Buy That Latte: How to Build Wealth as a New Grad

34 minute read

Listen to the episode on Spotify here.

A huge thank you to our listeners for your questions for this episode. We couldn’t get to all of them, so if you’re curious, please see the following articles Cam recommends on these topics:

What to know about inflation
Finding a financial advisor
Paying off student loans

Loved the episode but need more information? Here is Cam’s list of resources to learn more about building wealth in your 20s.

Sydney: (00:00)
It can be difficult to talk about money, how much we’re making, how we’re investing and what our financial goals are. The topic itself is shrouded in mystery, sometimes exclusivity. And this keeps us from engaging in conversations about money. So in order to create a more transparent and inclusive environment where we actually feel comfortable with sharing our money goals, Anjana and I wanted to start off this episode with chatting briefly about what we do as college graduates with our money and investing. Not to, not by any means to like, brag about what we do, because I know for myself, it’s, it’s extremely basic for myself. You know, I contribute to my 401k up to what the employer, my employer matches. And because I have this like out of sight, out of mind, I’m not a very like hands on investor. I also use a robo advising and robo investing platform.

Anjana: (01:09)
I also am doing very basic things with my money, so by no means do this because I, I’m not a hundred percent sure I know what I’m doing. but you know, and also, I, I do think we should all be transparent when it comes to salary, but I’m not gonna say it on the podcast just because I don’t know if it’s legal, but if you wanna know, feel free to ask me the way that I deal with my money is I am currently — and just so everyone knows I’m currently still living at home. And so, like, I have a lot more I guess just like bandwidth to be able to save. And so I do like 70/ 30 split with my checkings and savings. So 30% goes into [checking]and 70% goes into my savings account. Post-Tax I also contribute to my 401k employer match. So my company match is 7%. And I do that and I also contribute to my Roth IRA through Ellevest. I contribute about $200 a month to that. And all my savings are in a high yield savings account with ally bank. I do not use a robo advisor though, Sydney, you reminded me that I should .

Sydney: (02:23)
And with all of that said, we are not experts by any means. And so we are so excited to be able to bring you today’s episode with Cam Rogers, who is an expert and answer all of your money related questions, starting with the very basics to investing and how to start growing your money after you graduate college. Cam Rogers is a private wealth advisor at Ellevest, where she focuses on building generational wealth for women. Prior to Ellevest, Cam spent close to a decade at JP Morgan, where she was working with some of North America’s largest public and pension investors. She brings a wealth of knowledge on all things financial wellness, myths about moneyand women, and impact investing to this episode today.

Anjana: (03:11)
We do want to note that this episode details the very first steps to building wealth for new grads, and the conversation will be centered around around women to build a better understanding of the systemic disadvantages that women face when it comes to money and investing. We will not be going too deeply into things like crypto and NFTs, although that is an episode that we are planning for early next year. So keep an eye out for that and stay updated on our Instagram. And we also wanted to thank our listeners is this episode for all your great questions, so huge thanks to those who answered our Instagram poll, including Carly A., Charissa L., Sherry S., Mimi M., Sarah M., Sami V., Ruby H., Alex L., Diane H., Pranav V., Ileana T., Natasha M., Ciara T., Alyssa N., Mark B., and Megan S.

Sydney: (04:02)
Without further ado here is Cam Rogers.

Anjana: (04:05)
Cam, thank you so much for joining us today. We are so incredibly excited. I, especially as an Ellevest member and Roth IRA holder, we’ve been really wanting to have someone who’s from Ellevest, talk about money with us. So thank you so much for being here.

Cameron: (04:23)
Thank you for having me.

Sydney: (04:24)
Yeah. Thank you so much for your time. And we wanted to kind of kick off this episode by getting your perspective on and breaking down you know, why historically women have shied away from investing and financial planning. When asked how investing makes them feel, women are more likely to bring up words like ‘nervous’ or ‘risky’. I know that resonates with me as well. What are some common myths you hear about women and money?

Cameron: (04:57)
You know, I’ll start with it’s on my mind that I had a conversation with a new woman in my Ellevest network earlier this week. And we we hopped on a zoom and I, you know, I was looking at her on the zoom and she was, she seemed very uncomfortable. She was fidgety. She was sort of looking at, at the corners of the zoom screen and, and we were talking in about two minutes and she said, “Cam, just so you know, I literally feel, feel ill when I think about and talk about money.” So just so you know, this is the, the manifestation of this. And I think most people on this podcast can empathize, right? Like a lot of those emotions come up for us. When we think about money, I’ll answer your question in a few ways. I do wanna contextualize women and money and, and women and money in the U.S.

Cameron: (05:52)
This group may not know this, but women in the U.S. specifically have decision making control of over 11 trillion. We manage 5 trillion of that exclusively. That’s the equivalent of the GDP or the, the output of Japan. Right. So, to contextualize that number we’re set to inherit a lot of money over, I think the lifetimes of, of a lot of women or individuals on this podcast, that’s about 30 trillion and we make a lot of money as part of our everyday professional lives in terms of our income for trillion dollars. Oh, by the way, that that doesn’t, you know, include unearned income from caregiving activities, et cetera. So I think that number would be a lot higher with all of that said though, the gender wealth gap for the average, and I will emphasize average woman in the U.S. Is 32 cents to every dollar white man has.

Cameron: (06:51)
And if you break out that statistic for black and brown women in the U.S., the wealth gap is one penny to a white man’s dollar, which we all know is unacceptable. So , it’s important as, as we’re talking about everything, wealth and the wealth gap is different from income and pay and the pay gap. So the gender pay gap gets a ton of attention. We know this much more attention than the wealth gap, but I would argue that the gender wealth gap is way more important. And that’s because the gender wealth gap is how much money women have or keep in comparison to men. So I’m gonna get, I’m gonna get to your question, but I, you know, I wanna contextualize all this. There, there are a ton of things that contribute to the gender wealth gap. One of the largest contributors is that women invest less and later in life and we hold 70% of our wealth in cash.

