On today’s episode of Wealth!, Host Brad Smith breaks down top personal finance tips amid a slow labor market a housing affordability crisis.
The US Job Opening and Labor Turnover Survey (JOLTS) reported a decline in April job openings to 8.06 million from 8.355 million, the lowest level since February 2021. Bankrate Senior Economic Analyst Mark Hamrick says that the print “is pretty consistent with what we expect in the context of a job market and a broader economy that are normalizing after the disruption, the volatility, the distortions associated with the pandemic.”
Meanwhile, the housing market continues to face an affordability crisis. Yahoo Finance’s Dani Romero explains how high mortgage rates and low inventory levels are putting pressure on homebuyers in a tight market. As a new survey reveals that 91% of Gen Z adults view housing affordability is their top voting issue, Redfin Chief Economist Daryl Fairweather discusses how homebuyers should navigate the current market. She urges homebuyers to ensure they can afford their mortgages in the short term, explaining, “You shouldn’t bank on rates coming down as part of your financial plan because they may not come down or they may not come down as quickly as you were hoping.”
Another major part of financial planning is emergency funds, which one in five Americans lack, according to Bankrate. Self Financial Head of Community and Financial Expert Monique White breaks down how you can prepare for an emergency without sacrificing your everyday needs, laying out the building blocks of a savings plan and urging everyone to start saving as soon as possible.
Family Office Investor Rashaun Williams highlights how index funds are a great place to start when investing, emphasizing the growth of the tech sector amid a “very risky” market.
This post was written by Melanie Riehl
Video Transcript
Welcome to wealth everyone.
I’m Brad Smith and this is Yahoo Finance’s guide to building your financial footprint.
Our community of experts will give you the resources, the tools, the tips and the tricks that you need to grow your money.
Hey, on today’s show, job openings falling in April to their lowest level since February of 2021 will tell you what it means for the labor market at large and housing hurdles.
New Redfin data reveals Gen Z top voting issue has to do with affording the keys to their own kingdom will dig into the data.
Plus how to make a fool proof emergency fund.
We ask an expert for the tips and tricks to better saving habits, all that and much more on today’s show.
But first we got a fresh read on the labor market this morning, April job openings falling to their lowest level since February 2021.
Meanwhile, the number of hires didn’t change much.
This is all a sign that in some sectors, employers are still on boarding new workers, but the number of jobs available in aggregate are continuing a downward trend.
So what does this mean for everyday workers here with more.
We’ve got Mark Hamrick, who’s the bank rate, senior economic analyst?
Mark.
Great to have you here.
Just want to get your read through on what we saw come through in jolts this morning.
Good morning, Brad.
Great to be with you.
I think this is pretty consistent with what we expect in the context of a job market and a broader economy that are normalizing after the disruption, the volatility, the distortions associated with the pandemic.
And so you reference there, the number of job openings is the lowest since early February or early 2021.
Well, what was going on then?
It was the rush to reopen the economy in the months before that.
And so we had job openings topping 12 million which, you know, it was mind blowing, then it’s still mind blowing now.
But the number of job openings is still above pre panem levels, which is healthy, I think.
And uh we’ll see just how this normalization or perhaps slowing process works its way through the system as we get into the second half of the year.
You know, Mar and you wait it out.
Well, I mean, this week, we’ve got a ton of data that’s coming forward on the employment situation front in totality, of course, jolts just being today ad P private payrolls tomorrow and then it all leads up to Friday’s big jobs report as well for the trend that we’re seeing really emerging here.
What is the fed gonna be looking forward to, to, to really shift the tenor of their conversation towards a cut?
Well, I don’t think they’re going to shift the tenure of their conversation.
The conversation remains the same attentive to their dual mandate.
With the major focus being inflation, with prices too high and inflation uh above where they want it to be.
And of course, if we were to see a significant weakening in the job market, which we have not seen with the unemployment rate below 4% for more than two years.
Then let’s think about the dual mandate, stable prices, maximum employment, then they start to be a little more concerned about the maximum employment piece of that.
But for now, the focus is almost exclusively on the stable prices piece.
And you know, we have to get through, I would say several months of data for officials to be attaining greater confidence that inflation is coming down closer to their 2% target.
Certainly.
And, and all these things in mind, how important is the wage data that we’re going to get over the course of this week to that inflationary calculus that the fed is running?
