Shirley Ngo:  On today's podcast, how can investing be as simple as shopping at the grocery store

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Monisha Sharma:  and why you may be leaving 1000s of dollars on the table by not investing today?

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Shirley Ngo:  Let's get started, right now

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Monisha Sharma:  Hi everyone and welcome to make it shine your money podcast.

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Monisha Sharma:  I have here with me, 

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Shirley Ngo:  Shirley.

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Monisha Sharma:  And of course Monisha is here to help you guys answer a very important question. Why don't you invest in the stock market? So Shirley I know you've had some really amazing success over the last year and a half in the stock market. But before that, I think you were completely ignorant of how to invest and what to do is that,

 

Shirley Ngo:  Oh, I'm a total newbie. And when you say success, like that's a word that we would use loosely, because it's really new. And I'm, I think of myself as a long term investor. 

 

Monisha Sharma:  Yeah. 

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Shirley Ngo:  And part of the reason why I was very hesitant to start was because of all the jargon out there. 

 

Monisha Sharma:  Right

 

Shirley Ngo:  Money is just tough to understand, even though it shouldn't be right. So that was one of the reasons why I took a long time before I decided put any money in the stock market.

 

Monisha Sharma:  You know, it's funny, you say that, because, you know, there's been numerous studies, I know, Goldman Sachs put out a study that said over the last 140 years, if you look at a 10 year return of the stock market, it's been about 9.2%.

 

Shirley Ngo:  Right. And that includes all the stock market crashes that went along with it.  I remember in 2008 2009, that was there was a huge crash, right? I lost my job at that time. And I remember everyone was panicking. And I remember thinking at that time, since I was not invested, like, Haha, look at me, I still have all my cash.

 

Monisha Sharma:  And you're not alone right. Like 1000s of people think that way - millions you know, to be realistic. And that's, I think, what holds people back. So you know, I think one of the number one reasons people don't go out and invest in the stock market and think cash is safe, is because of all these ups and downs that we've had, it doesn't feel like a guarantee, right? A stock market, it's maybe a little bit close to gambling,

 

Shirley Ngo:  I can definitely see why people view it that way. And I think that's why a long term horizon and investing is important. You have to be able to ride out the highs and lows of the stock market.

 

Monisha Sharma:  Yeah, one of my absolute favorite quotes when it comes to investing is it's not timing the market, but it's time in the market. I think if I remember correctly, like last year, there were seven days that had the highest gains of the whole year. And so if you were trying to time the market, and you're like in and out in and out, and you missed those seven days, you actually missed the biggest gains in the full year. But if you stayed invested last year, I think on average return was 13%. Compared to you know what we talked about 9.2% on a decade average. So you would make money if you stay invested. That's one thing, right? So taking that long term horizon is so critical, so important. And that's also why you don't want to put money in the stock market that you need tomorrow, or anything that you need for emergency. So that's a critical aspect that people miss out, especially when you think about long term investing. Like as an example, if you're 20 years old, and you invested $10,000 in the market, probably grows, like I said about, let's say roughly 5% That's even taking a cut to what Goldman Sachs said. So by the time you're 60 years old, that $10,000 is now $70,000. That's substantial.

 

Shirley Ngo:  So what about if you didn't have $10,000? At age 20?

 

Monisha Sharma:  Yeah, and I think that's spot on. Right? I think one of the bigger reasons that people don't invest outside of just being uncomfortable is they don't have excess funds put in the stock market. And so we do have another podcast that talks about the importance of saving. And I'd really encourage people to listen to that, because it will surprise you, you know, what prevents people from saving on a day to day basis. So if you think more about the stock market, if you think more about investing, Shirley what finally made you comfortable enough to take the plunge, 

 

Shirley Ngo:  It was really talking to non professionals, like friends, co workers that have similar lifestyles and goals. To me. When I think about it, there's really two conversations that made a huge difference in how I viewed investing. The first conversation was with your mom, actually, we were talking about mortgage rates. She was helping me find a home. And we were talking about what mortgage payment I could afford, right? And I said to her at that point, I want to put down as big of a downpayment as possible, because I don't want to worry about interest. And I just wanted to pay it off. That's that's what I've learned my entire life. And she said, Oh, I've never heard of that before because mortgage rates are so low in Canada, you have to figure out how much you can afford every month, what your expenses are, and then how much you could put towards your mortgage. And then everything else that's excess, you invest in anywhere else you want. So it could be the stock market. And typically, the stock market rates are higher than your mortgage rate. So you should definitely put in the stock market or save up for a down payment for you know, an investment property. And when she said that, it just finally clicked like, Oh, you're right. Why am I trying to put down as big of a downpayment as possible? So that was one conversation that changed the way I thought about money and investing. 

 

Monisha Sharma:  I love it women helping women, right. And I think it's so important to hear from people that are like you like my mom is in no way a financial whiz. But when it comes to basic practical things, I think that's why it helps to hear from somebody that has a similar worldview as you.

