In this insightful episode of "Money Talk With Tiff," host Tiffany Grant dives deep into the pros and cons of various investment options. From the dynamic world of stocks to the stability of bonds, the tangibility of real estate, the convenience of mutual funds, and the high potential yet volatile nature of cryptocurrencies, Tiffany offers a comprehensive overview to help you make informed investment decisions.

Whether you're a seasoned investor or just starting, this episode provides valuable insights to guide your financial journey.

Check out the full shownotes: https://moneytalkwitht.com/podcast-show-notes/pros-and-cons-investments/

Key Points Discussed

• Stocks: Ownership in companies and potential for high returns but with volatility and emotional stress from market fluctuations.
• Bonds: Steady income and lower risk, ideal for diversification, but with lower returns and interest rate risks.
• Real Estate: Tangible asset with rental income potential and tax benefits, though requiring significant capital and management costs.
• Mutual Funds: Diversification and professional management with accessibility for small investors, balanced with management fees and lower control over individual investments.
• ETFs (Exchange Traded Funds): Traded like stocks with generally lower fees but come with market risk and possible complexity.
• Cryptocurrencies: High potential returns and increasing acceptance but highly volatile and with regulatory uncertainties and security risks.

Resources Mentioned

• Website: moneytalkwitht.com
• Ask Tiffany a question: moneytalkwitht.com/asktiffany
• Join the community: https://academy.moneytalkwitht.com/offers/vXQV4zb2
• Become a host on AirBnB: https://moneytalkwitht.com/airbnb
• Buy Real Estate on Fundrise: https://moneytalkwitht.com/fundrise

If you have a question you want Tiffany to answer on the podcast, visit the website to submit your question. Don't forget to share this episode, subscribe, and leave a review to support the podcast!

Connect with Tiffany

• Twitter: @moneytalkwitht
• Instagram: @moneytalkwitht
• Facebook: Money Talk with Tiff

Disclaimer: The content provided in this podcast is for informational purposes only and should not be considered as financial advice. Please consult with a financial professional before making any investment decisions.

You know what it is. That's right. It's time to talk money with your money

nerd and financial coach. Now, tighten those purse strings

and open those ears. It's the money talk with Tiff

podcast.

Hey, hey, and welcome to another episode of Tiffany's Take, where I answer

your money questions right here on the podcast. So if you have a question that

you want me to answer, just go to

www.moneytalkwitht.com.

ask Tiffany and I will be more than happy to answer.

There's also a feature on there where you can record your voice. I would love

to hear some of you all's voices. That would be awesome. But if

not, you can also just do it with text as well. So

anyway, this question today, someone asks, what are the pros and cons

of different investment options? So I made

a list of a few different types of investments. Now, of course,

investing is very wide. Like, you can invest

in a whole bunch of different things. So I'm going to

mainly, so I'm going to talk about the

main forms of investing. But of course, like I said,

you can invest in businesses. You can invest like, there's so many things you can

invest in. So that was a very general question, but I'll try to make

it as specific as possible. So first and foremost, let's

hop into it. Stocks. So stocks is when you own

a piece of a company. So some of the pros for that are

potential for high returns. So, you know, if the company's doing well,

they invest some of their earnings back into the business,

and then the rest they give to their shareholders, which would be you. And so

if the company's doing really well, then you get some of that

profit and you can make money. Also, if

the company's doing well, the stock price is going to go up, and so

that makes more people want to buy it, therefore continuing to

drive the price. So if you look at something like Amazon or

Google or any of these tech companies, for instance, if you look at

what they were worth, let's say ten years ago,

versus what they were worth now, you'll see that as more and more

people bought the stocks, then the stock price goes up, the

people that were already in make more money and so on and so forth, that's

pretty much how investing in the stock market goes. So anyway,

you do have ownership in the companies, and then it's also very liquid.

So it's very easy to buy and sell stocks. I

just sold some the other day, and it's a very easy process.

