The Investing for Beginners Podcast - Your Path to Financial Freedom

By Andrew Sather, Stephen Morris, and Evan RaidtBusiness Investing

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The Investing for Beginners Podcast - Your Path to Financial Freedom episodes

June 05, 2018 IFB60: Personal Finance 101: Money Lessons to Our 5 Year Olds

Welcome to Investing for Beginners podcast this is episode 60. Tonight we’re going to talk about money lessons for our five-year-olds.
Andrew and I both have younger daughters and we’re going to talk a little bit about money and what we would teach our kids if we wanted to teach them more about money and I thought I would go ahead and start off and talk a little bit about some of my experiences with my little girlie and kind of go from there.
Just to kind of give you a little bit of background my daughter’s going to be six here very shortly and we go to Walmart a lot to go shopping and stuff and she always wants toys and she wants Toys Toys Toys more toys.
My wife and I have been discussing about whether we should give her an allowance, whether she should earn it and kind of going back and forth on what we should do. And so I thought that I should have her to help her learn the value of money that I should give her some air quote jobs to earn the money that we give her every week.
And so what I thought of was kind of creating basically three buckets. The way I do it is that I have a little chart that we created and Sadie, my daughter and I sat down and we went through everything and we came up with jobs that she could do things like emptying the dishwasher, dusting, helping us vacuum, sweeping the floor, getting dressed every day because that’s something she likes to do at this stage.
All those things we came up with dollar amounts and why not so at the end every Sunday we look at the chart together and then we tally up her money and then we hand it over. And so instead of just giving her the money and just letting her kind of run wild with it and going to Walmart or Toys R Us who was going out of business sadly.
Whether we do any of those things and just let her go run rampant and basically blow all the money. I thought about my life in how I kind of learned money and I love my parents to death but they didn’t teach me much about money and I kind of had to learn it the hard way and I after working in the bank for all those years I noticed that very much so people are really not taught money.
They’re not taught how to use it what its value is how to earn it how to save any of those kinds of things we all have to learn it the really hard way I’ll give you an example just recently when I was in another restaurant I was working in I was away from the restaurant for a bit and a vendor came in and I needed somebody to write the vendor a check and the other manager that was on duty was a younger guy and I called him up as a hey can you write this check out for this vendor and he’s like no I can’t I’m like why he said I don’t know how to write a check and I thought wah wah ha ha.
And he’s like I don’t know how to write a check and I’m like how is that even possible then I thought about it for a second he’s younger he’s worked in the electronic he’s lived in the electronic age and so with the internet and the availability of online banking and debit cards and credit cards. Makes sense he’s probably never ever written a check before so I just thought to myself while I was talking to my daughter that this is something that I need to try to help her with.
And so the avenue that I started with to kind of work on this and again this is always going to be a work in progress was I came up with a bucket of three buckets that she should put her money in and encouraged her to try to help her with these ideas.
And so the first the first bucket is kind of your spending money so for five-year-old she doesn’t have to worry about rent or car payments she gets to worry about buying or Toys. What I did told her was is that you could put some of your money in there so that’s the money that we can go when we go to the store to go shopping that you can buy yo...
28 min
June 02, 2018 IFB60:Personal Finance 101: Money Lessons to Our 5 Year Olds
Welcome to Investing for Beginners podcast. In today's episode, we discuss money lessons we would pass on to our 5-year olds.

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33 min
May 22, 2018 IFB59: Listener Q&A: DCA, Canadian DRIPs, Recent Negative Earnings

