A 27-year-old influencer advises her thousands of followers to delete Robinhood and go for a 401k and ‘boring’ index funds

Robinhood on cellphone
  • Instagram influencer Helen Lu tells her followers to focus on retirement accounts, not Robinhood.
  • She touts the benefits of “boring” investing like index funds and 401(k)s.
  • “Many people have become millionaires from index fund investing,” she said in an Aug. 5 post.

One millennial influencer who calls herself the “Money Minimalist” says her thousands of followers should delete Robinhood and focus on long-term investing like retirement accounts instead.

Helen Lu, the 27-year-old influencer, told Fortune in an interview that Robinhood has more people interested and curious about investing, “which is great.”

“But if someone would rather set up that app than their 401(k), I tell them to delete the app,” she said.

The problem with Robinhood, Lu told Insider in an Instagram message, is that it was “designed to make investing feel like gambling.”

With retail traders joining the markets in droves amid the COVID-19 pandemic, Robinhood has come under scrutiny for gamifying investing – a claim that the app’s chief Vlad Tenev has denied, saying instead that it’s made investing easier for everyday people.

In March, Robinhood removed its digital confetti feature – which popped once users made their first trade – after the company faced scrutiny for its game-like features during a congressional hearing following the GameStop saga. Robinhood did not immediately respond to Insider’s request for comment for the story.

The craze around meme stocks like GameStop this year has pushed new, younger-skewing investors into the stock market, according to a previous report from Fidelity. Those investors are now turning to something familar to learn how to invest: social media.

Lu, who has 16,000 Instagram followers, takes a more traditional approach to investing, which is quite the opposite of many finance influencers who teach momentum trading and speculative investing.

For example, in one post she advises teens to open a roth IRA, research index funds, and hold investments long term. “Many people have become millionaires from index fund investing,” she said in the Aug. 5 post.

“Buy and hold. Long-term investing. I like telling people that boring growth is better than exciting loss,” she told Fortune.

In messages to Insider, she said she uses Vanguard for index funds and recommends the book “The Simple Path to Wealth” by J L Collins for anyone looking to start investing. She also touted the benefits of retirement accounts like a 401(k).

“You can lower your taxable income, pay less in taxes, AND get an employer sponsored benefit,” she said. “That doesn’t happen when you invest with Robinhood.”

Read more: An ultimate guide to 10 top altcoins, their real-world applications, and why investors are betting their tech is the future of crypto

Read the original article on Business Insider

4 personal finance books that changed my relationship to money for the better

Welcome to Personal Finance Insider, a biweekly newsletter that connects you with the stories, strategies, and tips you need to be better with money.

Open book with money signs coming out of it on orange background 4x3

Here’s what: Books I’m currently obsessed with

I’m a book lover. You can find me reading no less than three books at any given time. Usually one is a novel and the other two are nonfiction.

Picking up a nonfiction book is one of the most cost-effective ways to mentally download a ton of information about a particular topic. And there’s no shortage of books about my favorite topic of all: personal finance.

I’ve read dozens of books about money, and many of them have been helpful in teaching me the basics – how to save, invest, and budget. But today I want to share four books with you that have given me an entirely new understanding of my relationship to money. Here are my current obsessions:

  • Brian Portnoy’s “The Geometry of Wealth” is full of insights that inspire me to think about how I can use money to shape my ideal life. He brings in lessons from other disciplines – history, neuroscience, and philosophy – to illustrate how everything in life is connected to money and how we can use that to our advantage.
  • Morgan Housel’s “The Psychology of Money” implored me to think about how we behave as investors, savers, and earners. He takes what we assume to be true about money and turns it inside out. I’m always game for new perspective.
  • Rachel Rodgers’ “We Should All Be Millionaires” is a new book, released this past spring, that had me hooked from the introduction. Rodgers’ financial ambition is infectious, plus her ideas are inventive and totally actionable. This book has reminded me to never sell myself short.
  • Ramit Sethi’s “I Will Teach You To Be Rich” has been a favorite for years. It was first published in 2009 and updated a decade later. In addition to really helpful beginner investing and money management advice, Sethi introduces the concept of building a “Rich Life” for yourself and how to identify and get over your money hangups. It’s always relevant.

Happy reading!

Tanza Loudenback, Personal Finance Insider correspondent and certified financial planner

P.S. My time at Insider is coming to a close – it’s been a pleasure sharing my money musings with you over the past year. Going forward, senior editor of Personal Finance Insider Stephanie Hallett will be authoring this newsletter.

