The future of the Finance industry...... PayPal

 ***Please make sure to do your research and consult a professional. I am not a professional and content is intended to be used and must be used for informational purposes only.****

The big financial institutes have dominated for centuries. I think the new technology is testing those institutes and this can be a great thing for consumers. Look around and you can see all the daily tech we are using for our new form of banking. The two companies that have stuck out to me are PayPal (PYPL) and Square (SQ). 

Let's take a look at some of the recent trends:

Digital, Peer to peer, Online shopping, Buy now pay later or in instalments, Digital wallets, Mobile pay, Crypto, AI, Automation, Rewards, lower fee structure.

You can look around as she how technology is disrupting the industry. Here are just a few companies doing the disrupting:

PayPal, Square, Robinhood, Apple Pay (Google pay, Samsung pay. Amazon..), Acorns, Chime (?), Varo Money, AfterPAy....

As you can see there are plenty of examples. I have chosen to speak on PayPal but I also like Square. I am just more familiar with PayPal. Over the years, PayPal was primarily known as the eBay payment. That is far from true now. I first noticed a big shift once I saw PayPal as an option at Home Depot. They had been spun off from eBay by that time. Even recently. people made a big fuss when eBay announced that PayPal would not be its primary payment processor. However, it was going to still be an option. I was a little shocked people reacted that way, because by this time PayPal was already making big moves outside that eBay connection. Look at where you have shopped online in recent month and you will see how prevalent it is as a payment option.  

The reasons why I like PayPal? 

Offers peer to peer in multiple currencies, Consumer to Business payment (where it started), Business POS, PayPal Credit, Venmo (yes venmo!!), and now they are dipping into Crypto. 

They hit on most of the big trends. They are looking to continue to innovate and enter new areas. They don't hit all the notes but I like the story and they aren't tied to a bigger company (Apple Pay, Amazon..), are a public company (Robinhood, Acorns), are known (Chimes, afterpay).

I think this is an area with plenty of investment options for the long run. One very large trend is the buy now pay later type formats and for that I would say keep an eye on AfterPay. The trend is the modern online version of layaway. It is less diversified in its business offerings and is a riskier pick. Again, I also like Square (Square card, CashApp, POS, Jack Dorsey).

These would have all been great buys during the March dip. I still think there is value here in many of these Fin Tech companies that will continue to disrupt the industry. Some of these I would keep an eye on for  a future IPO or a buying opportunity. 

Apple Inc (AAPL) 4 for 1!!!

  ***Please make sure to do your research and consult a professional. I am not a professional and content is intended to be used and must be used for informational purposes only.****

Apple Inc is an interesting ownership for me. It starts with wanting to own one of the big tech companies for years but never buying in. The "big four", or"big 5" (aka FAAMG) depending on who you talk to, are Facebook, Apple, Amazon, Microsoft (or Netflix for FAANG), and Google (Alphabet) . Although they all operate in different arenas they are all ultimately tech companies. I have always passed on the opportunity to put these stocks in my portfolio for various reason often because they were too expensive for my taste. They sell at a high PE and I was not willing to pay so much money for one stock. But in actually I should have bought as I would have made a fortune on them.

Which brings me to how I have come to own Apple shares. As a consumer, I have had a back and forth relationship with Apple and Google's Android devices. Lately I have taken more to the Google/Samsung side (I am writing this on a Samsung Chromebook). I like to stick to stocks I am a consumer of since I tend to better understand the company, customers, products, and brand.

However, in this case I went with Apple over Google stock. It goes back to the same reason why I was always hesitant to buying into these stocks and is relevant to today, perceived value in the price. Apple had a 7 for 1 stock split when the stock was at about $700. It was my chance to get in at price I could afford. Now it is back to the Mid $400's and about to have another split (4 for 1).

When a company splits its stock it is simply increasing the number of shares in a company which in effect lowers the market price per share but IT DOES NOT CHANGE THE COMPANY'S MARKET VALUE.  This is why I earlier stated perceived value.