Some consort, sometimes, depending on the company,

there's very high volatility and risk. It also

requires some research and some knowledge about what you're looking at. Like

I can go into a whole different tangent about the

different indicators and things that you can look at, you know,

stuff financials and things like that to make sure that you're making a good

investment. And then sometimes emotional

stress due to market fluctuations. So the market is

always going up and down, up and down. And

that's why I don't even look at it honestly when I

invest, I invest for the long term. And so I just

buy some stocks or mutual funds, which I'll talk about later, or

some bonds or whatever, and I just let it sit and that's it. I don't

really touch it too much. So that can kind of cut out that

con. But anyway, stocks is one way that you can

invest. Another way to invest is bonds. So

bonds, some pros with that steady income through

interest is lower risk compared to stocks. And it has

some diversification. Diversification. So usually what I

tell people is you want to diversify between stocks

and bonds. So depending on how close you are to retirement is

how much you would want in stocks versus bonds, since stocks are

more volatile. If you're young like me, then you

can have more of those in your portfolio than bonds because

you have way more time for the market to correct itself

and to, you know, make more money on the long term.

You would want more bonds if you're like close to retirement

and you don't have that time to let the market do what it's going to

do. Right? So that gets me to the cons with

bonds. It has lower returns than stocks. There is

an interest rate risk. So interest rates fluctuate just

like stocks and bonds do. And so

you have to also think about that. What is the

Fed doing? What's the interest rate here? What is my interest rate

with this bond? Would it be better if I just put in a savings account?

You can start thinking through those things. Then. Another con is

inflation can erode your returns because you're letting your money sit

there with a lower return

on investments than, let's say, a stock. And so if inflation is

high, then that's eating up what you can make. So those are

some things to keep in mind when it comes to bonds. Let's go

into real estate, which is something that I want to get into

more. I do have some real estate now, but I want to get

into it even more because I love it. But some pros with that, it's a

tangible asset. So it's something that you can actually see, feel,

touch. If you so choose, there's potential for rental

income, whether you decide to do short term rentals, medium term

rentals, or long term rentals. Short term rentals would be like

Airbnb, VrBo, things like that. Medium term is

like, you know, if there's travel nurses or something coming into town, they

might rent it for like a few months, or people

that, or people that

filed an insurance claim, they're waiting for their house to get repaired or whatever the

case may be. Those are more the medium term. And then long term is what

you're mostly familiar with, which would be just getting a

renter in there and doing a lease. So there's so many

different options when it comes to owning real estate for renters

income. And then also there's tax benefits with real estate.

So if you're not familiar, make sure you get with a tax professional,

do some research on what those tax benefits are and

how you can take advantage of them. Now, some

cons with real estate, it requires significant capital, whether

it comes in the form of actual cash or a loan.

And it's also an illiquid asset. Even though you

can sell a house or sell some land or whatever the case

may be, it does take some time. So it's nothing like a stock

where you can just sell it today, get your money, you good in like a

few days. With a real estate, it'll take a little longer time.

So that's why we consider an illiquid asset.

Also, management and maintenance costs. You got to keep the property up, whether

it's land or a house or a commercial building,

you still have to keep it up. So you have to pay for management, maintenance

costs, all those things. So there's definitely some cons with

investing in real estate, but there's also many pros as well.

Mutual funds. So this is one of my favorite things to

do when it comes to investing in the stock market particularly.

But mutual funds offers like diversification

from the outset. So mutual funds, I like to tell people it's

like a basket of stocks, and

you are buying multiple companies in one swoop.

So you have immediate diversification versus buying

individual companies. It's also managed by

professionals, people behind the scenes that are, you

know, going in, changing out the companies, making sure

it's making money, you know, that type of thing. And it's also

accessible to small investors like ourselves.

Some cons with mutual funds, there are some management fees.