Well, of course, as you are beginning to ask that question, I was going to say what’s incredibly important to the workers and even the employers who have to consider whether to provide those pay raises.
But let’s sort of harken back to the fact that first of all wage gains have been moderating as with the strength of the job market overall.
And the fed does not believe that wage gains have been a primary cause of the inflation.
We have seen.
We all I would say, I want to say we all know, but I’m not sure everybody believes that that the source of inflation has principally been the supply chain disruptions.
And then of course, adding literally insult and injury and injury to the whole situation was Russia’s invasion of Ukraine thinking about how that disrupted prices in a globally connected economy.
But I, you know, ultimately these things are all normalizing.
I think what of course is still the real problem at hand is that prices remain elevated.
And so even we could, even though we talk perhaps until the would be cows come home about the level of inflation coming down, people are agitated and financially pressured by the reality that prices are still high and the fed really can’t do much about the latter.
You know, it, it’s interesting mark higher for longer rates is what we’ve continued to hear and have to really wrap our minds around.
How, how much longer are we talking with that in mind?
I mean, we’ve heard some economists change their projections for this year from what we were talking about coming into the start of the year, it sounded like five or six rate cuts down to one or two, maybe even none.
Yeah.
Uh obviously, you know, I think I’d be foolish to try to get over my skis on making a prediction about what inflation is going to look like 456 months from now.
But, you know, I do think the consensus is probably about as close as you can get to.
Right.
Right now where, you know, maybe you get something on the order of one or two rate cuts by the end of the year.
But we have a long way to go before we get there.
But I think higher for longer has more relevant meaning to perhaps our viewers and essentially all the stakeholders in the economy.
And I’m going to focus primarily on consumers for this and that and who are ultimately borrowers and savers as well.
And that is that higher for longer can also mean that we’ll not get back to the extremely low levels of interest rates that we saw not only immediately after the global financial crisis, but during the worst economic parts of the uh pandemic and Chairman Paula said that that’s his expectation as well.
And so what does that mean?
Uh just as much as those times were in a sense, historically distorted, perhaps normalization means that we have higher rates than what we had seen during those crises and really for the balance of the 20 tens.
And so that means that, you know, perhaps we shouldn’t expect mortgage rates at 3% and just barely above we should expect uh, borrowing rates to be as low as they were more broadly.
But also we may see uh better yields on savings than what we saw during those low interest rate years when essentially the unintended consequences of that low interest rate policy was that savers were the unintended casualties of that mark.
Always great perspective.
And inside Mark Hamrick bank rates, senior economic analyst.
Great to see you, Mark.
Thank you, Brad.
Great to be with you.
Thanks.
Well, stocks in the red this morning as investors weigh signs that the surprising resilience in the US economy might be starting to show cracks.
Both the S and P 500 the NASDAQ composite trying to shake off some jitters here but feeling the pressure on disappointing manufacturing data.
So how should you play into the market right now here to weigh in?
We’ve got Jessica Inskip, Director of Education and product options play and our very own Jared B re over there at the Wi Fi Interactive Take it away.
Yes.
Thank you, Brad.
And thank you Jessica for showing for appearing here today.
We’re gonna talk about the spy and uh if you follow me on Twitter, that’s my handle at spy Jared.
But here we are, these are record highs right here.
We are off just a little bit.
This was just a tiny, tiny, little correction.
What’s your view on the market right now?
Just tell me how you would play this in options.
Yes, absolutely.
And from a technical view, this is an engulfing pattern that gives us a bearish flag right here.
Exactly.
And so this gap right here is means of support.
So from a technical view, I would want to understand my sentiment, do I expect volatility and uncertainty to increase?
Am I going to be bullish perhaps to that top where we were?
And how would I position an option strategy utilizing that?
So, so yes, here it comes here.
It comes.
Yes.
So that option strategy here, if this is my means of support where this gap is, I want a gap up.
But this is my stopping point.
Options can be directional, but we’re in the middle here.
So we can either a position a trade here that’s gonna benefit as long as the security doesn’t move and doesn’t go as high here.
That’d be a cash secured, put, excuse me AAA um a short call, a credit call spread there or I can do a cash secured, put here on the upside or a call that’s a little more speculative, but it only be to this spot which puts probabilities less in our favor.
You could bet that the market goes nowhere or just a little bit upwards.
It’s like a slightly bullish bias to it.
Exactly.