If doing this doesn't increase the actual value of the company why do it? Why is Tesla doing a split as well? Typically this done to make a single share more affordable to smaller investors. It is also a positive sign about how the company feels about its outlook on its stock.

To me this signals another possible trend, the importance of smaller and individual investors. These two tech companies feel that making their stock available to the everyday investor maybe a telling story. As more individuals are now investing on their own due to apps like Robin Hood and zero fee trading. (that is us!!).  And yes Tesla is a tech company not a car company, it trades like tech not like car companies do but that is another post. It will be interesting to see if other high priced companies follow with splits.

Back to Apple, this may be another opportunity to get in on Apple. However, with many companies offering factional stocks you already had a chance to get it a a lower price point.  

I also feel comfortable enough understanding Apple, its products are all over the place and I interact with it as a consumer and with its consumers. Everyone seems to have an Apple product these days, I have an ipad and ipod sitting next to me. Even with Apple hardware sales being softer these days, their innovation starting to slow, government looking at tech giants, and legal issues with the app store, I think they are a buy. I believe in Cook and Apple has been able to increase its revenue in its services division along with its customer base are all positive signs. Apple also has ALOT of cash on hand (about $200 B).

I think owning stock in  FAAMG (FAANG) stocks is a good idea but I wouldn't buy all of them for diversification purposes. It is possible these stocks could be facing a bubble. 

T. Rowe Price Equity Index 500 Fund (PREIX)

 ***Please make sure to do your research and consult a professional. I am not a professional and content is intended to be used and must be used for informational purposes only.****

PREIX is my go to when I am looking to invest more to my portfolio. It is my largest single holding. It is an Index fund the is based of the S&P 500. I am a believer that the everyday person is likely best off investing in a solid index fund for a big portion (or all) of their self managed portfolio. This is especially true for those that don't have time do the research for individual stocks but want the exposure to the stock market. The indexes historically have a much higher return than any other investment type and is easier than actively managing your portfolio. Index Funds are a great option for retirement accounts (more about that later). 

You can also choose different indexes that focus on different segments. Alternatively you can also look at mutual funds or ETFs.  Mutual funds are like index funds but tend to have higher expenses. EFTs have lower fees than Mutual Funds as it isn't actively managed. 

The reason I choose PREIX over other available funds is because I  personally tend to follow the S&P 500 over many other indexes. It also tracks well-known American based businesses representing a wide range of industries (safer & diversified). Other top indexes are Russel, Dow, NYSE, Nasdaq. There are international index funds as well.

Another reason I have chosen PREIX is because it doesn't have a minimum buy in and a low expense ratio. Expense Ratios represent the main cost of owning the fund and is subtracted from each fund shareholders returns as a percentage of the investment. In general index funds have lower expense ratios since it is managed to reflect the index it is based off but they can vary from fund to fund. Some index funds require a minimum investment. Ones with higher investment requirements tend to have a lower expense ratio. Over a long period (compounding factor) this could impact your overall return. If you have the money to invest into an index fund with a lower ratio you should but this is a good fund to start with.

PREIX does have a minimum hold time before being allowed to sell without penalty. Since I plan to hold long term this isn't an issue for me but should be considered when buying.

Summary:

-PREIX is an Index fund based on the S&P 500

- Doesn't have a min investment requirement

- Expense ratio (.19%) isn't the lowest but isn't the highest

-Index funds are great low cost options to not have to actively manage your account, don't have the time to do the regular research for stocks, and provides exposure to stocks

-9.57% standardized return since inception and 13% in last 10 year (just under the actual s&p 500)

Investing in these times

It has been interesting as of late if you follow the market. It is crazy  how the market seems to be in a separate reality what is going on around us. Over the last year I have been watching my investments and trying to figure out what this next election cycle was going to bring to the market. Then the COVID-19 and recent protests showed up. These making it even more confusing.

How is the marketing rebounding so much through these tragedies in our nation. Unemployment is up, small business are shuttering, global economies are strained and we are divided as a nation on something that should be unifying us (BLM & Police Brutality). We saw oil futures go NEGATIVE, the stock market pument and almost completely rebound.