Cameron: (07:42)
So going back to my story from earlier, it’s honestly, no wonder why women, you know, can have the physical manifestation of feeling sick when we’re having these conversations. And we take action often under a feeling of scarcity as opposed to abundance. So this propensity to think in terms of scarcity, you know, what I have right now versus what I could have has perpetuated a lot of broad and to be quite honest, terrible generalizations about women and money. There’s a pervasive narrative that women are bad with money, right? There’s a lot of commentary out there and, and sort of cultural you know, not even norms, but, but a lot of narratives that we should save and we should stock our money away and protect and don’t buy the latte and all of these things. And, and this is despite the research that a couple of points for you, women who work invest 90% of their income back into the health, nutrition, and education of their families and communities, mm-hmm, , that’s as opposed to 30 to 40% for men and women have shown to be just as good of investors as men, maybe better, cuz we’re honestly less trading and transaction oriented.

Cameron: (09:06)
That doesn’t mean we’re complacent, but we’re longer we’re, you know, we’re long term strategic thinkers. So you know, to your point around, around misconceptions or, or certain actions of women when the narrative goes in that way, and when we feel like we’re going out on a limb, when it comes to money, you know, it’s, it’s a nerve wracking event. So what I find with a lot of women who I meet and, you know, women across my network is when we begin to there’s this feeling of like, I have to know everything, I have to buy the book. Mm-Hmm if I don’t know everything you know, I’m, I’m either not gonna do anything or I’m gonna outsource decision making to someone else, be it, a family member, a, a partner, whatnot. And I think this, you know, this pathway where it’s either general inertia or broad based outsourcing has been, you know, has been hard and in terms of Ellevest and what I’m doing at Ellevest is, is what we’re trying to, you know, change the narrative around. And, and in very many ways, combat.

Anjana: (10:13)
I love how you make this super intersectional, right? Like there’s so many different factors, not just gender, but race mm-hmm , the kinds of families we come from. Like for me specifically, coming from an immigrant family, like money, isn’t something we’ve talked about, like, you know, retirement, and we don’t talk about mutual funds and all that. I’ve only learned about these things since like I graduated, which is not the case for people who come from generational wealth, people who come from specifically white families. And you know, they had mutual funds since they were like seven or whatever, you know, mm-hmm . And so I, you know, thank you for bringing that up. I’d love to like also make this a little more personal to you as well. Like how did you, were you always really good with money? Like how did you come across this interest, especially? And how did you join Ellevest, were you always like “I knew I was going to be a financial advisor.”

Cameron: (11:01)
Was I always a financial advisor? You know, I was lucky in that my parents talked to me about money. And that, to your point, that’s, that’s a game changer. Right. My mom took me to open up my first bank account. I think I was eight. I don’t even know, like, if it was, you know how she did that.

Anjana: (11:23)
Yeah, see I was 18.

Cameron: (11:24)
Yeah, yeah, yeah. You were 18. She, she took me when I was eight. I remember sitting at this, and this is part of it too, it was like a big wooden table and an old man across from us. I mean, talk about just being really scary from the outset, but, you know, I took my lemonade stand savings and you know, any other tour money. And we opened up my bank account. I remember depositing the money and it wasn’t like I was depositing a lot of money.

Cameron: (11:50)
It was really sort of just that money to begin with, but it was a really formative moment for me for a number of reasons. One, my mom took took me and, and she in many ways has been a huge player as has my dad, but, but kind of in, in thinking about this and, and, you know, developing myself professionally. But, too, back then the federal funds rate, which is general sort of savings rate for the U.S. Economy was 5%, which meant that the bank savings rate is 5% that compares to almost zero today. So every month when I got that paper statement, even though I wasn’t depositing money, I was seeing, I was seeing my money grow. Right. It was, it was astounding to me. It was interesting. And so I think a lot of that you know amazement at growing wealth with sort of a plan in place, even though that, you know, money in a savings account, really isn’t a plan was helpful.

Cameron: (12:47)
I studied you know, international business and finance in school. I, I started at a big bank in asset management. My path to Ellevest was, you know, becoming deeply ingrained in the investing conversation. In schoolI was, you know, I did well in school. I studied really hard. I’m a hard worker. You know, but, but one class I didn’t have to work as hard in was principles of investments, which was sort of, you know, first indicator that this may make sense. I worked for JP Morgan for 10 years. I worked with some of the country’s biggest pension investors and then individuals and families, and got to a point in finding Ellevest where, you know, one, I didn’t think I was serving the, the breadth of individuals that I wanted to serve. And, and two, I was laser focused on the ESG sustainability and impact space and Ellevest was building that from day one. And, and so that was how I found my way there a couple of years ago.

Anjana: (13:47)
That’s awesome. Syd, and I also studied business and it’s funny cuz something that’s always bugged me about our school of business and the finance classes specifically, you know, first of all, the people, the professors who taught the finance classes, weren’t very welcoming to women in the first place. Secondly, like once you finish that intro class, it’s like astounding to me, like it’s literally a class of maybe 35 frat guys and then five women. Yeah. It’s it hasn’t changed in forever. Definitely something we hope that will change later. And I love Ellevest’s mission. One of the biggest things is helping women achieve financial wellness. Can you explain what exactly that means and how it’s different from financial independence?

