Beginner's Guide To Investing



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Hello, everyone. Thanks so much for joining us today! My name is Christina and I’m the Financial Wellness Program Manager here at Copper State Credit Union. My cohost today is Ryan Graham, financial advisor with Copper State Wealth Management. We are super excited to be here today and to chat with you all and give you a Beginner's Guide to Investing.



Preparing For Investing


Emergency Savings

Before you dive into investing,  it's important to start with how to prepare yourself and to prepare your finances for investing. First is building up your emergency savings in a cash account. When I say cash account, that means you have immediate access to the funds, if needed. Emergency funds should be accessible via a bank or credit union checking or savings account. You’ll want to have 3-12 months worth of living expenses saved. Living expenses includes basic needs such as food, housing, transportation, and utilities. Childcare, if needed. Whatever that monthly total amount is, you want to try and build it up to that 3-12 months’ worth. Everyone's situation is different. The people that I find who need just the three months of savings, maybe have a newer vehicle and are maybe renting, have a really secured source of income like retirement, social security, or just been at a job for a really long time. I think when we get into the more of the 12 months of expenses set aside, somebody that's maybe got an older vehicle, owns a home that might have things happen, air conditioners break, things like that. And then, little things like being in a certain industry or obviously with the pandemic, we've seen a lot of industries like retail that people were out of work unexpectedly. 


Goal Savings

Another great preparation task before investing is to set up some mini savings goals. We think of this as more short-term savings that will likely be needed in the next 1-2 years. This should be held in a cash account as well, not invested.

Examples of this would be saving up for the holiday season, a vacation fund, new furniture, car or house down payment, etc. 


Assess Debt Health

The final step to take before investing is to assess the health of your debt load. Ask yourself:

  • What types of debt do you hold and how much? Spoiler alert: Not all debt is bad, and not all debt should keep you from investing!
  • What is your debt to income ratio (DTI)? Take monthly debt payment minimums divided by gross monthly income. The lower the number, the better. Financial institutions like to see under 35% with no more than 28% going towards housing. 
  • Are you paying appropriate interest rates? - Maybe your credit score has gone up since you last looked at your debt situation. Consider an auto refi, home refi, or consolidation loan if it makes financial sense for you.





Investing Defined

Investing is taking money and putting it to work towards achieving a goal. The days of making money off of checking and savings are pretty much gone. Interest rates are at an all-time low, so we really want to put our money that's not our short-term need or emergency money and we we want to put that to work for us and see it grow. Your checking and savings accounts don’t have any risk, but the problem with them is that they’re not keeping up with inflation. If inflation is 2% per year, you’re effectively losing 2% of your cash savings on a yearly basis.

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It’s important to start with what your timeframe is when starting an investment conversation.
If you have 2-5 years to invest, you’ll be looking at a strategy that’s conservative to moderate
If you’re playing the long game, 6+ years and beyond, that’s where you can be more aggressive and potentially take on more risk. It's recommend to have a minimum of $1000 if you’re ready to start investing.




How To Start Investing

First, set an appointment with a financial advisor. Financial advisors go through extensive training and many of us have been in the financial industry for a long time. What we’ll do is sit down with you and look at what your financial goals are, assess your overall financial situation, make sure you have a savings plan in place, and take a look at your debt load. After that, we’ll have a conversation about risk and reward tolerance.

Investing comes with the risk of seeing your money fluctuate. You could put in a thousand dollars and that money could go down to $900 or it could go back up to $1100. It all depends on what type of program you and your advisor decide is best for you, and what your current situation is, as well as some of the things that are happening in the world. Really just taking a step back and making sure that you've got time, so if things are going down, you have time to let it recover.

Then it’s the advisor’s job to make recommendations on products or programs that we feel will be beneficial for that person’s situation. It’s very individualized and we love to set up that ongoing, long-term relationship. It’s not just a transaction.


Contact Copper State Wealth Management



Basic Investment Types

Today we’re discussing 4 basic types of investments: Stocks, Bonds, ETFs, and Mutual Funds.

