Episode Transcript:
Miesha Williams 0:13
Welcome to the networthy, the podcast, we're talking securing, saving, and investing the bag from side hustles, to main hustles and everything in between. Let's get to it.
Miesha Williams 0:30
Hi, everyone. So I'm here today with a little stock talk for you. Unlike the episode title the stock market is not in a good spot right now. The pandemic has affected the overall economic health greatly. People are out of work, businesses are filing bankruptcy. I mean, it's scary out here in the stock market sheets. We talked earlier in the pandemic about whether or not now's a good time to invest. And you may have noticed that the answer still varies depending on who you're asking. Personally, my stance on this is still the same as it was back in March and April.
Miesha Williams 1:00
If you are out here, you know out of work or is there's a chance that you could be out or work soon. Your priority should not be investing right now. You need to have an emergency fund, you need to have a safety net. You need money put away for a rainy day because baby, the storm is here. You have to make sure you and your children will be able to eat before you go playing games in the stock market, especially during these times because the market is testy like one day it's up, one day it's down, like she is in her feelings right now. I mean, even without kids, you still have to feed yourself. Keep a roof over your own head. You need cash. You may go put your last $1,000 in today and look up tomorrow wish your feelings hurt and they will be hurt. But seriously imagine going in and putting your last little bit of savings into stock right now and finding out tomorrow that your job is closing. And then once you go to pull that back out, you now have half of what you put in because the market done crashed again.
Miesha Williams 1:59
We ain't got time for them games, you know? But, I know y'all hard-headed and so am I. And I'm aware that there are many of you who are in a position to invest right now and you know you would like to reap the benefits. I kind of cut back on how much I've been investing but you know, well that little automatic deposit is still going into my Robinhood account it's just not as much as it was before because you know, I'm so I'm trying to beef up my safety net a little bit. I'm trying to make sure that I'll be good if something happens because I have bills to pay. I have rent and I'm not trying to move back with my mom right now. I mean, not that there's anything wrong with that, but me and my mom are completely different personalities. I'm an Aquarius, she's a Pisces, like, we don't work under the same roof. Okay. I love you Ma. Okay. So I also want to say that I am not a financial adviser. I will not tell you want to invest in right now, but what I will do today is, you know, go over different types of stock with you. And I'll even end this with a little bit of homework for you today. So the goal is to give you some insight on what your options are to help you get started. What you do from there is entirely up to you. So let's get to it.
Miesha Williams 3:24
This episode was created using the anchor app, a free podcast creation tool, which allows you to record directly from your phone or your computer. I'm actually recording in my car right from my phone right now. You can download the anchor app or go to anchor.fm to get started, believe me it's the easiest way to get started with your podcast. Download the anchor app today.
Miesha Williams 3:58
So we're going to start off with my favorite. And I'll let you guys in on just a tiny little secret. I am a longtime investor. So this just means I enjoy making investments that I feel comfortable holding on for five or more years. I have no desire to sell my stock off tomorrow, next year, even the year after that, like I am confident that I'm holding on to this for a little a little while. I prefer to let my gains grow slowly over time. So dips in the market do not scare me. I am prepared to wait them out. I'll ride it out. That's okay with me. This is different from short term investing. Those types of folk may sell the same day, the next day, a week later, whatever they want to do. It's just not me. And I'm not saying there's anything wrong with this. I'm not saying that there's a right or wrong way to do this. You honestly just have to figure out what works for you. I'm just saying that I personally choose to hold on to my investments because when things happen unexpectedly, you know, like a certain pandemic that has a good amount of America out of work. Hello. I'm not left stressing about what's lost.
Miesha Williams 4:58
I'm confident the stock market will bounce back because shit, I've been at the bottom and I bounce back my tribe bounces back consistently and that's called being resilient. You know, so I'm with it. I'm ready to wait.
Miesha Williams 5:11
But moving on. What I am introducing to you right now is called an REIT. REIT's have helped me immensely during this journey and REIT stands for real estate investment trusts. This is attractive to many people, myself included because it allows them to dabble in real estate investment without buying real estate directly. Personally, I would love to own multiple properties and have tenants, collect and rent, like you telling me I get paid and I don't have to do shit. Oh, whatever. But I have hella student loans and God is still working on my temper. So if you're telling me that I can get paid without really having to argue someone down about why their rent is late, bet that up, you know, like both things are obviously attractive. you know? Being able to get paid from someone else having to go to work in paying you to live in your property? I'm with that. But being able to get paid and not having to like, be knocking somebody's door down about why their rent is late, you know, knowing that they're out of work and they got kids and they got mouths to feed. I would feel bad I would feel bad and on top of that, like I said, I got hella student loans. So it's just like multiple things going on. You know, that would stop me from buying property right now. Life happens, shit happens. But REITs is my way to go right now for right now. And this might change for me three, five, ten years down the road, but we're talking about right now REITs is for me.