Here are some of the things I did during this time:

-Bought index funds as the market went down and back up to lower my  average cost basis
-Bought into stocks I believed were good stocks for the long term and thought would come out of this environment strong (value)
-DIDN'T dump and of my index funds or retirement holdings. Although I considered selling and rebuying lower. I ultimately decided against it since I didn't react instantly and didn't know when that bottom was. It ultimately was the right decision as I am almost back to even on my 401K and could have missed out on those gains. Although, if done correct would have been a big gain but it was to risky for me to try.

Moving forward I am interested in a few things. I have been working on a project to bring people in my circle together to discuss investing and building wealth. A discussion I think doesn't happen enough in minority communities.

A second item I am interested in is looking to continue to support small business with an extra plus for supporting minority business or businesses within my circle. I don't want to simply be a customer. I want to figure out how to leverage my skills and resources to help support and build these.

A third interest of mine is building knowledge with my nieces to empower them to build a financial understanding to be successful in whatever they decide to do. I have already started a saving plan and discuss the importance of savings but I want their knowledge to expand into ownership (business, investments, realestate...). I also encourage them to an overall balanced education and want them to explore their interests. It scares me thinking that they, as black women, will need to work twice as hard to get half the opportunities others will.

What is going on?

-Buy strong growth stocks in increments as they decline over the next day or two
-Sell any bad holdings on any market strength
-Smack your local politician in the face (not really but yeah) for filibustering and stalling on making a decision on the debt ceiling for political BS.
***I am not a professional and you should consult one prior to making any decisions. Make sure you do any needed research on anything before you invest.

Eliminate Debt

Here is my next piece of on personal finance. Unedited and untouched.

I know what I have been telling you is stuff that has been heard before. That is because it is solid advice. Before you can start making money and build wealth you need to prevent becoming poor. That is why you need to setup your future, eliminate your bad habits and eliminate your debt. What sense does it make to "make money" when you are losing it on the other end. Budgeting is another one of these peices that will help you analyze your spending, build capital and help prevent you from going broke.

The pieces I have been giving are just overviews and not details on how to do each piece (which is just as important as the step its self).  These steps are not as simple as they may seem. They can be complicated depending on your level of knowledge on the topic and financial situation. With that said, I am willing to give further details on each peice if requested.

Always do your homework before making any moves.

Jim Cramer is my Favorite Wall Street guy. His show Mad Money is on CNBC. His books are prety good (I have read two Confessions of a Street Addict and Stay Mad for Life).


    

401K

This is one of a series of post I am going to post about my views and pointers on personal finance and investing. 

This is the first thing you should do if you ask me. I use the title 401K because this is likely the most commonly offered program by a company today. It can be any of several other offers in-which a company puts money into something with you. 

Benefits

-Best return for your money (Make more money then self created investing, bonds, mutual funds or the cost incurred for unpaid dept. This is because you would have gain/save at least 50% with the match, not to mention any additional interest gained or profit sharing).

-Deferred  taxes (make money on what you would have given to the government now and then give it to them later)

- Putting away for retirement (who knows what is going to happen with social security) or for those of you who have the attitude "I might not live that long" for your family. 

-Cost you very little ( you don't feel it as much in your regular check-deferred taxes-, the matching by your company, plus interest and piece of mind gained for a small percent of your check- 1%-6%<--likely spend more on coffee, eating out, beer or poker night)

Stock Picks

This is my first post on investing. I will post more information on general investing but wanted to give some of my current stock picks. These aren't the only stocks I believe are good right now. I like some energy companies,  some gold plays,  some cloud plays and would stay away from pharmaceuticals for example. Always do your homework before investing in anything and consult a professional (not me). I do own a few of the stocks mentioned in the video but not all of them.

Stocks Picked:

MOTR- $15.38

AA-17.11

GM-31.39

F-15.04

C-4.43

BAC-13.48

Mentions:

VZ-37.18

T-28.54

GOOG-586.89

AAPL-344.97