Cameron: (14:32)
Yeah. I feel like wellness is such a buzz word right now. It, the idea of general wellness, you know, whether it’s physical wellness, mental wellness, spiritual wellness, relationship, wellness, that’s all discussed so frequently. You know, I’ll, I’ll, I’ll take a little tangent and this will all make sense, but so that anyone listening to this podcast knows we’re recording it on December 2nd. December is a tough month for me. I think a lot of people on this podcast can empathize. It’s always a tough month for me on the physical on this front, right? Like, yeah, there are the parties that go later than you would like on school nights and you’re not getting the sleep that you want and you may not be getting up to, you know, go for a run in the morning and maybe you have a glass of wine.

Cameron: (15:20)
Maybe you have, you know, one of those delicious, cheesy appetizers or whatnot. But like I always struggle during this month. And so Anjana and Sydney, if you, you asked me, okay, “Cam how are you addressing your physical wellness over the holidays? Given all the things that you mentioned?” What if I told you, oh, well, you know, I’m addressing my physical wellness by having a pair of sneakers in my closet and a bag of spinach in my refrigerator? You would think I’m delusional, right? Like if I answer that, that way, it’d be like, get off, get off this podcast. You’re done and you’d be right.

Sydney: (16:01)
Cut off.

Cameron: (16:02)
Right! Cut off. Because ownership and intention means nothing without agency and action, right? Owning the sneakers does not add to my physical wellness unless I use them and use them intentionally.

Cameron: (16:17)
The same idea goes for wealth. So we always say financial wellness is not necessarily the equivalent of financial independence. There are many people who have achieved financial independence, but haven’t given a thought to financial wellness. So when I, I think about financial wellness at its core is one, knowing what you have two, knowing where you’re going and three, feeling good about that. And I know that all sounds remedial, but you really have to anchor around that. Given, you know, as we talked about earlier, money is women’s number one source of stress. Finding financial wellness is critical in helping us live our full lives. And, you know, we can argue it’s, it’ll help us to achieve that physical wellness, emotional wellness, spiritual wellness, et cetera. And, and we really can’t have that without financial wellness.

Sydney: (17:06)
Right. Yeah. Yeah. It’s interesting too, that you, like when you put it that way and relate it as well to like these other aspects of our lives that I think one, we might find, you know, a bit more approachable to tackle things like, you know, physical wellness, especially emotional wellness, I think is also one that has definitely, especially during the pandemic been, you know, kind of spotlighted as well and, and brought to people’s attention. But again, it’s this idea like financial wellness where, you know, we, you know, it might be at the back of our minds, but like we were talking about earlier, it can, it can be really intimidating to even know where to start. You know, and, and like, what does it look like? And so kind of leading into that you know, we did ask our listeners some, you know, fielded what they might like to hear got a lot of great questions. It was difficult to narrow them down. But I think a great place to start would be, you know, what are the first steps to investing and especially in the context of, of young people, maybe mm-hmm, just graduated, you know, kind of building out their career. What are important things for them to keep in mind, especially when investing?

Cameron: (18:20)
Yeah. And it’s first and foremost it is important to know the difference between keeping money in a checking or savings account versus an investment account. I know that sounds simple, but if we go back to the little baby eight year old cam example I was earning a 5% return on that money. You know, you can’t, you know, you can’t get that now. And given the fact again, that we mentioned earlier, 70% of women’s wealth is sitting in a bank account that’s earning nothing. It’s just a really, it it’s important to make that distinction. I think we’ll, we’ll hopefully touch on investing in, in different environments later and especially in inflationary environments. But the other thing to keep in mind is that general price inflation across the us is usually 2-3% a year recently during the pandemic it, and, and very recently as in the last few months, it’s, it’s been about 6% on an annualized basis.

Cameron: (19:21)
So keeping money in the bank, your, you know, your, your benchmark or bogie is not zero it’s, whatever inflation is, right. So it could be, you know, two, three up to 6%. So important thing to keep in mind. Investing, ust so we’re level setting, when you invest, you are typically buying partial ownership of a company or other asset, or you’re perhaps loaning money to, to a company or government. So this is different from, you know, purely putting money in a savings account. There are of course inherent risks when you, you know, extend beyond just loaning money in a bank. So it’s always important to reflect on why you’re investing for, and I think we’ll touch that touch on that in a bit, when we’re talking about goals based investing when it comes to getting started, there’s a personal finance rule. And some may know this that I like to anchor around.

Cameron: (20:24)
I wish I had a better name for it. I call it the fifty, thirty, twenty rule as do many others. If someone comes up with a better name, please shoot me an email and let me know, but it’s a, you know, it’s a good, good way to think about your after tax income. And if you were to sort of bucket each piece of that, how much goes to your needs, your wants and your savings for future you. So under that rule 50%, and we’re gonna talk in, in after tax terms, 50% of your after tax dollars should go to your needs. So think things like bills, groceries, transportation, housing, minimum debt payments you know, the things that you need to do. So that’s the 50% bucket, right? 30% of your after tax dollars should go to your wants. So sure. You know, this is the most fungible bucket, right?

Cameron: (21:24)
Sure you don’t need to out and grab that glass of wine, or maybe you don’t need the apple TV subscription, but, you know, Ted lasso is so good. I would argue it’s completely worth it. so good. Fun’s important. We know that and variations of, of fun are, are deeply important right now. So it makes sense to budget for that, right. But again the role will need to be fluid in, in certain environments in certain income and, and sort of saving scenarios. So I would say that 30% bucket is most, most fungible. That last 20% goes to future you. And, and I know future you sounds very opaque, but that’s your retirement savings. Those are your taxable savings, savings for a big purchase or expenditure if I’m truly just starting out, or if I’m advising someone who’s right outta college and are like, where do I start?

