How to use your internship income to buy every company in America

Misinformed college students who will keep their summer internship earnings in a savings account are missing out on thousands of dollars.

Too many people don’t realize a direct deposit paycheck into a bank account will return 0.01% annually and lose even more to inflation, whereas allowing a supercomputer to manage your money will return about 7% annually. Young people have become incorrectly risk-averse and lose out on compounding profits because of being overly sensitive to investing in a market that has far less risk than they realize.

Now is the best time in history for young people to avoid savings eaten away by inflation at banks and instead invest in safe stocks. For as little as $100, you can own a little of every big public company in America through index funds. These are diversified investment devices that track a larger financial market index (SP 500, Dow Jones 30, etc.).

Of course, having some cash on hand is necessary, but the bulk of your money should be stowed away to grow.

High schools oftentimes don’t teach about mutual funds or indexed exchange traded funds, but these world-changing investment devices are making it possible for students’ summer internships to pay them for the rest of their lives. All students need to do is trust the proven returns and dive into an investment that is better than fearfully hiding cash in your underwear drawer.

The first and most important aspect for new investors to grasp is that buying stocks is not as difficult as people play it out to be.

When investing pioneer Jack Bogle founded the Vanguard Group in 1975, investing changed forever. With the development of mutual funds and indexed ETFs, middle-class people could invest like billionaires. Institutions like Vanguard own stocks in effectively every publicly traded company in the world and utilize high-speed computers to manage investments and allow ordinary people to invest in these low-cost stocks.

Vanguard controls $5.1 trillion in assets, which means buying one of their offered index funds guarantees you own part of hundreds or even thousands of different companies. The world’s most famous investor, Warren Buffett, preaches diversity to reduce risk, and there is no better way to manage risk than by owning everything.

Investments can be bought and sold in a flash and converted from cash into stock or stock into cash within days, ensuring your investment can be liquified instantly.

Those who are proud of being risk-averse and only hold cash will lose about 2%-3% of their money each year to inflation. However, if you own the Vanguard SP 500 Index Fund (ticker symbol: VOO), you will earn 7% on average per year.

To put this number into perspective, imagine you and a fellow intern are working tirelessly throughout the summer and take home a nice $10,000  when you finish. You, who keeps $10,000 in cash, will be worth the equivalent of $9,700 the next year.

However, your clever partner who invests their money in a diversified investment will probably be worth $10,700. Additionally, that $700 will help the money grow quicker for years to come and may result in a junior year internship and a nice Mercedes to fill the garage of the Florida house you just bought to retire in.

Investing money for a more secure future is not something only old people, rich people and risky people should be inclined to do. In fact, income from college internships is the ideal opportunity to get started with a diversified portfolio that has the potential to double your investment five times in only 30 years.

Getting started is simple.The first step is managing to find income and thousands of talented students at this school are doing this the entire year.

Second, all it takes is signing up for an account at any insured investment bank or stock brokerage.

Third, transfer some or all of the money from a bank account into a brokerage account. Brokerage accounts at the best firms insure money up to $250,000. For young people, Robinhood and Charles Schwab offer the safest services with minimal fees.

Once your account is funded, the simple process of turning most of your cash into an appreciable asset is complete. After researching some basic information about some of Vanguard’s indexed ETFs, you can decide what investment is right for you.

Finally, once you have invested your money in a proper place, safe from the dangers of inflation (and your own erratic spending), your excitement will grow alongside your portfolio.

Fred is a freshman in Media.

[email protected]

How ‘Bad With Money’ Helped Me Finally Figure Out My Finances

An impromptu trip to Paris isn’t something too many people can afford with ease; Gaby Dunn certainly couldn’t when she dropped $800 on a last-minute plane ticket to France in 2012. It wasn’t her wisest financial decision, but these days, the 30-year-old podcaster and author is making very different choices. It hasn’t been easy figuring out how to manage her money, and she chronicles this jagged road to financial literacy in her self-help-guide-meets-memoir, Bad With Money.

Dunn, who began her career as a journalist, worked at a variety of news outlets in her 20s while also maintaining a personal project on Tumblr called 100 Interviews. She went on to create a YouTube channel and podcast with her comedy partner, Allison Rankin, but despite her online success, Dunn still had a very big personal problem: student loan debt.

She was resolved to pay off her loans, and in the process of figuring out how to do so, she launched her own podcast in 2016: Bad With Money, which explores the emotional, social, and institutional factors that influence financial choices. In Jan. 2019, she released a book by the same name, and in it, talks about her money journey as a creative millennial living with bipolar II, who still has to pay taxes, save for retirement, make a will, and everything else.

‘Bad With Money’ by Gaby Dunn



Dunn introduces readers to the concept of “money scripts,” or the ways in which you’ve been taught to think about money by your family and community. In the book, financial psychologist Dr. Brad Klontz discusses how these scripts — like “money can solve all your problems and bring you happiness” or “you need to treat yourself when you are feeling sad” — can subconsciously affect how you make decisions.

This book made me realize that I had internalized so many scripts about writers and creative workers. I assumed that most people in my line of work earned so little money that they didn’t need to know about financial literacy, because all their money went straight to rent, food, and bills. This attitude wasn’t an informed perspective. I needed to recognize that I do benefit from understanding personal finance.

In the name of research, Dunn spoke about money with nearly every member of her family and many of her friends. What she found is that there are many different attitudes about saving and spending, even among people who spend much of their time together. Dunn self-educates throughout this journey: She learns what a stock is (she’s not ashamed to say she doesn’t understand them!) and researches how retirement accounts work.