Miesha Williams 6:48
REITs are required to pay most of his taxable income through dividends. So you'll see that they usually pay higher dividends compared to like individual stock options. And for those of you who are new to investing a dividend is just a little payment you get, you know from the corporation that you hold stock in or shares of stock in. So, I'm gonna do like a little bit of language talk right now, because a lot of you guys when y t'all talk to me like "Oh, yeah, I just bought stock, I just bought duh duh duh" and what you're buying is shares the stock into a company.
Miesha Williams 7:21
So let's break this down a little bit. As a shareholder, you receive part of the corporation's profit for holding stock in their company for holding shares of stock in their company. So for example, we'll use Amazon. Everybody knows what Amazon is. You buy a share of stock in Amazon, they may pay you $26 a year for that one share of stock. So let me backtrack a little bit and put a little disclaimer, disclaimer. I have not checked to see what how much Amazon pays for holding stock in Amazon because I don't hold Amazon stock. So that's not something that I looked into you. So it may be 26, it may be higher, it may be lower. This may change, especially with everything going on right now. But think of this example that I am explaining to you as one of those examples that you used to get in math class, you know? So when they'd be like Susie went to the grocery store and bought 50 oranges and you know for a fact, Susie is allergic to oranges and nobody even buys that many oranges because they're not even that good. But you roll with it anyway, because it's in the book and this is the example they gave you, and this is what they chose you to do your math with. So, you know, give me that same grace.
Miesha Williams 8:35
So let's start over. You bought your stock at Amazon, they may pay you $26 a year for that one share stock, the number of shares you hold determines your total payout. So let's say you have two shares of Amazon stock, that $26 now turns to $52 to 26 times 2 is 52. Are you following me? Did you get what I'm saying? If not, you can go back and rewind that about 20 seconds and get that example played for you again. The amount of shares you hold will determine your total dividend payout, if the company pays dividends so that's another thing. Not every company pays out dividends you know, as you're looking into stock to invest in you can look up how much if any dividends they pay to their shareholders and how often right so this is easily done by a quick google search if you're looking to invest and I don't know a pharmaceutical company and you don't know whether or not they paid dividends, you can look it up. It'll tell you, and if it says that they don't and this is something that's like a deal breaker for you. Okay, then you know to move on to the next thing. If they say that they don't but you, like really enjoy this anyway, and you still want to buy in then go ahead and do it. If they say that they do, then at least you get to see how much you will earn based on how many shares you're, you know, planning on buying.
Miesha Williams 9:53
Back to REITs. though. REITs allow you to invest in real estate without buying a property, just buying shares until the trust, into the trust and then you receive dividends. Your Money is making money for you. That's my favorite thing. Okay? For my money to make money, so I don't have to make more money. You know, like, that should be everybody's angle. If my money is working, the more my money works for me, the less I have to work at least that's how I see it right? My end goal here is not having to work. That would be wonderful. I will probably still work anyway. But just to have my money generating more money in the background. This is good. You know, like I said, ain't nobody living here rent free. Except my neice. My money living here rent free. It's making more money for me. Okay, let's keep going.
Miesha Williams 10:40
Then you have ETFs, okay. ETF stands for exchange traded funds. ETFs can contain many types of investments including stocks, commodities, bonds, or a mixture of these mostly a mixture of these. So you may hear people talking about the s&p 500. And that sounds so starky because it is. The s&p 500 is the oldest and most widely known ETF available and investors use this performance of the s&p 500. It uses the performance of the s&p 500 to track the performance of the market because once you have something that's been around for so long, and you've had like your major plays as a part of it, you know how everything else is going to move when you see how it moves, right? It just gives you a good like prediction of everything else. So investors will use it to track performance of the market. So a couple of months ago with a market crash. You may have heard a lot of people talking about this s&p 500 this is just the ETF has a whole bunch of shit within it.
