Are you putting off learning how to invest?
I get it, investing can feel super overwhelming and complicated. On top of that, you might be completely zeroed in on paying off debt and you’re wondering if you should even be investing if you’re not debt free…
To help answer all these questions in a simple way that will allow YOU to start building wealth today, I’ve got Chloe Daniels on the podcast! Chloe, founder of Clo Bare Money Coach and The Lazy Investor’s Course, is a money coach focused on helping people learn how to invest and build wealth without shame or judgment. And bonus – she is hilarious, wonderful, and has an incredible story to share!
Let’s go ahead and dive into today’s interview!
The Road to Investing
ALLISON: “Welcome Chloe to the Inspired Budget Podcast! I have been looking forward to this, not because you are just so amazing and awesome, but because we’re like real life friends…Chloe, and I go way back… And I always have so much fun when I’m with you. And I think your story is really inspiring to a lot of people. So I’m excited to have you on to share it today!”
CHLOE: “Thank you. I’m super excited too!”
ALLISON: “So I want you to dive in and just tell us a little bit about your money journey. Were you always interested in personal finance? Because you specifically teach people how to invest. Is this something that you learned at a young age? Or is it something that you’ve always found interesting?”
CHLOE: “Oh my gosh, I wish I had loved this from an early age. That would be amazing, because I started working when I was probably eight or nine years old. And if I had known a fraction of what I know now I would have opened a Roth IRA account for kids and started contributing when I was that young. But I didn’t know anything about personal finance really until I was like 27 years old. So for context, I’m 30 now, but Clo Bare originally started as a mental health and relationships blog…I had dealt with a lot of challenges in the mental health space from the time I was like 11 years old. So I, at the time, was struggling really hard with depression and anxiety. And I was like, you know what, I’m gonna go back to therapy. And I’m going to start a blog, because I know I enjoy writing, if I don’t know what it’s going to turn into at least it’ll hold me accountable, and it’ll help me address the things that I need to address… And as I chronicled my journey through some things, those issues started to get resolved. So my mental health issues started to get resolved or well managed and eventually I got to the point where I was like, ‘Okay, I really can’t ignore the fact that I’m still really bad with money.’ And being bad with money, we all know, seriously impacts our mental health. I mean, it’s the key to everything, whether it’s your relationship or whether it’s just your general well being and not feeling like I could ever get a grasp on my finances, just made me feel trapped. I thought you know, ‘I’ll never be able to retire I’m never gonna be able to take the kind of trips I want to take. I’m never gonna be able to do what I want I’m gonna have to always have a stressful job.’ So I decided I don’t know anything about this. So I’m just gonna get started. The same way I got started with the blog… I don’t know what this is going to turn into. But I just started by sharing my budget every single month and talking about the wins and the losses and literally listing out…everything I spent my money on for like three and a half years…and it just kind of evolved from there. So like you said, Now I really focus on teaching people how to invest. But it started off with budgeting, and then understanding debt payoff. And then eventually, it was like, you know, ‘I really, really like this whole investing thing.’ And there’s just not enough people talking about it. And especially in a way that’s approachable, and like fun, right?”
ALLISON: “Yeah, it’s like anyone who’s talking about it before, it was like an encyclopedia. And it’s almost like, purposefully using super high vocabulary and not giving analogies so that way you read about it, and you still feel confused and dumb. And you’re like, nope, not I’m not going to touch this.”
CHLOE: “Oh, yeah. 100%. It’s funny that you say it’s like reading an encyclopedia, because I immediately think of Investopedia… literally the go-to resource for learning about investing. But still, if you don’t have a base knowledge and you go read an article on Investopedia, you still leave feeling confused, like, ‘Wow, Am I really that stupid? I can’t even understand this article from Investopedia.’ So that’s kind of why I took that pivot. And also, just because I find it really, really interesting.”
Should You Pay off Debt Before Investing?
ALLISON: “I love it. Okay, so one of the things you did is that you increased your net worth. So, not only did you focus on paying off debt, but you looked at the bigger picture, right? So tell us exactly with how you did that. How did you increase your net worth? How long did it take you? What was your big number that you hit that you were really excited about?”
“Yeah, so I was able to increase my net worth by $200,000 in two and a half years. And actually, now it’s $300,000 in three years. So yeah, it’d be so wild to tell 2017 Chloe this. Just to be like, ‘Hey, just so you know, you’re gonna be totally fine.’ But I actually think a lot of people do this: I got into the personal finance community through the debt free community. That was my first goal, that was the intro. I was so siloed in. My blinders were on, of just like ‘debt freedom, debt freedom, debt freedom, debt freedom – it’s the only thing that matters.’ Because to me, debt freedom is the easy answer. It’s like, I don’t have to go learn anything, I just have to pay this off as quickly as possible. So… my original plan was ‘I want to be debt free by the time I’m 33.’ But as I dove into the debt free community, it opened other doors to personal finance. And so I slowly got into the FIRE movement. And that really intrigued me. And the more and more I learned, I couldn’t really ignore the fact that I was missing a huge part of the wealth building journey, which is investing. But I kept those blinders on for almost two years… for almost two years, I was like, ‘Nope… I’m not going to invest. I’m going to figure this out by saving my way to retirement.’
