S3 E1:💰How to Be a Rich Old Lady with Amanda Holden
EPISODE SUMMARY
You've done the foundational work. You know what your life costs. You're chipping away at debt, you've got a little cushion building.
So what comes next?
For a lot of us, investing is the part that feels locked behind a door someone else has the key to. Too much jargon. Too much math. Too many men in quarter-zips talking about the market.
In this week's episode of the Money Healing Club podcast, Rachel sits down with Amanda Holden, author of the instant bestseller How to Be a Rich Old Lady. Amanda has a real gift for making investing feel approachable instead of intimidating, like a friend walking you through it at the kitchen table.
They get into why investing is the bridge from surviving to thriving, the real story behind your 401k, and how to start even if you're self-employed and not sure you're "the investing type."
💬 "It is completely made up. None of this is natural." - Amanda Holden
Key Takeaways:
Foundation first: emergency fund, then high-interest debt, then investing. You can live in that foundation phase for a while, and that's okay
If your job offers a retirement match, that's not free money. It's part of your paycheck, so go get it
Pull two ideas apart in your brain: the account is the container, the investments are what goes inside it. Opening a Roth IRA isn't the same as actually investing the money in it
Time is your best asset. Investing is slow, tree-growing stuff, not week-to-week panic-checking
The jargon is intimidating by design. It got kept by the old boys, and it's still something you can learn
An index fund holds a little of everything, so one company tanking doesn't tank your whole retirement
Self-employed? A Roth IRA is a great place to start, then a SEP IRA or Solo 401k as you grow
You can't shop your way out of capitalism by skipping your Roth IRA. Opting out usually just hands the problem to another woman in your family
About Amanda Holden: Amanda Holden is the founder of Invested Development, where she's taught over 25,000 students, mostly women, how to invest. She studied economics and communications at UCLA and worked in investment management before becoming a leading voice on women and money. Her debut book, How to Be a Rich Old Lady, came out in January 2026 and was an instant national bestseller. Online you'll find her as Dumpster Doggy, bringing her activism and her signature trashioned outfits.
⏰ EPISODE BREAKDOWN
04:00 | From Surviving to Thriving Why a financial foundation comes first, and where investing actually enters the picture.
10:00 | The Match Isn't Free Money Emergency funds, high-interest debt, and why capturing your employer match is part of your compensation.
17:00 | The Caboodles Metaphor The reframe that makes the whole thing click: the account is the container, the investments are the treasures inside.
34:00 | Index Funds, Without the Jargon What a fund actually is, why you don't have to pick winners, and how owning a little of everything protects you.
💌 Connect with Amanda Holden
📱 Instagram:dumpster.doggy
📚Resources Mentioned
How to Be a Rich Old Lady by Amanda Holden (available wherever books are sold, and through our bookshop.org link that supports small bookstores and the podcast)
Brokerages to open an account: Charles Schwab, Vanguard, Fidelity
Automated investing services: Betterment and M1 (great if you want it handled for you, with M1 offering a bit more control)
💬 Join the Conversation
What's keeping you from starting to invest? The jargon, the fear, the feeling that it's just not for you? Rachel wants to hear about it.
Click the big orange button on our site right from your phone or browser and let her know: https://www.moneyhealingclub.com/podcast
💝 Support the Podcast
Help keep the Money Healing Club podcast going! If this show has helped you feel less alone or more grounded with money, please consider contributing here: https://buy.stripe.com/4gMdRb3Nc9ZKfpM2MQd7q0b
🎧 Your next listen:
If this got you thinking about what wealth really means to you, head to What Does "Wealth" Really Mean for Your Money Story? w/ Nicole Cloutier. Rachel takes the guest seat for a conversation about how wealth differs from rich, the baggage we inherit around wanting more, and how it might simply mean having your needs met and having options.
https://www.moneyhealingclub.com/podcast/s2e43
🎙️We're a proud member of the Feminist Podcasters Collective where creators like me are uplifting diverse voices and driving meaningful change.
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💰 How to Be a Rich Old Lady with Amanda Holden
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Amanda Holden: [00:00:00] it's a little bit of a misunderstanding to think that like- And I think that the word, it's like the word investing that really throws us off. It makes us feel like that's the, the only way in which like we're really investing in these corporations when in reality, the, the two primary ways that we invest in these corporations is by providing them our labor and buying their products.
Rachel Duncan: Okay. I- can we pause there?
Welcome to The Money Healing Club podcast. I'm your host, Rachael Duncan. I'm a certified financial therapist and art therapist, and I founded The Money Healing Club. It is just the best online space to find financial therapy resources. Just a reminder, this podcast is for informational and entertainment purposes only.
It is not a substitute for mental health care, financial or tax advising. Please do your own research and find professionals that can help you with your particular situation. So you know, we can talk about how we spend, how to spend less, how to save, how we borrow money and pay it back, and how we have feelings about money and relationships and [00:01:00] attachment, and all this beautiful stuff we talk about in this podcast usually.
And doing all those things, you'll probably see some real progress with how you approach money, how you feel you have a more positive relationship with it, and even improved bank balances. That's all really great, and it's really foundational stuff. But then what do you do next? The next phase really truly is investing when it comes to money and building wealth.
And so I'm really excited to introduce to you, if you don't already know her, the one and only Amanda Holden. I'm so excited she's coming on the pod. She's coming to talk about her debut wonderful book, How to Be a Rich Old Lady, and you do not need to be a lady to benefit from this book. In this conversation, Amanda's going to share with us how to do just that.
And it's not through leaning in. It's not through being a girl boss. If those work for you, that's great, but Amanda's gonna talk us through boring, old investing in index funds in your [00:02:00] retirement accounts. So if you're unsure if you can actually understand investing, if you have felt left out of those conversations, if you feel there are barriers to you participating in your own retirement, this conversation is for you.
I think you're gonna find the whole idea of investing actually a lot more approachable after listening to Amanda teach it today. Amanda Holden is the founder of Invested Development, a financial literacy business through which she has taught over 25,000 students, mostly women, how to invest. Before becoming a leading voice on women and money, she earned degrees in economics and communications from UCLA and worked in investment management.
Her book, How to Be a Rich Old Lady, which came out January 2026, was an instant national bestseller. She's known online as Dumpster Doggy, which is a story she explains in the book, and Amanda shares her activism work in her signature trashoned outfits. Look for her book wherever books are sold, and we have a special link to [00:03:00] bookshop.org, which is a great online bookshop that supports small bookstores and the podcast.
That's linked in the show notes. So let's talk about what we don't usually say when we talk about investing and retirement with Amanda Holden
Rachel Duncan: Welcome to the Money Healing Club podcast, Amanda. Thank you for being here
Amanda Holden: Thank you for having me, Rachel
Rachel Duncan: Okay. So Amanda, tell me how do I become a rich old lady, please? are my, what are my five easy steps to becoming a rich old lady?