PFI Newsletter divider

Ad: This startup wants to help you plan for an easy retirement

After seeing too many people miss opportunities to maximize their retirement income, SmartAsset developed a free tool that helps you find unbiased, expert advice. If you’re ready to make smarter decisions around investing your 401(k), optimizing your savings, and minimizing taxes, SmartAsset’s tool can help you accomplish your financial goals. Learn More »

Disclaimer: SmartAsset is an Insider affiliate partner. We may earn money when you use our links. Learn more.

Join the Master Your Money Bootcamp

In our first two Master Your Money Bootcamps of the year, we got organized – and then we used that mental space to start dreaming big and crunching the numbers. Now we’re taking action.

Our third Master Your Money Bootcamp: Make a plan, presented by Fidelity, is a month-long challenge broken down into simple, one-week exercises. We’ll walk you through tasks that include finding the right accounts for your goals, opening those accounts, setting up an automated system, and figuring out whether you could benefit from professional help.

You don’t even have to sign up. Just check back here for a new exercise every week, or jump in at any time, and follow along on Twitter, Facebook, LinkedIn, and Instagram.

Stories you might have missed

5 strategies an entrepreneur used to go from making $41,000 a year to being a multimillionaire in her 30s

This is a taste of the inspiring advice you’ll find from Rachel Rodgers in “We Should All Be Millionaires,” one of the books I recommend at the top of this newsletter.

Extreme frugality was so stressful it made it hard for me to save, but my new system is helping me save thousands more every year

Insider contributor Katherine McLaughlin set up two separate checking accounts for spending after realizing that just because she was “good” with money didn’t mean she had a good relationship with it.

I travel the US full-time on $90,000 a year by following a few smart money rules

Angie Colee, a confidence coach who works with entrepreneurs, has been Airbnb hopping while working for the last nine months. She explains the financial moves she made to take the leap, and how she keeps it going.

5 challenges I did with my husband to save an extra $2,500 in 2021

If you’re looking for ways to bulk up your savings account before year’s end, here are some simple ideas that worked for Insider contributor Jen Glantz.

Enjoying this newsletter and want to recommend it to a friend? Here’s a sign-up link.

Read the original article on Business Insider

A survey of 2,000 Americans found they’re more likely to talk about politics and relationships with their friends than money

two men talking to friends
Americans are more likely to talk to their friends about politics and sex than money, a Master your Money poll found.

  • A taboo around money persists in America, according to a new Insider poll.
  • Talking money with friends is unpopular across all generations, and more so among older Americans.
  • Money is a sensitive topic, but discussing it can lead to better financial outcomes.
  • This article is part of a series focused on millennial financial empowerment called Master your Money.

Even after a year in which personal financial hardship dominated the national conversation, results from Insider’s new Master your Money Pulse Poll suggest that Americans still aren’t comfortable discussing money with friends.

When asked which topics they regularly discuss with friends, each of the following outranked the topic of money: health, sex and relationships, politics, current events, and pop culture. The survey was conducted in May 2021 and included responses from 2,130 people 18 and older.

Although there is some variation among generations, the trend tracks across all age groups – Americans are most likely to talk about current events with their friends and least likely to bring up finances.

Old Americans say the are less likely to talk about money with friends:

  • 47% of 18-to-34 year olds regularly discuss money
  • 38% of 35-to-54 year olds regularly discuss money
  • 25% of 55-to-74 year olds regularly discuss money

These results underscore a longstanding taboo around discussing personal finances in America. This “society-wide gag rule” exists at varying degrees, Joe Pinsker wrote in an article for The Atlantic, particularly between socioeconomic classes, genders, and cultures.

“Many Americans do have trouble talking about money – but not all of them, not in all situations, and not for the same reasons. In this sense, the ‘money taboo’ is not one taboo but several, each tailored to a different social context,” Pinsker wrote.

Talking about money can lead to better financial outcomes

Money is an uncomfortable, emotionally charged topic for a lot of people. If you feel like you’re lacking or not saving as much as you’ve been told to, there may be embarrassment or shame. If you feel like you’re doing well compared to what you know (or assume) of others’ situations, there might be a tinge of guilt.

