Investing For Beginners: Don’t Just Keep Your Money In The Bank!

they lie to you you can start investing with any amount of money and that's because we have something called a lot of us women don't know this but there's a difference between managing your money and building wealth when you focus on strategies like budgeting and saving all your money in the bank what you're doing is managing your money which is a good foundation for your financial health however building wealth requires a little more than that if you want to become wealthy there are many ways to do it and we're going to talk about them later in the video but trust me girl stacking up money in the bank is not one of them hi and welcome or welcome back to the channel if you're new here hello i'm vanessa a certified financial educator and on this channel we talk all things earning more and building wealth and today honey we have a really important thing to talk about in today's video i'm gonna open your eyes by telling you why you shouldn't keep your money in the bank and then later in the video i'm gonna tell you what to do instead if you want to turn your hundred dollars into a hundred thousand dollars but before we get into it please go ahead and hit the like button so that this video can go out to more women and help them become financially empowered number one what actually happens when you keep your money in the bank if you think the bank just keeps your money in a safe little box ready for you to come pick up whenever you want to honey you're mistaking the bank puts your money to work for them let me explain if you have a friend called kimberly who wants to purchase a home and the home costs a hundred thousand dollars and she has a 20 down payment of 20 000 guess what she will go to the bank to get a loan and the bank will take some of your money some of my money some of cousin raymond's money and give it to kimberly and then they would make money on top of our money through interest but here's where it gets a little funky the interest rates that they would charge kimberly on her loan is very different from the interest rates that they will pay out to us the people who've deposited our money in the bank so basically our money will be doing nothing for us but doing everything for the bank and while you might think it's worth it because your money not doing anything also means your money is not taking any risks honey let me tell you something your money is taking a risk and that risk is called inflation yes girl inflation went up to about six percent in 2021. now when you hear the word inflation what it simply means is that the prices of goods and services have gone up so imagine if you have one thousand dollars in the bank and you're going to sleep thinking oh my gosh i can buy five things that cost two hundred dollars each now because of inflation those five things that would have cost you one thousand dollars now cost fifteen hundred dollars because each of them is now three hundred dollars but still you have only a thousand dollars in the bank aren't you losing money you are because the whole point of money is to be able to buy things and if everything gets more expensive but your money doesn't actually go up then you're losing money but what's the real meaning of this doesn't mean we should never keep money in the bank at all there are three buckets of money that i would recommend that you keep in the bank one is your emergency fund two we have sinking funds and three is your operating capital first of all what is an emergency fund an emergency fund is an amount of money that you set aside to cover unforeseen circumstances as a rule of thumb it's usually good to start with at least three months of your living expenses sinking funds are savings that you plan to spend on specific things in the near future so for example if bae pops the question and you both have to plan a wedding you're probably gonna need to set some money aside to pay for the wedding and three we have your operating capital this is money that you use for your day-to-day living for your rent your phone bill and other things that you need to survive now of course there are great systems for allocating and budgeting your money and if you want me to make another video about that then let me know in the comment section i'm literally making the content that you need now beyond these three things which are good reasons to keep your money in the bank your money should be working for your girl so let's talk about how you can turn one bag into a hundred bags now i promised you in a previous video that i was gonna talk more about investing on the channel because more of us need to start doing it and that's the way you put your money to work there are three beginner investing strategies that i used when i first started investing and there's no reason why i would know this and keep it to myself i literally want all of us women in this community to win and investing is an important piece if not the most important piece of the wealth building puzzle i first started investing through index funds and if you have no idea what an index fund is i got you boo when you invest in the stock market one of the things you have to consider is diversification and what that simply means is that you don't want to put all your eggs in one basket for example you don't want all your money invested in stocks related to tech or all your money invested in stocks related to travel because look at what happened in 2020 for example a lot of restaurants and hotels and airlines suffered a lot because of what happened in the world now just imagine if all your investments were in stocks that were related to the hospitality industry what would happen you would lose all of your money but think about it the same thing that happened in 2020 that caused the hospitality industry to go down is what caused the tech streaming and social media industries to go up now that's exactly the reason why we want to be diversified you want to make sure that you have enough variety in your portfolio to reduce your risk and what that's called in the finance world is hedging now chances are you're no professional investor if you just started investing you definitely do not know which stocks are good which bonds are good which assets are good to add to your portfolio and that's where index funds come in now take the s p 500 for example s p 500 is an index that tracks the top 500 companies in the us so when you buy into the s p 500 you're already buying a little bit of the entire stock market in one bundle it takes out the hassle of hand picking what's good and just lets you buy the whole bundle for a low price the second investment strategy i started out with is dollar cost averaging this just means that no matter what happens in the stock market you're just putting the same amount of money in every single time that way when the price is down i can get more when the price is up it just means i can get less but every single month i'm investing no matter what h