Cameron: (22:21)
If you have a 401k, a work-sponsored 401k, 403B, solo 401k, or a the option for a SEP-IRA, absolutely start there. It’s, these are great saving structures for a number of reasons. One, if you’re working for an employer that offers them their work sponsored, which means that your employer is basically required to that, the retirement for you vet the investment options, negotiate fees. So you mm-hmm , you really have someone in your camp doing a lot of the initial leg work, which is important. You can also automate your contributions. So maybe it’s twice a month, once a month, which takes out a lot of hurdles to investing, right. It’s almost sort of like out of sight, out of mind. If you’re just starting out, like, let’s say you’re contributing to a 401k, you can actually contribute quite a bit.

Cameron: (23:21)
You can contribute up to $19,500 this year, if you’re under 50 and not only can you contribute that much and that money is invested, grows tax free over time, but you’re also reducing your taxable income. So let’s say you’re making a hundred thousand dollars a year. You max out your 401k, you’re under 50. So that’s that $19,500, you know, your taxable income is then $80,500. Mm-Hmm so there’s that tax piece there. And if your company has what’s called a match, so matching a percentage or dollar amount of your own 401k contributions, there’s no free lunch and investing, but, but that’s about as close to money as it gets, I would say so, so definitely start there. Right?

Anjana: (24:08)
Yeah. I definitely wanna touch on real soon, the kind of general rules of thumb about investing in yourself, especially, and I mean, I will say the 401k, it is a pain to see it, leave your paycheck, but when it’s matched, it’s a beautiful, beautiful thing.

Cameron: (24:24)
But you don’t, you, you rarely see it. Right.

Anjana: (24:28)
I get a mail. Like I get it in my mail that says like, how much goes in or my ADP, like how much is taken out after taxes.

Cameron: (24:34)
But that’s after the fact, right? You can’t change anything.

Anjana: (24:37)
I know you can’t, it’s.

Sydney: (24:38)
White out, white, out,

Anjana: (24:39)
Just white out, but you know, you mentioned earlier having fun and how important that 30% is mm-hmm one of our listeners had asked how do you balance having fun versus saving? And, you know, obviously when you’re in your twenties, it’s supposed to be the time of your life, and you do still obviously want to enjoy your life without thinking too much about saving all this money for when you have a house, like in this economy, maybe like 40 years from now. But you know, would love just your thoughts on that.

Cameron: (25:12)
A couple of ideas there. One, if you can make it programmatic, you know, like the, like using that rule I think that’s most helpful. To the investing side of the equation should be fun, right? So maybe be more engaged in what you’re doing, you know, instead of tossing out that monthly 401k statement, take a look, see what you’re, see what you’re invest in. No, it’s, it’s true because when you, when you know what your money’s doing, when you have a sense of what companies you’re invested in, like you’re engaged, you’re, you’re in it, right. You’re, you’re, you’re reading the news. You’re seeing what’s going on. You have a view. So I know that’s, that’s, I’m punting a little bit. I totally understand that. I am, I am punting, but this should be, this should also be fun and you should be engaging with the ways in which you’re growing your money.

Sydney: (26:11)
Yeah. It’s I had just taken a look the other day. I was curious with my I’ve been employed at this at my current role for close to a year and a half now mm-hmm and started investing in the 401k, you know, as, and contributing to that as soon as I could. And I was just curious, and I took a look like at the summary of like contributions so far, including like the employer match. And I was like, oh, it’s like, it was interesting what you’re saying when you’re, you know, when you’re seeing what it is building and like what this could be, mm-hmm, , it’s definitely like a motivation or it is kind of excitement in a way, because you’re like, well, you know, this is what I’m I’m building and what I’m growing. Yeah. As opposed to focusing on like, what, you know, oh, I’m losing this right now. Like I’m, you know, it and so I guess also touching more on, or again, you know, like some of these general rules of, of thumb when it comes to investing starting with a, a rainy day fund mm-hmm mm-hmm what, how does one start to kind of plan for that? How much should be in that? Mm-hmm

Cameron: (27:18)
General rule of thumb is three to six months of living expenses. We’ll start there. I tend to be a little bit more conservative, especially during the pandemic. I, I would say six months of living expenses that may not be immediately available to do for many – entirely fine. So I would say that should be the goal to work towards. I would also include in there, or how you think about your cash savings, anything you need to fund within the next 18 months. So from now to, to 18 months from now, I would keep that in cash too, again, errs on the, the side of conservative, but what it prevents is a scenario, like what we saw in March of 2020, when you saw sudden, you know, drop in stock markets. You know, if someone was invested fully in public equities or fully in U.S. Equities, that would be a 30% loss of principle. Granted it rebounded very fast, but you wanna make sure you’re accounting for, or purchases big expenditures that you have visibility into as, as well as that kind of emergency savings pool.

Anjana: (28:35)
Did you say 18 months?

Cameron: (28:37)
Looking at 18 months?

Anjana: (28:38)
What kind of, I mean, can you give an example of like, what kind of — for people our age —what those expenditures could be?

Cameron: (28:43)
It could be the down payment for a home purchase. Like, I actually had two friends early on in the pandemic call me and say, Hey, we, we have this down payment saving. Should we, should we be in trading? Like, should we be opportunistic about this? And I told him, I was like, keep it in cash. I know that there’s this sort of propensity to, to wanna step in, but for something so short term in nature. And I, I know it feels weird to say 18 months is short term, but it is in the grand scheme of things. I would say, keep that in cash.

Anjana: (29:13)
mm-hmm and should all that money be in a high yield savings account?

Cameron: (29:18)
Yeah, I would say don’t invest it, keep it in high yield savings account, wherever you can find high yield today. That’s the conundrum today, right. With, with interest rates so low.

