Step by Step Savings Accounts Setup for Beginners!

how people should see their money, value their money. People have to start saving when they could afford it when the kids are young and how the market works short-term versus long-term. There are thousands and thousands of different funds. We showed you how to a open up separate accounts for each occasion or each child. The only way you want to continue thinking about it is maybe I could I could afford already $30. I could already $40 and so on and so forth. And this is not where get get rich quick. and they want to start investing but they're overleveraging themselves what they could really afford to put away long term and what ends up happening they crash you have so much more to to save and put away long term and that's that's that's idea of this that's idea of profit the most is Robin Hood I specifically don't like Robin Hood since Robin Hood turns into a casino people start trading and doing options and becoming experts on which stock will be up tomorrow which [Music] Kim, thank you so much for joining me on the Let's Talk Business podcast. For our listeners, it's not the first time we had you for a full episode and you gave phenomenal advice for people. Obviously, you don't give financial advice, but you gave coaching as far as how people should see their money, value their money, and how they could actually use their money wisely. Um, and one of the things we discussed on our episode and I've seen you speak about it is people have to start saving when they could afford it when the kids are young in order to make some, you know, plan retirement. Obviously, most of our people will talk about, you know, you have these occasions, bar mitzvah, weddings for kids. They want to save up money for those occasions. So, a lot of chatter out there is about investing in the S&P. It's something that has compound interest. It's something that you put away small money but ultimately with with the years you are a you're saving and plus it it actually gives you a nice return on average. So we're not about the fin when this conversation is not about the financial part of it. It's a very technical conversation that I wanted to go through is I've had a lot of people come to me probably you had people come to you as well. I tried it. I was playing around with the system. I don't know how to do it. What what are the mechanics of it? I want to do it the right way. I don't want to find out when I'm making a wedding for my kids. I didn't log into that account the whole day and all of a sudden I find out that I forgot to do something and and and and now I have to go, you know, I didn't have that result. So today, if you could be kind enough and show us setting up a dummy account, putting in information, what are the steps a person would do that our audience would really appreciate it. Great. Welcome. Welcome. Thanks for the great introduction and it's great to be back. We hear fantastic u feedback from our first episode and I'm looking forward to this one. Um you pointed out that I'm not a financial advisor, which is someone that can advise you where to put your money. That's correct. I'm a financial coach. So, this is educational to teach our viewers how to open an account and how they could do it. And of course, for financial advice advice, they should speak to a financial professional. And whoever does this should be familiar of the risks of investing in the market and how the market works short-term versus long-term and everything else. People should familiarize themselves with it. This is for someone that knows exactly what they want to do and it's just a how-to for those people. Beautiful. Perfect. So there are many financial institutions of where um one can trade. The most popular I I want to say the most popular but it's very popular is Robin Hood. I specifically don't like Robin Hood. Since Robin Hood turns into a casino, people start trading and doing options and becoming experts on which stock will be up tomorrow and which won't and all the other um gambling that ends up happening on Robin Hood. While you could do the same on other with other financial institutions, it seems like the user interface on Robin is just too friendly for that. So that's why I don't use Robin Hood and instead I go to Fidelityinvestments.com. So it's Fidelity Fidelity.com which is Fidelity Investments. I'll share my screen now. Sure. And show you the Fidelity homepage. So here we go. This is the Fidelity homepage. And when it comes to opening an account, we click here, open an account. And there are multiple different accounts that one can open. They have tens of different accounts. If you click on all accounts, all accounts, we won't go there. The most popular is one of three, a brokerage account or within an IRA, a retirement IRA. There's a traditional IRA and a Roth IRA. I'll briefly discuss the difference between those accounts. A brokerage account is where you can buy stock and sell stock uh and mutual funds as well at any time. You can buy today and sell tomorrow. And it has um you actually pay taxes on it. the money that you contribute. When it comes to investing in the market, there are different types of types of the different types of account had different tax ramifications. So, let's discuss brokerage for a moment. A bro