Amanda Holden: Oh my gosh. Well, this is an answer that only took me about 280 pages to outline in my book.
Rachel Duncan: Mm-hmm
Amanda Holden: That is the question at the, at the, the core of the work. And so tell me, Rachel, do you really want to take some time to walk through some steps as outlined in the book?
Rachel Duncan: I really do. I mean, it's all I do anyway is talk to people about their money, and I also very [00:04:00] proudly walk the talk, you know? So yes, please.
Amanda Holden: Sure. So I think it's probably helpful to understand that my book, How to Be a Rich Old Lady, is a book on investing. So it's a manual on, you know, not just building your financial life, um, you know, the idea of survival in mind, which it's, it's also that, but it's, it's going from surviving to thriving. And so part of the reason I wanted to write this book is, well, first of all, my background is in investment management, and so it is my area of expertise.
It is also a field for which I feel like there is just a lot of miseducation, misunderstanding, misconception. Uh, and so I wanted to write a book, and, and really the way that I thought about it is like, "How do I write the manual that I would want to hand to my girlfriends?" Or perhaps, you know, I'm getting older, my girlfriends' daughters.[00:05:00]
Rachel Duncan: Mm-hmm
Amanda Holden: And, and so what that means, what we're left with is a book that is predominantly focused on growing wealth as opposed to, you know, for example, um, finding some stable ground or, um, getting out of poverty, which are also very important and essential steps to becoming a rich old lady. But because I am just inherently limited by the amount of words I'm able to pack between the front cover and the back cover, really this is my focus.
I bring all of that up to say, y- no matter what, still the, the, the first step for anybody is building themselves a financial foundation. And a financial foundation is really, again, like, y- you could call it a financial foundation, you could call it financial security, but it's feeling like you are getting from month to month [00:06:00] with, you know, maybe the word's not e- ease, but not worrying about going into the red every month.
That's the first goal.
Rachel Duncan: Yeah
Amanda Holden: so a- achieving some, some financial stability is the first step. Now, that's a big step unto itself, and
Rachel Duncan: And we can be there f- yeah, we can live there for a while, and I think that's also, like, where people come to me, that's a kind of... I often say, like, I, I help people with the zero to one because in my lane, in my training, I, I, I really, I don't talk about investments specifically, you know, maybe more generally.
But like, okay, like maybe we're starting with what is money? And like, what does my life cost? I do think those are some important ones, but it doesn't stop there. Those are important, but then what I really love in- about your book, and like, okay, but that's to get the foundation, and then to actually grow wealth, then i- investing has to be in the picture for you to grow wealth
Amanda Holden: Yeah , Absolutely. And we can talk a little bit about the mechanics of it and why that is the case. But, but really that first [00:07:00] step is-- And so maybe even like let's just say the first step is meeting with Rachel
Rachel Duncan: Thank you. Or someone like me.
Amanda Holden: and, and healing your relationship with money, and educating yourself about financial literacy.
People always want to, like they wanna know, "Okay, like what's, what's the best investment?" You know, what's like-- Okay, well first like let's even talk about like, like what is it that you are trying to accomplish? And often where we get to is like this understanding of like, "Well, the, actually the first thing I want to accomplish is I wanna feel safe from month to month."
And so if that is the goal, which I think is a pretty standard or universal first money goal, um, at least from a personal financial planning perspective, right? There may be other types of like, you know, heal my relationship. That might be the true first goal. But if we're talking about from a personal financial planning perspective, the good news is that y- for pretty much everybody, the advice is the same.
[00:08:00] And I know that we're all special snowflakes. We've all got our own personal goals and things that we want to accomplish. But then again- Everybody's gotta pay their bills. Everybody's gotta cut their toenails, right? Like, we actually share more in common than we don't. And so first steps are opening up an emergency fund where you start saving money that is designated for emergencies, and you try only to touch it in the event that you have an emergency.
Now, if you are somebody where money is piling up in your checking account because you have a little bit of a surplus each month, and in your mind that is money that you would use if you had a month where you needed to use it, well, congratulations, you have started your emergency fund
Rachel Duncan: There you go.
Amanda Holden: There, you did it.
Money piling up in the checking account really is most people's first emergency fund. We can make it official by putting it in a bank account, like a high-yield savings account or, you know, an account at your credit union or wherever it may be, where it is designated for savings. And so just building [00:09:00] yourself some sort of cash cushion, that's a really great first step.
The other next step that is often paired with building em- an emergency fund is paying off high-interest debt. And the reason that that comes next is because there's just... Well, first of all, you're pl- paying an exorbitant rate of interest, and, and there's really no way that you could invest your way out of the interest you're bleeding out in credit card debt.
And so if the goal is ultimately to build wealth, then eliminating credit card debt as much as possible so that you ultimately get to the point where you're able to pay it off in full each month, that's a next step that we can integrate. And again, we're still talking about this first initial step of building a financial foundation.
Now, of course, there is a little bit of flexibility built into these steps. For example, if you are somebody that happens to get a match Through your 401k at work or your workplace [00:10:00] retirement plan, so that's when, you know, your employer gives you money, but you usually have to trigger it by putting money into your 401k first.
That's the match element. Oftentimes, what you can get out of your employer is a 100% match for some of the money that you put in. That's a 100% immediate return on your investment. So if you put in 5% of your income, they may match that at 5%. And so all of a sudden, 10% of your income is going into your 401k.
Again, that's an immediate 100% return on your investment, which trumps even, let's say, a 23% rate of interest on your credit card. And so if you are somebody that is lucky enough to have a match through work, us self-employed sweeties, we don't get those. I mean, I get an employ- I get an employer match, but the employer is me.
And so both the employee and the employer is me. Luckily, my boss [00:11:00] is so nice.
Rachel Duncan: Sometimes. I know sometimes I'm like, "I don't know about my boss. Like she's pretty unreasonable."
Amanda Holden: I know, she's so cute, but maybe a little bit too hard on her employees.
Rachel Duncan: And you know what I love you saying your, in, in your book, you know, 'cause I, I've heard it out there like, "Oh, well, you know, it's free money." And you're like, "It ain't free money. You're working for it. It is part of your compensation," right? So let's, let, let's not think about this as free money. If you do, if that program is offered, it is part of your compensation, so like let's get after that.
So right, you're saying if you, if any of us are in a situation where there's a retirement program included with your work, that would be good to be included even if you're also paying down debt. Don't wait to pay down debt if you have that option
Amanda Holden: Yeah. And, and it all kind of depends, right? Like I, I could also imagine a scenario where, you know, somebody is really, really struggling to get by even with their corporate job because that's just the nature of things in the United States of America currently, and [00:12:00] there is just no money to go into the 401k, even if there is a match.