Alberto E. Rodriguez/Getty Images Entertainment/Getty Images

I found it possible to look at my money scripts with a little more honesty and bravery because of Dunn’s disarming approach to talking about money. Readers won’t find complicated financial jargon in this book; she writes in-depth about what a credit score is, but she doesn’t pretend to know exactly which credit card is the best for every person.

After exploring the daunting personal finance world alongside another novice, I found myself with a set of action items that didn’t seem daunting: Set up a Roth IRA, save for unexpected medical expenses, and make freelance income goals. It’s not like I couldn’t do these things before, but my assumption that a just-barely-getting-by writer couldn’t or shouldn’t bother with financial literacy had been getting my way. This book is probably most useful for readers — like me — who haven’t spent much time thinking about financial literacy at all, and want someone to explain things to them from the beginning.

Dunn foregrounds experiences that other personal finance books may ignore; for example, she is bisexual, and she discusses the rise of the LGBTQ wedding industry in her chapters on how we spend money related to romantic love. She devotes an entire chapter to analyzing why systems are purposefully set up to be too complex and confusing for people to thrive financially, and why she sees some better paths forward through Democratic Socialist policies. “The structures we have collectively created and live in are not working for the vast majority of us, but we can also collectively build a different system,” she writes. She recognizes the benefits of understanding money through current political and social systems, but she pushes back, too. While she advocates understanding the medical insurance system, for instance, she also believes that basic medical care should be a right and not something that will send people into deep debt for the rest of their lives.

I found it incredibly satisfying to be privy to the nitty-gritty of Dunn’s financial path — from having to sell her possessions online to afford an unpaid internship in New York City, to becoming a successful writer and actress in Los Angeles. (By “successful,” I mean that she mentions the $50,000 payment she and Allison received for selling a TV show script, and she refers to her finances as much better than they were even just a few years ago.) She outlines her spending, breaks down what she spent in a random month in 2017 line-by-line, and acknowledges that she still experiences dry periods due to the lump-sum nature of much of her income. I enjoyed knowing that even people who publish books occasionally spend, as she did, $600 on Amazon. “Not every month is this bad,” she writes, “but man oh man!”

Near the end of her book, Dunn compares money to a character from the 1982 movie The Thing — the shapeshifting alien, a monster Kurt Russell struggled to defeat because it can look like anything and undermine his trust in his team. “Money is the alien,” she writes. “We are all Kurt Russell.” After reading the book, I have the tools to make healthy, useful money choices for me, but I don’t feel the need to make the same money choices as other people. Most of all, I feel encouraged to figure it out.

Ridgewood Savings Bank: Does Your Bank Offer These 5 Big Perks? – WABC

NEW YORK — There are few banking tools you depend on more than your checking account. That’s why, no matter how you like to spend and manage your money, you need an account that makes it easy and rewarding.

Unfortunately, not every checking account can deliver. If you’re thinking about upgrading yours, here are five valuable benefits you should expect from your bank:

1. Easy Ways to Manage Your Money
A busy schedule shouldn’t keep you from staying on top of your finances. The right bank will offer state-of-the-art digital banking tools that let you manage your money when and where you want. At Ridgewood Savings Bank, our highly rated Mobile Banking app brings the bank to you: Deposit checks with your smartphone, pay bills, schedule recurring transfers, get eStatements, use the Money Management (MX) budgeting tool, pay friends and family using Popmoney – you can even bank with your SmartWatch.

2. Cool Rewards
Does your bank provide you with a debit card rewards program that shows you they are grateful for your business? If not, look for a bank that will. Ridgewood has two FREE rewards programs: With the first, uChoose Rewards, you can earn rewards points automatically when you make purchases with you debit card, check your points balance online, easily redeem points online and access a vast selection of rewards, including cash back, travel, sporting events, concert tickets, gift cards and more. With the second rewards program, Purchase Rewards, you can turn everyday purchases into cash by activating exclusive cash back offers at select retailers.

3. Tons of Surcharge-Free ATMs
You shouldn’t have to pay to get your own money, but here in New York and across the country, out-of-network ATM fees are higher than ever. Choose a bank with a large ATM network so you can avoid ATM fees without going out of your way – even when you’re away from home. As part of the Allpoint network, Ridgewood offers our customers surcharge-free access at more than 55,000 ATMs around the world – far more than you’ll find at even the largest national banks.

4. Instant-Issue Debit Cards that Are Convenient and Secure
Other banks make you wait days to receive your new card in the mail. But when you open your checking account at a Ridgewood branch, you’ll have your free Ridgewood Debit Mastercard before you walk out the door. Plus, add your Ridgewood Debit Mastercard to your Mobile Wallet and use Google Pay, Apple Pay or Samsung Pay to make payments with your phone. And if there’s ever a suspicious transaction, find out fast with real-time Debit Card Fraud Text Alerts.

5. Built-in Identity Theft Protection Services
Did you know that tens of millions of Americans are impacted by an identity crime, such as identity theft or data breaches, each year? That’s two new victims every second. The risk of identity crime is growing, which is why it’s important to choose a bank that offers the resources to help you fight it. Ridgewood partners with EZShield to provide all our checking customers with ID restoration services with a Certified Resolution Specialist, available 24/7 from U.S.-based experts. Ridgewood Premier Checking customers receive EZShield ID Protection Plus, which provides dark web monitoring and credit monitoring, free.

Upgrade Your Checking Account – and Your Bank
Whether you want easy ways to manage your money, a competitive rate or exclusive benefits, Ridgewood Savings Bank has the checking account for you, along with lots of great features you won’t find at most banks. Learn more, compare accounts and open yours today.