Miesha Williams 11:35
The draw of a ETF is that in many cases it may be cheaper to buy just the ETF instead of buying each stock, bond, commodity individually, right? So think of this like you would think of when you see the girls who sell lashes and lip gloss and they bundle them together. Right? So separately, you may have lashes for $20 and you may have your lip gloss for $15 but bundled together instead of you know, separately, this is 20 plus 15, 35 but bundled together, let's say she sells them for 30. So now you're saving $5 for buying the bundle, right? Mmh saving money. We all love doing that. So that's why a lot of people like doing the ETF. Another reason which should be a big one for you guys, and you probably should write this down what I'm about to say, it's about to be a little ghetto but you should write it down anyway.
Miesha Williams 12:26
It helps you diversify your portfolio. Yeah. So there is this little meme or me-me, whatever you pronounce it as a meme that's floating around that says, what is it? It kind of goes like instead of buying your nigga. Can I say nigga? It's my show so I'm going to. Instead of buying your nigga a pair of Jordans or a pair of Nikes to buy him stock, buy him Nike stock. Okay, that's cool and all this great my nigga likes shoes but if you buy him $1,000 worth of Nike stock and Nike crashes the next day. Now you're looking goofy. That was a bad gift. Okay, it's not a bad gift, I won't say that. But it is a goofy gift to just buy Nike stock. So instead of just buying Nike stock, you might decide to also bought stock in Sony, you might, you know, even get a little more about a couple REITs, you might pharmaceutical, whatever, like, you're trying to diversify your portfolio because if one thing goes down, the other one might still be going strong, right? So you're not if something crashes, you're not just losing out on everything at one time. Do not put your eggs in one basket is what I'm trying to get at here. Right? diversify your portfolio, have different types of things you're investing in. Don't just buy Nike stock, buy some other stock, introduce him to other things. Just not just Nike also introduce him to a financial advisor because maybe you're not his financial advisor. But we're moving on still. So yeah.
Miesha Williams 13:57
Diversifying your portfolio helps to reduce the risk that if something crashes you know that you not just losing all your money at the same time. So all your gifts shouldn't be in one basket, diversify, diversify, diversify. Very important, but we're moving on.
Miesha Williams 14:12
The next thing that we're talking about is mutual funds and mutual funds is similar to ETFs. In this regard that instead of buying one stock, you're pulling your money together with other investors to purchase a collection of stock bonds, or a mixture of these that can be more expensive, you know, when investing in them individually, right. So we've hit REITs, we hit ETFs we hit mutual funds, we are diversifying our portfolio so we're diversifying, diversifying, diversifying.
Miesha Williams 14:42
Okay. So then you have your individual stock options, which I kind of touched on a little bit earlier, but individual stock is might be the first thing that you think of when you think about buying shares of stock, right? So these are your companies, your individual companies, your Nike, your Disney, your Apple and your Amazon. on the list goes on and on and on. You can look at any type of publicly traded company to find what you can and cannot invest in. Right. These can be sorted into multiple categories from there.
Miesha Williams 15:13
The top of these categories are blue chip stocks, so blue chip stocks are shares in stable companies and this includes your Disney and your IBM. These are companies that have been around and are expected to stay around right? This is your home girl that has like been riding with you for years through all the embarrassing moments and you call her she gone answer and she gonna come out with less somebody tires with you, I've never done that I don't know why I used that as an example. But owning bluechip stock is good if you're looking for a low stress option. These are healthy companies that have been proven that they can you know they have proven that they can stick around for the long haul. So you know if you wake up tomorrow that Disney is not just wiped off the face of the earth, Disney gonna be around for a while right? We are not expecting Disney to go anywhere and as an investor to invest into a company like that, that you know, isn't going around I mean, isn't going around isn't about to just like dip out on you is like, that is reassuring, that is refreshing. You want to buy stock in that company because this company is just like, yeah, you know that you're not gonna lose your money, right? Well, you don't know that you're not going to lose your money because when you invest in anything, there's always a risk. But the point here is these companies like Disney and IBM. They are like the least the least risky, does that make sense? They are not as risky as something like a penny stock, right? So that moves us into our next category.