And since we’re in that blackout period with the fed, there is uncertainty, uncertainty and volatility go hand in hand, I would stay on this side of selling, which has higher probabilities of success because we’re just selling the volatility.
Once that collapse and uncertainty is removed, then we where you have higher probabilities of success.
And just like if you, so if you’re selling options, so that that could mean a lot of risk depends on how you play it though.
Correct.
So how, how do you interpret what we’re looking at here?
Yeah, absolutely.
I love this chart that you put together.
So I, that’s fine on the selling side though.
This is high volatility.
So we have high volatility.
We have a naked, put this obligates you to buy the underlying security.
But this means as long as the stock or in deceased remains above the current price you’re going to make out, OK?
It’s not largely directional, it’s neutral with a slight directional bias, but a short call spread you mitigating your risk.
So if I were to sell a call at those all time, highs, I would cap my risk because I’m obligated to sell the security.
I need to create a buy at a further out of the money.
And that’s how you create the spread.
And that’s the way that I would position that in this current environment is selling a credit call spread right at those all time highs like we show it on S and P 500.
Great.
And I wanna move on to apple.
This is a different stock, a different look here.
Um I’m gonna show a two year chart so I can show just the trading range.
Um this goes back about a year and you can see we’re at the upper end of this trading range right now.
Which of these strategies are you thinking about to uh to, I guess, fulfill your view here on Apple?
Yeah.
And I really think they’re related because Apple is a huge component of the S and P 500.
And in order to overcome when we’re range bound or looking at these all time highs, we need a catalyst.
We have WW DC coming in.
That could be a big one very, very soon.
It could.
But that’s expectations.
There’s uncertainty which means maybe sell the news or you’re just talking volatility, volatility.
Exactly.
So in this case, there are two options, selling the credit call spread would be the same a similar scenario.
However, I do expect a catalyst.
We’ve expected A I, I would accept stock ownership and something like Apple, therefore, cash secured, put.
All right.
So let’s let’s go back to our four square here.
Where does the cash secured put?
Fall in this square?
Yes.
So this would be the naked short play it naked.
Meaning you just have a less of a requirement, maybe 25% of the exercisable value rather than 100%.
That’s the variation.
All right.
So here is our options chart and this is what you’re considering doing, selling the June 21 $190 put for $2.50.
Just kind of outline the risk and reward here.
Absolutely beautiful.
So, right here, this is 190.
This is where at the stock I need it to remain in order to be profitable.
But because I’m selling this out to June 21st, I’m collecting $2.50 that represents this area here.
So I’ve reduced my break even to 187 50.
So I have this cushion if Apple were to move adversely, the news weren’t taken very well.
I would be obligated to buy the security at 190 but it’s offset by that premium of 1 87 50.
If it continues to decline, I still have full stock ownership, which was kind of the goal in the first place.
Such optionality here, Jessica always great to have be here.
That to you, Brad.
All right.
Thanks so much to both of you, Jessica Insa of Oman’s play, Director of Education and product and our very own, Jared Bry.
Thanks so much.
Well, with roaring kitty back in the news after provoking yet another Gamestop rally.
A question many beginner, wealth builders have is, should you trust financial advice from Reddit and social media for some tips and warnings?
We’re joined by Yahoo, finance contributor Ross Mack.
Hey, Ross.
Good to see you, Brad.
How’s it going, buddy?
Going?
Well, going well.
All right.
So what do the good people need to know if they’re tapping into fin talk or Reddit or any forum where people are sharing some of what their portfolio may look like.
Yeah.
Well, one, I’m always gonna be in the, in the camp of actually arguing that the benefits can outweigh the negatives.
Right.
At the end of the day, we’re talking about people coming together, we’re democratizing the access to information, right?
We’re talking about maybe sharing, you know, secrets and skill sets that otherwise we probably would not have heard of.
And that can stem from health and recipes, parenting, advice, and obviously money management and investing, right?
I’m kind of part of that community, but there always is, you gotta always err on the side of caution, right?
And I think when it comes to the negatives, you have to understand that unfortunately, some people romanticize the idea of trying to attain something that they probably never are gonna get, right.
And as a result, some people can fall victim to either scams and bad players.
I think if we look back historically, especially with this roaring kitty that being the Gamestop, a lot of people actually fell victim, right?