Terms and conditions apply. Products, services and benefits subject to change without notice. Message rates may apply. EZShield is a third-party company and is not affiliated with Ridgewood Savings Bank.

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‘I’ve been crying all day…happy tears’: Young cellist with…

Eddie Adams didn’t have the money to buy college textbooks this semester, so he had to rely on his classmates at George Mason University to loan him theirs. He is the principal cellist in the school orchestra, but he couldn’t afford to buy or even rent a cello. That, too, he had to borrow.

That was two weeks ago.

After a story ran in The Washington Post about Adams’s tormented, impoverished childhood and how the cello has become his lifeline, people started donating money – more than Adams ever imagined was possible.

The day the story ran, April 13, Adams looked at a GoFundMe that had been set up for him and saw it had reached $25,000. It was so much money, he was sure there was a technical problem with the fundraising site.

“I legitimately thought it was a glitch in the system,” said Adams, 20, who as a child moved around northern Virginia with his mother and five siblings about seven times, including to a homeless shelter in Alexandria.

The next day when the fundraiser reached $70,000 – and hundreds of people had left comments telling him he was worth every penny – he texted his strings professor and mentor, June Huang: “I’ve been crying all day. . .happy tears.”

And as he refreshed the site again and again over days, he watched in disbelief at the collective generosity of people who had read his life story and watched videos of him playing the cello.

As of Wednesday morning, the GoFundMe donations had reached $133,243.

“I still don’t want to believe it happened because it’s too much money for me to even think about,” said Adams, who is estranged from his family, and his only home is his dorm room.

On top of that, people donated other large and personal gifts, including: Two people are buying him cellos, one valued at up to $20,000 and another that will be specially made for him, valued at more than $30,000. A couple in Delaware bought him a $700 custom-fitted tuxedo he will wear during performances. Gift cards and checks started arriving at the university, totaling close to $5,000.

The City of Alexandria invited him to play at a homeless shelter, Huang said. He plans to do it.

A married couple, both doctors, invited Adams to dinner after being moved by his description of a childhood in which he was the target of family jokes for getting good grades and “acting white.” In an email, the physicians wrote that “we are retired African-American physicians who have had our struggles with being ‘white-acting’ high-achievers.” The dinner is set for next month.

As for the money, Adams first move was to pay a $250 deposit for an educational music festival he will be attending this summer. Then he went to the dentist for the first time since he was a child. And he paid off $15,000 in student loans that were accruing interest and had been weighing heavily on him.

“That was a very big moment for me,” he said.

Also important, he said, is he is now able to rent an off-campus apartment with friends next semester, meaning he’ll have an address he can list on job applications and other forms.

Huang, whose support of Adams was described in The Post story, said she has been deluged by calls and emails from people who want to help Adams. Huang first heard Adams play at an audition for the school orchestra. She dropped her pencil, forgetting to score his performance because she found it so soulful and beautiful.

When the donations started coming in, she told him: “Eddie we have just secured your education. No matter what happens to me, beyond where my health or my job may take me, you will get an education.”

It was Huang’s private violin student Noah Pan Stier who at age 12 set up the GoFundMe page last year after Huang told him about Adams’s difficult childhood. Noah recently turned 13 and had a Bar Mitzvah, asking for donations for Adams instead of gifts. By early April, Noah had reached his goal of raising $10,000. That is the same GoFundMe that is now at more than $133,000.

“When I saw him play, I thought that he deserves to succeed and something like money shouldn’t get in the way,” Noah said. “It feels really good to help Eddie.”

Now, Huang is the point person coordinating Adams’s donations and talking with people around the country and in places like Germany, England and Singapore who contacted her in recent days wanting to help. She has been getting pro bono guidance from various estate planners, tax lawyers and accountants to figure out how to keep the money safe for Adams and make it last. She said she’s been in nonstop motion the past 10 days, but she’s thrilled with all the support.

“I feel a great sense of relief. Being part of a worthy cause its very life-affirming,” Huang said. “I knew there’s a limit to what I can provide for Eddie. I needed a community behind him.”

She said her dream is he will be a successful musician one day.

“I tell him, ‘You owe me. When I’m in an old-folks home, you better come in and play for me,’ ” she said.

Huang said she includes one of Adams’s close friends, Adam Rothenberg, and his former middle school teacher, Gerald Fowkes, in financial discussions she has with Adams for transparency sake. She keeps all his financial information in a binder the four of them can look at. And she’s trying to teach Adams how to manage his newfound money at the same time she’s trying to figure it out herself.

Huang has helped him put the bulk of it in CD’s so it will earn interest while they figure out what to do with it. She is trying to untangle whether his windfall disqualifies him from scholarships, grants and financial aid he has been relying on to offset tuition and living expenses.

Adams said he is now getting a lot of attention on campus, as people approach him and say they had no idea his past was so difficult, that he faces so many challenges. He’s shy so the attention is not always easy for him.

“I have anxiety about these types of things, but I should get used it because it’s all really good,” he said. “I’m trying not to think about it because finals are coming up and I’m trying not to let that take up all my head space. I still need to study and practice as much as I was before. I need to focus on my schoolwork because that’s the whole purpose of it all.”

This article was written by Allison Klein, a reporter for The Washington Post.

Five crucial money mistakes rich people never make

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We all make mistakes, yet there are a few bad habits the super-rich tend to avoid. Here are five money missteps that may be keeping you from getting rich.