Miesha Williams 16:41
And penny stocks are the complete opposite of blue chip stocks. They are the ghetto. I love me a penny stock Honestly though, like I'm not even gonna lie like as women we do love a project. We do love a project and I love me a penny stock. They're like clearance stock and I've seen them go for as low as two cents a share. You're probably like what the fuck? I can buy a spot for a share stock for two cents, ma'am, yes you can you just gotta know where to look. The risk with penny stocks are high because like nobody really knows how these companies are going to perform like they can be doing well one day and then the next day just disappear you don't know. I have definitely lost money in penny stocks I'm not gonna lie to you, I think was like some type of oil penny stock. I didn't regret it, I would do it again.
Unknown Speaker 17:31
Anyways, moving on. The risk with penny stocks are high, but the reward can be great. So like imagine buying 100 shares at five cents each. So that five cents times 100 you're investment is $5. So you're literally spending like, what you would spend at the McDonald's on the dollar menu on 100 shares of stock. And let's say this performs well and the stock goes from five cents to $10. So I have not seen this happen.
Miesha Williams 17:59
I'm not sure if it has happened, it may have happened. But again, this is one of those textbook textbook examples that you use in math and science class. We know Susie, wasn't at the store buying 50 oranges. Your math teacher told you she was and you listen to her so you gone listen to me. Okay? In this example, your five cents turn to $10. So your $5 investment has now grown to $1,000. This sounds like gambling, doesn't it? There's a high chance this won't happen, but there's a chance that it could and that's just the risk that you take, right? So many people do enjoy penny stocks. I think penny stocks are good though for like short term investing. So this is just me and my own personal experience. So like with a penny stock, it can jump from like 50 cents to $1 in a day, so let's say you put like $1,000 in and so now you get like this huge gain within a day. But this company isn't stable, so it's not really something that you would think of holding on to for five years. So penny stocks might be good if you're a short term investor
Miesha Williams 19:05
You also have value stocks, right. So I said penny stocks was clearance but value stock sounds like clearance, Dollar Tree Dollar General you know like same, they cousins, they cousins.
Miesha Williams 19:19
So the difference is the value stocks may not be going for as low as a penny stocks you know like penny stocks literally go for a couple of cents value stocks may be a little bit higher than that but they still slept on you know. So your value stocks is like your favorite rapper that everyone is sleeping on. So you know they're good but nobody's streaming their music yet. You're in a car you like pass me the AUX imma put this on. Nobody wants to hear it, like turn that shit off like? Excuse me this is fire, but nobody is paying attention. Um you know they good but, whatever. You're investing in potential, right? you're investing because you believe that one day their value will increase. So that is how they differ from penny stocks. Penny stocks literally be like five cents and nobody knows how this company is gonna perform. But a value stock is something that is, you know, not not as cheap as penny stocks but they might be like 10 $15 and you believe that it's going to grow you believe that this company has potential and that one day they will be the next Amazon the next.
Miesha Williams 20:19
I can use Amazon as an example and I'm gonna stop one day I'll promise you guys. They might be the next Microsoft, they might be the next whatever so you're willing to invest in a potential because you can see that one day they're going to grow into something great value, value, right? potential. This is another thing I said I said they cousins, cause like I said we love a good project, we love a good project. So investing into a value stock is sometimes a good project but of course it is still risky because what happens if you think this thing has value but nobody else ever stops sleeping on them and the company cannot survive and now you lost your money.
Miesha Williams 20:55
Again, just the risk that you take when you start researching your stock you'll find that there are many other categories of stock and a wide wide world of options, right? The world is your oyster. Google is your friend. There is so much information readily available to you just don't fall down the YouTube rabbit hole of hotepness. Okay, so we are doing our research but we are making sure that is coming from reliable places. And we are not getting it from YouTube 3015654322105 that's going to tell you that every kid born after 2012 is here to save us from some type of racial apocalypse which might be true because it's happening. But whatever we're staying away from the conspiracy theories and we are getting our research from valuable sources right.
