writers, financial advisors, and pretty much anyone doling out money advice will wax poetic on the ad­vantages of starting young and being consistent as an investor. The rea­son for this isn’t wishful thinking about what could’ve been if they’d only started sooner or been a little more aggressive with their contributions to the stock market. It’s simple math.

Reason 1: Compound Interest

“Compound interest is the eighth wonder of the world. He who under­stands it, earns it. He who doesn’t, pays it,” Albert Einstein, allegedly, once remarked.

Regardless of which wise man (or woman) made the statement, truer words were never spoken. Compound interest and the principle of com­pounding are essential reasons why investing early and consistently are touted as the means of wealth creation.

In short, compound interest is earning interest on interest. In ex­tremely simple terms, it works something like this:

On January 1, 2019, you invest $1,000 in an index fund. (We’ll get to what that is shortly.) By December 31, 2019, you’ve earned an 8 percent rate of return, so a total of $1,080 is now in your account. Starting in 2020, you begin earning interest on the $1,080 in your account, not just on the initial $1,000 investment. In 2020, you earn a 6 percent return on your $1,080, so you now have $1,144.80 in your index fund. Year after year, your money compounds, and you earn interest on your interest.

An increase of $144.80 in two years might sound like chump change, but imagine how quickly you can take advantage of compounding if you’re contributing to your investments monthly or even annually? In the scenario just described, you didn’t put in another penny after the ini­tial $1,000 investment and you still earned $144.80 in two years.
Or try this example:

Instead of starting with $1,000, you begin investing $100 per month in an index fund. Over the course of twenty years, with the fund receiving an average 7 percent return, you will have earned $49,194.59. It only would’ve amounted to about $24,000 if you’d put the same $100 in a basic savings account each month instead of investing it.

Investing allows you to take advantage of compound interest in a way that socking your money away in a savings account doesn’t.

Reason 2: Inflation

“The idea is, you will not outperform inflation without investing,” says Carrie Schwab-Pomerantz, president of the Charles Schwab Foundation, and senior vice president at Charles Schwab & Co., Inc. “What I mean by inflation is the natural rise of prices for goods.”

A hundred dollars can’t buy you as much today as it could’ve in 1989 or 1999 or even last year. Before you feel like contradicting me, let me say that obviously this isn’t always true for every good on the market. Thanks to competition in certain sectors and advancements in both manufactur­ing and technology, there are items once inaccessible to the general masses that are affordable today. But when we’re talking about inflation, we’re really referring to purchasing power. It’s why your grandparents could take a family of four out to a nice dinner for $5 in the 1950s, but today you can’t buy a value meal at McDonald’s for one person for $5. Having $100 in your bank account in 1989 would be equivalent to having $203.591 today, according to the Consumer Price Index Inflation Calcu­lator from the United States Department of Labor.

Money nerds make a big deal about inflation because your money will essentially lose value over time if it isn’t at least keeping pace with infla­tion. From January 2008 to January 2017, 2 percent represented a decent rule of thumb for what to expect inflation to be.

Your money needs to keep up with inflation, especially when you’re saving for long-term goals like retirement. Just putting that money in a savings account will erode your purchasing power because savings accounts don’t offer great interest rates. Or, as it’s more commonly called, annual percentage yield (APY). In 2019, many bank accounts only offer you a measly 0.01 percent APY. That means if you have $1,000 in savings, you’ll get a whopping $0.10 in interest by the end of the year. Some banks offer higher rates, like 1.75 percent APY, which would net you $17.50 in interest, but that’s still a pretty measly rate if that’s where you’re putting your entire life savings because you aren’t investing.

Investing helps protect your money against inflation. Sure, there will be years of low returns, but the average annualized return of the stock market will (most likely, because I can’t make promises about market performance) outperform inflation. We know this because we have de­cades and decades of data, and even factoring in terrible years, it still av­erages out to beat inflation. However, this argument does make the assumption that your investments are diversified over a variety of sectors and companies and are not all in a single stock. We’ll get into what those terms mean in chapter 2.

Reason 3: Time

The earlier you start, the longer you have to let compound interest do its job for you, and the better you can weather the ups and downs of the market. And best of all, the less money you have to invest each year to meet your goal. Think that sounds suspicious?

Meet Jake and Stacey, twenty-six-year-olds who would like to retire at age sixty-two. They’ve just started new jobs, and neither one has ever invested or saved for retirement before. They each earn $50,000 a year, and their employer offers a 4 percent match on their 401(k)s.

Stacey enrolls right away, putting 4 percent of her salary ($2,000) in her 401(k) in order to get her full employer match (an additional $2,000). For simplicity’s sake, let’s say Stacey stays at the exact same salary for the next thirty-six years, and that she receives an average 7 percent return on her investments.

In thirty-six years, when Stacey is sixty-two, she’ll have just shy of $600,000 in her 401(k).

Jake decides to wait until he’s thirty-six to begin investing in his 401(k). That means ten years of employer matches left behind, which, before compound interest, is $20,000! Again, for simplici­ty’s sake, we’ll say Jake also stays at a stagnant $50,000 salary per year his whole career.

Jake tries to play catch-up and puts 10 percent of his $50,000 salary toward his 401(k). That’s $5,000 a year from Jake + the $2,000 employer match he receives. He, too, receives an average 7 percent return on his investments.

In twenty-six years, when Jake is sixty-two and wants to retire, he’ll have almost $481,000 in his 401(k).

Jake contributed $3,000 more per year to his 401(k) than Stacey did, yet he accrued approximately $119,000 less than Stacey be­cause she started earlier.

The Jake and Stacey example highlights why time matters. The earlier you start, the less you have to invest each month or year in order to reach your goals. Trying to play catch-up later is much harder than most people think.

“What you forget when you’re a young person is that you don’t have a mortgage yet, you don’t have a family yet. Your financial commitments are less, and you have flexibility, and making decisions may feel tough then, but it’s easier to make [them] then than when you have a mortgage and a family,” explains Julie Virta, senior financial advisor with Van­guard Personal Advisor Services.
Even if you earn a lot more later in life, it doesn’t always mean you’ll have hundreds to thousands of spare dollars a month to try to catch up on the investing you should’ve done a decade ago.

Table of Contents

Preface: Is This Book Right for You? 1

Introduction: The Case for Investing 3

Chapter 1 But Are You Ready to Start Investing? 17

Chapter 2 Let's Establish a Common Language 29

Chapter 3 Grabbing the Bull by the Horns When You're Risk Averse 47

Chapter 4 I Have a 401(k) - Do I Need to Do More Investing? 57

Chapter 5 Should I Invest When I Have Student Loans? 79

Chapter 6 I Want to Put Money in the Market-How Do I Start? 93

Chapter 7 I Like Gambling - Isn't That Like Individual Stock Picking? 111

Chapter 8 Investing-Of Course There's an App for That 125

Chapter 9 Robo-Advisor or Human Advisor-Which Is Better? 139

Chapter 10 Impact Investing - Making Money Without Compromising Your Ethics or Religious Beliefs 155

Chapter 11 Riding Out the Panic of a Market Crash 163

Chapter 12 Sniffing Out a Scam 177

Chapter 13 So, You're Ready to Sell an Investment 189

Chapter 14 Tactics the Wealthy Use to Make and Preserve Money 195

Chapter 15 Where Can I Get More Investing Advice (Because I've Been on Reddit…)? 209

Conclusion: Now It's Time to Level Up! 219

Acknowledgments 223

Notes 225

Index 229

From the B&N Reads Blog

Customer Reviews