When the stock market drops — as we saw in December, when major indexes all dropped at least 8.7% — you have to know what you are doing or you can get burned. If you don’t have time to spend a few hours a day tracking the market, the cost of a good financial advisor is well worth the investment.

Ivory Johnson, founder of Delancey Wealth Management in Washington, D.C., said most wealthy people don’t try to manage their money themselves — they hire financial planners, CPAs and attorneys to protect their assets and reduce their risks.

And when are risks the highest? When markets start taking investors on a roller-coaster ride.

“When investors are stressed, the odds of making a bad decision increase,” he said. “Wealthy people mitigate that stress by having good advisors.”

While some may balk at paying a fee, the returns on that money will, most years, be well above that amount. During the bad years, your advisor can help you mitigate your losses to preserve your wealth for the long haul.

The average investor may have stocks and bonds in their 401(k) savings or investment portfolio. The rich branch out and diversify.

Remember Enron? Many employees of the energy giant bought into the company’s sales pitch so much that they put all of their retirement savings in its stock. And when the firm went belly up — so did all of their savings.

In addition to stocks and bonds, the ultra-wealthy invest in things such as real estate, limited partnerships and private markets, according to Tom Corley, author of personal finance tomes such as “Rich Habits.” That way, if stocks, for example, are having a really bad year, you may make up the difference with a good year in real estate or vice versa.

Another appealing factor that draws a lot of wealthy investors to real estate: It may provide an extra income stream. In addition to the potential appreciation of that property, if you rent it out you get an immediate source of income, which can give you a nice cushion should you lose your primary job.

And of course, you won’t be as worried in a year when stocks are down.

“Most wealthy families have real estate holdings because it offers recurring revenue, tax benefits and creates equity,” Johnson said. “It also puts less pressure on their stock portfolios to perform.”

The ultra-wealthy don’t get caught up in the latest fads, pouncing on the next “new” thing.

Take bitcoin, for example. The cryptocurrency took off in 2017, making instant millionaires out of some early investors. That spurred a lot of people to jump in and try their hand at making a fortune.

That could be fine — if you’re a professional trader or just want to play around with a little gambling money. Yet fads like bitcoin are risky business: The cryptocurrency has since fallen a stomach-churning 70% in the past year.

Warren Buffett, who is famous for his philosophy of investing in what he knows and then holding on to it for the long haul, told CNBC last year that “in terms of cryptocurrencies, generally, I can say with almost certainty that they will come to a bad ending.”

The legendary investor, who is worth $80 billion, according to Forbes, believes you have to know what you know — and stay the course.

“What counts is having a philosophy … that you stick with, that you understand why you’re in it, and then you forget about doing things that you don’t know how to do,” Buffett said at the Berkshire Hathaway annual meeting in 2018.

Those who are caught up in the “follow the herd” mentality may do so because they are focusing on “one thing they think can make them rich overnight,” said Johnson at Delancey Wealth Management. “It doesn’t work.”

Wealthy investors are patient and don’t necessarily think about short-term returns.

“Most people don’t sit down and actually plan out how they are going to invest their savings over the next 20 years,” Corey said. “The wealthy do. They just don’t wing it.”

And it’s not just about making money for themselves; it’s about creating generational wealth that can benefit their grandchildren and beyond.

“Instead of buying a painting for the living room, they’ll spend extra money for art that can appreciate,” Johnson said. “They join clubs and organizations so the relationships they make will offset the fees, even if they don’t realize it for several years.

“This demands foresight, estate planning and patience.”

The volatile stock market may make you want to run for cover. Because the rich are in it for the long term, they don’t tend to panic.

They also have a lot of liquidity and financial resources they can lean on when the stock market, real estate market or other investments go south, so they don’t “need” to sell, Corley said.

For Johnson, it’s also about the world giving us what we give out.

“Anxious investors receive anxiety, and confrontational people are always engaged in some form of conflict,” he said. Meanwhile, optimistic people experience more positive outcomes.

“Over a lifetime, this becomes a habit and you’ll often find that wealthy people who are happy got that way because they were optimistic, as opposed to becoming optimistic because they got wealthy,” Johnson said.

More from Invest in You:

  • Financial lessons a mother of two learned after an unimaginable loss
  • Two simple insurance charges to understand with health coverage
  • Josh Brown: How I explain the stock market vs. the economy

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.


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Capital – How the paparazzi make their money

Santiago Baez has been a paparazzo since the early 1990s. Camera in hand, he’s witnessed the fallout of extramarital affairs, new babies, deaths, new love and breakups of some of New York’s most famous residents.

For paparazzi like Baez, earning a living requires an encyclopedic knowledge of where famous people live in New York, as well as a network of drivers, and shop and restaurant workers who call in tips when they spot celebrities in the vicinity. Often, the tips are from the celebrities themselves via social media: looking to build a following, they alert the public (mostly directed at photographers) about their movements, or their publicist will call an agency to dispatch a photographer.

Most pictures aren’t worth much, but a shot of a new baby, a celebrity kissing a new paramour, or a wedding can change fortunes overnight.

But Baez’s income is not dependably constant. His success balances his training and knowledge of celebrities with the crushing awareness that his earnings are remarkably variable and unpredictable.

The ‘paparazzi gold rush’

These fortunes are determined by a handful of people like Peter Grossman, the photo editor at Us Weekly from 2003 to 2017. But Grossman didn’t work with paparazzi directly; instead, a photographer like Baez sells his pictures to an agency that has the relationship with photo editors like Grossman. A paparazzo receives anywhere between 20% and 70% of the royalties the picture earns, depending on the photographer and the deal he or she negotiated with the agency. The more senior, skilled, and talented paparazzi command better terms, which often includes exclusively selling their pictures to just one agency.

