Cliff Notes: How to Invest your 401k with Kezia Williams

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but it's going to be completely revamped. It's gonna be a different situation. But Eyl University includes over one hundred past webinars weekly webinars, access to our movie club, access to our book club, access to our Facebook group, bi weekly real estate calls with MG the Mortgage Guy, and once a month financial planning calls with me. All of

that is included in the EYO University membership. So if you're interested, you can go to eyouniversity dot com right now and enter promo code eyl at checkout for forty percent off. Yeah. So four one K, right, this is the beginning of the year. The four one K is a lot of people's first way to start investing in the stock market. Right, most people actually the majority of their stock investment, or if they only they only have one stock investment, and that is the four one K. Right.

A lot of people don't have outside stock investments outside of a retirement plan. So what is your suggestion for people, young people or old people whatever that you know might have just signed up for the four one K or are in a four one K. What's your thoughts on allocation and things of that nature.

So like the Internet that you're using on a regular basis, you already know you was going to be scrolling through Instagram, following uy L following in, following a shot, following Troy following, like y'all said, all right, but you also use your Internet to run your business. Your cell phone, you gonna call your girlfriend, You gonna gossip about that guy you swipe right on and he showed up at the day a whole catfish. But guess what else? You're gonna use

your cell phone to call? Make business calls in order to generate business. Like when I started looking at the number of tax deductions that are available for your business, those number over four hundred deductions. If you're going on vacation but you're doing business for a certain percentage of time, that's no longer a business. I mean, that's no longer

a vacation. That's now business travel. So when I started to reorient my mind into thinking about what are the things that I'm gonna do anyway, you know, just as an individual, how can I reclassify that as my business, I was able to see how I can reduce the taxable income because you all talked about taxes being expensive. Taxes are expensive the more income that you earn, because the percentage that they charge in taxes increases along with

your income. With deductions, you're able to reduce that tax liability, and that's what deductions really afford to you. So that was I really liked how you all talked about that. In regard to the four O one K four O three B if you're working with a nonprofit organization four one K four three B TSP. If you're self employed, it is the IRIS the traditional ROTH, and we can

talk about that as well. The first thing that you want to do is you want to ask your employer, because the four to oh one K is an employer sponsor program, if they can match your contribution and how

much they match per dollar. So one of my employers match up to six percent of the salary that I was earning, so every single year, just like you said, Richard, they're going to ask for those individuals who want to contribute to the four oh one K, they're going to ask how much you want to contribute and how frequently, So you want to make sure that you ask those

critical questions. The second thing is the biggest mistake that I made, is I did listen to my mama because she told me listen at twenty years oh, you were going to be invested in your four one K, and I will tell her at twenty years old, I'm not thinking about retirement. I'm not thinking about retirement. But we know the benefits of compound interest. The earlier you get started, the more your money can go to work with you or work for you over the years. So my mom

started investing in retirement at thirty one. She thought if I could start eleven years ahead of her, then perhaps I could retire early. But for four one ks, you want to look inside whatever your employer has set you up with. Initially, for me, one of the biggest mistakes I made is I looked inside of my four one K late and I saw that nearly one hundred percent of my money was invested in money markets. So I

think I heard maybe Ian talking about it earlier. I came in maybe about ten minutes towards the end of the conversations. But money markets are not going to return as much as equities, So like my money is returning one or two percent a year. It took me like two years to check it. One or two percent a year. That's equivalent to your money be invested in a savings account.

Think about a four to one K. If you were active managing your funds, or you're critically thinking about what mutual funds you want to select, then you should be returning at least, in my opinion, at least that what the S and P five hundred is returning. So one

to two percent was too low for me. So I had to go inside of my four o one k, look at the mutual funds that my employer has selected for me, and then get smart, just like you all said informations on the other side of your fingertips, get smart about what mutual funds I thought we could perform better for me versus what my employer selected. What are some of the things that I look for. The first

thing is rule of thumb. You take one hundred and ten, you subtracted by however old you are right now, and whatever that resulting number is is the percentage of equities in which your mutual funds should be invested.

the different asset classes that are available to you. So I heard Ian talking about bonds. You can do real estate, you can do a mixed fund. So like, you want to take a look at what's inside of that fund. Next, you want to take a look at your mutual fund. What is the expense ratio? Because over time, the higher the expense ratio is, the more expensive it is to keep that particular mutual fund. I recommend that the expense

ratio be one percent or fewer. Okay. Expense ratio is what fund managers charge you to pay them to actively manage the investments within your mutual fund portfolio. Okay, so that's one percent. You take that one percent and you multiply it by the money that you have invested in that account. It's important that you understand what type of equities are in there. So you may look at like what is the type of fund and may say things like large cap, mid cap, small cap. I believe Ian

was talking about this earlier too, so large cap. Those are the large companies that you definitely recognize their names. That's the Amazon's.

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black swan event. No one could have predicted that we would be in the middle of a health pandemic, right, a health pandemic that nobody could have anticipated. And those companies that were able to serve our needs while we stayed at home, which is why they call it stay at home stocks, were able to experience tremendous growth. Okay, so MidCap MidCap, and then you have small cap companies and so those are small capitalized. That's what that CAP

stands capitalized companies. Okay, so you want to take a look at that. Not everything that I take a look at. When I'm looking at mutual funds, I'm looking at the sectors. So you know, there's eleven sectors in the stock market, Like, what are the top three to four sectors within that fund? Again, one of the things that I loved about with Ian said he said, hey, these were the top three performing sectors for twenty twenty. Technology? Was it communications? Consumer discretionary.