Anjana: (29:25)
Right, right. How many retirement accounts should you have? Cause I have my 401k with my employer match mm-hmm and I also have my Roth IRA that I contribute mm-hmm two hundred dollars to monthly. Should I be doing that? Should I not?

Cameron: (29:38)
You should be doing that. Yeah. So, so if you have a employer sponsored retirement account, you can also open up an individual retirement account, an IRA. If you’re under 50, you can contribute up to $6,000 a year to a Roth IRA or traditional IRA. If you’re making over a certain amount, you will be limited in your ability to contribute to a Roth IRA. And if you’re making over a certain amount and these are all those numbers are all available online and, and they often change every calendar year with you know, cost of living adjustments and whatnot. Yeah. You may not be able to deduct your IRA contributions, butif you have the capacity to do both, you, you should definitely be doing it. Okay.

Anjana: (30:28)
Okay. Good to know. On the right track.

Cameron: (30:30)

Sydney: (30:31)
. And so, you know, we had touched to, we had touched on, you know, the rainy day fund and when it, when it comes to goals based investing, and so, you know, having specific financial goals that you you’re working towards, how do you begin to kind of map out and align your investments to those goals that you have?

Cameron: (30:52)
Yeah. You know, it’s so funny. Sometimes when I talk to prospective clients at, at Ellevest they’re like “Goals based it’s, you know, that sounds so fluffy,” I’ll say to them, I was like, “okay, like you were a kid once, was there ever a time when you went to the doctor’s office and as they’re reporting back to you on your health, they, you know, gave you your general growth rate since your last visit?” Like, I don’t think so. Like that would be strange, We’re we’re humans. We don’t speak in rate of return. We rarely speak in rate of return. We speak in terms of milestones and goals. Especially women, you know, we, we mentioned, or I mentioned that statistic earlier about women who invest their income back in into families and communities. So we absolutely speak in terms of milestones.

Cameron: (31:45)
So when we’re investing, , our milestones are our goals, and they’re not fluffy. They’re tangible big things. It’s career independence. It’s buying a home, it’s taking that trip you’ve always wanted to, to take it’s helping out a family member. So I always say we should be investing with a goals based approach. It makes what we’re doing more tangible and, and honestly trackable over the long term. So when we talk about goals based investing the goal you’re looking to solve for should guide your mix of investments in equities, also known as stocks, in fixed income, also known as bonds, and potentially alternative investments. If, if they’re available to you. I always say as a rule of thumb, if your goal is longer term in nature. So let’s say, you know, five years to the, you know, 10, 20 years, et cetera, mm-hmm, that investment should be, have more heavily weighted in growth oriented investments like stocks.

Cameron: (32:50)
So going back to stocks, a stock is partial ownership in a company. When you have partial ownership in a company, as long as you own it, you participate in the economics of that company. So the earnings, the cash flow, the long term value of that company to society. The primary reason behind owning a stock is to earn a rate of return on that investment over time to grow your wealth. That long term return may come from appreciation, so that company growing its earnings, maybe that company becoming more valuable to society. That company may also pay what’s called dividends to shareholders, which is basically the company saying, Hey, we’re gonna pay a share of our earnings back to you. And we’re rewarding you as a shareholder for, you know, giving us the capital to run, run our business. This mm-hmm . So again, longer term investment taking a goals based approach, you would wanna align it with a more equity, growth oriented portfolio.

Cameron: (33:51)
On the flip side, when you invest in bonds, also known as fixed income of a company or government think of that as basically extending them a loan, they borrow from you, they pay you interest and at the end of the loan, they pay you back. So when you are investing in fixed income, your goal is to preserve that money and earn a little interest along the way. So it’s better for near term things where you have, have visibility into something, but wanna, you know, earn a, a rate of interest above you earn with money sitting in cash or in a high yield savings account. So I would say when you’re thinking about goals based investing again, go back to that mix and it, and it will be weighted in, in one direction versus another, but that’s how we think about goals based investing at Ellevest.

Sydney: (34:39)
Thank you for making that. So like tangible as well and actionable and like taking mental notes.

Cameron: (34:45)
Oh, good. .

Sydney: (34:47)
But no, it’s, it’s clear. And I think like also just just like, as a side note, like kind of going back to what we were talking about earlier, when, when we are like talking about money as women, it feels like a much more, you know, like approachable, I guess, like amongst ourselves, you know, it feels like a bit more approachable of a topic.

Anjana: (35:07)
Yah, so, Syd and I, we were just in a meeting the other day we were talking about, well, like crypto and stuff, which we know absolutely nothing about, andNFTs. And we were talking about how, like, within male friend groups, like they talk about it so easily. It’s just like a normal topic of common conversation. And it’s just not the same at all with women. And we like, feel like we’re left out of the conversation a lot. Yeah. Like none of my friends know anything about it and so, you know, we, I think most of our listeners have for the most part, like a basic idea of what to, how to start. Right. You have, yeah. We can talk about paying off debt later, but, you know, we have our — once you pay off debt — like you have your savings account, your six, six months of rainy day savings,

Anjana: (35:48)
now we know 18 months out in the future and then we, you know, all that money is in an HYSA [High Yield Savings Account] we know, to max out our 401k. And also if you can contribute to a Roth IRA, I think most of our listeners do this stuff. I think the hard part for women, young women, especially is like, once we do the basics of saving and budgeting and whatnot, what comes next. Right. Mm-hmm what is, when we talk about investing and you kind of just already touched on the bonds versus stocks mm-hmm yeah. Where do we even start? You know, we hear all those terms, these terms like stocks, ETFs index funds, mutual funds, crypto, like yeah. How do we parse through all this?