And if that's you, that's okay, but in general, one of the very first moves we want to make when we're able is, yes, pay off high interest debt like credit cards, but also if you can, make sure you capture that match. Yeah, like you said, Rachel, that is money that is technically contractually obligated to us, and so it's not necessarily free money, but you are, you know, essentially giving your employer free labor if you do not
Rachel Duncan: Great
Amanda Holden: capture your entire, the entire amount that is owed to you in terms of both compensation and your retirement match.
And so those are really great starting places. If you are somebody where you feel like your debt is Like under control, and by that what I mean is like we're talking about high interest debt right now, but maybe you're somebody and you've just got a student loan or you've got a mortgage.
Rachel Duncan: Car loan
Amanda Holden: the, a car loan, exactly, and maybe the rate of [00:13:00] interest on that loan is not so high.
Maybe it's like a six or a seven or an 8%. We don't love paying that rate of interest either, but it's, you know, maybe it feels like the debt is under control. It feels more like a bill than anything else month to month. And if and when you make it to that point, my recommendation would be to swiftly move to integrating investing into your strategy and specifically investing for retirement, which I know retirement's so far away, it's so hard to make it a priority so early in this process.
But it is also true that saving enough for retirement, it's, it's going to be probably the, the biggest expense of our lifetimes. Because if you think about it, right, like think could you walk away from work this year with no income? Most people could not. And what we are talking about when we're talking about retirement is [00:14:00] potentially walking away from work for 20 or 30 years.
And of course we hopefully will have Social Security at the time, but we also might not. And even if we do, it will not be enough. And so we're talking about needing a lot of money to help care for ourselves in our old age, and it is such a big job that the best way that we can do it is just to start as soon as we're able so that we can take advantage of what is probably the strongest tool that like any regular person has to make this happen, which is the compounding returns that you can achieve through investing.
And I don't always love to open up with compounding returns. Like, to me, esoteric math is never going to be what motivates me personally, and I wouldn't expect it to be what motivates the next person either. And so instead I kind of start with this avatar of like what are we working for? Who are we working for?
And who we're working for is this future version of ourselves, and it just so happens to be [00:15:00] that investing is one of the tools that is going to help us to get there. And the sooner we get started, the lazier we can be overall
Rachel Duncan: Which is what we want, y'all. We wanna be lazy rich old ladies, okay?
Amanda Holden: And like, you know, maybe not lazy in our aspirations, um, for our lives, but certainly like lazy in terms of the amount of time that we're willing to commit to learning to invest.
Rachel Duncan: So, you know, I use the metaphor of gardening a lot with investing 'cause I think, I think the metaphor really holds up. Um, you know, the weather is kind of the market. Like, we can't control the weather, but you can control what you're growing. And how time is one of the, is such a significant aspect of gardening, and I think investing.
And I think we could pull away from the jargon of, like, compound interest, where it's like your best asset is time, right? For these things to kind of simmer and grow. And I mean, this is always assuming, right, that growth is always gonna be, you know, upwards in general. But, like, [00:16:00] I've lived in this house for six years, and just this morning I was looking outside, and my neighbor has these two trees in his front yard that he planted for his son and his wife.
It was very sweet. And they were baby trees when we moved in. And six years later, they are, like, full-ass trees. I was just thinking like, "Oh, whoa." Like, when did they get so big? But, like, also that, that's kind of the point, right? You, you put into this fund and, you know, if you look at it week by week, you'll get freaked out, right?
Because there's downturns and stuff. But you back up and it, it's like a tree. It's a long, slow growth. And then, and then you have this m- like more established thing when you're ... This is all idealized, of course. But when it is time to pull from it. Because I do think time is our best asset if we have it.
Amanda Holden: Yeah, absolutely. It's witchy stuff, and the, and I actually use that exact same tree analogy in my compound returns chapter
Rachel Duncan: Oh, perfect. Exactly. Exactly. Yeah, and it's, it's really, it's really true. Okay, so we're kind of balancing here, you know, where [00:17:00] first just, like, financial foundation. What does my life cost? Can I have something to work with? I'm gonna use that something to work with to pay down high-interest debt, or we would call, like, un- unsecured debt, stuff that's on credit cards.
other types of debt that are, um, secured debt, right? It's often because there's an asset or there's some other factor that's keeping the interest low, like student loans and, uh, car loans, mortgages, things like that. Those are, depending on what that rate is, less of a priority to pay down so quickly. If those are there, I'm with you.
Treat it like a bill. Just treat it like a bill so you can get some of that extra money into the market. There's a lot of different ways to do that. Not everyone has 401ks. Do you wanna talk about, like, you talk about suitcases. There's different suitcases you can get. Do you wanna talk about that real quick?
Amanda Holden: Sure, but maybe first we should talk about the caboodles.
Rachel Duncan: Oh, okay. Caboodles. Yes, we should talk about Caboodles
Amanda Holden: I know, my editor was like, "You have so many metaphors about things inside of things." I was like, "I know, but we need multiple different metaphors about things inside of things."
Rachel Duncan: you know [00:18:00] what? The millennial audience is like clicked right into those things. Yes.
Amanda Holden: Yeah. So, you know, uh, very generally what I call it is investing for retirement, but of course there are multiple steps to investing for retirement. And what I will say is that with investing, the learning curve is very much upfront, but the goal is to get this set up so it's happening automated, right?
Like, I think what I say in the book is like, "Babe, like, let's get your shit set up so you can get your ass outside, because life is meant for living. It's not meant for checking your, investment balances every, every 15 minutes while ignoring your precious loved ones." That's not the point.
And so it, it, it, it is unfortunately v- a very jargon-filled process, and you are learning this whole new language of investing. And so you almost have to treat it like learning a second language or like learning a, a foreign language, which is to say [00:19:00] that when I start rattling off jargon, if it's the first time you've heard it or if you're unfamiliar with it and it doesn't make sense or it doesn't stick, yeah, that's kind of how it is when you learn a, a new language, this like totally make-believe language.
And so
Rachel Duncan: and to pause, I also think it's what, especially for women, makes us feel sometimes distanced from the whole financial thing, 'cause like I don't know what those words are. And that, that's also by design, right? This is patriarchy at work. Like, here's some words. Oh, if you don't know them, that's on you.
It's like, well, no one ever taught me these words. And I think what's so important about what you're saying is like, they're also just words that you can learn. Like, there isn't- it's not that complicated. Like, the basic stuff, like the stuff in your book, like you do not need to have special skills. It does not involve math.
It really doesn't. It is a set of information and terms that you might not know, and it's been kept by the old boys, and that sucks, and we're sorry, and it's absolutely something you can learn. It's actually not that hard, 'cause like boys do [00:20:00] it, so like it's not that hard, right? If boys can do it, you can totally do it.
Amanda Holden: Yeah, and it's, it's, it's super intimidating stuff, and I cannot stress this a- enough. It is completely made up. And so none of this is natural. It's not
Rachel Duncan: Well so is money
Amanda Holden: I know, and so it's not like it's like natural, like you can tap into your intuition and know, know what it is. It's just rules and, and, and laws. And so h- okay, so here's how I would start.
