ACCOUNTANT EXPLAINS: The Optimal Order of Investing Your Money
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In this video, I cover the optimal order to invest your money. Enjoy Xx
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⌚️Timestamps:
00:00 - intro
00:42 - Safety Net
01:36- High-Interest Debt
03:36 - Employer match
04:27 - Additional Fund
05:23 - Tax-Advantage Account
05:53 - Low-Interest Debt
06:38 - Other
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DISCLAIMERS & DISCLOSURES
This content is for education and entertainment purposes only. Nischa does not provide tax or investment advice. The information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal.
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Would you suggest maxing isa first or putting the money towards first house? Which one have financially better return?
For average earners, paying off high interest debt and paying up monthly subs is GOLD. 6 leaner months will soon fly by. I paid off a credit card, phone, and my gym. £310 extra per month made available. For average earners this is as good as a 10% - 13% pay rise.
For what it’s worth as an example to others: I am aggressively paying down my mortgage, on track to finish in 5 years on a 30 year mortgage. You could definitely argue that this does not make financial sense compared to investing the cash instead, but it is my only debt remaining and I still invest in my 401(k) and stocks at the same time. The psychological benefits are worth it to me.
Amazing! Well done! 😊
Yea if it makes sense to you then do it. If someone else feels better to not pay off low interest mortgage and have a lot in invested savings then that’s right also
The way I see it once it’s paid off you know that is something you no longer have to worry about if something goes wrong, say with your health. Instead of having to juggle money around when it’s already a stressful situation.
Great job! Although it doesn’t optimize net worth, it does make poverty almost mathematically impossible. Even if you are ill/injured, have to quit work, and live on food stamps, complete worst case scenario, you’ll still be able to pay utilities and eat. Housing is the largest personal finance expense even for upper class Americans. I’m investing instead, but paying down the house must be a lifestyle-mindset changer! Having the value of the house in diversified investments is what gives me that freedom feeling.
I’m also overpaying and not just because of the psychological payments. The thing I never hear in these videos is risk. Paying off a mortgage - especially a variable rate - means eliminating a massive risk. It is literally the roof over your head. Investments vary - even if they go up consistently there can be substantial, and lengthy, dips. When my mortgage is paid off in 3 years that’s it - my family has a place to live forever.
The sense of freedom and relief having an emergency fund gives you is really hard to describe. I still remember the point where I made it a priority and not having to stress about money when your car breaks down or you get fired from a job is life changing. For that reason alone I would agree it’s the top of the list.
I was blown away by this video. I come from a poor country and I am literally financially illiterate. I am so grateful I found your channel Nischa and I thank you for from the bottom of my heart for your videos.
I saved up a 12 month safety net plus an emergency fund. Took a few years, but I got there. I cannot express the peace of mind I feel from having that security - like a warm blanket around me 😊
I just hit my $1000 emergency fund goal. I am now making the move of investing $100 every month into government bonds. (From July 2023 to July 2024) Then simultaneously when I’m investing in the bonds , I will be saving another $100 towards my 6 months worth of living expenses ( will move to 12 months when I hit the 6 months goal).
congrats!!! why bonds and not a high interest savings account? do they offer a better interest rate at the moment?
As someone who works in finance, I totally agree with your advice. I will just immediately create a 3 to 6 months expenses emergengy fund before anything else to avoid making new debts. Unfortunately in Italy we don't have tax-advantage accounts which are an amazing opportunity
S
In Italy, and other EU countries, it makes sense to invest into ETFs that are marked "UCITS". These are supposed to be tax free across EU members.
@@sledgex9 the profits when you sell them are taxed at 26 per cent
@@francy-mv6zt Profits from UCITS marked funds must be tax-free in an EU country. That's part of some eu directive IIRC. You should research it. Now it's another thing if national law hasn't been adapted to the directive. IIRC there are cases where citizens the tax against the EU courts (versus the national courts) and won because the eu directive is clear that UCITS are tax exempt on all eu members.