Exclusive shots that make waves in the world of tabloid news can command huge sums: Grossman told me he paid “mid six figures” for a series of photographs of the actress Kristen Stewart in a passionate embrace with Rupert Sanders, the married director of Snow White and the Huntsman, a film she had starred in.

Grossman lived through the heyday of paparazzi photography: he was the man behind the rise of “Just Like Us” pictures in the early 2000s – candid shots of celebrities doing mundane tasks like getting coffee or pumping petrol that proved a hit with his magazine’s readers. Soon, lots of outlets were publishing their own “Just Like Us” pictures, kicking off what’s known in the industry as the gold rush years, coinciding with the heyday of Paris Hilton, Britney Spears, and Lindsay Lohan.

At the gold rush peak, an exclusive ‘Just Like Us’ picture would typically fetch $5,000 to $15,000

Although the price of a photograph depended on what the celebrity was doing and whether it was an exclusive, at the gold rush peak, an exclusive “Just Like Us” picture would typically fetch $5,000 to $15,000.

The gold rush era brought about gold rush mentality, with many new photographers flocking to the industry, willing to break laws and giving paparazzi an even worse reputation for going too far and harassing celebrities and even their young children. Grossman urged everyone to take a coordinated step back, pay less for pictures, and not break laws or put themselves or others in danger to get the shot, but it didn’t work.

The global financial crisis and the rise of online media finally killed the gold rush. Digital media increased the demand for celebrity photographs but decreased the price media companies were willing to pay for them. Photo agencies began to consolidate or go out of business, and the remaining ones changed their business model. Instead of making magazines pay per photo, they offered a subscription service: publishers could use as many photos as they wanted to fulfill the greater demand for cheaper shots. As a result, paparazzi are paid a small fraction of the subscription fee; how much depends on how many of their pictures are used each month. That means an exclusive “Just Like Us” photo that would have fetched $5,000 to $15,000 before, now pays only $5 or $10.

Paparazzi are earning less and less. Gone are the days when many could count on a six-figure income. Now, getting a rare exclusive shot is necessary to earn big money.

Risky business

Seeing a celebrity often happens by chance, which is exactly part of the reason why Baez’s income is so volatile. Not surprisingly, Baez employs risk strategies in his craft similar to what people use in financial markets.

Financial economists separate risk into two broad categories: the first is idiosyncratic risk, or the risk unique to a particular asset. Suppose Facebook changes management; the future of the company is unclear, and the price of the stock might drop based on factors unique to Facebook that don’t impact any other stock. Idiosyncratic risk is risk that applies only to one individual stock or asset.

The paparazzi face lots of idiosyncratic risk. What a celebrity does today – whether she spends time with A-list or D-list friends, for example – determines how much the paparazzi earn that week. If a celebrity stops being interesting or popular, the value of these pictures decreases. Such images are like a stock: their value varies based on a particular photographer getting the right shot at the right time.

Photographers often form teams or alliances to share tips  to increase the odds they’ll be in that place

The paparazzi manage this idiosyncratic risk by spreading it around: photographers often form teams or alliances to share tips (on sightings) and sometimes royalties to increase the odds or payoffs they’ll be in that place.

Because each photographer bears lots of risk based on how lucky he is that day, an alliance pools their luck, reducing their idiosyncratic risk.

The second kind of risk is systematic risk, or risk that affects the larger system instead of an individual asset. Systematic risk is when every stock rises or falls together because the entire market surges or crashes as it did in 2008. Systematic risk events often happen because of a big economic disruption like a recession or an election result that people think will affect business. Systematic risks are harder to manage than idiosyncratic risks, and the downsides are potentially more dangerous. If the entire stock market tanks, you risk losing your job and stock portfolio at the same time.

You can see systematic risk play out with paparazzi, like the boom of the gold rush years and the crash when people stopped buying tabloid magazines during the recession. The downside of systematic paparazzi risk has become more severe in the last 10 years. It is harder for everyone to make money. Many paparazzi have left the business: after nearly 30 years of taking celebrity photographs, Baez moved back to the Dominican Republic in the summer of 2018, with his wife and son, to find new work.

Paparazzi – just like us?

The job of a paparazzo is riskier than most. But to some extent we all face some level of idiosyncratic and systematic risk in our careers, so we can learn a lot from these photographers.

The more systematic risk associated with your job, the more exposed you are

Suppose you want to change jobs from a safe, salaried support role to a sales job based on commission. Odds are you’ll earn more than you did in the salaried job because as a salesperson you will face both kinds of risk: it is a job with loads of idiosyncratic risk; for example, how much you earn will depend on your sales skills and the behavior of your clients (you can manage this risk by working in a team and having lots of clients). You will also face systematic risk because sales depend on the state of the economy.

Systematic risk is especially dangerous. In an economic downturn, your pay may be reduced or disappear entirely, it is likely to be harder to find another job, your assets might take a hit, and your partner’s income may be at risk too. The more systematic risk associated with your job, the more exposed you are.

Why we feel so much economic anxiety

The livelihood of the average paparazzo is threatened by major changes in the publication industry. The photographers manage idiosyncratic risk by forming unstable alliances, but the larger systematic risk that could wipe out their jobs is harder to manage. They could form a union and demand better terms from the agencies, but historically they struggle to cooperate with one another. And the paparazzi are not the only ones who face the risk that their jobs will no longer be viable.