What I would do is I would pop these two ideas apart. So there is the account that you invest inside of, for example, a retirement account, and then there are the investments inside . So the, these may be funds that hold stocks or bonds, okay? And so
Rachel Duncan: Here, I have a visual, right? We've got like the container. That is the 401k or the Roth IRA or whatever it is, and then you have the investments as like the water or your bevy inside
Amanda Holden: Exactly. And so the example that I use in the book is that the retirement account, so let's say a Roth [00:21:00] IRA if you're opening it on your own; let's just use 401k as a shorthand if you've got a plan through work. Of course, there are many, many, many more different types of retirement accounts because they would never make it easy on us, now would And so the 401k or the Roth IRA, that is the Caboodles. And so for anybody that is not an elder millennial woman or gay man, let me explain to you
Rachel Duncan: a caboodle?
Amanda Holden: what a Caboodle. So, when we were growing up, a Caboodles was this like... It was like almost like this double-decker treasure storage unit, and it most commonly came in like, like maybe like a purple and teal version.
There was also like a very sophisticated light pink and light blue version. But it is a container for which you held all of your girlhood treasures. And so
Rachel Duncan: and you know what it was? It was a tackle box for 12-year-olds. Exact same design. It was a tackle box. Yep.
Amanda Holden: Exactly. And so of course, the caboodles [00:22:00] itself has some magical properties, and we can talk about those and, like, basically, spoiler alert, you get s- tax benefits when you're investing inside of a retirement-specific caboodles inside of your, your Roth IRA, inside of your 401k. And so there are some magical properties to the caboodles, but at the end of the day, it's still just kind of is-- it is just a storage unit.
It is just a storage u- It's a, it's a glorified storage unit for your treasures.
Rachel Duncan: There's no makeup in it yet. There's no nail polish in it yet. It's just the caboodle
Amanda Holden: No. No, no. And so let's say you open up a Roth IRA at Charles Schwab, you hook it to your checking account, and you send in $100 a month. You think you just invested, but you did not Because that money then goes to sit in cash inside of your Roth IRA.
The Roth IRA is just the bank account. It's just the caboodles. Okay? And I will get a little bit more specific here to say [00:23:00] that the Roth IRA of it all, or the 401k of it all, really what it does is it tells us how the investments inside will be taxed. And so it is a bank account, a fancy bank account, that can hold cash and can hold investments, and the fact that it is also a retirement account, that tells us how the investments inside will be taxed.
And we can come back to that, but you can also just, if you want, take me at my word that if you invest well and if you invest for a long time, you are getting a tax benefit as compared to w- if you were to invest in, like, that regular degular brokerage account, that regular degular tackle box, right? Like, that boring green t- tackle box that was, like, Grandpa's, right?
And so it's-- You're getting a tax benefit when you do the investing, the long-term investing inside of it. Okay? But even still, you put the $100 in, it goes... it sits in the Roth IRA. Now we're moving to step two, because [00:24:00] remember I said pop these two ideas apart in your brain. There is the account. That's the Roth IRA, that's the 401k, that's the brokerage account, that's the caboodles.
And next, we are moving to the second and distinct piece that is investing the money. So taking that cash that exists inside of that account and actually using it to purchase investments. Now, when we are talking about investing inside of a retirement account, we are most commonly talking about buying stocks and bonds.
Now, you probably won't buy-- Or you, you know... Most of us won't buy stocks and bonds individually. We will purchase funds that hold stocks and bonds. But let's pause there, because I want to complete my caboodles metaphor before we get into the, the d- like, the distinct differences between the two, or between these, these different pieces of terminology, to say that the investments, the funds that hold [00:25:00] stocks and bonds, the stocks and bonds themselves, these are going to be the treasures you keep inside the caboodles.
And so like you said earlier, I don't... I think you said maybe your nail polishes. I loved a teal nail polish growing up. You know, your tie-dye scrunchies, your, your Dr. Pepper Lip Smackers, your Lisa Frank stickers, right? These are the investments. These are the treasures that you hold inside the caboodles.
And so if you are investing on your own, for example, our friend that opened her Roth IRA, it is going to be up to you to choose, pick buy those investments yourself. Okay? Now, if you've got a workplace retirement plan, part of the benefit of that is that the investing is almost always done automatically for you.
Now, that doesn't put you off the hook totally. I still encourage people to know exactly what is going on inside for a lot of reasons, right? This is our [00:26:00] entire financial future that we're talking about, and we should know what it's being invested in
Rachel Duncan: I remember when, when I, I, I actually helped set up a 401at my old work before I went to grad school, which I'm so grateful for 'cause it was like, I was like 28, and the owners were like, "We wanna set up a 401. Figure it out." I was like, "Okay." And I did not know what I was doing, but I was so glad 'cause not only did I learn a lot, it was also like, oh, you know.
It was, it's, it's a, it's a thing. It's, it's definitely a program that the company puts on. We had to do a lot of research and stuff. And then a representative from the fund came out and, like, educated us, which was incredible. And it was kind of like when you go to a nice restaurant and it's a prix fixe menu or, like, a limited menu.
They're like, "Here are the 12 or 20 funds," I can't remember. Like, it was kind of limited, but I also really appreciated that because I wasn't as overwhelmed with choices. And in- included in there were, like, target date bonds or total stock market, right? There was just a range, but it was a little bit more, you know, pared down, and that really helped, like, make the decision and at least get started.
And then, yeah, once I chose [00:27:00] one, then it was just like, okay, and then this portion of my paycheck forever would just go into that one. But the, I did need to select. There was a, like, there was the selection part, which was very important.
Amanda Holden: Yeah, and so the, the evolution of the 401k has been kind of interesting. So, you know, they, relatively speaking they're, so they're still pretty new. We saw a move away from pensions into 401ks, unfortunately, en masse in really like the '90s and the early 2000s.
Rachel Duncan: And
why is that? Can you actually back up? I really appreciated your bit of history in there, 'cause it's like, oh, that made sense, but I'd never had it explained. Why was it? Why did companies go from pensions to 401ks?
Amanda Holden: So for anybody that's not familiar with a pension, my-- especially our younger sweeties on the call. So a pension is when your workplace saves and invests money on your behalf, and they send you a check in retirement. And so all of the work of planning for retirement is essentially done for you. All of the work of investing for retirement [00:28:00] is done for you.
And there were a number of reasons why companies started to eliminate pension plans. I mean, the kind of like the-- probably the easiest way to explain it is that, like, they became extremely expensive and difficult to manage for corporations. And I believe that it is still corporations' responsibility to care for, for their employees and to, to step up and do the work.
But it is also true that it is very expensive to do. And s- there were some other reasons, and this is, like, getting a little bit into the details of it, but there was also some laws that were imposed that made it really difficult for corporations to overfund during the good years, which just made it very difficult then in the bad years when the market wasn't doing well to meet all of their obligations and send out all of their checks.