a brokerage account is you put in taxed money. So, if you earned $100,000 this year, you pay taxes on the $100,000 and that money that's taxed already gets invested. Then, when you sell, it depends. If you sell within a year, you pay income tax on the gains. Of course, if you sell at a gain, you you pay income tax on the gain. If you sell after a year, that depends on your income. So, if your income is less than for a married couple, I believe that for 2025 is approximately $96,000. If you sell at a gain, so that that's called capital gains tax. And capital gains tax for someone that earns $96,000 is actually at zero. So, you can sell your stocks at a profit and not pay any taxes. If you earn from 96,000 up until I believe it's in the $400,000 range and again the 96,000 is for a couple up I believe it's around $400,000 range you're you pay 15% capital gains tax and above that if your income is higher than that you pay 20% in capital gains tax. So that's a brokerage account. In the brokerage account, correct? Okay. It's not locked. You could actually you could sell whatever you want. If you sell within a year, it's income tax. After a year, it's either zero, 50%, or 20%. And paying that tax for someone that's in a higher tax bracket, income bracket. That's actually amazing because that means that you made money and you're paying um somewhat to the government and the rest you get to keep and the rest is a lot. It's either 80 or 85% which is amazing. Now, when it comes to retirement account, let's click on open an account. You can open either a Roth IRA or a traditional IRA. And again, the difference between the those accounts is the taxes. Now, when it comes to investing in a traditional IRA, the taxes are as follows. Let's say I'll just use those numbers as an example. If someone contributes $5,000 now, and then in retirement, it's worth $50,000. The money that they contribute now is not taxed. So, technically, they earned $100,000 and they're contributing $5,000. So that money isn't taxed. Now they when they file taxes, their accountant will tell them, "Hey, you can have a tax benefit and you can defer this $5,000 that you're contributing to your traditional IRA. You don't you won't have to pay taxes now on it since it's tax deferred. So you'll only pay taxes on $95,000 and you'll see a smaller tax bill when it comes to filing and paying your taxes. That's great. Then in retirement, the $5,000 hopefully turned into $50,000. at that time you'll pay income tax. The other type of IRA is a Roth IRA. The Roth IRA is that if you currently earn $100,000 and and you contribute $5,000, you pay taxes on that $5,000 just like you pay taxes on your entire $100,000. So, you pay taxes now, but the benefit is that in retirement, the entire $50,000 that it hopefully grew to is taxfree and you're not paying any any tax on that. That the traditional IRA has a tax benefit now. And the Roth IRA has a tax benefit. Got it. So, so basically basically the only both of them are taxable. The question is if you're getting the benefits on from the get-go on the on every year or you getting it at the time you withdrawing the money at the later later date, right? and and and usually what will make a difference like which type of person would go either or like like is there any like category of person that traditional IRA would make more sense than a Roth IRA. So I recommend people to ask of their accountants what they recommend but one way people like to recommend is that if someone's in a high tax bracket now they would want to go with a traditional IRA. This way they have the tax benefit now that it's tax deferred up until retirement and we don't know which bracket retirement might be. Got it. Okay. So so back to to where we were and thank you for this uh this explanation. I think it's important because people hear the word IRA and average person if the company's not contributing to it and stuff like that they're they're confused. So let's let's go back to brokerage account. I guess I guess when it comes to um savings accounts for you know let's say we said for these simas or any type of account you want to create for long term it would be if it's not a retirement purposes um brokerage account would probably be the the way to go right I just want to add one more thing you mentioned their company if people do it through their employer and that's a 401k 401k is pretty similar to an IRA the difference is when it comes through their company it's called The 401k versus an IRA is an individual retirement account, but it operates pretty similar. Let's go to the brokerage account. So, what we're going to do now is we're going to open an account. Let's open the brokerage account. Are you a Fidelity customer? We'll answer no. Just for me, you can add your wife if you want to. I'll be adding the information here. [Music] So now it's asking you where your cash will be held. Right? So entering the information until here was very easy and fast. Now they ask you where do you want to keep that cash and what's recommended. They recommended they actually had even a sign here recommended. Um but they took that off. I see. But we recommend SPAXX. What this is is this is just a money market account. Let's call it a savings account. So when you add money here, it's just a high yield savings account