One reason people seem to worry more about their economic future than they did in the past is that they sense more systematic risk in the job market. A few decades ago, most of the employment risk was idiosyncratic: conflict with the boss, a position that was a bad fit, a poorly managed company. If you lost your job, you could probably find another one just like it. Workers formed trade unions, banded together, and demanded better pay and benefits, confident that there was a need for their skills. The job market had its ups and downs, but risk seemed to be relatively easy to manage.

In today’s economy, systematic risk is more acute. There’s a chance technology – robots and artificial intelligence – could take over your job or at least require new skills you don’t have. If you lose your job during a recession, you may never find a similar one.

It is a larger trend that threatens everyone, but for paparazzi like Baez, the threat is more immediate. It is a risky business that is only getting riskier with fewer rewards.

This article is adapted from An Economist Walks into a Brothel by Allison Schrager, published by Portfolio.

To comment on this story or anything else you have seen on BBC Capital, please head over to our Facebook page or message us on Twitter.

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Want to get your financial house in order? There’s a monthly subscription service for that.

The same payment model that you use to cover Netflix and Spotify each month has arrived to the world of financial advice.

Charles Schwab recently announced it would start charging investors in its Schwab Intelligent Portfolios Premium service a one-time $300 fee for financial planning and a $30 monthly subscription.

Participating clients have access to a certified financial planner who can give them ongoing advice. Investors can then view and update their plan online as their goals shift.

The new subscription fee replaces an advisory fee of 0.28%, which was charged against the assets clients invest in the program. Clients need to have at least $25,000 to invest in order to participate.

“Having a set premium model with an ongoing subscription is the right solution for a given client,” said Cynthia Loh, vice president of digital advice and innovation at Schwab.

“These are clients who are looking for advice, particularly in pivotal moments in their lives, including getting married or having a baby,” Loh said. “They want to speak with an expert on how to better plan for their future.”

Individual financial advisors are also offering subscription-fee planning — and you can get it without a huge nest egg.

“It works really well for younger people who don’t have assets or who are looking to manage money on their own, and they want financial planning guidance along with that,” said Eric Roberge, a CFP and founder of Beyond Your Hammock in Boston.

Traditionally, financial advisors have charged investors about 1% of the assets they manage in order to pay for their services.

“If you have an assets-under-management fee model and your investments do well, your revenues go way up,” said Vanessa Oligino, director, business performance solutions at TD Ameritrade Institutional.

However, as the cost of investing has gone down — for instance, Fidelity launched its zero-fee funds last year — investors want advisors to justify their fees and provide more value than just their investment prowess.

“Most people at the wirehouses don’t want to help someone who is 25 years old, has $30,000 in a 401(k) and $1,000 in the bank.”
-Rockie Zeigler, CFP and founder of RP Zeigler Investment Services

“Advisors have to be much more articulate and deliberate in saying ‘Here are the financial planning services,'” said Dennis Gallant, senior analyst at Aite Group.

“There’s fee compression, the commoditization of asset management to some degree, boomers retiring and millennials moving up — all of this accelerates the solution toward advice,” he said.

That guidance includes budgeting, understanding employee benefits and investing in your 401(k), as well as advice amid major life changes, including marriage, having a baby and paying for college.

The amount you pay for a subscription-based relationship with an advisor could vary.

For instance, financial advisors who are part of XY Planning Network don’t require clients to have a minimum level of assets in order to work with them. They may charge a start-up fee, along with a monthly retainer fee.

“Most people at the wirehouses don’t want to help someone who is 25 years old, has $30,000 in a 401(k) and $1,000 in the bank,” said Rockie Zeigler, a CFP and founder of RP Zeigler Investment Services in Peoria, Illinois.

He charges his subscription-fee clients $500 upfront, plus a $150 monthly fee.

For that cost, clients get four to six personal conversations annually, ongoing communication with the firm, a twice-yearly review of their 401(k) plan and more.

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The level of interaction you’ll get will also vary based on your circumstances and the advisor’s service offering.

“Some advisors are very hands-on and meet monthly each year because they’re doing cash-flow coaching and it takes that intensity to learn how to build those savings habits,” said Roberge.

He charges an upfront cost of $2,000, and a monthly retainer of $200 for the first year of service.

In that time, Roberge builds a plan for the client, implements it over the year, and meets with the client about six times.

“In between, you have access to me if there’s something urgent and that can’t wait,” he said.

It’ll take some footwork to find the best advisor for you, but here’s where to begin.

• Vet your professional: Dig up your advisor’s details on the Securities and Exchange Commission’s website, as well as the Financial Industry Regulatory Authority’s BrokerCheck page. These sites provide details on disciplinary actions, state licensing and years of experience.

• Ask if your advisor is a fiduciary: Confirm in writing that your financial advisor is acting in your best interest and puts your needs before his or her own.

• Find out how they’re paid: Whether you’re selecting an advisor under the AUM model or the subscription-fee model, ask about how much you’re paying and how often will you pay your professional.

• Know what you’re getting: Whether it’s a set number of meetings, infinite access via phone or email, or a written financial plan with quarterly goals, understand the service you’ll get – and get it in writing.

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From Fixing Brains to Managing Money

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Make sure your kids grow up smart about money with these strategies

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Money is big, and it’s all around us.

Adults, who have learned from experience about irresistible sales pitches, can find it hard to make good financial decisions. Imagine what it’s like for a wide-eyed 8-year-old to confront a dizzying array of choices. We know what can happen in the future if we don’t save.