The negative associations go on and on, so it’s no wonder most Americans aren’t chomping at the bit to discuss their bank balances, debt journey, or salary with their social circle. But this tendency to be tight-lipped can be more harmful than we realize, particularly when it comes to solving issues like equal pay and the racial wealth gap.

Interestingly, when it comes to asking for advice, a higher share of the Master your Money survey respondents said they go to friends than a financial planner – though most turn to relatives and financial websites.

The younger a person is, the data revealed, the more likely they are to ask friends or relatives for financial advice. As a person approaches their retirement years, they are more likely to get advice from a financial planner.

Working with a professional, such as a financial planner, coach, or therapist, can help you navigate your current money struggles and even uncover the deeper beliefs and attitudes holding you back from making progress. Data show people who seek help from an advisor are more likely to report happiness, confidence, and stability in their financial and personal lives compared to those who go it alone.

Read the original article on Business Insider

5 ways cutting corners can hurt the success of your franchise business

Fastfood workers
Franchisees have the luxury of a franchise support system with tools to help navigate the difficulties of running a business.

  • Underestimating startup costs is a one way to create risk for your franchise before it’s launched.
  • Franchisees should tap into the built-in franchise support system for advice on finance and operations.
  • Having a business plan is the best way to cover all the financial and operational strategies for success.
  • See more stories on Insider’s business page.

Becoming a franchisee has immediate advantages that make it an attractive business opportunity for entrepreneurs – established brand/reputation, tried tested and true templates to follow, franchise support services and a pre-existing customer base are just a few of the benefits.

While these are critical components to the success of any business, franchises run a risk of depending heavily on these factors to be successful. The following five ways contribute to a mindset that can cause a franchisee to cut corners within their franchise, hurting their business in the process.

1. Underestimating startup costs

Ensure that you’re covered from a finance perspective. If you’re borrowing to finance your franchise, account for costs like legal fees, rent, payroll, utilities, and debt repayment. Also, factor in the length of time it will take to generate your own working capital to cover business operations. The general recommendation is to plan for a year when determining your borrowing needs. Ask for enough funds to cover the above plus operating expenses for a year as a minimum.

On average, it can take a business upwards of one year before you earn a steady stream of profits. Ensuring that you have the capital to meet all cash flow for operations allows you to focus on learning the business well and navigating the ups and downs of entrepreneurship without worrying about being able to meet your obligations.

2. Not utilizing the franchise support system

Starting a new business is an overwhelming and stressful endeavor, especially for someone who doesn’t have business experience. Franchisees have a luxury that many business owners don’t: access to a franchisor who has created an ecosystem of knowledge to support its franchisees. This is an invaluable tool for franchisees that shouldn’t be underestimated or underutilized. The reality is that at some point, a founder or other franchisee has run into the same problem you may be facing and a possible solution may already exist that you can leverage quickly. Why not tap into a resource like this?

3. Underestimating the importance of reviewing your financials

Assuming that your business will be immediately or quickly profitable is an assumption that carries great risk for a franchise owner. While it is possible, it shouldn’t be expected. A highly recommended practice for franchisees is to ensure that you have a proper financial reporting framework setup where you are reviewing revenue monthly and annually, evaluating profits and operating expenses.

In doing so, you learn the trends of your business location and can develop strategies to adapt to when variables change within your financial reports due to business operations. Creating a financial reporting framework can include adding an accounting system to your resources at startup, or hiring an accountant to ensure that your tools are able to extract the information required to share and evaluate.

4. Underspending on your marketing campaigns

Yes, the franchisee has immediate brand recognition and a pre-existing customer base – but your franchise needs to build up rapport and recognition locally, too. Wherever you choose to locate your franchise, you will meet competition from other businesses that have been successful and others who have established deep roots in the community. A franchise should go above and beyond making its contribution to the corporate franchise marketing fund and ensure that a secondary budget is created to target local customers specifically.

5. Not preparing a business plan

The franchisor covers a great deal of the setup and operation structure for its franchisees, but underestimating the value of a customized business plan that is specific to your needs and that of your community is a great risk. A business plan provides a roadmap to success and clear and succinct information on the critical factors of success. It is also a useful and often required tool for financial and operational expansion.

A typical business plan includes an executive summary, market analysis, management structure, description of product or service, marketing and sales plan, financial projections, funding request, and a general appendix.

Opening a franchise is a great opportunity for an entrepreneur to get into business and build upon an already successful and reputable brand. Take careful consideration in how much you plan to go above and beyond with your franchise to ensure its success by treating this business the same way you would if you were building from the ground up. In doing so, your business will only come out stronger and wiser.

