9 Things to know about ETFs

Even though many millennials have been generally bad at saving and investing so far, something they have been good at is choosing investment options that make sense.

At this point, I’m sure most of you have heard the term ETF. ETF stands for Exchange Traded Fund and is an investment vehicle that tracks an index, a commodity, or bonds.

ETFs have exploded in popularity as tech startups such as Acorns, Wealthfront, and Motif Investing have targeted millennials to strategically invest in ETFs.


So what makes these funds so sexy for millennials?

  1. ETFs are easy and cheap. Easy to purchase as there typically no minimums required to invest, and cheap to purchase and cheap to hold. One of the most attractive parts of ETFs are the low fees compared to other investment vehicles such as mutual funds. Mutual funds tend to have much higher fees that can add up to hundreds of thousands of dollars over a life time.
  2. ETFs trade like stock. This means that prices of ETFs change throughout the day. What this also means is that you can sell your shares anytime so you maintain liquidity.
  3. Shareholders (you) of an ETF don’t actually own the investments that are within the ETF itself. For example, you own some shares of the Vanguard Growth ETF which holds Apple as one of it’s investments. Even though you own the fund, you don’t own Apple itself.
  4. The main difference between a mutual fund and an ETF is that a mutual fund is an actively managed investment vehicle, whereas an ETF is a passively managed investment vehicle. What does that mean? ETFs typically track a market index while mutual funds actively buy and sell investments within the fund as market conditions change.
  5. How do individual ETF investors make money? Shareholders of an ETF make money through the fund’s performance. The fund’s performance is dependent on how well the underlying securities do. Proportionate profits are paid out in the form of dividends or interest.
  6. As stated above, ETF’s are extremely popular with millennials. Just how popular? According to Chris Concannon, CEO of Bats Global Markets, 40% of millennials are invested in ETFs!
  7. ETFs don’t provide a guaranteed return. Though a lot of ETFs are considered to be some of the safer options for investing, there are no ETFs that promise a certain return and you always have the chance of loss.
  8. Taxes on ETFs are similar to taxes on stock. You don’t get taxed until you sell your shares. This differs from taxes on mutual funds as you are liable for capital gains taxes every year in a non-retirement account.
  9. How do I get started? As mentioned above, there are several tech startups that are disrupting the investment industry by providing easy and thoughtless ways to invest. Acorns is a startup that rounds your every purchases to the nearest dollar and invests the difference into low-cost ETFs. Wealthfront is another startup that offers a way to save for retirement using the best technology without the high fees.

It’s important to educate yourself additionally on the different types of ETFs and how you can take advantage of compounding your savings through investing!

5 Things You Should Negotiate

Negotiate? Really? No way! I thought the price was set?

These are the questions and comments that I always get from people when I tell them that I negotiated the price of a certain expense down to what I wanted.

The disbelief comes from the culture of paying what is asked and not what is always best for you. We have grown up in a society where we give our hard earned cash to strangers for a set price and never look back.

Negotiating is part of many cultures across the globe. So what makes so many Americans think that they can’t ask for a deal? Is it the pride? Is it the egos? Or is it just plain laziness?

I believe it’s the combination all three.

Here are 5 things you should always negotiate.

1. I recently decided to leave the ‘burbs and move to a popular district downtown. Living downtown typically equates to much higher rent than other parts of the city and the place that I chose is no different. Most people don’t realize that apartment buildings need to meet certain occupancy in order to have steady cash flow. After choosing the apartment where I wanted to live, I made it clear to the leasing office that I was not willing to agree to the desired rent but I was willing to sign on the spot if they could work with me on the rent and terms of the lease. I was able to bring the rent down by 30% and the deposit by 20% if my roommate and I were willing to agree right away.

2. Cable/Internet/Cell Phone Bills. These bills suck. You are usually overcharged for devices such as remotes and routers while receiving the worst possible customer service from someone that you cannot understand. Most people that you can communicate with regarding these services are working on some sort of commission plan where they need to meet certain goals. These people have the leniency to give deals and even free months of service without any commitment. These companies also have the ability to give out deals that have never “existed” because they need to keep their user base strong at all times. Something to definitely take advantage of.

3. Furniture stores are a lot like car dealerships. Both are great places to get a boost of self-confidence from all of the people that want to be your friend and serve (sometimes feed) you fresh cookies and popcorn. Furniture is known to have mark-ups in excess of 70%-80%. On top of the annoying salesmen and the ridiculous prices, the quality sucks. The salesmen at furniture stores are usually paid a low hourly/base pay while making the majority of their money on sales. That being said, they are ready to make deals and get paid.

4. Medical/Dental Bills. I won’t get started on our broken health care system or how dentists are some of the most money hungry and blood sucking (literally) people in the world. I will say that medical and dental bills can usually be negotiated. The hospitals/clinics would rather cut a deal with you on late bills or even new procedures than having to go through the collections agencies or the risk of losing you to a medical competitor. Need a root canal? Negotiate.


5. Gym Memberships. We are currently living in a society where the gym is becoming more of a social scene for young professionals than the bars. With steroid use on the rise and Lululemon back on it’s feet, gyms like Gold’s, LA Fitness, Lifetime, Equinox, and Planet Fitness are competing for business more than ever. This list doesn’t include the 100’s of local gyms that are opening daily, or studios like Soul Cycle. A lot of these gyms require a down payment or a contract, both which can be negotiated if you tell them about going to a competitor. As far as fitness studios go, you are definitely better off using ClassPass than buying individual classes.

The lesson here: Always ask yourself if you can negotiate because chances are, you can.