You will find that as expense ratios. So

when you're looking at, you know, whether you want to buy

it, you'll see something called expense ratio, and it'll have a

percentage, and that'll tell you how much you would have

to pay. And management fees. Now, they take the management fees

off the top, so it's not like they're just going to be taking money from

you, like after you already see it, if that makes

sense, they already take it out. As part of owning the mutual

fund, you have less control over the

individual investments. Like I said, is somebody else handling that part?

So that's why it's also important to do your research on who's the

fund manager, what's their track record, what is their five year, ten

year, what does all of that look like? Also, there's a potential for

lower returns due to fees. It just depends on how

you choose. But, you know, you do have those

fees kind of eating into your returns as well.

Another option that's similar to a mutual fund is exchange

traded funds, or ETF's. Again, pros,

diversification. It's also traded like stocks, and it's

generally lower fees than mutual funds. And then some

cons for ETF's, some of the trading costs,

market risk, and sometimes they can be complex to understand

something else that's similar to ETF's. And mutual funds are index

funds, which is a good option for people, too. Index funds

just follow an index, so it's not anybody really touching it

too much on the back end, and so the fees are lower. So I

personally love mutual funds and index funds, but

as with everything, you know, make sure that you're doing your research

and picking what works best for you.

All right? And last but not least, just because it's a hot button and everybody

wants to talk about it, but cryptocurrencies. So I personally don't

invest in cryptocurrencies, which I'll get into. Why? Why, you know, when I

get to the cons. But some pros are, it's high potential

returns is decentralized and global, and it's

increasing in acceptance. So more and more places are starting to take

cryptocurrency and things like that. Now, the cons

is it's extremely volatile, very

volatile. And that's one of the reasons I don't get into it. You

know, when I was in my master's program,

one of my teachers who's an economist, she was like

investing in currencies, and not just cryptocurrencies, but

currencies in general is like picking up pennies in front of a

steamroller, because you never know when it's about to

go down. And the amount of money that you make, you know,

on a day to day is not too much, you know what I'm saying? So

when she said that, it just stuck with me. And I don't really do

cryptocurrencies like that. But anyway, also, there's

regulatory uncertainty. So that's one thing that I

struggle with, too. Warren Buffett was like, don't invest in anything that you don't

fully understand. And I take that to heart. And I'm just

like, so people can mine and just make

more. And you, you know, this, that and the other. Like, there's, there's many

things with cryptocurrencies that I'm just not comfortable

dealing with as an investor. And then security risks.

So, of course there's security risks when it comes to

cryptocurrencies. We saw what happened with the big

cryptocurrency shakedown that happened not too long ago,

where the bank shut down and things like that. So you just have

to be careful. Now, don't get me wrong, there's plenty of people that make plenty

of money in cryptocurrencies. So if you have the time, you want to do the

research, you want to get into all

of that, by all means, feel free to do it. I just say do

it from a place of knowledge. Do it from a place of

knowing what you're getting into versus doing it

so that you can follow a trend. Because usually, and I'll be honest

with you, since we're on the topic of investing, usually if something is

trending, it's probably at its peak or it's going to its peak. And

so the people that make it in before it's

trending, those are the people that actually make money. So

that's why it's important to do your research, see what's out there,

and get on it early before you start seeing the crowd

go. All right, well, thank you so much for listening to this episode

today, and hopefully that answered your question. If you

have a question that you want to ask on the podcast, just go to

moneytalkwitht.com axtiffany and I'll be more

than happy to answer for you. In the meantime, in between time,

please be sure to share, subscribe, all of those

good things, write a review rate, and review the podcast. I would love

some more ratings. Let me know what you think,

and I will talk to you next week. Bye.

Thank you for listening, joining and being a part of the Money Talk with TIFF

podcast this week. You can check TIFf out every Thursday for a

new Money Talk podcast. But if you just can't wait until next week,

you can listen to previous podcast

episodes@moneytalkwitht.com or

follow tiff on all social media platforms at

moneytalkwitht. Until next time, spend wise

by spending less than you make. A word to the money wise is

always sufficient.