just without the FDIC insurance. It's a savings account. And then once it's in here, once the brokerage account or the retirement is open and you transfer money into the account, it'll be held in this kind of savings account. But you still have to take another action later if you want to invest in the S&P or elsewhere. You'll have to take that action afterwards and trade. So first will be held in spaxx. Open an account. Let's create a username and password. and then they ask you for for one of those codes. Let's get a text message. Submit security code. Correct. So the next thing is link your bank account. The way we connect the bank account the recommended way is through vicinity. So we enter our bank username and password over here. Once you open your account, you click on accounts portfolio and this is where you'll see the account. But let's let's open this. Let's say we want to open three accounts for three in three different children. So each child can get their own wedding fund. Open an account and again another brokerage account just for me. And as you see opening the second account should take less than two minutes. We want to open it again within and keep the money in spaxx until we invest it. And this is where we link the bank accounts. Again, we add $10 and we link the account. Now, let's click on accounts and portfolio. And here we have the second account. We can do that over here with open an account multiple times and open multiple different accounts for each child. You could rename this. You can rename. Okay. So, let's rename it. Oh, beautiful. This is a room. Beautiful. So now we have the two accounts open and once it's nicknamed um A and S we know that this money cannot be used for anything else. This money is dedicated for the wedding and if the month is tight or if we want to use Sar's money for anything else we can't use it. This is dedicated for their wedding discipline this way. For those who are watching this is where discipline comes into play. You got to be disciplined otherwise um it defeats the whole purpose. Exactly. And I believe everyone watching is disciplined in some things. All we're saying is you can be disciplined in this uh manner as well with your wedding funds as well. Just do it. Okay. So now that we have the the the accounts open, zero balances, how do we putting it into the S&P? How do we setting up that it should be auto debit? Perfect. So we can do two things. Number one is transfer money and keeping it in the account but it isn't invested and it doesn't grow. Um, it's just like a high yield savings account and the money just sits or we can do a recurring transfer and and and a recurring investment actually. So, let me just show you first how to transfer money. If we want to let it sit, um, we open or we don't or first we want to set up the recurring trans the one-time transfer. We go to EFT to or from a bank. Let's contribute $10 to a Rome's wedding fund. So we do from JP Morgan Chase and again at this point your your banking is already linked because we did it in the earlier step. Correct. I do a onetime transfer of $10. Continue. Submit. Great. So I'll click on the Fidelity logo here. It'll take us to the home as you see here. Now, the money didn't really get withdrawn from your Chase account yet, but Fidelity is laying out $10 and are letting you continue investing as a matter of good faith. They believe that your money is there is in Chase and it'll transfer over tomorrow. So, they already laid out the $10. They do it sometimes, some types of accounts and now we can trade it. So, now the money is just in SPAXX, which is essentially just a money market account. Now in the money marking account itself is also a high yield money marking like if somebody says yeah when I I called it money market account I called it high yield savings it's it's a money market account but it operates like a high yield savings account just without the FDIC insurance. Got it. Great. So now it's just sitting there. If one decides that they want to invest in the S&P 500 this is what they do. They click on trade. Let's buy. There are many different ways to buy the S&P 500. For myself, I like to buy uh the Fidelity mutual fund, which is called FX AIX. That's their ticker symbol. And it mimics the S&P 500. So, and that's a mutual fund. Mutual fund. The account of Ron wedding fund. FX AIX. And as you see here, it's a Fidelity 500 index index mutual fund. Action by dollar amount $10 preview. As you see here, they laid out the money in good faith. Let's pray. Um, submit the order. Um, order received. Now, the end of tomorrow, it'll this will get invested in the S&P 500. Okay. Now, just to make sure that I understood correctly, when I did the transfer of funds, that's going to be a recurring. So, now you showed me a one time. That was a one-time transfer and a one time trade. Okay. Let's go to Sarah. by Sarah's account. Let's set up recurring weekly $20 a week, which will be approximately $80 a month. So, beautiful. We'll click on transfer here. Manage recurring transfers. Here's investments or transfers. We can create either a recurring transfer, which will be just an FX in SPX, which is just in the money market account, or we can invest it automatically into the S&P 500. So it's a both steps in one in one shot. Exactly. And that's what