Is it reasonable to expect a first-grader to understand the future consequence of present decisions?

In fact, you can teach kids to understand money, whether they’re 3 or 13.

And who better than you to deliver these lessons? After all, the family is the first place most of us learn about money. Over a third of respondents in the Invest in You Savings Survey said their financial role model was a parent. Men had a slight edge as the go-to parent: 19% of participants said it was their dad, and 18% said it was their mom.

Thomas Henske, a certified financial planner with Lenox Advisors, likes this metaphor.

“Why do we expect kids to know how to handle money when we don’t put it in their hands to let them practice?”
-Thomas Henske, CFP, Lenox Advisors

Imagine your kid wants tennis lessons. You drop him off at the courts, but you’ve neglected to bring one critical thing: a racket. So the fundamental component he needs in order to learn is missing.

The same analogy can be said for money. “Why do we expect kids to know how to handle money when we don’t put it in their hands to let them practice?” Henske said.

Most kids don’t stumble on money on their own.

“They get to college, and lacking experience with money leads to disastrous results,” Henske said.

Kids often don’t understand how credit works, so they sign up for a credit card at a school event and use it to pay for a pizza with their pals.

“Unless someone has been armed with some basic financial knowledge, that can turn into a ruinous situation,” Henske said.

Needs vs. wants

One of the biggest things you can teach young kids is the difference between needs vs. wants.

Any 7-year-old can see the difference between ordering a $3 soda in a restaurant and drinking water, which costs nothing. “Drinking is a need,” Henske said. “Drinking Coke or lemonade is a want.”

Patti Valeri, senior wealth strategist at PNC Wealth Management, recommends cluing kids into family discussions about other expenses, such as a car or an upcoming vacation. “Having the conversation sooner than later is important, even if it seems like it’s over their heads,” she said. Let them hear decision-making around how you spend money.

Rethink consumerism

Some families take living large literally. Wendy Juvenal Mays, 48, a criminal defense attorney, is the mother of six. She recently retired her law practice to spend more time with her family. “I couldn’t be the best at both, so now I stay home,” Mays said. On the side, she runs a podcast for families about financial independence.

With eight in the family, almost everything needs to be supersized, from meals to vacation plans to the size of their car, which needs to accommodate more people. Food is a challenge, and Mays says that getting meals on the table means stretching the budget creatively.

“We have to really think about consumerism,” Mays said. When she was folding laundry, she noticed that all the kids’ jeans had holes. Previously, she might have run out to buy more. Now she says she’ll mend the holes and they’ll all make do with what they have.

A family of eight living on one salary means living on less while still finding ways to live large.

When Mays’ husband was asked to chaperone a school trip to Disneyland, he asked if he could purchase additional tickets at a discount so the whole family could go.

When a relative passed away, it meant the family had to drive 14 hours, because flying would have cost $3,500. “Those are the choices we have to make,” Mays said.

Take care of yourself

Working while you juggle responsibilities and manage to pay for day care is a challenge for parents of younger kids. This stage can seem as if it will never end, Valeri said. Care is expensive, and generally people are at an earlier career stage, so they are earning less money.

Even amid a busy life with small kids, Valeri said you need to look after yourself so that you can be there for them. “Make sure you put money away for retirement and take full advantage of anything available,” Valeri said.

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Take full advantage of the company 401(k) plan if you have access to one. If you’re self-employed, use an individual retirement account.

Check out your company’s health-care options. Even if there are just a few plans to choose from, understand all the terminology so you grasp how the plan’s co-pays, deductibles and co-insurance all work. If you have access and can spare some more money, fund a health savings account to offset future health-care costs.

Lay a foundation

Nicholas Hartford, 32, didn’t want his son to grow up with the same bad money examples he’d gotten from his father, who spent freely but ran into financial difficulties.

A field service engineer in Maryville, Tennessee, Hartford wants Skyler, 10, to understand money basics, from simple banking concepts to cost versus value. Spending can lead to a good outcome or to nothing at all, he said.

Both parents talk about cost and value in terms Skyler can understand. If a toy costs $20 or $30 but is likely to break within a few days, is it worthwhile spending that money?

For about a year the family has been holding regular monthly budget meetings.

Since then, Hartford has watched his son’s spending habits change.

“He wants things that have more value,” he said.

Some video games run as high as $60, and Skyler will look for ways to save up or earn money for these. He is more interested in cost and value.

Skyler can earn money doing chores, and he is tasked with managing the family’s $100 monthly lawn-care budget. When he wants something, his parents will ask him to look around the house to see what he can do — take out trash or do dishes, for instance — to earn the money.

“He will usually negotiate, and he understands that he needs to do something that helps out so he can get something.”

Hartford’s advice is to be patient.

“They’re coming from no knowledge at all on the subject,” he said. “We try to use basic terms and oversimplify things.”

Give an allowance

When it comes to how kids learn to handle money, the weekly allowance is critically important, Henske said — and he doesn’t believe in tying it to doing chores or getting good grades.

The allowance is a way to teach kids how money works, how to budget, how to plan their spending. “If you just give a kid money whenever he wants it, how does he learn?” Henske said.

When they are young, Henske recommends a dollar for each year, starting at age 10. They’d get $10. To parental objections that $10 seems like a lot of money, Henske asks parents to consider how much money they spend on their kids every week.

“Show me a parent who’s not spending $10 a week on their kid,” he said.

Learning about money and behavior are two separate conversations, and there will always be a reason to dock them. Use the allowance as a financial teaching tool and leave the emotions out of it.