Welcome to Investing for Beginners podcast this is episode 59. Tonight Andrew and I are going to answer some reader questions, he’s gotten some emails and we wanted to go take a moment and read through those. We’re going to read some stories and we’re also going to answer some questions so I’m going to go ahead and start us off.
The first one I’m going to read is from Anthony the letter starts with:
Andrew,
I just wanted to express my gratitude for what you and Dave are doing with your podcast. One of the things you both preach frequently it’s patience and resisting the fear of missing out. This recently saved me a decent amount of money. There was a stock that I really liked because they were selling in a bargain I mean this stock would look great. I invested once a month in research during the time in between about two weeks before I would normally make a purchase I noticed the price kept going up and going up. I felt like I needed to buy in NOW or else I would lose potential gains it took all of my willpower to just hold off and wait until the month was up before buying in.
I’m sure you can guess what happened next they went back down to its original price the next week then I went down a little further by the time I bought it it was actually spent less than it would have been if I had bought it a month prior this just goes to show how little things like having a little patience can help you in your financial success.
Thank you for your time and hard work you put in your effort is truly helping others towards achieving financial freedom.
Thank You,
Anthony
Dave: well Anthony you’re welcome. Glad you are finding some value in what we’re doing that’s what we’re here for is to try to help you guys.
Andrew: your thoughts that’s perfect that’s we’re going to start the show on the peak and it’s just going to all go downhill from here all right.
Now that we pat ourselves on the back let’s actually help some people.
Here’s two questions from Josh both good questions. so we’ll tackle them one at the time.
Hi Andrew you talked about dollar cost averaging and its importance however how do you distribute across your portfolio all into a single position or spread out across multiple?
How much is too much to put into an individual stock I have five thousand dollars putting a thousand dollars into 5 stocks makes sense. However is there awaiting to placing more dollars into one position versus another? Can you invest too heavily or not enough into a single position while neglecting other positions?
Several questions sort of saying the same thing, love to hear your thoughts.
Thanks Josh
Dave: I guess my thought on what Josh’s question is equal waiting to start would probably a great thing to start with that’s kind of how I do it. But then as you find more information about the companies you can adjust that as you go along and get more comfortable with how you’re investing.
There’s never really going to be a right or wrong answer this is really going to be more depending on what you’re comfortable with and how much volatility each of these particular stocks are going to have and how much you can stomach investing into a company that is air quotes losing money or is going down in price maybe not losing money is the best way but maybe the stock market is punishing the stock and you still think it’s a great position.
Then that’s when your strength of conviction of what you’re doing is going to come into play. So that’s really kind of how I would look at it Andrew what are your thoughts?
Andrew: yeah I agree and you’re kind of alluding to the idea where it’s going to change as time goes on so something that investors are going to have to think about.
36 min
May 17, 2018 IFB59:Listener Q&A: DCA, Canadian DRIPs, Recent Negative Earnings
Welcome to episode 59 of the Investing for Beginners podcast. In today's show, we take some listeners questions and tackle dollar cost averaging, DRIPs, and others.

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40 min
May 02, 2018 IFB58: Efficiency and Financial Ratios Formulas: ROA, ROE, & ROC