I like to do with myself. So I'll click for the on the investment create an automatic investment mutual fund. Sarah symbol is again FX AIX. So it'll automatically withdraw from the account. Go into Sarah's wedding fund and invest in the S&P 500. I would like to do $20. They have the option of weekly every two weeks or monthly. I'll click on weekly. What day of the week? Tuesday. And then I have to link the bank account. So I'll toggle this on. Select this account. Preview. Confirm. And that's it. Let's look at manage. It's set up. And let's call this our forced savings. Why is it a forced savings? It's actually a forced investment because now I know that every every Tuesday I will have $20 exit my account, get transferred and invested into Fidelity and I must be disciplined and never touch this money. And I I'll try never to cancel this business Hashem. And what I will do is hopefully increase it from $20 to $40 to $80 as well as the the other kids as well. And this is now my fourth investment as a wedding fund into the S&P 500. Mhm. And you could have as many account as you want and you could have for different occasions and you could have even for the same kid different occasions or different beautiful. Now let me ask you so this is the only thing you need to know about putting away those $20, $10 whatever it is for the wedding fund. It's that and you want to be familiar as we start off by saying you want to be familiar with how the market works. Why one shouldn't gamble on the market and what the S&P 500 means. um that you want to be familiar with the market can be up and it can be down and the market can in 2008 they crashed 50% and you want to know about that. You want to know how the market works. Understand that one shouldn't invest their emergency fund in the market or that if someone wants to buy a house in two years from now that shouldn't be invested in the market either because then it's only for long term. Exactly. the risk the money the money being the market being down in two years and risking that their the $100,000 will only be $50,000 at the time that they want to Got it. Now, let me ask you, is there a point of coming in um on the dashboard and seeing the graphs up and down or you recommend? If someone that someone that does this only does this because they're familiar and on how the S&P 500 works, they're disciplined. They already they're already familiar with it. They understand that this is for long term. Someone with a that that wants to access the money next year on two years or in three years doesn't put their money here. At least I wouldn't. And it it doesn't matter if the if the market is up or down, at least not for myself. because even when the market's down naturally in the long term it'll be up again. Now you mentioned the the fund that you suggested. Uh I guess my question to you is um this is a personal preference. This is based on uh what you've seen working. If if somebody comes up and says I have a similar fund or anything like that. Is there major changes between the different funds? Sure there are all types of funds. There are funds that follow the gas industry, the oil and gas industry. funds that follow the chip industry, funds that follow everything, the car industry and funds that focus on international or on and there are thousands and thousands of different funds. But since I'm not a financial adviser and I don't follow those funds, I for myself with larger sums of money, I actually go to a financial adviser and they invest my money um for me. This is if I want want to start um on my own investing on my own just S&P 500 which is the most popular um fund for people to invest in and only if someone is familiar with with how it works. Now otherwise if someone wants more information I do recommend them finding a good licensed financial advisor that can invest their money for them and one that they should be familiar with the fees one that doesn't overcharge not too high on their fees and one that their primary business is mutual funds and not that they focus on a different industry and they also do mutual funds even if they're named as a financial adviser. Got it. So so let's recap for the listeners over here. So what we showed you over here is um you already heard about um the the importance of investing and saving money towards um those beautiful occasions that you will come up in your life but you know will come up um and and you heard about the S&P you heard about investing longterm not short term. What we showed you over here is how you open up a Fidelity account, put in your your basic information link your bank account and we showed you two things. We showed you how to a open up separate accounts for each occasion or each child. We also showed you how to make a one-off trade versus one-off transfer and one-off trade. Or we showed you how you could combine those two and set it up as a recurring way, monthly, weekly, and obviously these are basic settings that you could see. Other than that, um um again, not giving financial advice, just showing you the mechanics of it. You set it up, you forget about it, and the only way you want to continue thinking about it is, hm, maybe I could have I could afford it already $30. I could already $40 and so on and so forth. And this is not where get get rich quick. This