When I was 19, I got a part-time job at a nonprofit organization in New York. During my onboarding, the HR manager told me, "If you put $50 into the retirement account, the company will also put in $50. It's free money."
Growing up, my parents and I never talked about investing. When I signed up for my 403(b), I became the first person in my family to have a retirement account. I'm not alone in my experience. In 2019, only 31% of Latinos contributed to an employer-sponsored retirement plan. It's a statistic that I'm hoping to change.
In 2019, I started Investing Latina to share what I know about investing and building wealth. Today, my YouTube channel has 3,000 subscribers and counting, and I've built a community of more than 28,000 people on Instagram. And I'm making progress towards saving and investing my first $1 million.
Here are some of the biggest lessons I learned.
Early on, I didn't have a clear sense of how I wanted the money I was putting away to work for me. But a couple years into investing, I started to think more about what my retirement would look like and what my needs would be.
That was also when I realized that I needed to invest much more than $50 a month in order to build up the account. So I started to contribute a little bit more, especially as I started to make more money and had more budget flexibility. So every time I got a new job or got a raise, I would increase my contribution.
I started to realize that I was investing with a purpose. To me, that means financial stability and a goal of $1 million saved by the time I decide to retire. Today, I'm able to contribute at least $500 per month. As I watched my contributions grow, the best part has been seeing the earnings from those investments.
Video by Courtney Stith
It took me some time to figure out that the money that was going into my 401(k) was "pretax." This means that you aren't paying taxes on the money that is going into your account. Instead you are paying them when you are taking the money out in retirement and in a lower tax bracket.
When I opened a regular brokerage account years later, I learned that there was no tax benefit on it because I was paying taxes on the money that I deposited into the account. And then I would pay taxes again on the capital gains I earned from that account.
I still have that brokerage account, but it showed me the importance of diversifying the types of accounts I have. My best advice would be to use any tax-advantaged accounts like 401(k), Individual Retirement Account (IRA), or a college savings plan (529), if applicable, before you start using a taxable brokerage account.
Video by Helen Zhao
You can be charged additional fees when you invest for a few reasons. There are investment and account management fees. There are also often fees attached to when you buy or sell shares: These are often referred to as front-end or back-end load fees.
One thing new investors should be aware of is something called an expense ratio. It's a fee that you pay to own an ETF or mutual fund, and it's calculated as a percentage of the amount you invest.
Today, I focus on buying investments that have low expense ratios so that I can reduce my expenses and increase my earning potential. Keep fees in mind as you go along your journey. It could mean savings of tens of thousands of dollars in your lifetime.
I personally moved my investments from an expense ratio of 1.5% to one of 0.04%. In the past five years, I've saved about $10,885 in expenses. That's money that I was able to use for other goals, and that's the power of understanding what fees your investment carries so you can keep more of your profits.
Video by Stephen Parkhurst
When I left my job at the nonprofit, I had $6,000 in the account. When I started a new gig, I made sure to roll my 401(k) over to my new company's plan so I wouldn't lose track of it.
If you have an old account and aren't able to roll the money over to a new company plan, you can open an individual retirement account on your own. When you do a rollover, you want to roll into an account that has the same tax benefit, otherwise you may be subject to taxes when tax time comes around.
If you have had some job changes and need help finding an old plan, the National Association of Unclaimed Property Administrators has an online source to help you.
Growing up, I never heard my mom or dad say anything like "invest for a rainy day," or "invest for retirement." They talked about saving, but I never understood the importance of it beyond putting my allowance towards a new pair of boots or jeans that I wanted.
I didn't have clear goals, especially when it came to investing. What I realized later was that I didn't have a money mentor that I could talk to about money ideas and strategies. I eventually turned to the internet, where I found other like-minded people, and I started to learn more.
Video by Courtney Stith
I became a big fan of Erin Lowry, the founder of Broke Millennial, and Bola Sokunbi, the founder of Clever Girl Finance. Wanting to be a money mentor to others is what inspired me to launch Investing Latina.
Ultimately, my best advice is, even if it feels uncomfortable at first, start talking about money. We often don't get taught this in school. It's OK to ask questions and seek out an education. Take small steps to develop your confidence.
For me, taking the time to review my quarterly statements to see how much my account had grown helped me feel empowered to continue to build up my portfolio. Don't be afraid to get started.
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