1. Stocks

Stocks to me are the most exciting thing that we deal with. They have the most reward, but they also typically have the most risk to them. A stock is when we're taking ownership or partial ownership in a company. If we believe that a company's corporate profits are going to continue to grow, we want to have a piece of that, we want to be in on that growth. So the risk is, what if we're wrong? Last year was a big year for a company like Amazon, that through the pandemic a lot of people were ordering stuff from their homes because they weren't able to go out. Their profits went way up, and if you were a stockholder in Amazon, you probably benefited from that. If you had a thousand dollars invested in Amazon, you saw it grow substantially over the last year. There's always going to be bumps along the way of a stock growing, the company's going to expand, they're going to make financial decisions. So you really want to be a long-term investor when it comes to stocks, the more stocks you have, the more diversified you are, the less risk you're going to have in that bucket.

On the other hand, if you own stock in a company (like Circuit City in 2008) and it goes out of business, your stock and therefore your money you invested is basically zero. So that's where the risk lies, and that's where your advisor is going to do a great job to work with you on what types of risks you're comfortable with, and making sure that we're getting you in the right start. Another thing I like about stocks is, stocks that pay a dividend. A dividend is something that usually bigger, more established companies are going to pay out to you. What we do is, we take that dividend or income and we reinvest it to buy more shares. So if the markets are doing really well, and you're making a lot of money on the stock price growing, you're also going to make money on the dividend that's coming in. Whereas, if things are going down, we're reinvesting that dividend to purchase more shares, kind of like it's on sale, we're not paying necessarily what the full price would be. So that really helps us grow the account even faster.

2. Bonds

A bond is a fixed income instrument that represents a loan made by an investor. So, we're loaning money to corporations or governments and making money from the interest paid. You can think of it as like an IOU between a lender and a borrower.
Bond interest rates can always fluctuate so you could make more or less based on that. A risk with a bond is just making sure you’re investing in someone that can pay back the loan!

3. ETFs

ETF stands for an Exchange Traded Fund. These are groups or pools of stocks or bonds rather than individual ones. An example is the S&P 500. It has 500 of the largest companies in the United States inside of it. Another one is EAFE that's Europe, Asia, the Far East group of stocks.

If you buy a share of the S&P 500, you're going to own a small piece of all 500 of those companies. So you're going to have the risk that goes with all the companies, but you're also going to have the diversification that's really going to help protect you if some of those companies are struggling.

People like these because they’re inexpensive. I've always said in life, fees are only an issue in absence of value. So you're basically getting one of the lowest cost things you can do. There's really not management to it, you just own all the companies that are inside of it. So if the 500 companies are thriving, you're going to do great. If the 500 companies are really struggling, you're not going to do so great. This is where we find that, a lot of times not all 500 companies are going to go up or down at the same time.

4. Mutual Funds

Mutual funds are probably one of the most exciting things that I personally deal with in combination with exchange traded funds and portfolios for clients. So basically, mutual funds are established by a group of managers whose job it is to study how companies are doing, what their earnings are, what the bonds are doing, and they're going to try to compare to some of the ETFs/index funds. So if you are a mutual fund and you're trying to compete against the S&P 500, you want to make more money on it when things are good, and when things are bad and things are going down, you want to lose less money. So we're paying a little bit more expensive of a fee because we've got to pay for the management of the account. Hopefully, your money will have a more consistent journey and you'll end up with more money at the end of the investment terms.

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Strategies For Investing (Including Micro-Investing)


1. With a Financial Advisor - Dollar Cost Averaging or Lump Sum Investing

Dollar Cost Averaging is when you do a systematic or automatic investment of maybe $50 or $100 or more at a time, on a regular basis. Some of my clients do it on a monthly basis, some clients do it on a quarterly basis, maybe they're just doing it once a year. The nice thing with dollar cost averaging is, the market goes up and down through the year, so by buying throughout the year, you're buying at different price points. So you might be getting some on sale, you might be getting some a little bit more expensive when the markets are kind of at an all time high, like they are right now, but that consistency is really going to help you in the long term. You can also do what’s called a lump sum investment. Lump sum investments are putting a larger amount in at once. This is really diving right in towards reaching your financial goals. You have the risks that you're buying at the peak of the market, and things are going to go down for the next few months, but because we did a great job and asked you the right questions, we know that you've got time on your side to let the money grow back. By doing that, you're going to be completely okay that the interest from the bonds, the dividends from the stocks are going to continue to reinvest and buy more shares of those mutual funds. And over the next few years, you'll really see a nice accumulation to the account.