 

Shirley Ngo:  Yeah, absolutely. And I trust your mom, right? So when I heard her say it, I'm like, that makes so much sense. And you know what I've heard that advice before, but it just didn't click it because it wasn't from someone I trusted.

 

Monisha Sharma:  Right! Or even in a language you understand, because usually people will talk about rates and be like, oh, you know, mortgage at this rate prime plus this and that and all the jargon that gets thrown in. It makes it intimidating, right. And it keeps I find it keeps especially women out, it keeps both women and men out, but it seems to disproportionately impact women.

 

Shirley Ngo:  So the second conversation that changed my way of thinking about investments is with a friend, I was having lunch with him one day, and I asked him, Hey, how do you manage your money? And he said, he's always flip flop between having a financial advisor and do get himself? And I'm like, Why do you flip flop? Like, what's the pros and cons. And he said, with a financial advisor, he sees what his friend who was the financial advisor was also his friend, he sees what his friend is able to do. And he's like, Well, I can duplicate that, because all this friend does is invest in ETFs mutual funds. And he's like, why am I paying a fee for that? So then he takes the money out, and he tries to do himself, right. And he says, It's okay for a while, but then he starts to get itchy hands. And what he means by that is, he starts to pick individual stocks, right? 

 

Monisha Sharma:  He's not disciplined anymore. 

 

Shirley Ngo:  No, he's not discipline anymore. So he starts to watch the stock and stalking it. So it goes up - he's like, Oh, I'm so smart. It goes down. He's like, Oh, no, he beats himself up. And eventually, he can't take it anymore. And he sells at a loss or he sells before the stock goes up high. So he's no longer disciplined. He's not, he's now a trader, he's investor. And then he gets his money back all to the financial advisor to manage for him.

 

Monisha Sharma:  That's so funny. And I think that's such a relatable experience for anybody because the stock market, you know, when you buy a stock, you get an emotional attachment to it. Yes. And a lot of people have that where they're like, oh, but this is the first stock I bought, or even recently, like, my husband invested in Nokia, and he's like, oh, you know, is the first phone I ever had. And that's like an emotional attachment. But you know, the stock market doesn't care for our emotions. And I really do equate having a financial advisor to having like a gym trainer. And they really help you stay disciplined, they help you stay focused. But also like, you don't need a gym trainer to just go work out either, right? You don't need a gym trainer to just go out on a walk or starting eating healthy. So I think there's other avenues. So yes, you know, there's the opportunity of doing it all yourself, you know, how do you make sure you're disciplined. And then there's, of course, if you can afford it to get a financial advisor. But it's really interesting, he talked about it, because really, if we think about the stock market, there's at least three different products that you can buy. So, you know, like he said, you could buy mutual funds, you could buy ETFs, or you could really invest in individual stocks. So we've talked a lot about why you should invest in the stock market, but how can we invest in the stock market? So Shirley, what are ways that you've invested in the market,

 

Shirley Ngo:  There's a couple of things that you can do, definitely look into ETFs, mutual funds. Those are kind of like the cheating ways - they're not cheating ways - they are actually the most common ways to get started. And then another way is investing in individual stocks. So companies that you know like Amazon, Microsoft, those type of companies that everyone knows, you can buy shares in those companies.

 

Monisha Sharma:  Yeah, and ETFs are really what's called exchange traded funds. And really, I think the easiest way to think about it is, you know, you've got a basket of stocks, right? So if you think about going shopping, going into groceries, you want to buy fruit, you're buying a category, so you've got all your different apples, oranges, bananas, everything in there. And that's, that's an ETF because you're like, hey, I want to track how fruits are performing. Are fruits going up? Are fruits going down?. And you know that because you've got somebody else out there that's making sure that you've got your basket with all the right mix of fruit. 

 

Monisha Sharma:  And then let's say you're like, hey, I'm interested in the fruit. I'm also interested in the vegetables. I want to track that separately. That's another ETF. Or if you're like, hey, I want to track the whole grocery store. How's that doing? And that's another ETF. So a way to think about it is, you know, each of these different sectors, fruit, vegetables, I don't know the baking section. There are different sectors in the market, right? You've got technology, you've got clean energy, you've got people focusing on goals, there's ETFs, or each one of those sectors. Or if you want the whole thing you want to be S&P or S&P 500. That's the whole grocery store and somebody out there managing that for you charging a very low fee to do that and you can just, you know, cheat your way I surely said into getting to the stock market and not having to be that professional right. This is, this is made for you content, which simplifies things a lot. 

 

Monisha Sharma:  And mutual funds, they do pretty much the same thing, but they charge you a little bit higher in fee. And that's because they're maybe focused on getting you the shiniest apple. So you're looking at that sector or you're looking at that area, but you're like, hey, how do I get the best stock? And there's a team that's doing that for you. So you have to pay for that. And so that's where there's a little bit of a higher fee.

