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Chloe Daniels made the biggest financial mistake of her life in 2019 at the age of 28. She gave her then-boyfriend about $30,000 in just over a year as an “investment” in his business building homes in the Chicago area.
“At the time, it was my life savings,” says Daniels, now 32. “I didn’t even have an emergency fund. And every time I saved money, I was reinvesting it. I just kept putting more money into it.”
When the pandemic hit, the home flipping operation failed. Labor costs have ballooned. Timber prices have soared. It didn’t take long for the relationship to fall apart.
Daniels quickly realized that he would never make back his initial $30,000 investment. To this day, she says she has never gotten that money back.
“I didn’t know anything about investing at the time,” Daniels says.
This experience led Daniels to learn best practices in investing and personal finance, which she has applied to her current role as a full-time financial educator at her company, Clo Bare Money Coach.
“After you pick the riskiest investment ever, you don’t want to put your money at risk like that,” Daniels says.
Since 2021, Daniels has attracted a large following, primarily Gen Z and Millennials, on social media by teaching people the “lazy way to invest.” Her content, courses, and webinars focus on learning how to automate your savings and create simple portfolios with low-cost funds.
Rather than betting on hot stocks, buying gold or investing in ultra-risk private lending deals, Daniels emphasizes a set-it-and-forget approach to wealth building. She has created dozens of videos explaining the benefits of a Roth IRA and the historically positive long-term returns from her index fund purchases.
“My approach is still aggressive. Most of my portfolio is all stocks, but this is a more tried-and-true investment approach,” she says.
Her current philosophy that index funds are best for most investors is an idea touted by legendary investor Warren Buffett and a growing number of financial influencers, but her ex-husband It’s a far cry from the risky gambles of real estate ventures.
Daniels said in an April 2023 video. “The lazy way I invest is much simpler, much less risky, and incredibly easy.”
Explaining Daniels’ “lazy” investment strategy
Daniels is a big believer in using tax-advantaged retirement accounts like 401(k)s and Individual Retirement Accounts (IRAs) to build a simple portfolio with a small number of inexpensive index funds.
Index funds act as collections of stocks, providing investors with instant diversification by purchasing just one share. For example, consider the S&P 500, which tracks the 500 best-performing companies in the United States. When you buy an S&P 500 index fund, you’re acquiring partial ownership in every company the index tracks, from Apple and Microsoft to Coca-Cola and Disney.
Low-cost index funds can be purchased as exchange-traded funds (ETFs) or mutual funds. Both are very similar in functionality, but while some 401(k) plan platforms only allow you to purchase mutual funds, ETFs can generally be purchased at any broker that allows stock trading.
Index funds are considered less risky than picking individual stocks because your money is spread across hundreds of companies rather than one or two. Most funds are also cheap, with the best index funds featuring expense ratios of less than 0.03%, or less than $3 per $10,000 invested.
Daniels began her investing journey in earnest in 2020 by maxing out her 401(k) retirement plan while working full-time as a communications specialist at an engineering company. She contributed about 25 percent of her six-figure salary to this account and got a match with a company that was essentially free money.
Since then, she’s expanded her investment accounts, adding a Roth IRA, a traditional IRA, a tax-brokered Solo 401(k), and even investing money in a health savings account. As of March 2024, her net worth was $296,000, according to documents reviewed by Bankrate.
But she has used the same low-cost, passively managed funds to build wealth in all her accounts.
The main funds Daniels uses in his investment account are::
- QQQ: Invesco QQQ Trust (NASDAQ)
- VTSAX: Vanguard Total Stock Market Index Fund
- VOO: Vanguard S&P 500 ETF
- VOOG: Vanguard S&P 500 Growth Index Fund ETF
- VOOV: Vanguard S&P 500 Value Index Fund ETF
- VIMAX: Vanguard Midcap Index Fund
- VIOG: Vanguard S&P Small Cap 600 Growth Index Fund ETF
Autopilot your investments
Daniels not only keeps his portfolio simple, but also puts it on autopilot.
She practices dollar-cost averaging, a strategy where she invests a set amount of money at regular intervals, by transferring a percentage of her earnings directly into her investment account each month. This allows you to buy more shares when prices are low and more shares when prices are high, smoothing out the effects of market disruptions without having to time the market. I can. This is a notoriously difficult task.