Get comfortable in figuring out what exactly does that mean? And guess what Google is? Your friend on the other side of your fingertips again, is information. Don't swim in the ocean of knowledge and drowning ignorance. When we talk about technology, that's the Apple, that's a Microsoft, that's a Google. When we talk about consumer discretionary, that's home depot. Y'all was in y'all house, fixing your closets, painting your walls,

making your house look pretty. That's McDonald's. Were not going to negotiate if you should be eating them chicken nuggets. But let me tell you, some people got tired of cooking. They went right on in not drive through. That's a consumer discretionary category. Communications. Everybody was watching Netflix, Disney plus the introduction of five g's, So that's Sprint. I ain't gonna talk about y'all Sprint, folks, but the call always

drops somewhere. Communications sectors. Be smart about the sectors. What are the companies that you're patronizing that you're spending your hard earned dollars at during the pandemic after the pandemic, pre pandemic, Be smart about the sectors. What are the sectors that underperform? Energy? Why? That's oil, right, that's oil. You can't love Tesla and be pro energy too, I mean that's clean energy. You know something you're looking at energy?

You know you're taking the planes have been grounded? What do they require fuel? Right? When we're talking about cars, some of you aren't commuting to your nine to five. You're nine to five. You're not driving from your house to your job. You walk in from your bedroom to your living room. Okay, so you're not putting as much fuel in your car. Energy sector underperform, right, So like that's raking low. So you want to take a look at those sectors and you want to see if that

makes sense. What are some companies that are part of those sectors? And then I look at the top ten holdings within that mutual fund, because I think it's important you know one of those top ten holdings, how they performing. And then the last thing that I'll say is that, yes, I read the prospectives. That's important. You should always read the prospectus. Yes, for some of you all it's alone. But if you can sit and you can watch Netflix and Binge, watch it for three consecutive days and text

your boot, you can read the prospectus. But I also look at the benchmark, because the benchmark is what the fund manager said that they were going to this particular benchmark. I'm going to perform at or better than this benchmark. What is a benchmark? The guys talked about it on EYL. That's why y'all in here, right. So like that might be the S and P five hundred, five hundred publicly traded companies. That might be the Russell two thousand, you know,

is it a Wrestle two thousand growth? Is it a Wrestle two thousand value? It might be the Russell twenty five hundred, It might be the Russell one thousand. This benchmark. If you look at and this is a key that I do when I'm teaching my classes, I go to markets ft dot com. Or if you have a tarmac with Fidelity, or you know whatever, wherever your four oh one K exists, going there, maybe they have some resource tool.

But I go to marketsft dot com, I type in the stock symbol and I click performance, And when you click performance, it will show what was the benchmark for that particular mutual fund and at what percentage did it return five years ago, three years ago, one year ago, six months ago, three months ago today, if the stock market was open that day, Okay, it might be fifteen percent, twenty percent. Right, Let's say five years ago was fifteen percent,

three years ago was ten percent. Then you're gonna look at your mutual fund and you want to see how well those fund managers put the expense ratio. Did they charge you that one percent that point zero five percent to work? If their benchmark was fifteen percent. If Russell one thousand return fifteen percent and your mutual fund returned six percent, they didn't even meet their benchmark. That means

they set a goal that they couldn't even meet. And if they couldn't meet their goal five years, three years, two years, one years, what makes you think that they're gonna meet the goal today? So when I look at the mutual fund, I always look at that benchmark, and I'm always looking at the mutual fund and seeing if that percentage is higher than the goal that the fund

set for itself. And that's important to look at performance long term because, like Eyl said, twenty twenty was an amazing year for those people who got smart and got active in the market if you could afford to invest right those returns. Some of these mutual funds were returning twenty thirty forty fifty percent. We probably cannot anticipate that that's gonna happen in twenty twenty one with the introduction

of the vaccine. But if you look five years, three years, two years ago pre pandemic, you can see how those fund managers were managing that account apps in COVID and that could be a future indicator for their performance moving forward. Well, what's now to cut you off? What's the mutual fund or top two that you like? Because I know they're gonna kill us if we don't ask. I like the Fidelity blue Chip Growth so I believe that that is write down the stick to stock TI for that. But

that's Fidelity blue chip Growth. And then I also like B and Y melon small big cap, so that's d B max so d B m A x dB max. Okay, so those are the two that I have.

I just I just want people to fully appreciate the level of education because that was a lot a lot of gyms. Sometimes that you give people so many gyms, it's just like they don't fully understand what's what's being given to them. Now was like a full blueprint of actually how to break down fun.

about the investment language, they're all very similar. So you can use the same the same thing in individual stocks with your brokerage, investing for your kid, doing an IRA for one K. It's all very similar.

States Secretary of Homeland Security. Under President Trump, attempted illegal border crossings are at the lowest levels ever recorded, and over one hundred thousand illegal aliens have been arrested. If you are here illegally, your next you will be fine nearly one thousand dollars a day. Imprisoned and deported, you will never return. But if you register using our CBP home app and leave now, you could be allowed to

return legally. Do what's right. Leave now. Under President Trump America's laws, border and families will be protected.