You look at that and couple that with the the doge coins of the world of certain NFC S. What happened is people on these reddit and you know, social media communities, they’re now kind of having this herd mentality where it’s like, hey guys, Yodo Hole, I’m sorry.
YOLO Hole, everybody’s gonna have diamond hands, right?
I remember when gamestop was so big, everybody was saying Gamestop is gonna get to $1000.
So now you have people thinking that they’re gonna become millionaires and instead end up losing their life savings and thousands of dollars.
And so in the event, you are part of the community and saying, OK, I heard of this on social media, I now want to take the advice.
I think first things first you have to ask yourself, is this person qualified that is giving me this, you know, this advice, right?
Is he or she qualified?
And the next you have to do your own due diligence, right?
I can’t stress that enough, right?
Everyone do your due diligence because you have to ask yourself, is this company, how do they make money?
Right?
What’s the competitive advantage?
Right?
What’s the use case?
Especially when we start talking about, you know, crypto, et cetera.
And then you just gotta ask yourself, am I gonna be using money or investing money that my life’s not gonna, you know, crash and burn in the event?
I lose it, right?
You don’t wanna be risking money because every investment is a form of a risk.
So you don’t truly wanna be risking money on a investment that has a lot of uncertainty that, you know, you can’t afford to lose.
Certainly.
And we’re we’re taking a look at some of these safety tips as well here.
I mean, it’s, it sounds really compelling sometimes when you hear stories of multiple traders hopping in and there is a whole momentum trade as well that a lot of people perhaps get wind of and they say, all right, I don’t want to miss out on the momentum, but of course, uh you don’t wanna chase the trade as Steve Sos from interactive brokers uh was telling us yesterday.
Yeah, I mean, I think there’s a great saying is that the moment you hear about it, unfortunately, it’s too late, right?
And so in these momentum trades where to the, to your point, you know, once you get publicized on social media, chances are there are some wolves in sheep’s clothing that are actually they’re bad players, right?
There are people that, you know, are using, you know, bots that are making you think that this is advertisement when, in fact they’re trying to now drive the price up and make you want to buy it and now guess what?
You’re getting out.
Same thing when we talked about sports gambling right at the end of the day when you see someone wager $20 and made $200,000 guess what that is?
Advertising to hope that you yourself go do the exact same thing.
And so when you hear about, oh, you know, certain cryptos or certain, you know, YOLO various stocks, guess what?
Unfortunately you’re being advertised to and they’re hoping that you yourself, go buy it so that they can get out and exit at a higher price.
Yahoo finance contributor, Ross, Mac Ross.
Thanks so much for keeping tabs on all things reddit and even more with the momentum trades out there.
Appreciate it.
Absolutely.
Thanks for having me.
Thanks.
Coming up, everyone.
Housing hurdles affording that mansion with a moat isn’t easy these days with rising home costs and elevated mortgage rates, we’re gonna dig into the data preventing you from buying after the break.
We got a lot of housing data in the last couple of weeks and it really tells an overall story about the state of the housing market here to break it all down for us.
We’ve got our very own Danny Romero.
Hey, Danny Brad, the housing market is just unaffordable right now and mortgage rates are largely to blame here.
The 30 year fixed mortgage rate stayed above 7% since, since, since mid April.
And another concern with the housing picture is inventory.
People aren’t listing their home sales of existing homes in April fell nearly 2% on a monthly basis.
According to the National Association of Realtors.
The price tag on a home hasn’t come down either.
The median sales price on a previously owned home was about $408,000 up 5.7% from the last year and a record high for the month of April.
However, there’s some improvement in May.
There were 35% more homes for sale compared to the same time last year.
Data from realtor.com shows that’s an improvement but still below pre pandemic levels.
Now, if we shift over to the new home market, new home sales dropped 7.7% in April on a yearly basis.
Government data showed remember builders have been building out smaller homes and giving incentives to buyers, especially with these higher mortgage rates, Brad and Danny, what can we expect to see next in the housing market?
What is perhaps the next major movement?
There could be some changes coming to the housing market.
Goldman Sachs economist, revise their forecasts lower for home price appreciation growth.
Now they’re expecting prices to rise 3.9% this year and that’s down from the 5.5% appreciation expected back in February.
So the slow down in price could be a good sign but the firm doesn’t see conditions improving much for buyers.
Given the fact the strong demand and the healthy labor market, Brad.
All right, Danny, thanks so much.