“People on Wall Street are not only better educated, they have access to more information, but if they can’t always time the market accurately, I’m not going to… “No,” Daniels said.
I know it may sound very boring to continually buy index funds, but that’s the point.
“Movies like ‘The Wolf of Wall Street’ and ‘Damn Money’ make you think investing is like gambling, it’s day trading, it’s very dangerous,” Daniels says. he says. “There aren’t any movies about index funds, because they’re not interesting. It’s very boring.
“‘Oh, index funds are doing well again’ doesn’t necessarily make for an exciting headline,” Daniels added.
Investing rather than paying off student loan debt with low interest rates
While the idea of continually buying cheap index funds is not new, Daniels has a somewhat unconventional approach to investing and debt repayment.
Unlike some voices in the personal finance world, Daniels says there are more important things than getting completely debt-free as quickly as possible.
This is an example of influencers like Dave Ramsey, the radio host who built a multi-million dollar financial education empire on the premise that all debt should be eliminated before putting money into the stock market. The stance is in complete contrast to that of the person.
“It’s a crazy idea,” Daniels says. “There’s a lot between ‘no debt’ and ‘only investments.’ I think you should do both.”
Daniels believes it’s essential to pay down high-interest credit card debt, but as she points out, most Millennials and Gen Z owe tens of thousands of dollars in low-interest student loans. I am holding.
She believes that as long as interest rates are below about 5% to 8%, it often makes sense to pay off a small or minimal amount of student loan debt and invest at the same time.
Putting your extra cash into the market instead, especially in your 20s and 30s, where the power of compound interest is really on your side, could give you better returns over time, even when you factor in interest fees. says Daniels.
That’s because the stock market has historically had an average return of more than 8%, while low-interest student loans have interest rates of less than 4%. It won’t cost you much to hold on to that debt, but you’ll miss out on the potential growth that could come from investing at least some of your money.
“Running through different scenarios will tell you whether it makes sense to decide whether you want to pay off your debt early, do a combination of both, or just keep investing (with minimal payments). ”’ Daniels says.
Daniels admits that she didn’t follow this approach when she was in her late 20s, when she was paying off about $40,000 in student loans over two years. She calls it a “debt-free mistake” and another biggest financial regret.
“We did the math and it cost us about $1 million long-term,” Daniels said. “Yes, at the time, paying off that large amount of debt saved him about $18,000 in interest. But in the long run, he would actually save $18,000 in interest more than he would earn $1 million.” I don’t think anyone would choose.”
Daniels still has about $10,000 in student loans with an interest rate of 3.5%. She plans to make the minimum payments until her debt is finally paid off.
I quit my 9-to-5 job to work full-time at Kuro Barre.
In October 2021, Daniels quit her job as a communications specialist to pursue Black Bear Money Coaching full-time.
In addition to posting daily content about saving and investing on Instagram and Tik-Tok (which currently have more than 120,000 followers each), Daniels also offered one-on-one financial coaching. She earned about $5,000 a month for six months before quitting her 9-to-5 job.
But after spending all his time growing his business, Daniels says the benefits really started to come in.
By December, Daniels had debuted the Lazy Investor’s Course, with 91 people signing up for access for $379 each. So the starting amount is almost $35,000. Just over two years later, his self-paced Lazy Investor’s Course retails for $997.
What started in 2018 as a part-time blog about her personal experiences with saving and budgeting has turned into a six-figure full-time career managing an education platform built around her personal brand .
“I knew I would regret it if I didn’t try,” she says.
Daniels always points out that he is not a certified financial planner nor is he qualified to provide specific investment advice. She provides her educational resources and shares both the successes and failures she has experienced in her journey so far.
Various aspects of that journey resonate with people, especially women in their late 20s to 30s. Whether you’re struggling with deciding whether to pay off your student loans or invest, or trying to escape financial abuse, her videos will inspire you to say, “Oh, I can relate,” or “I’ve definitely been there.” It’s full of comments like “And a little bit.”
Rather than downplaying his mistakes, Daniels built a small fortune by embracing them and using them as an example to teach others how to be smarter with their money. Her no-one-is-perfect approach works and has helped thousands of people learn about investing.
“My students tell me over and over again that they chose me because they saw themselves in me,” she says. “And I think the fact that I’m telling people that it pays to be lazy with your investments also resonates really well.”
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