And so this was kind of an instance where this, like, maybe perhaps [00:29:00] well-meaning legislation had a really negative effect on pensions. At the same time, and so this actually happens I believe in, at some point in the '70s, maybe the late '70s, a, an accountant like, quote-unquote, "discovers" a paragraph in the tax code.
It's literally paragraph 401k in the tax code. And like how it got in there, I don't even know the answer to that. But basically, what it was was it existed as an account or, you know, you could basically open up an account and call it a 401k. And it was designed to let high earners stash a little bit of extra income in this account and avoid paying taxes on the amount that they put in in that year.
And because these people are high earners, they get to avoid taxes at their highest marginal rate, stick it into the 401k. The other benefit is then that money [00:30:00] also grows tax-free. So the investments themselves, that's a whole another type of tax that you have to be considering, taxes on investment gains, taxes on dividends, taxes on interest.
You also don't have to pay any of that when you're investing in a 401. It is a tax shelter in this way, and then you'll just pay income taxes on the money when you withdraw it in w- in retirement. But for these high earners, it is absolutely advantageous to pay that income tax later when they are no longer working and paying a really high marginal income tax rate.
And so it initially was designed as like, surprise, surprise, a tax benefit for high earners. And so it was this thing that first executives were only doing. They were just taking advantage of it as a way to save and invest in addition to their pensions. But companies started being like, "You know what?
That's just like a lot e- that's a lot
Rachel Duncan: That looks so much easier Just, just have them do that. Yeah
Amanda Holden: don't, why don't, why don't y'all do that?" [00:31:00] And so unfortunately, we just saw this shift again, '80s, '90s, early 2000s, away from the pension model and into the 401k model, where they basically just pushed the entire responsibility of saving and investing for retirement on us, which is completely unfortunate.
I'll be the first to say that, um, I don't even think that my book should have to exist because it is so unbelievably silly. It is just such an inefficient use of our time as a p- as the human species that every single person needs to learn to become a, a master of investment management, of modern portfolio theory.
It's, it's wild
Rachel Duncan: Both of my parents were educators, and they both worked for the state. And they were of that generation, they were older, of they both had very, I mean, not like living in luxury, but like absolute guaranteed pensions. They could retire at retirement age and have a retirement. And I think part of like, it, it's another generational difference where if your parents or grandparents [00:32:00] literally did not really have to save explicitly for retirement, and our generation does, it's a huge generational divide.
I mean, my dad had a PhD, but like he never even had to worry about it. He just knew. And it was this trust also in the government and in his job that he'd be cared for. And even his pension was transferred to my mom when he passed away. I mean, it was incredibly generous. And, that it doesn't exist anymore, and I think it's just there's so many generational differences, and I think it comes up a lot with my clients, right?
Like, "Oh, my parents are giving me XYZ advice," and, you know, depending on the age where you're at, our parents had a really different financial experience, and that is a, that's a big one
Amanda Holden: Yeah, it's a really big one. I will say that, it is, it is true that a lot of our, our parents and grandparents had pensions, but there were also a lot of folks whose parents and grandparents did not have
pensions. And, and, you know, I do f- I don't know the statistics on this, but I have to imagine that that also falls along racial lines, that, you know, a lot [00:33:00] of, uh, racial minorities in this, this, this country were not granted the benefit of a pension.
And so it is true that it would be ideal if we could, uh, collectivize this problem that is saving for retirement. Um, it is also true that our efforts in the past have not done a very good job of incorporating all workers. Social Security is actually an incredibly successful program. Do not believe anybody that tells you, otherwise.
Of course, it has its problems, but it's also never missed a check in 90 years, and anybody that pays into it is also going to receive checks on the back end. And so ideally, what happens for us in terms of our retirement planning moving forward is that we fight, we keep Social Security up and running and working, and we get what we paid into it.
And it's probably gonna make a lot of sense for us to be doing something on this side as well, not just [00:34:00] as insurance in the event that Social Security does not happen for us, but because even if it does, it won't be enough.
Rachel Duncan: I think that's the plan. Yeah. That's, we just, just plan for that, that it'll probably be there, probably not the extent that it was for, yeah, older generations. So, okay. I feel like we could talk forever, but I'm like, okay, what, what else would be so important when like you talk a lot about index funds and like everybody calm down.
You don't have to know everything about the stock market. You don't need to, you are ab- you do not have to pick individual stocks to be an investor. Could we just sort of focus the spotlight a bit on index funds?
Tell us first what they are.
Amanda Holden: Sure . Let's start with a fund. So a fund is just a big old basket of some other investment type. So it could be a big old basket of stocks, a big old basket of bonds, a big old basket of real estate holdings. It could also be a basket that holds a mix of those different investment types.
But I think what is really important to understand here is that funds in [00:35:00] and of themselves are not, not what we would call an asset class, an investment type.
And so if you are invested in a fund that holds stocks, you are invested in the stock market. If you are invested in a fund that holds bonds, you are invested in the bond market.
And so the first and most important thing is always to understand what is the actual cellular unit here? Like, what is it that we're actually investing in? And so in this case, it would be stocks or bonds or real estate. Those are the major asset categories that we're considering within any sort of, you know, retirement account, investment account, brokerage account online.
And so a fund is really just a way of being able to buy a bundle, and so being able to buy a bunch, which makes investing so much easier for us because if we had to go out and pick every single stock or bond, that would be an incredible headache. It would also be extremely expensive because there are costs involved in [00:36:00] buying and selling individual investments.
Now, pretty much all of the major low-cost brokerage banks do make that a- available for free, but there are often implicit costs, costs that are actually embedded into the, the act of buying that investment that you may not feel. You're not paying $10 to do it, but it does exist. And so just imagine, like, it creating a little bit of drag in your strategy if what you are doing is buying and selling these investments individually on an individual basis.
Now, why might somebody want to invest in... Like, let's, let's talk about the stock market because most of us are primarily going to be invested in the stock market. And so why might somebody want to invest in individual stocks?
Rachel Duncan: Tell
me. it, because they wanna pick the best stocks,
Sure. The winner, the blue chip
Amanda Holden: they wanna pick the winners, right?
We know that what has happened in, in the US stock market historically is that it's, it's come up about 10% per year. So your strategy, if you were invested across the entire US stock market, [00:37:00] up about 10% per year. That's very much an average. Years are often much worse and much better. But it is also true that that average is accounting for the fact that some stocks do much better and some stocks do much worse.
And so if you only ever picked, you know, Apple stock 40 years ago, you would have smashed the market average or the average of all stocks. And so yeah, the siren song is strong, right, to want to pick only the best stock. And so that's why folks are attempting to pick the best stocks in th- That's, that's why Robinhood exists, right?
Because the assumption here is that you would really probably only exert the effort or the energy to pick individual stocks if you wanted to try to do better than the average. Because the average is very easy to achieve through this thing called index funds. And so an [00:38:00] index fund is a specific type of fund where it is basically investing you in everything in some market or a representative sample of that market.