Keep tabs on all things domiciles homes, cribs, whatever you wanna call it.
Sticking with housing, it’s not an easy market for potential home buyers who are facing elevated prices and mortgage rates and low albeit recovering inventory levels.
And now a new redfin survey review is a whopping 91% of adult Gen Zers say housing affordability is their top voting issue ahead of the 2024 election here with more is Darryl Fairweather, who is the red fin chief economist Darryl.
Great to see you and thanks so much for hopping on to to discuss this data with us.
I mean, just walk us through the findings here because I think that’s really what’s striking about the number of people that are using this as a top voting issue.
Yes.
And Gen Z thought of housing as being the most important compared to other generations.
It tends to go down with age.
The younger people care the most about housing, baby boomers who are already homeowners already have fixed mortgage rates.
A lot of them don’t really uh see housing as their top issue.
They care more about other things, sir.
Yeah and sir with all of this in mind, where are we seeing moderation in the housing market?
Danny was just laying out some of the latest data that’s come through via uh the couple weeks of economic data.
But I mean even this morning, it seems like we’re getting more fresh readings just about affordability when it comes to buying a home.
It is for the most part less affordable now than it was last year and a whole lot less affordable than it was before the pandemic.
We’re seeing prices come down in Florida, but you have to remember that Florida was gaining uh more and more value up until last year.
So this is kind of an overdue correction.
The rest of the nation, it’s still prices going up and that’s amidst these high mortgage rates, but rents are coming down.
So if you are on the verge of deciding whether to buy a home or to rent, at least, you know that for the short term, your rents are probably going to get more affordable, not uh that’s affordable.
All of this considered, I mean, it’s, it’s coming back to inventory both on the existing side and on the new home side as well.
And, and we’re starting to see that the new home build outs get to some of the highest percentages, at least on a historical basis of the overall inventory and market that that’s coming online here.
And so what, what do you make of, of that dynamic that we’re tracking?
So the places where rents are coming down, it is where inventory is going up and some of that is coming from condos being converted into rentals.
Some of that is coming from new construction.
There’s a lot of new construction in the south and other places where there isn’t new construction where there aren’t that many needs to begin with.
Rents are still rising.
So even though I said rents are coming down, it’s not a guarantee.
It does depend on where you are in the country.
Is there a silver lining to all of this?
Well, I think that the fact that so many voters care about housing makes it more likely that this issue is going to be addressed.
Uh President Biden has been talking about housing affordability on his campaigns.
And at the local level, there has been progress with zoning reform and that’s in red states and in blue states, it’s going to take time for more inventory to come online, for affordability to come down.
But I think everybody is starting to reckon that adding to the supply is the only way to sustainably make housing more affordable.
Certainly.
And then when we think about the number of people that are saying and making the decision now to say, all right, maybe we just purchase now and refinance later is that part of the home buying calculus for people who are willing to take on a mortgage rate at this level?
Well, if you’re going to take on a mortgage, it’s really important that you can afford it in the short term.
You shouldn’t bank on rates coming down as part of your financial plan because they may not come down or they may not come down as quickly as you were hoping.
But I think for the most part, people who are getting these adjustable rate mortgages, they can afford them.
And it’s more of a hope that rates will come down or they’ll be able to refinance than something that they’re really banking on Darryl Fairweather, who is the Redfin chief economist Darryl.
Great to see you.
Thanks for jumping on Yahoo Finance with us.
Thank you, appreciate it.
Well, can you afford an expensive emergency?
A lot of Americans cannot we break down how you can build up your emergency funds?
So you could take on anything right after this quick break, trading in shares of around 40 stocks was halted on Monday due to a technical glitch on the New York Stock Exchange.
An nyse spokesperson attributed the tech issue to the securities information processor.
A Kas, a machine that consolidates data like bids, prices and trades into a single data feed.
Now, the issue was fixed shortly before noon on Monday and trading to the impacted stocks resumed.
Gamestop A MC, Chipotle and Berkshire Hathaway were all affected.
The error caused class A shares of Berkshire to plunge more than 99% and trading was halted in what the NC or the NYSE classified as an luld pause or a limit up, limit down pause, but let’s back it up here.
What is a limit up, limit down?
And how does the stock exchange even detect these kinds of issues?
So let’s break it down in our ever growing electronic world.
There are three market guard rails to help prevent what exchanges deem unnecessary volatility in stocks.