ALLISON: “Yeah, that’s not going to work.”
CHLOE: “I figured that out pretty quickly that it wasn’t gonna work. But I was, in my mind, I was just like, ‘No, you have to be debt free before you start investing.’ And the more I learned, especially because my debt was super low interest rate, it just did not make sense to pay that off early. So that’s when when I shifted my mindset from just being debt free at all costs to ‘let’s build wealth’ in 2020, that’s when I really started diving into investing as much as possible. And you know, that’s where my net worth really started to take off.”
ALLISON: “Yes. And, you know, I think that a lot of people, like you said, a lot of people kind of get in [to investing] through the debt free community. And I think it’s because that is the pain from day to day (paying those loans off). And so people are wanting to fix that initial pain. You opened your eyes to, ‘okay, that might be my pain right now, but let me look forward to what could possibly be my pain in my future. And let me deal with that too. And that’s a really big thing, and a hard thing for people to do. I mean, I know I didn’t do it, because I was so focused on my now. I’ve got to fix this now. And then whenever I was done, and we were debt free, I was like, ‘Holy crap, I have no idea what I’m doing. I have no idea what to do next.’ But I do think that it is good for some people to focus on [paying off debt], especially as you’re learning and building confidence. But it seems like you soaked in information and you developed confidence around money very quickly. Do you feel like that too?”
CHLOE: “Yeah. I mean, it’s so interesting to hear that it feels quick from the outside perspective… this journey that I’ve been on, it does feel quick. Because it’s like… two years ago, I knew nothing about investing. 2020 was the first time I decided to go into my 401k and pick investments on my own. At the time, I thought I was picking index funds, but I wasn’t. I was picking actively managed mutual funds. And then six months later, I go back in and I’m like, ‘Oh… this isn’t what I meant to pick.” and then I re-did it. So yeah, I guess when you think about it that way, it was really fast, especially for the investing knowledge. But that’s why when I when I did recognize, like, ‘Okay, I’m missing another half of the puzzle,’ I was like, ‘I need to change this as soon as possible.’ Because I was in my 20s still. And as we all know, the more time you spend in the market, the better off you are. And so I had to really convince myself through education that it was the right move for me to stop paying my debt off early, and instead, let the minimums ride. Just pay that minimum down and throw all of your money that you can into the investments instead. And I’m really glad I did it. And honestly, my biggest regret is not doing that earlier….But at the same time, you know, obviously still paying off $40,000 of debt in two years was still an accomplishment. You know, and it’s still nice knowing like, okay, yeah, I have student loan debt, but it’s like 20 grand now. It’s not, you know, $70,000.”
How to get started with Investing
ALLISON: “You decided, ‘okay, I’m missing half of the puzzle. I’m going to jump in and learn.’ I’m just curious from someone who was starting at zero….How did you learn? …What did you do? What did you read? What did you listen to? Because I’m excited to for anyone who’s listening to maybe take the same avenue you took…?
CHLOE: “Yes. So I will say I have my favorite resources and my free guide, which is the Lazy Investors Course Guide. But I started with blogs. So I started binge reading all the Financial Independence Retire Early blogs that I could get my hands on. And two of the most powerful blog series for me were the Millennial Revolution, which the they’re the authors of quit like a millionaire…they have an entire series on investing and it goes really, really deep. And really, it was amazing. And they also just have a really fun writing style. So it was like enjoyable to read. And then of course, the JL Collins Stock Series. So like everybody who’s in the FIRE community I feel has read that Stock Series at some point. So that was probably the second thing that I read. And then just to continue my education, I read tons and tons of different blogs out there to get a wide perspective on what’s out there. Because you know, you’ve got to be careful with who you trust on the internet, to make sure that you’re validating the information that you found. But I found that a lot of the brokerage websites were really, really educational. So Charles Schwab specifically has an amazing resource library of content that’s actually really easy to read. And, you know it’s legit content, obviously. And then, of course, you know, I read a couple of books. And then once I started getting really serious about it — and this wasn’t until last year — I was like, I want to focus on investing. I decided to start pursuing my CFP for the education component. I don’t know if I’m ever gonna sit for the CFP exam, but it’s nice kind of solidifying all of the stuff that I’ve learned on the internet..Because there’s things that you learn on the internet that you think is black and white, like one of the things that I think people get confused easily on the internet is backdoor Roth IRAs. Backdoor Roth IRAs, when you see somebody talking about it on the internet, it’s just like, ‘oh, yeah, put it in a traditional IRA, and then immediately roll it over into a Roth IRA.’ But there’s a lot more nuance to it. With a Backdoor Roth IRA, specifically, you’ve got to be aware of the pro-rata rule. And you’ve got to make sure that if you have any other existing IRA out there, you should be working with a CPA in order to do that, because likely, you’ll have some kind of tax implication because of the pro-rata rule. But like, that’s not stuff people are talking about on instagram”
ALLISON: “Exactly. Wow. Well, I just want anyone who’s listening to realize that for you to be good with investing, you don’t have to try to sit for your CFP exam, you don’t have to do that. I think it just comes down to being intentional, which I think you definitely were, you know, you dove in, maybe more so than the average person will, which is totally okay. But you were very intentional, not only just about what you wanted to learn, but about how you were going to learn it and consuming different materials. So I love that. I think that can be applied to a lot of things in life, right?”