And so let me give you an example. A total US stock market index fund is a fund, so it's a big old basket of investments, that holds literally every single stock in the United States. It also does so w- with proportionality to the size of each company. So weighted in your collection of now stocks, you've now got something like 3,000 stocks inside of your fund.
And so what you're really invested in is like, yeah, you're invested in the fund, but really what you're invested in is you're invested in every single stock in the United States. And because Microsoft is a lot bigger than Chipotle, you're going to have a higher weight, a higher allocation of your money is going to be put toward that bigger company.
We call this size weighting or [00:39:00] market cap weighting. And so the idea is that whatever is the average of the US stock market this year, which is to say, what's the average performance of all stocks in the US stock market this year, you will accomplish by investing in that index fund
Rachel Duncan: Right, and so like say a couple smaller public companies, right, go under or go bankrupt, they're just removed from that index, right? It's not crashing the whole thing down. Or if like one company's value just goes down, chances are pretty good others are gonna go up. So that's, that's how you're sort of catching the mean in that way, and that if a company goes under or goes down in value, you're not like unable to retire because that happens.
Amanda Holden: Exactly. And so it is just a really simple way to diversify. And so it has become really popular to invest in this way for a lot of reasons, and one of which, to kind of go back to my initial point of like, okay, but like, you know, maybe you're looking... Maybe what you're hearing is [00:40:00] me saying like, "Okay, you can earn the average in using an index fund." But like, I don't know, like, I don't wanna aim for average. I wanna aim for above average, and the word average almost leads us to believing the way it works is this: that let's say about half of stocks do better than average, and half of stocks do worse than average, and that, you know, over time, you know, you, you pull the average.
But like that's just, that's not what the distribution looks like at all. And instead... Because that would be really tempting, right? Like, that would be better than house odds, right? Like, I'll just like roll the dice, pick a stock, and see what happens. But that's not really how it looks. Instead, what we have is an extremely small number of out-performers that more or less buoy the average.
Rachel Duncan: drag everything along,
Amanda Holden: exactly. So most stocks do worse than average. Like, something like more than 60% or 70% of stocks are doing worse than average. And so it's much more likely that you are going to [00:41:00] pick stocks that do, that do worse than average.
And this is what makes investing in the stock market... Well, first of all, this like multi-trillion dollar industry where, you know, every Steve, Robert, and Chad is like trying, you know, is expending all of his, you know, precious energy and, and life force here on Earth trying to pick the best stocks. Like, this is what the investment...
This is what hedge fund m- managers do. This is what the investment management industry does. And they're trying to pick the best stocks, and, and guess what? They can't do it either. Even professionals do significantly worse than average. Retail investors, you know, the industry calls us dumb money. So dumb money is people who are trying to pick stocks on Robinhood or whatever.
Like, we consistently perform worse than average, and professionals, which is, quote-unquote smart money, does worse than average too. And so now of course, there are plenty of people that they hit [00:42:00] it big, right? Like, we all may- I mean, maybe not everybody, but like I know somebody that like just bought Amazon stock, and that was their strategy, and it absolutely, you know, kicked the tits off of a more
diversified
Rachel Duncan: yeah. And I'll tell an example. My, my, my dad, he, he was a teacher and, uh, he was a retired teacher, but every once in a while some old student would come along, like who had loved him, you know, when they were a kid. And so this guy came along, I remember I was a kid. This, this man literally showed up at the door, 'cause this is like pre-internet, and he had done really well with investing and stuff, and he wanted to give me some stock to like set me up for life.
And he gave me like, I don't know, a couple hundred shares in this company he was an early investor in. He was just basically like, "I'm gonna set your daughter up for life." We're all like, "What is this? What's this?" Right? And, um, time went on, kind of, kind of forgot about it, and I was like, "Oh." I was like in my early 20s, like, "Oh my God, am I like secretly a gajillionaire?"
Well, that company like went under. [00:43:00] Like, and that's the most common story. That's it, right? It wasn't worth anything. And like it took some sleuthing to like, oh, no, that, that's it. There isn't a secret story here. Like it just didn't... The company folded. Well, there you go. Yeah.
Amanda Holden: Yeah. I mean, like even if you're tracking something like the S&P 500 index, which that's not every stock in the United States. It's the 500, you know, basically the largest. And so the biggest are so big that it's often considered to be a pretty representative sample of how the total market does as well.
But even the S&P 500, it's like turning over in companies like once every decade.
Rachel Duncan: its not the same 500.
Amanda Holden: No, it's not. It's not this... In fact, uh, you know, even when you look at something like the Dow Jones, the only company that's been in the index the entire time is General Electric. There's only
Rachel Duncan: Yeah. Right, so okay, could we sidestep real quick? 'Cause we're talking really generally about investing and stuff, which is just really good information for everyone to have. But I'm guessing our audiences overlap, where it's like, okay, [00:44:00] I know I got to, but I do not wanna support oppressive systems, right?
I know that there's so many problems with capitalism. Like, I don't want to be supporting, you know, the Amazons and the Microsofts of the world. But you're saying I have to do that, and, and how can I do, you know, quote ethical investing. You have a chapter in that. But like, and also, like, I don't wanna cut my nose to spite my face.
Like, we don't want you not retiring because you're not gonna invest in these companies. How do we do when we have, like, real ethical quandaries of b- even being involved in this whole thing?
Amanda Holden: This is the question of the hour
Rachel Duncan: is the question, you guys
Amanda Holden: I would say, you know, I, I just got back from book tour, and everywhere I go, this is the question of, like, how... Like, I, you know, there's a tension here, right? On the one hand, you know, especially as women or femmes or, you know, queer people , like, we know that we need to have money, and we need to be in control of our money, and we need to use all of the tools available [00:45:00] to us within this system in order to achieve safety and security.
And also, the tools that we have available to us are, you know- Are threatening the very future that we're purportedly working toward. And so yeah, it is true that investing in corporations is starting to feel like, uh, quite sticky for a lot of people, and myself included. I wanna include myself in this group.
And there is not a tidy resolution to this. I don't have a tidy resolution to this. And what I am finding is that, you know, more than ever, what I am seeing is like, especially in leftist political spaces, people are encouraging other people not to invest at all. Because even if you are to use, let's say, like I call them ethical index funds, um, just as shorthand.
They can also be called ESG funds. I specifically point in my book to funds that at the very least, they screen [00:46:00] out both weapons and oil, which not all ethical funds screen out weapons makers, and they almost all usually scrape out fossil fuels companies. But even then, there are very few that scrape out both.
