Investing For the Long Term Beats Day Trading With Vivi Friedgut
📈 Vivi Friedgut’s mother taught her about the importance of the stock market, which resulted in her buying her first stock at just 15. Since then, she has seen firsthand the positive impact of getting into finances from an early age.
🚀Now, as the founder of award-winning edtech (education technology) startup Blackbullion, Vivi is on a mission to empower young people to become financially literate and take control of their financial future.
👀I was curious to see what Vivi thought about investing becoming a new ‘buzzword’, so we discussed the key differences between day trading and investing for the long term. We also talked about why we should be cautious to not get caught up in the hype and FOMO (Fear Of Missing Out), and what to make of the current surge in “hot” investments.
👉 Vivi is also passionate about raising awareness of financial abuse within relationships. This type of abuse can be hard to spot in friends and family, and Vivi shares the signs we can look out for to help someone who might be in need.
💸 We also talk about how to make sure you actively manage your finances as a startup founder: build a safety net, prepare yourself in case your business fails, and pay yourself along the way, as well as how to take care of yourself while you work on your business.
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You can listen (40 min) and subscribe here:
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1. start young and don’t stop— ever
Have you struggled to understand your finances due to a lack of financial education growing up?
Are you lacking the confidence when it comes to getting started with investing?
Has all the recent hype around investing confused you or put you off entirely?
“Investing is still the best way of building long-term financial wealth — that’s just the reality of it. And the only way to gain confidence is to start. I mean, you kind of just have to...jump in! Get in at the shallow end, but you have to be in the pool.”
Financial literacy is a journey, and while it may start in school, Vivi is a strong believer that learning should never stop. That’s why she launched Blackbullion: to provide digital financial education that develops financial confidence, knowledge, skills, and empowers better decision making. Vivi and her team are working towards their goal of improving outcomes for millions of young people across the globe by partnering with universities across the globe. Over 700,000 students worldwide can currently access personal finance courses and university funding through her platform. Vivi’s mission is ambitious: she wants to make the world a better place by making it money-smart.
Vivi is a financial management expert who spent almost a decade managing the wealth of high net worth families and individuals. She was prompted to launch Blackbullion because of her concern that most regular people don’t know how to manage their money and didn’t have the right resources to do so.
She describes Blackbullion as a financial well-being company that is like “Wall Street, Netflix and Sesame Street having a baby.” The craziness of expecting young people to figure out money for themselves, after spending a lifetime not being educated on the matter, leads to all sorts of problems, from debt to poor mental health and anxiety.
Understanding how to use money makes a huge difference to every element of your life. It all starts with thinking about how money can help you — rather than just seeing it as something that can just buy you ‘stuff’. Money is powerful, and the younger people learn that, the more powerful their financial journey can be. It’s also important to build a healthy attitude towards money. While some people may think that the desire to build wealth and have more money is ‘immoral’, Vivi sees it as a vehicle. She uses a very helpful analogy of having a car: it can either be a dangerous weapon that could potentially harm you and others, or it can be a tool that gets you from point A to point B safely. While money can be used negatively, but it can also buy you freedom and opportunity and enable you to lead the life that you want.
Vivi herself first started investing in the stock market at the remarkably young age of 15, thanks to her mum’s advice. And while not all of us have the privilege of learning about the stock market at such a young age, Vivi is confident that everyone has the potential to create a bright financial future for themselves — the important thing, she says, is to just start.
2.if it sounds too good to be true, it probably is
Getting started with investing is the best way to gain confidence in your ability to invest. Start with a small monthly sum (using automated investment apps that invest your spare change is a great way to start), and learn from your mistakes. Making beginner’s mistakes is all part of the learning process, and Vivi is no different. “I’ve made plenty of mistakes, but I’ve been quite lucky and also quite risk averse. My mistakes didn’t cost me a huge amount of money in the long term." Looking back on your stocks that may have dropped, say, in 10 years’ time, more often than not you’ll see that they’ve actually recovered.
You don’t have to be massively risky and speculative with your investments. Instead, focus on building a diversified portfolio. In order to do that, though, you first need to understand that investing and trading are very, very different.
With the FCA ringing alarm bells that younger investors are taking on big financial risks by engaging in high-risk investments like cryptocurrencies, it’s especially important to understand that day trading is a lot more like gambling, and that there’s no such thing as ‘get rich quick’ investments. FOMO (fear of missing out), hyped-up headlines and peer pressure should not inform your investment strategy.
Yes, there is a role for day trading — for example, if you’re looking to get an adrenaline buzz and put a few hundred pounds into something to see what happens — that’s fine. But you need to be willing to assume that the chances are, you might lose all that money. Essentially, young people need to be realistic about the downsides of day trading, and accept the hard truth that there is no such thing as easy money. You need to do your research and educate yourself, and avoid listening to influencers who have no background in finance.
If, however, you’re investing for the long-term in companies that produce things that have a market and are making money, that’s very different to trading in something like GameStop. To grow your wealth and to grow your asset base, you need to take the long-term route. Vivi realises that for young people, this strategy might not sound fun, but investing to grow your wealth should be a bit like watching paint dry. You should invest your money and forget about it (aka, leave it alone), and enjoy the benefits of compound interest.
3. Be aware of financial abuse
On another but extremely important note, Vivi discusses her passion for raising awareness about financial abuse, and laments that it’s something a lot of people aren’t aware of. Financial abuse is usually hidden away out of plain sight, however, in an abusive relationship, it’s often the first step before escalating into physical abuse. Financial abuse happens when the perpetrator misuses money which limits and controls their partner’s freedom. Some signs that something is wrong is when a woman doesn’t have access to any bank accounts and only seems to have a limited amount of cash on her. However, there is no defined check-list to go by if you suspect someone is suffering: the best thing to do is to act on your intuition, be a good friend, and ask questions.
RESOURCES:
You can follow and connect with Urenna at:
Twitter: @ViviFriedgut
Blog: Vivi Friedgut
Instagram: @blackbullion
Website: blackbullion.com
Other resources:
Vivi’s book: Stay Financially Healthy While You Study
FCA warns that younger investors are taking on big financial risks
If you are experiencing financial abuse or are concerned for someone else, Women’s Aid can offer support, or call the Police with the Silent Solution on 999 and press 55.
Emilie Bellet’s The i News column.