2. Self-Directed Investing

If you aren’t working with a financial advisor, another way to invest is called ‘self-directed.’ So that's where you're doing all your own research, you're having to open up your own account, you're doing all your buying, and you're selling on your own. If you've got questions on what's going on in the economy, you're really just reaching out to the internet, maybe talking to friends who might think they know what they're doing or know what's going on. That's got a little bit more risk. It's great because it's inexpensive, but you get what you pay for. Like if I'm going to have my vehicle break down, I'm going to call the mechanic, if I need something done on my house, I'm going to call that trade that works on that particular issue. I'm going to have to pay them a little bit more to do it, but I know the job's going to get done right.

3. Micro-Investing

Another option that’s become a trend recently is called micro-investing. This is taking very small transactions, even pennies and putting it into some kind of ETF or mutual fund. A lot of the online brokerage firms are having these ways to where maybe you spend $9.17 at the gas station, the remaining money they rounded up to put it in an account towards investing for your future. ($0.83) So that's an interesting way that you don't really notice that it's happening, but you can accumulate a significant amount of money by using your debit card and using the rounded up cent amount to put toward an investment account. It’s kind of like dollar cost averaging on a very small scale.

Pros to micro-investing:

• low minimums
• simple to use
• low cost for some types of investors

Cons to micro-investing:

• Often a fixed dollar amount fee, which if you don’t invest a whole lot, can take up a big chunk of your earnings
• No personal advice like you get on a regular basis from an advisor




Understanding Diversification and Fees

If we keep it really simple, picture you're on the hundred floor of the Empire State Building and you're in an elevator and you’ve got one cord holding you up. If that cord gets cut, you're falling all the way to the bottom. Now I don't know about you, but I think if you're going to go down a hundred stories without anything holding you up, you're going to crash and burn. But if you attach a hundred cords to that elevator and something happens to one of those cords, you might feel a little bit of a shake, you might know something's not right, but you're going to be protected, you're going to be safe. So the idea of diversification through mutual funds, through ETFs, through some of the other programs that we have, those are really going to help protect you from the scary situations of, oh my gosh, I invested in this and I lost all my money.

Of course, it's not like you can eliminate every single risk - there are still going to be those ups and downs along the way, but at least when you diversify it’s not a huge disaster when something goes down. 

When it comes to fees, we really want clients to know what the fees are and why we charge them. There are a few different types of fees - external fees for mutual funds, also internal fees, there's advisory fees for some of the different types of accounts that we offer. You're paying a fee for advice, you are paying a fee for, "Hey, I'm going to call you every quarter and talk to you about what's going on in your account, and making sure that we're on track to meet your goals," So there's a small fee for that. And when the markets are going down and you're scared, you're nervous, you're going to pick up the phone, you're going to call me, and we're either going to answer the phone and we're going to talk it through. But that's what you're keeping us for, to make sure that we can get you through some of the bumps.
Looking at some of the different types of fees, with external fees that's usually through like a mutual fund. And then the internal fee continues to pay that manager to continue to watch the companies for you, to make sure that as the economy's changing, that we're doing the appropriate buying and selling to help protect you while still trying to definitely make you some money over time. And then with the advisor relationships, typically you're going to have all stocks, bonds, mutual funds, and those ETFs that we talked about. So really the advisory accounts give us a lot of diversity to help protect the account.






Copper State Wealth Management

Financial Advisor Contact Information

Find out more about Copper State Wealth Management  at

Or, call 602.375.7378

Ryan Graham - 

Anthony Rocha -

Tony D'Astice -

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This article is intended to be a general resource only and is not intended to be nor does it constitute legal advice. Any recommendations are based on opinion only. Rates, terms and conditions are subject to change and may vary based on creditworthiness, qualifications, and collateral conditions. All loans subject to approval.