And so, you know , that's like, I guess what you could consider kind of like a harm reduction technique. Really , It matters the most on like the level of you. Like, if you don't want to profit , like every time America gets a war boner and like Lockheed Martin, you know, sells more weapons to, the United States or to, to Israel, like You can do that. But even when you peel , back weapons and oil and you look at what remains, what remains is big tech, right? Big tech is by far the biggest sector, and that just is code word for, for industry in both the U.S. economy , But also the stock market as well. And in fact, we're have-- e- experiencing what feels like a bit of an AI bubble, and we can come back to that if we want to.
but it's big tech, and [00:47:00] so you are invested in, in Microsoft. Palantir is included in almost all ethical funds, right? And then even beyond, uh, big tech, what do you have? You have big banks, you have mining companies, you have health insurers, you start peeling back the layers, you realize that none of this is really that ethical.
Rachel Duncan: Yeah. Manufacturers are pumping waste into land. I mean, where are you going to turn
Amanda Holden: Yeah, exactly. Pharma, and even like the real estate industry. Like a lot of these, um, you know, companies that were formerly, you know, only invested in like, let's say, commercial spaces like office buildings or malls , like they're now investing in single family homes and data centers.
And so it's, I mean, it's rough out there. There's like, there's really no doubt about it. And so I almost then come full circle to saying like, "Hey, you can use one of these ethical funds," but like let's also not kid ourselves about like what's actually happening here. Whether you choose to use the ethical fund or just the regular index fund, like that's not really going to be the difference [00:48:00] maker.
Really what we need is an entirely different system altogether. And I think, and, and people are welcome to disagree with me, but I think that, you know, the truest statement is, you know, whether we invest or not is not going to change the nature of the system that is capitalism, that is shareholder capitalism.
And so, you know, perhaps the biggest risk of being invested, even on our own small scale, is that we become so attached to our own money that when the time comes for revolution, we're unwilling to let go of what we have in a willingness to, you know, to allow the thing to break to clear the way for something better.
I, I mean, I think that that's... That's the major concern is that privilege corrupts and privilege, you know, it's like the, um, NIMBYism that we see out of boomers. Like often boomers have a lot of wealth tied up in their house, and what they [00:49:00] then don't want is for there to be affordable housing put anywhere in the vicinity at risk of, you know, hurting their home value.
And so it's this prioritization of one's own self and wealth over the collective good that I think is probably the primary risk of doing this investing thing on your own. What we need is people who are going to be willing to fight for something better, even if it means letting go of what they have.
And so, you know, in leftist circles, when people are discouraging one another from, investing at all, like I've, you know, I've been just so, you know, beaten up on the internet for being a person with, leftist politics, but who still teaches people investing and so... And I totally get it.
but I do think that like there is, it's a little bit of a misunderstanding to think that like- And I think that the word, it's like the word investing that really throws us off. It makes us feel like that's the, the only way in which like we're really [00:50:00] investing in these corporations when in reality, the, the two primary ways that we invest in these corporations is by providing them our labor and buying their products.
Rachel Duncan: Okay. I- can we pause there? I think that's so important, right? If I buy Amazon stock, I'm not handing Amazon $100. That's not how that works, right? Can, can you, like, get into that? 'Cause I went to one of your workshops where you described this so beautifully
Amanda Holden: Yeah, so you can think of, of stocks as a downstream effect, right? So, uh, it's, it's gonna, like, get a little bit nuanced in that, like, you know, we, we can talk about, like, what drives stock prices, but for the most part, people buying into stocks is what pushes the price higher. People selling out of stocks is what pushes the price lower.
It's supply and demand in this marketplace that happens to sell stocks, which are shares of company ownership. And so, um, a- you know, there's some other nefarious f- forces at play, uh, in the stock market, but that's just, like, a very general way to understand it. Now, it is also true that [00:51:00] it is going to be profit that is the engine for stock market growth, not in this, like, perfect one-to-one way.
It's not like, oh, Microsoft announces an increase in profits, its stock shares go up by an exactly commensurate amount. That's not the way it works. But instead, people are gonna be like, "Ooh, another quarter of profit.
Rachel Duncan: It's perception of value
Amanda Holden: Exactly. It's this perception of value. And so that's the mechanism that pushes the price higher.
And so it's not perfect, but it does actually work pretty well over long stretches. It can k- get kind of out of whack. I think we're a little bit out of ac- whack right now with, um, with tech companies and AI. But 10 years from now, the stocks that are gonna be performing really well are going to be for the companies that are really dominant 10 years from now, and that are profitable 10 years from now.
And so it's just helpful to understand that, that the profit is the engine that [00:52:00] will ultimately drive stock prices. But like you said, Rachel, when you are buying Amazon stock, you're buying it on what we call a secondary market. It's like, a reseller's marketplace.
You're not handing them the money. That's what happens only once during the initial public offering, the IPO. And so you're just buying it from a bank, essentially. Now, that's not to say that Amazon is not motivated by having higher share prices, right? A lot of the executives of Amazon have a lot of, a, a lot invested in stock, and they are compensated in stock.
And so they are certainly motivated for their prices to go higher. I don't wanna pretend like that's not the case. But it is also true that what Amazon knows must happen for investors to be interested in their stock is to sell a lot of Prime memberships. Because th- And, and you know, Prime is actually only a small piece of the business that [00:53:00] Amazon does.
Amazon Web Services is a much bigger piece of their business. but so it is, it is really our demand for what it is that they're offering, us paying them for their products and services, that is going to drive stock prices.
Rachel Duncan: Right, not the other way around
Amanda Holden: Exactly. Not the other way around. And you know what's so interesting about so many of these companies is so many of them are now making money through government contracts, right?
And so we know that this is the case for defense contractors who are almost fully making their profit from taxpayer dollars in the form of contracts, but that's true for a lot of companies, right? That's true for Boeing, it's true for Tesla, it's true for Amazon, it's true for Microsoft. And, and so it is this, it is this mechanism for essentially transmuting our tax dollars into corporate profit.
And so, I mean, it's just kind of a side note, but it is interesting to ask the [00:54:00] question of, you know, whether we as the taxpayers should be obligated to a share of what this system produces the back end. And, um, yeah, I, I mean,
Rachel Duncan: Hang on, I'm s- my cat is messing with... Everyone say hi to my cat who has, uh, come into the story. Okay
Amanda Holden: love your big fluffy cat
Rachel Duncan: He's like a, he's like a super villain cat. Okay, bye. Thank you
Amanda Holden: No, no, it's so good. I love him. Yeah, and so, like, I'll, I'll wrap it up by saying that the, if we really wanna hit them where it hurts, it's not by attacking their stock. Because even if you were to sell Amazon stock, that's not the end of the story. Because let's say we, there was a mass movement for people of conscience to sell their Amazon stock.
I would be for it. I would do it. But it is also true that if that is the mechanism that dropped Amazon stock's price lower, there are plenty of market participants who see Amazon stock on sale, and they are going to [00:55:00] scoop, scoop 'em up, and that's gonna push the price back higher. And that change, that delta, is going to be achieved by the bad guy.
Rachel Duncan: Right.