Read the original article on Business Insider

5 steps entrepreneurs should take to secure their personal and business finances

checking credit scores finances
Entrepreneurs should closely track spending and saving to understand where their money is going and how it affects their financial goals.

  • Responsible entrepreneurs should take steps to achieve both business and personal financial security.
  • There should be a clear separation of personal and business finances.
  • Track your spending and saving, create passive income streams, and plan for emergencies.
  • See more stories on Insider’s business page.

Entrepreneurship inherently involves financial risk. That doesn’t mean, however, that entrepreneurs can’t become financially secure. Remember, your personal finances and business finances are not the same. Responsible entrepreneurs aren’t just focused on making their business succeed. They also take steps to achieve financial security in their personal life.

1. Create true separation between personal and business finances

Failing to separate business and personal accounts can create serious financial trouble in the long run. If the business were to fail, you would lose all the money that is also being used to pay your rent or any other expenses. Even more troublesome, liability issues could leave you on the hook for company debts or legal troubles.

Maintaining separate personal and business accounts ensures that even if your company runs into financial difficulty, your “nest egg” won’t be compromised. Paying yourself a salary from your business account can help increase this sense of separation.

Never use a business account (including credit cards) for personal expenses.

2. Clearly define personal finance goals

While you may have established clear growth goals for your business, you can’t afford to let personal finance goals be an afterthought.

In a recent phone conversation, Tobi Roberts, cofounder and CEO of City Creek Mortgage explained, “As a business owner, you need to plan out what you’ll do with the salary you pay yourself from your company. After all, a big part of the reason why many people go into business is to support their desired lifestyle.”

Roberts continued, “Setting clear and meaningful goals will act as a series of guideposts to help you stay on track for reaching that lifestyle. Whether you want to move into a bigger house or buy a boat, setting a savings goal will help you better control what happens after you pay yourself.”

Your personal finance goals (such as retirement or even building an emergency fund) can also affect how you structure your business’ cash flow. You need to find a balance between paying yourself enough to live your desired lifestyle without creating a cash crunch for your company.

3. Create passive income through investments

“Making your money work for you” may sound like a bit of a cliché, but it’s an important to-do for entrepreneurs trying to achieve financial security. Continued investments in the stock market allow your money to grow at a much greater rate than it would if you left it in a checking or savings account.

As Investopedia reports, the more passive, long-term buy and hold strategy averages 12.1% returns on small stocks and 9.9% returns on large stocks, even when accounting for market crashes.

By simply putting money aside into an investment account each month, your money will compound, giving you an additional revenue stream beyond your salary. You don’t need to chase the latest meme stock to increase your financial standing.

4. Religiously track spending and saving

Managing cash flow is vital for any startup – and it is just as important for your personal finances. If you don’t understand where your money is going, you might find yourself running out of money as you try to attain a lifestyle you can’t quite afford.

Tracking monthly expenses is vital for identifying ways you can better use your money. This can help you identify things you should cut out of your life – like that gym membership you never use. Or, it can put the amount of money you spend on meals at restaurants into perspective.

Writing down how much you spend each month – and what you spent it on – makes it easier to compare your current habits with your long-term financial goals so you can make necessary changes. Quite often, small sacrifices now (like investing $50 toward an investment account instead of daily Starbucks runs) will pay big dividends later.

5. Plan for the unexpected

You never know what life will throw your way. This is just as true in your personal life as it is in the business world. And of course, unexpected negative outcomes for your business can have a tremendous impact on your personal finances.

While times are good, you should prepare for the future by building an emergency savings fund. Financial experts generally recommend that most people have emergency savings that would cover three to six months of living expenses.

Notably, those with a variable income or less stable employment – a category that many entrepreneurs fall in – are advised to have an emergency fund that covers six months or more. Contribute a bit of money to your emergency fund each month. This way, if disaster strikes and you are no longer making any money from your business, you won’t need to liquidate investments or retirement funds to stay afloat.

No matter what your business goals may be, you cannot make finances an afterthought. By taking steps to account for both your business and personal financial standing, you will have much needed security.

Ultimately, financial security allows you to support the lifestyle you want to live while giving you one less thing to worry about in your hectic entrepreneurial life. Prioritize your finances early on so you can establish good habits that last a lifetime.

Read the original article on Business Insider