Now, the first is a market wide circuit breaker.
This halts all stocks when the market suffers excessive declines in one day.
For example, if the S and P 500 falls 7% in a day, trading will stop for 15 minutes and then reopen.
Now there are three total thresholds where at level three, if the S and P 500 falls 20% during the session, trading will be halted for the rest of the day.
Now, the COVID pandemic gives us a good example of this.
The markets saw four market wide circuit breakers during the COVID related sell offs that took place in March of 2020.
Now, the second guard rail for the markets is called limit up limit down.
This is designed to stop excess volatility in a single stock, sudden price movements beyond certain price bands for a stock will then trigger a 15 2nd limit state where trading pauses and if the stock comes back within the price ban, then trading will resume.
But if not, the stock is halted for five minutes.
Now, the final guard rail here is clearly erroneous trades which means there’s an obvious error in terms of price number of shares or identification of a security.
After an incident in January of 2023 more than 4000 trades and over 250 stocks were canceled due to a tech issue.
An investigation found the trades to be clearly erroneous.
So once trades are found to have been made during an erroneous period, exchanges will move to bust or cancel those orders.
Typically, there will also be a notification given as to whether the ruling is eligible for appeal.
So after a trading halt, always check the trader alerts published by exchanges to know whether your attempted trade may have been canceled and whether it is eligible for an appeal.
Well, switching gears there times are tough for some Americans out there.
Nearly half don’t have $500 saved according to a national true cost of living coalition poll and one in five Americans do not have an emergency fund.
According to a bank rate survey to break down how you can prepare yourself for an emergency without sacrificing your everyday needs.
We’ve got Monique White self, financial head of community here with us.
Monique, great to have you back on the program with us.
First and foremost.
I mean, this is a jarring statistic $500 in savings is, is what we’re talking about here.
What is the first step that many out there can potentially take just to establish some building blocks to establishing savings and putting together an emergency fund?
Yeah, that’s a great question.
You know, right now people are struggling due to the economic climate, rising housing costs, inflation cost of living.
And so people are trying to figure out how to save right now.
The first thing that you can do is to just get started, sit down, take a look at your budget, see what you can realistically start putting towards your savings.
Whether it’s 10 $15 from there, you can start building a savings plan and start automating your saving, whether it’s coming directly from your paycheck into your savings account or you’re having it go from your checking to your savings.
The great thing about that is that you can tailor it to your paydays.
Um, another method is to use alternative credit, um, I’m sorry, credit building account.
So you can actually use that to build your savings and your credit at the same time.
And that’s something that self offers.
What about for people who are, are living paycheck to paycheck right now?
We we hear about this all too often and how that’s impacting the ability to save.
Right.
So I think that the ST most financial professionals will tell uh consumers to save 3 to 6 months worth of living expenses to save 20% of your income.
But right now, that is just not the case.
Um So it’s, it’s time that we reshape the way that we view our savings and it doesn’t have to be this big catch all scary account where you can only dip into it for these big emergencies.
You can actually tailor your savings that fits your current financial situation.
So you can have your standard emergency savings maybe instead of 3 to 6 months, look at how much you can afford for one month of living expenses and start from there.
Um You can also have a sinking fund where you have regular occurrences throughout the year that tend to be a financial burden.
So like your auto maintenance registration, things like that, that’s something that you can start saving for, continue to save for retirement, whether it’s through your employer or you can do it on your own through a Roth or you can have aspirational savings, a down payment, a new car, a new home.
These are all things that you can use as buckets for your savings and you can prioritize them accordingly.
How has the emergency fund evolved over the years?
I mean, II, I think about when we were talking about this before, it seemed like $400 was too much uh for some people to have in an emergency fund and now we’re talking 500.
I mean, clearly things are more expensive for sure.
But how should people’s emergency funds also kind of correlate and keep pace with the cost of living?
Yeah, you know, in order to keep up with the cost of living, you do have to have a strong savings if you’re not able to increase your income or reduce some of your expenses.
Your savings account is the only way to keep up with those type of things.
Um, so it’s important that you just take a look and be realistic and get started.
Um, focus on maybe a month of work of living expenses instead of 3 to 6 months.
Right now.
It’s all about doing what you can and creating a habit out of savings instead of it being this, this big account that seems unreachable and can be challenging for some people, you’ve got a lot of fresh grads out there that are trying to figure out.
Ok. All right.