Amanda Holden: And so, and so really, if we... I mean, like, if we wanna hit 'em where it hurts, what we have to do is stop buying what they're selling us. That's not always easy. It's a little bit easier for, for Amazon than for Palantir. But, um, you know, stop buying what, what they're selling to us, and to get, you know, really serious about figuring out ways to limit their power, and that- that's, that can mean a lot of different things.
you know, those on, again, I'm kinda just, like, generally using the term left, and they would say that's, like, never going to be possible within a capitalist system because the ones with all the power who do all the regulating are the ones with all the money, and so it is self-reinforcing. And so I would agree that what we need is an entirely different system, but this is the system that we have right [00:56:00] now.
Rachel Duncan: And we want to be rich old ladies. And, and so there's this balance, right? And like you said, like you mentioned harm reduction. Like, there isn't a perfect way to do this, but you also don't need to like, you know, stay up late at night necessarily about where your index fund is going. Like, we ... It's, it's an imperfect system, but if you are to retire, to retire with the lifestyle that you want, you, you've gotta really seriously consider the investment side of things, um, and not just like not buy lattes.
Like, that's not really the equation that will lead you to being, being a rich old person.
Amanda Holden: Yeah. Yeah, I mean, like, here's the thing. Like capitalism, one of its sneakiest tricks is it gives us this illusion of choice, as if we have this, like, choice to opt out of the system , which we very much do not. You either provide your labor to that system, right? Like, it's not hard to imagine a world where you have to be a door greeter at Walmart at age 80, and [00:57:00] you are providing your labor.
You are investing in that system. Or you have some, some capital. You actually have some capital ownership within that system. And, you know, f- for all of us, like, it's gonna be a matter of picking our, our battles. But, like, let's not pretend like, you know, whether we are slightly more one than the other, worker or capital owner, let that on the margins, that's going to make a difference as to whether the system exists .
And, you know, the, the problem with thinking that you can opt out of capitalism, and this is something that I've just learned, you know, working with so many students , is that you may think that you're, for example, opting out of capitalism by not investing in your Roth IRA, but the reality is you're just making the capitalism someone else's problem, and that person is probably your daughter.
Rachel Duncan: Mm-hmm. Yeah
Amanda Holden: Ooh, everything we know about caretaking, financial and otherwise, is that it almost always falls on some other woman in your family. [00:58:00] And some of the most difficult cases that I have with my students are women in the sandwich generation who are caring for their kids and for their parents financially, and they're feeling so extraordinarily stretched thin.
And so it's not as if your needs go away because you don't invest in a Roth IRA . And so it's just, you know, it's, it's r- it's really tough. There's not a lot of perfect, perfect solutions, but I think that like, yeah, we can't change the system by our personal choices, and so pick your battles. I personally choose to pick battles that don't put me at risk of living in elder poverty
Rachel Duncan: Gotcha. Aging is expensive. Aging is very expensive, and I think we need... And we live in a system, again, without the safety net for that. You know, I've got some clients in Europe, and, like, this is just a really different-- Like, we're looking at different stuff because, like, there's just they're, they don't have that type, that same type of risk.
And so here we are in the United States, and it's a different type of, yes, [00:59:00] we all gotta cowgirl up, unfortunately. and this is the system we're in, and we want you to be, to be safe. So if someone is listening and they... Let's, let's, let's paint a little picture, maybe someone who is self-employed, fully self-employed, and has been really nervous or intimidated about investing.
What would some of their first steps be, would you say?
Amanda Holden: So if you are self-employed, the first step is going to be choosing an account. A Roth IRA is a great first step, a, a great first place to look for just about anybody.
Now, you can't earn too much money and use a Roth IRA. If you do, there are backdoor methods , but I probably wouldn't mess with it in your first or second year. And so just look into s- into seeing whether you qualify for a Roth IRA. That's a great place to start. As you grow as a self-employed person, I would add either a SEP IRA or a Solo 401k.
The great thing about [01:00:00] being self-employed is that we actually have some of the very best options for retirement accounts, and by best what I mean is you can put the most amount of money in. A Roth IRA is a little bit limited at $7,500 per year. That's the max you can put in each year. But with a SEP IRA or a Solo 401k, those contribution limits, so how much money you can put in, they are much higher.
And so, but, you know, cross that bridge when you get to it. Start with something easy like a Roth IRA, and then later as you grow, as your investing practice grows, you can add something like a SEP IRA and a Solo 401k, which are just going to allow you to do more. But the important thing is, once we get that account set up and we get the money inside, we also have to invest that money.
If you are looking for help investing that money, I've got a couple of different recommendations. First, my book, How to Be a Rich Old Lady. Second, if you are somebody that, where you're just like, "I just [01:01:00] know, like, I'm not gonna read a book. I'm not gonna do it. I'm not gonna learn. I don't want to.
I could lie to myself and say that I'm going to do it, but it's gonna fall off my next 150 to-do lists," and if that's you, then I would recommend using something like an automated investing service. They're providing a great service. It does come at a cost, but it is absolutely better to do that than to not.
And so all of the major banks like Charles Schwab, Vanguard, and Fidelity, I believe offer some version of this. Betterment is also great. Um, if you want to have like a little bit more control over what you're choosing, but you want the ability to, you know, have some of the, um, the, like the upkeep done for you automatically, the platform M1 is really interesting.
And so those are some great places to start.
Rachel Duncan: That's great, right? - Even if you don't want to or you're not that interested in it, it, like you said, it's a little bit of upfront and then you just get that machine going. And it's not something you have to deal with all the time, but it is a key element of being able to retire as a [01:02:00] rich old lady.
And my vision is just, like, lots of lunches with my friends on a Wednesday, and we all want that or whatever version of your rich old lady life. We just, we want that for all of our listeners
Amanda Holden: I, I love that so much. One of, like, the potential names for the book, I was trying to, like, play with, like, like, lady lunch on a Tuesday. Like, you know, pi- picking flowers on a Tuesday. Like, pogo sticking on a Tuesday, right? Like, whatever it is that you want to do, I want you to be able to do it and just to be able to step away from, you know, labor, which is also a really in- intensive and, and abusive, uh, you know, system that we have in the United States
Rachel Duncan: Another wish I have for, for everyone. Well, Amanda, thank you so much for joining us on our podcast and, uh, where can everyone find you and get more goodies?
Amanda Holden: I'm mostly on Instagram @dumpster.doggy. I'm also on TikTok as well
Rachel Duncan: Okay, great. I will link to everything in the show notes. Thank you so much for being here and sharing your wisdom
Amanda Holden: Thank you for having me, [01:03:00] Rachel
Rachel Duncan: Thanks for listening to the Money Healing Club podcast. Here's the funny thing about podcasts. They are surprisingly hard to find, but once you find one that really speaks to you, you're totally in. I know it is for me. So word of mouth is truly how small shows like this grow. Maybe you even found this one because someone shared it with you.
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