Cameron: (36:26)
Yeah. You know, it’s interesting. So you, so we’ll parse through, well, I wanna make the distinction between a couple of these things. So what you described in that grouping, and thank you, Anjana is two things. So, so one thing is an asset class. And the other thing is more like implementation and, and vehicle. And I know this sounds kind of funky, but we’ll go through it. I do wanna touch on, so an asset at its core, as we all know, I know I’m getting remedial, but this is important is an object of some usefulness. So I would say original asset class probably dates back far, far longer than all of us to the survival assets of the caveman era. So think like food then was an asset, shelter was an asset. So early, early assets were very much commodities. When we look at the history of some of the asset classes, I just mentioned the history of debt.

Cameron: (37:28)
If you look back on the history is traced back to 3,500 BC. And I think in many ways was popularized when governments needed to fund wars that they couldn’t pay out of pocket at the time. The idea of a company stock. So equities really emerged when the industrial industrial revolution forced new ways to represent wealth and ownership of companies. So I say all of this not for a history lesson, but to emphasize that the emergence of asset classes is very much not a new thing and reflects the technological progress of a people and society. So, you know, if we are in conversations with friends or with others, and, and you’re hearing about these new asset classes, I know it feels like a lot, whether it’s crypto or NFT or specs or whatnot, but like it’s following trend. It just feels like right now it’s, it’s an expedited trend.

Cameron: (38:28)
So that’s that asset class piece. And when you talk about asset classes, it can be things like public equities, public fixed income currencies Crypto, which is, you know, more decentralized digital money. And then, you know, on the private side, things like real estate, renewable energy, private equity, private debt. So that’s the asset class side of the equation. So first you need to figure out, you know, what you want or have the capacity to invest in. And then the other piece you mentioned, Anjana, is the implementation, right? Do you implement that through individual stocks and individual bonds? Do you invest in a mutual fund? Do you, invest in an exchange traded fund, which some of this group may know as an ETF, do you invest in a private fund? So, so it’s it’s a broader conversation and there’s no, there’s no right way.

Cameron: (39:27)
It’s gonna be really specific. I would say when you were referencing the things we mentioned early on, it was very much a barbell right, like on one end of the spectrum, you have emergency savings, which are very near term on the other end of the spectrum. You have 401k, individual retirement accounts, very long term dated far in the future. Right. What we’re solving for is that, you know, if this were a, a sandwich that, that filling piece mm-hmm and, and what that filling is. So I would start with looking into asset classes. I don’t wanna give any specific advice cuz everyone’s situation is different. So then toll start with that asset class piece. And when I say start, like, it’s not all on you. Right. But have conversations around that. And then the next piece is the implementation, which is actually the, the vehicle for which you’re investing in.

Anjana: (40:24)
That’s great. Also a great metaphor with the, with the sandwich .

Sydney: (40:27)
Yeah, yeah.

Cameron: (40:28)
For those that, for those, well, no one, this is podcast. No one can see me. I was like, literally, you know doing a hand motion for a sandwic

Sydney: (40:38)
If I isn’t, you know, holding the mic, I’m sure there would be a lot more gestures from me. And so, you know, in talking about these, these different avenues and like crypto, stocks, what we just kind of ran through, when it comes to your portfolio, you know, I feel like we hear a lot of like, you know, diversify, diversify, diversify your portfolio. How diverse should your portfolio be? Like, is there such a thing as, as being too diverse or, you know, should it be more focused? Would love to get your kind of thoughts on that.

Cameron: (41:18)
Diversification is, is key. Going back to this idea of goals based investing and investing in things that are funding various goals throughout one’s lifetime. So diversification is, is key. I guess you could be at one point too diversified. And I think about it in two situations, I could see a scenario where someone’s invested in so many different, let’s say funds with exposures to companies that they don’t have full look through into that you’re you’re so diversified that you don’t know what you own, and there may be overlaps in concentrations, excuse me, that you’re not aware of. So I could see that being a scenario. But it’s better than the alternative, right? It’s better than like having all of your wealth in three stocks or all crypto or whatever. Yeah. And the second piece is if that were the case, it would be very hard to what’s called rebalance, your portfolio and rebalancing is basically buying or selling across your portfolio to bring your investments back in line with the target, like those goals based target. So if there were so many different things, investments, line items in there, it could make rebalancing hard. But again, I think it’s better to have exposure to several asset classes, several things because we all experience very different market environments than not, you know yeah. Than, than being invested in one thing.

Anjana: (42:57)
So to kind of like bring this back to being more tangible, and obviously I know you really, can’t, it’s hard to give specific advice cause everyone’s situation is different, but do you have like any kind of rule of thumb of how much you should invest in stocks? Like if we were looking at a pie, like how much should be in stocks, bonds, ETFs, we can leave crypto out of it.

Cameron: (43:15)
you know, it’s, it’s so specific to an individual because you know, if you’re in, you’re in your early twenties and let’s say all your goals are long term you should be very growth oriented. Like the majority of your portfolios should probably be in public equities. And if it’s appropriate private alternatives and a, and a small amount in fixed income for that, you know, balanced part of your portfolio and income piece of your portfolio. But if you’re retired and, and living off of your portfolio, that situation is very different. You know, one rule of thumb, we typically with our clients who have the capacity to invest in alternative investments, which a terrible definition, but I’ll give it as anything that’s not a, a, you know, a stock or a bond. We, you know, it’s typically anywhere from zero to 20% of their liquid net worth. So we usually don’t go above that. There may be scenarios where that’s different, but that’s sort of one, one rule of thumb and

Anjana: (44:16)
You’re saying things like, sorry, you’re saying things like real estate?