Welcome to Investing for Beginners podcast, this is episode 58. Tonight Andrew and I are going to talk about financial ratios and we’re going to talk about some ones that we have not discussed before so this will be fun.
We’re going to take a shot at talking about return on assets, return on equity, and return on invested capital as well as maybe a few other tidbits so Andrew why don’t you go ahead and take our first shot at return on assets.
Andrew: okay yeah I could do that. Return on assets so basically the three of these ratios a good way to think about them is they’re kind of like efficiency ratios. They are ways to evaluate whether a business is good at creating cash with what they have.
We’ve talked about some ratios in the past we talked about valuations episode 11 really good for that so we should I think we also talked about the cash flow statement I know we did that we might have done the income statement so we’re trying to piecemeal these lessons here and there.
These efficiency ratios are good to keep in your back pocket for doing the kind of stuff that some of these value investors like to do I know Buffett likes to use efficiency ratios like I think he uses ROE, Joel Greenblatt uses ROIC so these are some good ones to know and to understand obviously some of these accounting metrics are a little bit hard to conceptualize if you aren’t familiar with financial statements.
I would recommend maybe that’s a little bit over your head to try to learn some of the basics first try to tackle a financial statement and then maybe go back to an episode like this and then you can really comprehend return on assets. so that’s simple like it sounds so when you hear all of these return they’re basically talking about like what a company is able to create as far as profits go so the simplest way to use this equation as to say return is net income and then you divide it by assets which is total assets.
Pretty self-explanatory I would say you think about the type of businesses that are going to be scoring better on both return on assets and return on equity one that comes to mind would be like a Facebook right where they don’t need as many assets pretty much any financial website or why did I say financial that at least my brains on somewhat of the right general topic.
But any website any business that isn’t very capital intensive doesn’t need huge expensive factories in order to run they’re generally going to score really well on ROA or ROE and so I think ROE is also self-explanatory Dave do you want to talk about that one and talk about anything I missed about our way.
Dave: yeah the ROA what I like about it is it’s obviously it’s very simple to calculate and as Andrew was saying it is an efficiency ratio and I think that the thing that I like about return on assets is it gives you it gives you an idea of how effectively the company is converting its money into income.
And obviously the higher the number the better it is and so as Andrew and I like to talk about a lot assets are really was drive a business earning more money and when you think about return on assets the best way to think about it when you’re using it as a way to value a company is to look at the financial ratio as a comparison to like companies.
So for example you wouldn’t take a railroad and look at the return on assets and compare that to a bank or you wouldn’t take the railroad and compare it to Facebook because there are two different types of businesses. Where it’s going to be most effective is when you’re going to use it in in a relationship to other like to like businesses.
Let’s say the fang stocks which was all the rage so if you take Facebook and maybe Google or alphabet and compare those return on assets those it’s going to...
34 min
May 02, 2018 IFB58:Efficiency and Financial Ratios Formulas: ROA, ROE, & ROC

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38 min
April 28, 2018 IFB57: Comprehensive List of the Best Investing Books for Beginners

Welcome to Investing for Beginners podcast episode 57, Andrew and I are going to take a stab at talking about some of our favorite books.
Books are a fantastic way to learn and as Andrew and I are both self-taught investors we thought we would share some of the books that have helped shape our views and philosophies. So without any further ado, I’m going to turn it over to Andrew and he’s going to talk about his first book.
Andrew: yeah love to talk about them and it’s so crucial right if you want any chance at jumping into the stock market I think it’s important to instead of immersing yourself immediately in the media and in the charts and everything that’s going on the business world. You can build a base and a foundation and get some wisdom from people who’ve done this for decades.
Getting a huge head start on the rest of the investors who are going to they’ll go out and they’ll learn these expensive lessons where you can kind of shortcut all of that and you can really get your skill set get that at a much higher level in the beginning and the only compound from there.
I mean there’s some books while Dave and I don’t have like the whole financial educational background we do have a huge passion when it comes to reading these books. I’ve personally been reading these books voraciously and I’m just constantly reading new investing books so you start to get to a point where a lot of the books start to say the same things and that becomes a good point because then you understand which parts of these books are really crucial which ones have worked for a ton of investors and not just maybe one or two who sound really opinionated.
But has worked for the majority and then you start to get the collective wisdom of all these smart people and so I’ve always been just going through all these different books ever since I started out. So it gets hard for me to kind of pinpoint in and there’s so many different recommendations that I want to give out.
I’ll say this like what we’ll talk about the Intelligent Investor and that’s an obvious must read for everybody. It’s a book Buffett that highly praises it’s the foundation of any value mister you talk to they’re going to talk about the Intelligent Investor but I really think that books a little tough from a readability standpoint I think you need like a quick win you need to you need to get confidence you need to get excitement and you need a book that like starts to kind of it’s like baby food right.
It’s something that can start you out and until you get to some bigger more intense concepts that you can really chew on. so for me personally and I really lucked out like it’s kind of funny the way I got into it was I don’t know how I ended up at this bookstore I was out of Barnes and Noble. I don’t even know if those yeah they’re still around today right so I know there’s one down the street from where I work but I went into Barnes & Noble and I went over to the investing section and didn’t have really a clue right.
Outside of a couple of conversations, I have with the guy who really pushed me in the direction of investing kind of listening to him talk about some of the general principles of investing like dollar cost averaging was a big one that you really espouse in my head from the outset.
Outside of those like little discussions, I didn’t have much of a foundation when they came to educating myself in the stock market and investing as a whole. so I literally went to the investing section and I just had an open mind I had no idea which books I was going to pick out and just saw if anything really stuck out and I saw Beating the Street by Peter Lynch and literally like my thought process was what that named Lynch sounds really familiar like sounds like Merri...
43 min
April 25, 2018 IFB57:Comprehensive List of the Best Investing Books for Beginners
Welcome to episode 57 of the Investing for Beginners podcast. In today's show, we discuss the investing books that have helped mold, shape and educate us.