is not things that this is going to feed you a family in a year or two from now. This is purely a forced savings with a average of good return long-term investing it for 10 years 15 years and so on and so forth. That's how you do it. Now I want to ask you a follow-up question because this is a question that actually people ask me literally within the last 24 hours which is okay I'm so excited about it. I want to do it but my kids are all ages and and I I I want to do it. um what do you recommend for that person to how to go about it? So let's say they have a 12 year old, they have a 9year-old, they have a just a baby of 2 years old. So do you recommend we should change that dollar amount at this point or in order to get people started you would say do the same amount across all children even the ages are different? It really depends on the financial situation. Of course I would not invest um in wedding funds or anywhere else. else. I wouldn't want any investments until a a person can cover their debt um their month until a a person can cover their month until b they're debtree they don't have any credit card debt or any other debt and c they already have an emergency fund because the emergency fund shouldn't be invested. Once we have that and we decide that, hey, my financial goal is wedding funds right now. Once we're at that stage, we recommend um that. But it all depends on your ability um how much you can save. If someone wants to get to $100,000 in 18, 19 years from now, the ideal number is probably $250 a month. If they have older children and they want to get to $100,000 sooner, obviously that number increases and we have to calculate that um for each individual occasion and let's do that. Yeah, it's a very good point because a lot of people get very motivated by listening to something like this and they want to start investing but they're overleveraging themselves what they can really afford to put away long term and what ends up happening they crash and then they stop everything. So, as he said, rather start with a modest investment, something that you you will not feel it's that coffee in the morning that you stopped buying or you never bought and you could afford it because you wouldn't feel it. Start off that way and rather as you as you start seeing it um um you're going to start growing. And you know from a business I I remember I spoke once to to a a very large business owner and he told me that I asked him like in the beginning um you know it was so hard it's in the software business and how did he start um getting through and he shared a story from the a very interesting story that I it stuck with me. He said, um, we were doing payroll, um, but I didn't pay myself. And at one point I wanted to start paying myself, but I knew that if I'm going to say pay myself and then I have to cover payroll, I'll never it will never happen because we always shorten payroll. So he faked it. He said, you know, he make believe that he has another employee that he hired in his office. He gave it a different name. And this is how he submitted payroll. and and then the the person that was doing payroll was just adding that up and he said slowly but surely we're able to cover because I was able to squeeze it along with everything else that's going on in the company. So when we look at small money sometimes um you don't think you could save but then all of a sudden the $20 you could save and and 20 becomes 40 and 40 becomes 50 and 100 and so on and so forth. So my recommendation to everybody again not being a financial adviser start off with something and that something will become with a compound effect will give you the momentum and you'll all of a sudden you're going to find out you have so much more to to save and put away long term. And that's that's that's idea of this that's idea of profit first. You you take off something from the from the get-go and all of a sudden you find out that somehow you get by with the rest of the of the of what's what's left on the plate. Kim, thank you so much for giving us your time. I know this is going to be very valuable. And again, we want to finish the way we we started. Not Kim, not myself are doing any financial ad um um um advisor. Um you know, we're not licensed financial adviserss, nor do we want to be seen as that. This was a technical conversation about if you want to say if people wanted to know what are the mechanics about doing this, this is what we showed you. And if any given time you need financial advice, please pick a licensed financial adviser to guide you in the right ways. And we want to wish you happy savings and ultimately have financial freedom. That's what what we all wish you for. Great. Thanks many for doing this. I appreciate it. Have a good one. You too. And that's a wrap for today's episode of the Let's Look Business podcast. I hope you enjoyed the practical nononsense advice that our guest shared. If you found value in listening, I would be so grateful if you could share the episode with your friends and if you could give the show a five-star rating on Apple Podcast or wherever platform you listen. Subscribe to the show and get notified every time we publish a new episode. The Let's Talk Business Podcast is a PEX Group original production. Until next time, make it a great day. [Music]