Cameron: (44:19)
Yeah. The rationale behind that is typically not liquid. So what we’d call illiquid, if you think about something like a, a, a real estate asset or, you know, investing in a company, you have to see that through, like, you have to see a property through renovations leasing up that building, potential sales, same thing with aa company. You have to see that through their growth trajectory. And so you need time on your side, which is why it makes sense to in most cases, cap, cap that exposure.

Anjana: (44:52)
Okay. That makes sense. Follow up question. Syd and I are in San Francisco, so obviously all we hear about are our, you know, big tech FAANG companies. And so one of our listener questions was how does a smart person invest, where does savvy money go, right? Like mm-hmm, , it’s, it’s very, very easy, especially up here in Silicon valley to fall into the Tesla, apple, Netflix. Yeah. Conversation, you know, where, where can — you brought up privates? Is that, is that a good place to put your money? What are your thoughts?

Cameron: (45:27)
It’s, it’s prudent. I usually say it’s most prudent for those who have been investing in public equities and fixed income for a while and have the capacity to take that illiquidity. There are also rules around private investing too. In many cases you have to be an accredited investor. So it’s, it’s one avenue, but it may not be appropriate for everyone. The, you know, Tesla, Apple, Netflix, all great companies. The one thing I’ll note because I think there’s, everyone’s focused on, on, what’s gone on in, in the last year or two last year. And, and this is some recent research from Morningstar. The concentration of stock market returns reached a, a peak. So the five largest stocks, Apple, Microsoft, Amazon Facebook now, Meta platforms and Tesla contributed to 37% of last year. So 2020’s market returns. Wow. 2021 through late November were obviously in early, only December right now, the five largest stocks, pretty much that same group, except sub alphabet, Google, for Facebook meta, that same group just contributed 8% to market returns.

Cameron: (46:50)
And that compares to an average of 3% between the years of 2009 and 2019. So last year was kind of an anomaly, but because it feels so because it feels so recent you know, we’re, we’re like, ah, should, should I be all Tesla? Or should I be all you know, whatnot, there is a case for diversification. That’s obviously like the mega mega side of the equation. There’s even the case for diversification. If you know, you’re someone who works at a smaller company, maybe a company that went public last year earlier this year. And, and one thing to note is half the companies that raised more than a billion dollars at initial public offering IPO this year are actually trading below their listing price. You know, despite what feels like very strong and robust stock markets around the world. So it’s something to think about. Last, you know, last note around concentration.

Cameron: (47:50)
And I know I’m, I’m referencing a lot of research, but there’s a lot of good research to know out there is corporate competitiveness, excuse me, and creative destruction is a, is a real thing. So my former employer, JP Morgan puts out some tremendous research it’s it’s put together by Michael Cembalest and it shows that more than 40% of all companies that were ever in the Russell 3000, which is an index experience, some sort of very meaningful price loss, which will define as a 70% decline in price from peak levels. That’s never recovered. So yes, like there are many very, very successful companies that have generated massive wealth over the long run. But if we look at the history and, and we look at the broad data set, you know, probably about 10% of those stocks since 1980 would what would be, what we’d call mega winners in that respect.

Sydney: (48:52)
You know, we’ve chatted a lot about some really great advice dove into like financial wellness earlier. I was really excited to also switch gears and chat a little bit with you about impact investing mm-hmm you know, attention. I feel like there’s been growing attention to like sustainable or like values based investments especially among like millennials and, and younger investors as well. You know? So I guess kind of twofold one for those who may not be familiar with what exactly impact investing is if you could touch on that. And then also I wanted to pick your brain on, you know, there’s, I think a body of research that suggests there might be a trade off, right between values based investing and then significant returns while others say, you know, no impact investing is profitable. Can one be a socially responsible investor and still see strong financial returns?

Cameron: (49:53)
Well? Oh, I love these questions. I’ll take these questions anytime . So impact investing is, or investing for impact is knowing what your money is doing and, and having greater accountability around your money. I want to acknowledge there’s so much terminology out there and everybody, you know, says different things. So sustainability, ESG, SRI gender lens, impact, intentional, conscious, regenerative. Like there’s a lot of language around impact investing. Some people will ascribe certain characteristics to some of this language, but just know that that terminology is often traded around, which I know is not fun, is you’re getting to know a, a new space, but you know, it is what it is. I think that the anchor around impact investing is, you know, when we invest, whether it’s intentional or not you know, when we’re investing in an equity or fixed income security of a company, that’s effectively a vote of confidence in the future value of that company, you’re providing funding to them to continue to do what they’re doing.

Cameron: (51:06)
I know when we’re, or, you know, buying something on, on Robinhood or investing at Ellevest, it doesn’t feel like that, but that’s truly what it is. So it’s, you know, it’s important to know what you’re doing. I appreciate the question around, it’s almost like a ledger question. Well, the return question, and almost like a ledger question. On the return side are our view at Ellevest is that any investment needs to very much stand on its own. So when we look at an investment, we say, you know, the expected return of this investment needs to be commensurate with the investment risk you’re taking and investment risk could be, you know, the, the part of a company you’re investing in. It could be the type of asset you’re investing in, in. It could be the geography, it could be the liquidity. So that’s the first question we ask.

Cameron: (51:51)
And once we ask that question of ourselves, we then ask, what impact is this making? How do we measure that impact? And how are we holding ourselves accountable? And we can do this to the point of saying, you know, the set of companies we’re investing in has saved, you know, this amount of metric, tons of carbon versus a benchmark portfolio. So we can get super granular about, you know, with that, or we’re funding this many more women owned and operated businesses. So that’s, that’s powerful stuff. To your question around the argument that, you know, doesn’t it make sense to just make your money, invest your money, build wealth, give it away. Is that not a good approach? That, you know, that’s an approach that’s been used for a number of years, I call that kind of the ledger approach, right? You like do stuff on one side of the ledger and then you give it away on the other side of the ledger.