Henske likes letting kids choose how to allocate money into three categories: spending, saving and charitable giving. Parents can match dollar-for-dollar or a percentage, depending on what matters most. To encourage kids to save, you could match by an equal amount. The spending jar generally does not receive a match.

“It’s such a personal thing,” he said. “A family might care more about donating time and volunteering than giving money to charity.”

Check out 4 Money Lessons Everyone Should Know by Age 25 via Grow with Acorns+CNBC.

Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.


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Savings mistakes to avoid at every age

Compassionate Eye Foundation/Natasha Alipour Faridani/Getty Images

It’s never too early to start saving. Learning the true value of money can never come soon enough. Whether you’re self-taught or have loved ones who can show you the way, making important savings steps is vital to your financial future.

To be sure you’re on the right track, learn from other people’s mistakes. Nick Holeman, CFP, a senior financial planner at Betterment, says it’s important for people to build good savings habits as early as possible — even in your teenage years.

“If you’re a parent with a teenager, this is a good time to open a joint checking account,” Holeman says. “Teach your teens how to manage money, budget and track their spending. Encourage your teen to open an IRA when they get their first job.”

Regardless of age, there are certain mistakes to be mindful of at every age.

Savings mistakes to avoid for 20-somethings

Graduating college and dealing with the burden of student loan debt can make you feel like you barely have enough to make ends meet, let alone stash money away. Dawn-Marie Joseph, president and founder of Estate Planning Preservation in Williamston, Michigan, believes an emergency savings fund is critical at this stage.

“Recently, I was working with a college graduate who is paying $500 per month in student loan repayment,” Joseph says. “Bills like this can be overwhelming and take your focus off the future. Building an emergency savings can help with the loss of a job or vehicle repair.”

Joseph recommends putting money into a savings account from every paycheck, even if it’s only $5 or $10. It will add up.

Holeman notes that putting off retirement savings can hurt, too.

“It might seem like it’s a long way off, but the time to start saving for retirement is in your early 20s,” Holeman says. “Is a 401(K) or other retirement plan offered by your employer? If not, open an IRA and start making that money work for you.”

Savings mistakes to avoid for 30-somethings

Life in your 30s is much different than your 20s. Your job might be a little more stable. Your paycheck might be a bit higher than it was a decade ago. Your goals might be different, too. Maybe you want to buy a home or expand your family.

“Supporting children is a big expense,” Joseph says. “You’re likely still paying down your education debt, but you’ll have to learn how to manage new expenses as well. This is when you’ll need to develop a savings habit.”

It might be hard to factor in the added cost of a child, but it’s possible once you budget for it. Restructuring your budget is important for any major change in your life, so research those expenses and crunch the numbers and figures beforehand so you’re not caught off guard.

If children aren’t in your plans, but buying a home or getting married are, you should still lay out a budget reflective of those lifestyles.

“Whether it’s a wedding, a house, a big trip or college for your kids, each of these goals has a different amount needed and a different time horizon,” Holeman says. “Decide which of these goals is most important to you and how much you have to save each month to achieve them.”

Instead of having a regular savings account, look into high-yield savings accounts. These are accounts that pay a higher annual percentage yield than traditional savings accounts. The best offers are more than 2.00 percent. Try to find accounts that charge low or no fees as well. The less money taken out for fees, the more you can save for the big milestones to come.

Savings mistakes to avoid for 40-somethings

Retirement feels closer than it did a few years ago. By now you may have a solid hold on your budget. You’re trying to save but might not be doing as well as you think you are.

“Your 40s are when your financial responsibilities become palpable,” Holeman says. “One of the biggest mistakes people in their 40s make is not countering ‘lifestyle creep.’”

Lifestyle creep is when you start to spend more as you earn more. While earning more money is great, that doesn’t mean you should overspend to keep up with the Joneses. Live within or below your means and save for major financial goals.

Those goals may include helping your children pay for college tuition, retirement or paying off your house. Instead of spending more, keep saving for your future or those of your loved ones.

Savings mistakes to avoid for 50-somethings

If you have children on their way out of college, do they know how to handle the financial responsibilities of adulthood?

“Take the time to have a serious discussion with (your kids) about what they plan to do after graduation,” Holeman says. “It’s great to help out your children, but you’ll want to make sure you’re not jeopardizing your own security.”

That means you don’t want to jeopardize your own retirement by helping your children start their own lives after school. Set clear rules and expectations. Continue to put as much away for retirement as possible. And use any extra money to make catch-up contributions to your accounts.

Holeman also suggests having the difficult but necessary conversation about death.

Estate plans provide a roadmap for important decisions regarding your health and assets, and generally cover two phases: before and after your death,” Holeman says. “By having one in place, you’ll remove any ambiguity around your wishes when it comes to protecting your family, loved ones and assets, in case you’re unable to do so.”

Savings mistakes to avoid for 60-somethings and beyond

Your best working years are behind you, but that doesn’t mean you need to stop working. But you should still plan ahead.

“At this age, the biggest mistake is underestimating your needs,” Holeman says.

Those needs won’t be what they were 10 or 20 years ago. Consider rising healthcare costs and downsizing your living space. Evaluating how you’re living or planning to live will impact your savings.

“In order to make sure your bases are covered, budget for the ‘boulders’ in your life — the large or recurring items you prepare for monthly, such as your rent, mortgage or car payment,” Holeman says. “Once that’s done, monitor your personal checking account for how much is safe to spend until the next month.”

At this stage in life when your income is more fixed or even reduced, it’s important to watch your budget closely, save for unexpected expenses and cut back on spending.

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