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47 min
April 19, 2018 IFB56: New 2018 GAAP for Marketable Securities Will Inflate Earnings

Welcome to episode 56 of the Investing for Beginners podcast. In this week’s episode we’re going to talk about something that Warren Buffett dropped in his latest shareholders letter and he was also mentioned on a video on CNBC that was released recently and this is relating to new GAAP figures that are going to potentially inflate earnings figures and we’re going to dive into that.
Andrew is going to start us off and talk a little bit about some of the background and then we’re just kind of go back and forth, so Andrew one should go ahead and start us off there big guy.

* New GAAP accounting rule will affect financial institutions, like banks, insurance companies.
* This new rule could inflate earnings for said companies.
* Isn’t the first times accounting rules have changed
* If you invest in these types of companies you need to be aware as the rule takes effect.

Andrew: yeah sounds good and like my M.O. for this podcast has been kind of to hate on CNBC. I just have to say like they put up a new video series and it’s probably the best thing on YouTube other than my own stuff obviously.
Okay great there they did like three hours with Warren Buffett on Squawk Box and edit it down and I think it’s about an hour to an hour half of the content on their YouTube channel right now and this was back in I think early February’s when they interview him mid-February is when it was released so he’s that’s straight from the Oracle himself talking about some of the stuff we saw with Bitcoin a lot of the market volatility we saw at the beginning the year and most importantly.
Which kind of from my understanding from the way I’m kind of interpreting all of this he just mentioned something as an aside and they talked about it briefly but like the whole majority of the finance industry right now is completely ignoring this and it’s going to have a big impact for a certain group of companies. And it’s relating to what they’ve referred to with these GAAP which is generally accepted accounting principles or practices. And it’s the way that these companies are having to report the financial data that’s all audited and it’s how they come up with the earnings number.
And so it’s going to be a big kind of thing and it’s all in a hand in hand with like the new tax reform stuff that we’re seeing and so it’s like this unprecedented thing and it’s definitely something we need to discuss.
We’re going to try to keep everything basic explain everything from the very top down and keep it in simple terms but it’s something that’s important to understand so we can know how to approach these type of businesses moving forward.
It’s not going to necessarily affect every single company that’s out there right now but it is something that we should definitely talk about.
I guess the first thing Dave I will ask you how would you break down some of the major aspects of this are going to be net income and marketable securities and then how those are defined so can you for the beginner that’s out there who doesn’t have an accounting background can you break down what net income is and then marketable securities after that?
Dave: okay so I’ll go ahead and take a stab at this so net income is really the easiest way to think of it is the money you make on the money, you make.
In simple terms think about your own paycheck when you bring home your paycheck and you pay all of your expenses the money you have left over there’s your net income so after you pay your rent your utilities maybe your cell phone bill maybe you got to get your dog washed or groomed any of those kinds of things that money that’s left over ...
30 min
April 19, 2018 IFB56:New 2018 GAAP for Marketable Securities Will Inflate Earnings
Welcome to episode 56 of the Investing for Beginners podcast. In today's show, we discuss the new GAAP earnings rules that Warren Buffett brought to life in his most recent shareholder letter.

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33 min

About The Investing for Beginners Podcast - Your Path to Financial Freedom

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The Investing for Beginners Podcast teaches you how to buy your first stocks and build long-term wealth in the stock market— without the hype or confusing jargon.