Cameron: (52:49)
The one thing I’ll say is if you’re really not paying attention, because capital is powerful because it is recycled, you could be completely negating what you’re doing on the philanthropic side with some of your investments. We had a situation at Ellevest where we had a client who in a big way with supporting clean water efforts in a developing nation. And until they did a full look through, into their equity investments in their portfolio, had no idea that they were invested in a company that was one of the biggest contributors to water waste in that same region. Ah, I know, wow, like completely eradicating, if not, you know, eradicating the benefits of giving, if not making the situation worse. So, you know, if you’re gonna take that approach, you, you just need to know that that could be a possibility, right?

Anjana: (53:40)
I love, love, love how you answered that. And I love that Ellevest has a team that like looks at the actual impact and stuff, which I’m sure is a lot of effort. I think one of my favorite things and what makes me feel good about myself, about putting my money in a Roth IRA with Ellevest, I know, like I check mark that little box that says it goes into impact funds. And I would much rather be doing that than help Jeff Bezos get to space. So

Cameron: (54:04)
No comment,

Anjana: (54:07)
Understandably. So I think we’ll end this with the latte factor, just to kind of go back to how we started this whole conversation around the myths about women and money. One of my favorite articles that Sallie Krawcheck wrote was “Just buy that f***ing latte.” And when I, when I first started learning about building wealth and stuff, the very first book that I was recommended was the latte factor. And I was like, some of this stuff’s a little sus, I don’t know. And you know, we’ve had classes where like men would come in and tell us, you know, if you save this amount of like money on lattes, you’ll be a millionaire by the time you’re 50, I’m like this like rate of return was really high. Like, I don’t know what situation this would happen in, but okay. You know, like I would, first of all, love for you to kind of explain the issues with masculinization of money and the whole issue with the latte factor in the first place. And then we’ll get to the second question in a second .

Cameron: (55:06)
I mean, mean to, to think that you can distill long term wealth creation into “just don’t buy the latte” is an issue in itself. Like we’re not gonna go into this. We actually I’ll send you, I’ll send you both one. We have these great mugs you know, that buy the fing latte. Yes. And favorite gift of all time. But so that’s issue number one, but it also goes back to this point earlier of cost cutting, saving, preserve scarcity. Again, like it’s no wonder why when women think of money, just like for those that can’t see me, I’m holding my hands up in a circle, but it’s, this is finite. This is scarce. This is all I have. So I’m gonna save it, like going back to that cash piece, you know, women keep 70% of their wealth in cash versus, abundance, growth, movement. You know, which, which tends to be sort of more masculine in nature. So we take such issue with that, that we, you know, created a mug that says by the, by the effing latte, I, I just it’s — to distill personal finance for women into that is inappropriate. Yes. I’ll leave it at that.

Anjana: (56:27)
yeah. Agree. do you, I mean like, like you mentioned, and this was in the article, like 90% of articles on money written for women are about saving and budgeting. And in contrast, 72% targeting men on money are about investing and growing their money. And, you know, Sallie talks a lot about how this is a systemic issue. There’s a lot of things we can’t as individuals fix, but from, you know, your perspective, is there something that we can do to like move away from this idea of like scarcity for women? Mm-Hmm

Cameron: (56:55)
I, I go back to, you know, one of my favorite terms is agency. So having per personal agency over your money, again, you could have a ton of money, but not have agency. So knowing what it’s doing, not only how it’s invested going back to that, that idea of goals based investing asset classes, investment vehicle, but what it’s doing, going back to that idea of sustainability and then building that ecosystem around you to create that agency. So it could be working with a financial advisor. It could be, you know, having a really good accountant or a CPA. It could be, you know, planning for the future through trust and estate planning. So I would start with, with that piece, because as you begin to feel that your money’s working for you again, going back to the sneaker reference like sneakers are not doing any thing for me in my closet.

Cameron: (57:52)
You gotta, you gotta use it once you begin to feel like it’s, it’s working for you, that creates this feeling. You know, maybe it doesn’t immediately make it doesn’t immediately feel like full abundance, but you know, you can feel yourself working to that. And it’s a really wonderful feeling. You know, and last thing I’ll say is there’s a, there’s a prudent and appropriate way to talk about it and we should be doing it. We should be doing it with our girlfriends. We should be doing it with our guy friends, with our daughters, with our sons, with our parents. So being more open, it’s obviously difficult in friend groups and households and cultures where, where that isn’t normal, but we really need to normalize that conversation around money.

Sydney: (58:33)
Right. Well, I know we’re at time. I think that was, that was a wonderful way to, to wrap up this super amazing episode. And we just are really appreciative of your time cam. This was great to have you on. We would always love to do a part two

Cameron: (58:48)
Oh my gosh. We gotta do a part two.

Anjana: (58:51)
All the information we still need to talk about! Where, you know, if our listeners wanna reach you, where is an appropriate place to?

Cameron: (59:00)
Yes. So definitely you should, you should check out Ellevest. You should, Anjana referenced our CEO, Sallie Krawcheck. So follow her. We are on, oh gosh, we are on LinkedIn. We are on Instagram. We are on Twitter. We’re on Facebook. We have a great website. I actually think we have the strongest social media presence of any financial services company, which is a, a low bar to beat, but we’ll take it. My name’s Cameron Rogers, I’m on all things, but probably, you know, first and foremost, LinkedIn, and then my email if there are any follow questions is