I gotta set up savings.
I gotta, you know, pick out which retirement accounts I wanna build out and, and according to the new employers, you know, uh, uh, options that I can opt into all of these things considered, there’s a lot being thrown at them right now.
Where should they be kind of prioritizing the different accounts or different funds that they’re setting up?
Yeah, so if your employer offers you a uh retirement match, definitely take advantage of that.
Essentially, that’s free money and you don’t wanna leave that on the table.
So that’s always a good starting point when it comes to your savings.
Um You can also, you know, I know we’ve been talking about savings, but your credit is also just as important.
Sometimes it’s a topic that’s um not in the forefront when it comes to your finances and when you have a strong credit score that is helpful to the health of your savings as well.
A strong credit score can save you money in the long run when it comes to interest rates and being eligible for certain credit products and how much you have to put down for a day down payment for a home or renting a house.
So those are, that’s something that you should focus on is having a strong credit score and then maybe prioritizing your retirement Savings Monique White, self, financial head of community Monique.
Great to see you again.
Thanks so much for joining.
Thank you for having me.
Certainly, everyone.
We’ve got much more wealth on the other side of the short break, you’re watching Yahoo finance the NFL season may be a few months away from kick off.
But that doesn’t mean teams aren’t busy filling out their roster, securing new sponsorships or even bringing in some new owners and partners.
Late last month, Atlanta Falcons owner Arthur Blank announced four new limited partners are joining his ownership group following approval from the NF L’s full ownership.
Joining me now is one of those limited partners, venture capitalist, Rashawn Williams, Rashawn.
Great to see you.
I mean, when I saw this come across, I was just like, let’s go.
Finally, it’s about time we get more people who are getting a seat at the table and representative of so many of those players who are also involved in the league’s operations on a day in day out basis.
Uh uh What, what is the significance of this?
From your perspective?
What comes next after this?
Well, Brad, first of all, it’s great to see you.
You know, I’m a huge fan, I’ve been following you for years and years since visiting you on the New York Stock Exchange years ago.
Actually doing the Lyft IP O I see you have the Lyft CEO coming up later this week for earnings.
Um Look, I think Atlanta is a very special place and I think the Falcons hold a very special place in the community for Atlanta.
And I’m just appreciative of the opportunity that the organization that Arthur Blank gave to us.
And we’re just gonna try to be the best LP S that we can possibly be and really give back to our community.
I mean, you are no stranger to kind of having a, a line of communication with so many of the athletes, either falcons related or non falcons related.
As you’ve been able to kind of work with them on their own investment and wealth building strategies.
What are the considerations that they’re making now differently about how to put their wealth to work and making sure that they’re making money and they’re growing out their wealth passively or actively.
Yeah, brand, like you mentioned the last 24 years, I’ve been focused on the first generation wealthy or the quick wealthy or the underserved community in terms of teaching financial literacy, all the things that I learned on Wall Street at Goldman Sachs and as a venture capitalist the last 24 years.
And there are a few things that I’ve been teaching guys and mentoring them on the most important concept that all athletes NBA MLB or even someone that just exited a tech company or someone that just left Wall Street and has $5 million and ha has never done anything other than investment banking, right?
But they’re 34 years old.
Very similar concepts.
Number one, become the general manager of your own finances.
One thing you’ll notice that successful millionaires and billionaires do is they make their own investment decisions and they have a very qualified team around them.
They don’t have to be on the field running plays or calling plays, but they have to be the general manager making sure they reward the people doing well and they kind of reads their portfolio when things are not going well.
That’s one thing that we don’t see.
I would say first generation or athletes entertainers do that much.
They usually hand that off to someone else who tells them, hey, trust me with your money, you just focus on that thing that you do.
The second thing that you’ll notice that is happening in this society now that wasn’t happening 20 years ago is that athletes are finally figuring out and entertainers, the wealthier you become the less you need a financial advisor.
This is something that billionaires have known for decades.
And it’s a very simple conversation.
Look at the configuration of wealth for billionaires and it’s 90 plus percent alternative investments, businesses, they own real estate, they own less than 10% of their portfolios are actually in stocks and bonds.
Yes, that 10% represents $200 million but it’s still $2 billion in alternatives.
So if you want to invest and grow your wealth, like the wealthiest people in this country, you have to own private businesses, you have to own real estate.
And then the last thing I’ll say is the successful investors in this industry align themselves with financial coaches.