Miesha Williams 21:44
We are remembering that subject in school that that unit that you had in school where they taught you how to you know, check your sources, we are checking our sources, we are finding information on these companies or we are going to these companies websites. We are looking at the documentation that they have releasd for their shareholders, we are. Yeah, it's a lot. But all this information is readily available to you. So like I said, the world is your oyster, you have so much that you are able to look up any type of question that you may have. You also have access to me find me on Instagram at Mieshawill, M I E S H A W I L L, or Instagram at thenetworthy? which is literally at the net worthy. Either one, ask your questions. We here we will get you pointed in the right direction. Anyway, my homework for you though this week is to look into the type of stock that you're interested in purchasing. And if this is an individual stock, then look into that, you know, individual company if it is something that is like you're pulling from a lot of different places, you might want to look at how like if you're doing ETF or a mutual fund or whatever, you might want to start looking into how you know it has performed in the past, but if it is a individual stock, you wanna look into the company and the type of documentation like I said that they released for their shareholders you might want to look how the company has performed in the past. Right? So you want to do your research on whether or not they pay out dividends and if this is a deal breaker for you look, you know, yeah find out if it's a deal breaker for you that might be like the first place you start like, are you a dividend person or are you not with me, I kind of do both. I prefer I prefer a stock that pays dividends but if there's something that doesn't pay dividends, I usually buy less shares and some that does pay dividends then I know to buy like hella shares because I like getting that money back. Right.
Miesha Williams 23:34
Look to see the current price in the market and chances are it's on sale. It's on clearance, like girl rack up because of Coronavirus. Like I said the market is going through some turbulent times right now. She don't know what she want to do, she don't now how she's doing and every time the government does anything, somebody in politics says anything the market be like Up, down, up, down, up down, you know.
Miesha Williams 23:55
So, it might be that when you go to look at the current price on the market now and you see that is cheap. And then you look at it's past performance, you see, you see that as a dip like $50 since March, that is very possible because everything that's going on. So then that might be when you decide, well, well, maybe I should put money in, right? Or maybe be like a, I'm not putting money in at all. So what you're trying to do is you're trying to see if this you believe this company can survive the pandemic, and you're comparing it's current price to where the price was before the pandemic started, right. You're gauging how much you may be able to gain if you invest now and the stock bounces back. Remember earlier when I was talking about being resilient, do you believe this company is resilient. Do you believe that this company can come back from its worst days? Do you believe? Do investors believe it? Do the professionals believe it? Right so these are all things that you're trying to weigh.
Miesha Williams 24:49
You're gauging how much you may be able to gain if you invest now on the stock bounces back to his pre pandemic price. So for example, if the cost of one share is currently $5, but $5, but it was $10 before the pandemic, and you believe the company will be able to bounce back to it's pre pandemic state, you're risking your $5 because you believe that $5 investment will soon double to $10. And I do not mean soon because this could be something that takes three to five years to happen. So you might you have to also keep that in mind. Right? So you're buying things at a low price now, like American Airlines,
Miesha Williams 25:20
American Airlines, a lot of the airlines, their stock prices, dipped their stock dipped and they went from like performing really well to being on sale. Right. So a lot of investors had to decide whether or not they wanted to invest in the airlines. And this was dependent on how long they were planning on keeping, you know, the shares of stock.
Miesha Williams 25:40
A lot of people decided not to because they didn't believe that the airlines could bounce back as soon as they want it to I was the type of person that did and um, this is not me telling you to do it. This is not me telling you to do it. But I am the type of person who loves to travel and I cannot see a world where we are not on planes. So when everyone was like don't invest in airlines you know, everything's crashing I was like I'm gonna go ahead and rack up on these airline stock because five years from now I know that I am going to be in somebody's... southwest.
Miesha Williams 26:12
I was about to say first class but let's be real, I'm not doing that. I'm gonna be on somebody's plane going to somebody island five years from now at least that's my hope and even if it takes seven years I'm okay with holding on to that stock for seven years. I don't see a world where we just don't have planes I believe that the airlines that I invested into will be able to bounce back from where they are now.
Miesha Williams 26:32
Keep in mind that the market is wilding right now and it may be some years before you see any return on your investment. It could be tomorrow it could be seven years like I just said, but you have to be prepared for whatever the market throws at you. So please, please please and I cannot stress this enough. Please do not go investing money you cannot afford to lose right now. Okay. So any type of money if you put it in right now if you are not able to pay your rent next month. If you lose your job and the market crashes again and you lose that money in the stock market.
Miesha Williams 27:01
So we are only investing if we know that we can pay our bills, that we can eat. That in our worst case scenario that we will be okay and we are landing on our feet. Don't go throwing money away that you cannot afford to lose.
Miesha Williams 27:14
Period. So, again, do ya homework. Protect your peace. You might have to go listen to this another time because I've been rambling and so this might be one of those you listen to, two, three, four times. I'm not gonna argue with you about it go do your thing. I see y'all next week.
