How To Buy Stocks? How To Start a Retirement Account? Dorian Finance Podcast ep 10–How-To-Start-a-Retirement-Account–Dorian-Finance-Podcast-e2e5o39

Last podcast How To Make New Year’s Resolutions, Lessons learned in 2023, How To Create a Budget? My New Year’s Resolutions

This episode topics are

  • How to buy stocks?
  • Retirement maths 
  • How to start a retirement account?
  • Index funds 101
  • High yield savings account 101

Investing accounts 

How to buy stocks?


Where is the overall stock market at? Up or down

What does the company make?

Are they profitable or losing money? 

What level of risk can you handle? If your stock goes down by 50% would you keep it or sell it? I normally sell my stocks if I can’t see them going back up quickly. 

Brokerage Account

Is like opening a check account at a bank but it is how to buy and sell stocks

Deposit Funds

You will need to link your bank account to your brokerage account to deposit your money into to start buying stocks. 

Stock Selection

Choose the stocks you want to buy based on your research.

Place an Order

Use your brokerage platform to place a buy order for the selected stocks. I mostly use limited orders to only pay what I want it. 

Monitor and Manage

Keep track of your investments and adjust your portfolio as needed. This is where your level of risk comes in. For example, I sold all of my GE shares after they went down by 50% which I was debating whether or not to keep it. Good that I sold because GE went down another 50% after I sold all my shares.

How to start a retirement account?

Roth IRA or traditional IRA or 401(k)
Roth IRA or traditional IRA or 401(k)
  • Determine Your Retirement Goals:
    • Determine how much money you’ll need in retirement.
    • Thinking about factors such as your current age, desired retirement age, and expected lifestyle.
    • What do you want to do in retirement? Watching tv gets boring really fast. 
  • Choose the Right Retirement Account:
    • Common retirement accounts include 401(k)s, Roth IRA, self-employed retirement plans like SEP-IRAs or Solo 401(k)s.
    • Each account has their own set of advantages and disadvantages 
    • Take Advantage of Employer-Sponsored Plans
      • If your employer offers a retirement plan (such as a 401(k)), take advantage of it.
      • Contribute enough to maximize any employer matching contributions, as this is essentially free money.
  • Research Investment Options
    • Understand the investment options available within your chosen retirement account.
    • Consider your risk tolerance, time horizon, and investment goals when selecting investments.
  • Select a Financial Institution:
    • Choose a reputable financial institution to open your retirement account.
    • This could be a bank, credit union, brokerage firm, or online investment platform.
  • Complete the Necessary Paperwork
  • Set Up Automatic Contributions
  • It’s more likely that you keep doing it if the money comes out of your account automatically
  • Monitor and Adjust
    • Regularly review your retirement account and adjust your contributions or investment strategy as needed. As you get closer to retirement, you may want to adjust your asset allocation to be more conservative. Meaning more bonds or cash that you put into a high yield savings account. 
  • Stay Informed
    • Stay informed about changes in tax laws, contribution limits, and other regulations that may affect your retirement account.

Index funds 101

1. What is an Index?

  • An index is a statistical measure of the changes in a portfolio of stocks representing a portion of the overall market. Examples include the S&P 500, Dow Jones Industrial Average.

2. How Index Funds Work?

  • Index funds passively manage their portfolios by holding the same stocks or bonds as the index they track.
  • The goal is to replicate the performance of the chosen index rather than trying to outperform it actively.

3. Diversification

  • Index funds provide instant diversification by holding a broad range of assets within the index.
  • This diversification helps spread risk, reducing the impact of poor performance by any individual stock.

4. Low Costs

  •  index funds have lower expense ratios compared to actively managed funds.

5. Passive Management:

  • Index funds follow a passive investment strategy, meaning they don’t rely on fund managers to make buy/sell decisions based on market analysis.
  • This passivity generally leads to lower turnover, which can be more tax-efficient.

6. Popular Indexes:

  • S&P 500: Represents 500 of the largest publicly traded companies in the U.S.
  • Dow Jones Industrial Average: Includes 30 large, publicly traded U.S. companies.

7. Benefits of Index Funds:

  • Diversification: Spread risk across many assets.
  • Low Costs: Typically lower fees compared to actively managed funds.
  • Consistent Performance: Matches the performance of the underlying index.

8. Risks and Considerations

  • Market Risk: Index funds are not immune to market downturns.
  • Tracking Error: The fund’s performance may deviate slightly from the index due to tracking error.
  • No Outperformance: Index funds won’t outperform the market; they aim to replicate its performance.

9. How to Invest?

You can invest in index funds through brokerage accounts, retirement accounts, or directly through the fund provider.

10. Long-Term Investment

Index funds are often considered suitable for long-term investors due to their passive nature and the historical upward trajectory of the stock market over time.

High yield savings account 101

A high-yield savings account is a type of savings account that offers a higher interest rate compared to traditional savings accounts. These accounts are typically offered by online banks and financial institutions. 

Here’s a basic overview of high-yield savings accounts:

1. Higher Interest Rates

I have my capital one 360 performance savings with 4.35% Annual percentage yield or APY.  

2. Online Accessibility:

Many high-yield savings accounts, you can manage your account through a website or mobile app.

3. FDIC Insurance:

Like traditional savings accounts, high-yield savings accounts are usually FDIC-insured up to the legal limit (currently $250,000 per depositor).

4. No Minimum Balance Requirements:

High-yield savings accounts often have no or low minimum balance requirements. 

5. Easy Access to Funds:

Most high-yield savings accounts allow you to easily access your funds through electronic transfers, ACH transfers, and sometimes even through ATMs.

6. No or Low Fees:

Many high-yield savings accounts have little to no fees, helping you keep more of your earned interest. Make sure to get one that has no fees that why I picked mine for no fees when they are some offer 5.5% but with fees or limits

7. Interest Compounding:

Interest is usually compounded on a monthly basis, meaning you earn interest on both your initial deposit and the interest that has already been added to your account.

8. Purpose of High-Yield Savings Accounts:

Emergency Fund: Often recommended for holding an emergency fund due to their accessibility and safety.

Short-Term Savings: Useful for saving for short-term goals like a vacation or down payment.

9. Factors to Consider:

Interest Rates: Compare the interest rates offered by different banks to get the best return on your savings.

Fees: Check for any maintenance fees or transaction fees associated with the account.

Access to ATMs: Some high-yield savings accounts provide access to a network of ATMs for easy cash withdrawals.

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