Think of a financial coach as a person that’s putting in more money than you doing more due diligence in you and has a track record of actually making money.
That’s the thing that you see that’s happening with athletes and entertainers.
They’re aligning with V CS and private equity guys.
They’re not just getting deals from random people in the streets anymore.
They’re literally aligning themselves with the top 20 venture capital firms and getting in these deals and getting these exits.
You know, it, it’s particularly interesting.
You, you’d mentioned Lyft and us speaking back when that company was going public and I think about the number of private companies that you’ve kind of baked into your investment thesis.
What, what is maybe one of the most compelling thesis that’s out there right now or themes that’s even out there from your perspective.
Yeah, I would say industry wide, everyone’s been focused on cybersecurity, quantum protection and quantum computing and A I for the last five years.
It’s becoming uh you know, news headlines now with A I, especially because of all of the revenue growth you’re seeing uh in that space and in that industry which is driving the S AND P. But in the private markets, we’ve been dealing with the A I and the quantum and the cyber for the last 5 to 7 years easily.
So that’s first and foremost, the second thing is within those industries, there’s a large disparity between profitable late stage unicorns and unprofitable companies who still need funding every year in order to continue operations.
And those companies that are not profitable are getting penalized with lower revenue multiples than the ones that are profitable because of where we are in the interest rate environment.
So there are some buying opportunities if you can buy some of these companies, knowing that we’re coming into a different cycle on the interest rate side and kind of ride that multiple expansion that a lot of investors like myself are, are taking advantage of a lot of people out there.
They say, hey, I can’t get into some of these private names and, and I have to wait for them to come public.
Should people be jumping then at those companies when they do come public or what’s the best due diligence that they can implore once some of these businesses are finally able to make it into the equity markets.
Yeah, I I hate to say it because it’s a very risky market, but I highly recommend people just do index funds and not try to pick the winners.
It’s very difficult even the people who are paid to pick the winners still get it right?
Only 30 plus percent of the time, right.
So if you are a retail investor or a part time investor.
I highly encourage you to do something like a QQQ.
If you want to capture a lot of the technology companies, it’s been averaging 18% returns the last five years.
It was up 54% last year.
Obviously it’s more volatile.
So on the down market, it’ll, it’ll underperform versus everyone else.
But if you want to really capture a portfolio of technology companies that are public, I would highly recommend an index fund or mutual fund that represents tech.
Now, in terms of picking your spots.
Look if you can get into an IP O which literally only the top investors in the country can really get into or after it’s free trade that day, go for the biggest and the best go for the ones that are profitable right now, you’ll get rewarded.
And if you’re feeling really adventurous, go for the ones that you think in the next few years have a path to profitability, but stick in those three industries, uh quantum uh cybersecurity and A I.
And I think for the foreseeable future, you’ll be fine.
The only thing that’s adventurous is my golf game rashawn.
Uh Just lastly while we do have you, you know, the show is called wealth.
I, I gotta know for people who are trying to actively build wealth.
What’s your number one piece of advice?
Uh The number one thing I would tell folks that I’ve actually never heard any financial advisors or financial gurus say anyone.
So you’re hearing it here first Brad because you’re my guy.
Is this very simple question, what’s your number?
And what I mean by that is what percentage return do you need on your investable assets or your net worth to double in the next 10 years?
And if you wanted to expand on that, what percentage return do you need on a portion of your assets to live off of passive income?
This is the problem where people who have $10 million and they retire at 35 if you’re only getting 2% returns, but they need 10.
In order to grow an internet work and live off passive income, there’s a slow leak to the bottom.
So you always start from what number do I need?
Not.
What number am I getting?
What do I need?
And then you align yourself with places that you can get those returns, whether it’s stocks, real private equity, venture capital, franchises or bonds or in this case, even money markets at 5%.
So start out asking yourself what is your number?
What percentage return do you need?
Not what I’m giving.
And then you find the best team that can help you accomplish that goal.
Always a wealth of wisdom in your words of Sean Williams.
Thanks so much for joining us here on Yahoo Finance.
It’s great to see you.
Good to see you.
Absolutely, everyone coming up, you won’t be able to get loud on the floor or dance again at J Lo’s concert this summer because her tour it’s canceled.
Love.
Don’t cost a thing, but that ticket did will break down what you need to do when a concert gets canceled.
That’s next.