CHLOE: “Totally. And that’s what I tell people to folks are always asking me for what books specifically I recommend. And I’m like, you know, you can start with the free stuff that’s online. There’s so much good information out there on the internet, go out there and get it. You know, that stuff’s available for free. And then if you want to book go buy a book, but I learned most of what I knew to get myself started from the internet. But yes, it’s doing that validation. It’s doing that confirmation, making sure that you’re getting your information from multiple sources, and you’re also making sure that they’re reputable sources so that you’re not just listening to some life insurance salesman on a blog somewhere.”
ALLISON: “So here’s my question. Let’s say that someone’s listening who wants to increase their net worth, they’re saying, Okay, I want to be like Chloe, and I don’t want to deal with the pains of today. But I want to deal with the pains of my future and set myself up so that way, I’m not in an uncomfortable place financially. So they want to increase their net worth, they want to get into investing, but they’re kind of lost. What do you suggest is like literally the first step for what they should do?
Two Choices: Target Date Funds or Robo Advisors
CHLOE: “So if you’re at the beginning, and you’re like, I have absolutely no idea what to pick for my investments; There’s two things you can do that are literally the easiest thing that anybody on earth can do them. Once you’ve opened a brokerage account or a Roth IRA or a traditional IRA, you can either do what’s called a target date fund, or you can use a robo advisor. So both of these, again, require little to no knowledge in order to get started. Target Date funds are a little bit more on the old school side. But essentially, they’re this idea of being able to purchase one thing, and that one thing is going to have a bunch of different investments inside of it that are going to automatically shift around the closer you get to retirement. So with a target date fund, let’s say you want to retire in the year 2050. So you pick a target date fund 2050. And that Fund is designed to basically slowly move from wealth accumulation to wealth preservation, so that by the time you’re in 2050, you’ve got this pile of money that is safely allocated in lower risk portfolio that you can start withdrawing from. And you didn’t have to do anything. All you had to do is purchase the index funds. So that’s one of the easiest ways. And most people if they go and look at their 401k, or they go look at their 403 B, 90% of the time, you’re gonna see target date funds inside of them, because they’re easy. A lot of them don’t want to spend their time learning how to pick their own index funds, or any kind of fund.
But the other way is to use a robo advisor. So I love robo advisors, especially for beginners. I’m not like the end all be all robo advisor user, but I think they’re fantastic for getting started. Because they solve the issue of you know. ‘I really want to start investing, but I don’t know if I want to trust somebody with my money. What can I do instead?’ Well, robo advisors are algorithm based financial advice. So what you’ll do is you’ll sign up with betterment, or Wealthfront, or M1 finance, answer a bunch of questions and they’ll give you some recommendations on what portfolio to pick. Now that robo advisor is going to do all of it for you. They’re going to pick your investments, they’re going to allocate your investments, they’re going to reallocate your investments if your time horizon or goals change. And again, you didn’t really have to do anything. You just had to fill out a couple of questions and pick which portfolio you want to go with. And usually they’re pretty low fees. So when you’re comparing it to the fees of a financial advisor, which are anywhere from 1% all the way up to like 1.5% or even higher, with a robo advisor you’re looking at, I’ve seen free robo advisors all the way up to like, .25% Maybe point .5%.”
ALLISON: “I love it. I think what I love is that your first step is to actually take action. Right? Even if it’s imperfect action, even if you’re not really sure, just take action, take imperfect action, and then continue to learn. So that way you can tweak and master it”
CHLOE: “Right. Because the thing is, the most important thing when it comes to investing is having time. So if you are waiting and waiting, like I did to wait for that perfect moment, when you’ve studied everything, and you know exactly what you’re doing, right, you’re gonna miss out on precious time and even two years can make a huge difference on your portfolio. So you know, taking that one step, not only do I think it’s important because of time, but it’s also important because it almost takes the fear away, when you decide to take action and just do something, even if it’s not perfect. You’re doing it. It’s like all of a sudden, you’ve got this confidence, because you’re like, well, I have a target date fund inside my 401k. You know you’re doing something. So to me taking that step, even when it’s not like, maybe it’s not going to be a forever thing, maybe you’re going to eventually learn how to take your own index funds and do that that’s okay, you can do that. That’s, it’s flexible, you’re not sold to this one thing for the rest of it’s not like when you pick a degree in college or student loans. This is changeable. This is easily changed. So yes, so I think I think that’s huge. It’s just taking one step.”
ALLISON: “I love it. Oh, my gosh, you’re full of so much information. And you have some incredible videos on Instagram that are entertaining and educational. So if you’re not following Chloe on Instagram, go follow her now!”
I hope you enjoyed meeting Chloe and getting a little bit inspired about looking at the bigger picture when it comes to your finances. Not always focusing on what today holds, but looking at your future too!