 

Shirley Ngo:  So Monisha does that mean, it's better to invest in a mutual fund versus an ETF.

 

Monisha Sharma:  If you're listening to this podcast, and you're novice or newbie to investing, my recommendation is to start with ETFs. You know, this is this is a way that you can cheaply get into investing. And two ETFs, I can recommend I mean, as an example, VTI, which is a Vanguard ETF mimics a total stock market. So that is the whole grocery store. So if you want to invest in the full grocery store, and as Goldman Sachs already said that, you know, over the last 140 years, every 10 years, we've seen at least a 9.2% growth. So that mimics that. If you want to be a little bit more niche, you can invest in VFV, that is a Vanguard ETF that invests in the S&P 500. So another way to think about it is probably the best sellers of the grocery store. That's what it's focused on. Now, we are not sponsored by Vanguard at all. And this is just a recommendation based on personal experience. So feel free to go out there and do more research of your own. But these I think, are easy ways to get into the stock market. 

 

Monisha Sharma:  So Shirley, we've talked about why it's important to invest in the stock market? How can people do that?

 

Shirley Ngo:  Well, there's a bunch of ways, I recommend actually just going online, just doing a simple Google search of brokerages that you can start with. So the ones in Canada that are most popular, you got your Wealthsimple. You've got your Questtrade, those are known - you just download an app. And I don't think there's no minimum amount of money that you need to load into the app to start trading. 

 

Monisha Sharma:  Right 

 

Shirley Ngo:  The user interfaces are so simple, they break it down. And you can start as you could start buying ETFs right away. Yeah, so just look up the ticker symbol of the ETF that you're looking for. So you were saying VTI?  I'm sure both Questrade and Wealthsimple have VTI. And you can start right away.

 

Monisha Sharma:  Yeah. And in addition to that, if you bank with someone's any of the banks, right, they always have, which Shirley said is a brokerage, which is kind of an investing arm. So if you go online, you'll see it there, they'll actually recommend it to you. And if you don't see it, feel free to call that 1-800 Number, right, all the banks in Canada want you to invest. It's actually one of the ways that, you know, it's like I said, a win win. So go online, like Shirley said, search for either Wealthsimple, Questrade, as an example, or just contact your local bank. But it's important to get started and get yourself educated. You might have to do a little bit of paperwork, if you've never done this before, just to set your account up. Don't let that hold you back. Right? Like don't let that be a barrier to you know, what could help set a good financial foundation for you.

 

Shirley Ngo:  So even though there are these simple apps out there to help you get set up and invest for the first time, there are still some hurdles when you are filling out the paperwork. And a good example would be I remember being asked about, do you want to put your money in an RRSP versus a TFSA? Or do you want a personal account? And I'm like, oh, no, what does that mean?

 

Monisha Sharma:  Now again, if all of this feels like too much, right, then what you need is somebody at the bank to handhold you and there's nothing wrong with that. And that's where the advice shifts a little bit. And instead of getting an ETF, maybe the right thing for you is to get a mutual fund. And what that means is you'll pay a little bit of fees, but then someone can help set all of this up for you. So that's something that also you can look at, you can book an appointment with a financial advisor in any bank, you don't have to bank with them, but you book an appointment you go in, and they will guide you step by step, and they will explain in all detail how this translates for you.

 

Shirley Ngo:  Okay, we've discussed a lot of ideas. To summarize, these are three takeaways.

 

Monisha Sharma:  Number one, Investing is for the long term, it allows you to ride out the highs and lows if you're invested over a longer period.

 

Shirley Ngo:  And number two, start small, get comfortable and keep learning. Do your research, talk to professionals, and people you trust when it comes to money.

 

Monisha Sharma:  And number three, if you're brand new investors start with ETFs, or mutual funds as a good way to wet your feet. We've actually attached a list of ETFs that cover various sectors with brief descriptions in our podcast details. We've also attached a handy guide that you can use to understand the differences between a mutual fund and an ETF.

 

Shirley Ngo:  So after talking about this for our last couple minutes, I think the key point is just do it.

 

Monisha Sharma:  Yeah, I think you have to step away from any kind of fear about, hey, I'm going to lose everything I own, like you have to step away from that. 

 

Shirley Ngo:  And one other thing you can do is you don't need to invest all your money at the same time. Why don't you start small start with what you're comfortable with? And see how it goes.

 

Monisha Sharma:  Even if it's just $25 you can actually invest $25 In ETF and for a mutual fund, you need a minimum 500 But that's how small it needs to be. Get out there, set it up and just do it and make it shine.

 

Shirley Ngo:  Let us know if you have any questions about money. And we can even invite some experts to join us at the next podcast. 

 

Monisha Sharma:  Your feedback is very important in making sure that we're creating the right content. So please rate Review and subscribe

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