@@sledgex9 its simply not true. You have no clue what you are talking about!
I LOVE how you get straight to the point ughgh such a relief fr so many people waste so much time the first few minutes.
I'll have the list framed and hung on the wall - this is so precious to me, and a huge validation, and an explanation, of why I am constantly being told I am doing better than the majority of Canadians, financially. Although a single mom, an immigrant, and currently a public servant, i managed to achieve the whole list in 12 years here, and of course, what I was building for my life before that. I am a huge believer in continuous education, which helped me change careers drastically from a teacher to an IT - and now with Nischa and Ali Abdal's videos, SKillshare etc, I am learning skills and building the knowledge to start a side hustle or two. Thank you so much, Nischa, and much love 💕 from Canada 🇨🇦.
appreciate how you make your content bitesize so its easier to digest, thanks! looking forward to more content
New subscriber Nischa - love your clear, simple and (FINALLY!) easy to understand insight. Great great work
I am probably a bit older than your key demographic but I always learn something new from you. Keep up the good work.
Definitely agree with the list and thank you for all the insights!
Your videos are the only thing I look forward to on a Sunday. Thank you for being so consistent and for being such an inspiration to me.🙏🏼
you need to get better sundays
@sheikhaa100, thank you for joining me every Sunday!
@@casualuserish totally subjective. That's why the suggestion can at best only be surely for you.
Thanks Nischa! Binge-watched most of your videos, very enlightening!
I like that you consider the psychological part of investing and finances.
Glad I found your channel, thanks for the great tips Nischa!
Love your videos. You break it down in a way that anyone can understand. Thank you so much! Already subscribed about a week or so ago.
Good stuff! Thank you, Nischa!!
Possibly my favourite video you've made simply for how easy it was to follow on from whichever stage you're at. Kept each segment detailed but fairly brief too. Thanks for sharing your knowledge!
Always loving your thoughts, i'm learning from you immediately for my future financial freedom plan ❤❤❤
Well done. As a CPA in the States, nice job relating the US and UK versions of similar vehicles to each other.
I love your channel , you explain things so well
Thanks for making the video. That is some great advice. I think these basic pieces personal finance advice should be mandatory in secondary schools.
One thing about the emergency fund: remember to adjust it on, at least, an annual basis AND/OR when you expenses increase substantially. In the first case, make sure you’re keeping up with inflation by adding cash to the fund to account for Costco of living increases. Easiest way I’ve found, take your total saved, add current inflation, divide by 12. Add this amount monthly to the emergency fund. At end of year, redo the calculation and top it up as needed. Try to keep the emergency fund in easy access savings to counter around 10-20% of inflation. At major events, say having a child, getting a pet, buying a house and having service charges or maintenance to cover, recalculate the emergency fund amount needed and budget to top it up accordingly ASAP.
Love the vids, its great as usual, also thanks for the brilliant app been studying a bit using that.
Nischa, you are a machine. I don't know how you manage to pull off such awesome video content and have a full time job in an investment bank. I hope this soon frees you from the shackles of full time work to teaching us more about money management. Thank you for taking the decision to make these videos. You have it down to a T. Just look after yourself, I hope you don't burn out from all the hard work
Another brilliant video!
This is brilliant!. Thanks Nischa.
Thank you so much Nischa! ❤
Very true statement, what we are thought in school is kind of different from what the real world is. They really shine teaching us how to save and companies to invest in.. Thanks Nisha for this video still watching
Great advice reference the emergency fund ! And paying off debt
Hi Nischa. Happy Sunday and thanks for these finance gems. They help alot and I also incorporate some on my channel as well. Bless🙏
Happy Sunday! I’m glad they’re helpful
Hey Nischa! After being inspired from your journey from under 10k subs back in Dec, I finally started my own channel! Keep it up 😁😁
Thank you so much for tailoring your video to UK and US!
I have been following your Content for a while now and it's been amazing. Funny enough, I have an Accounting Degree and will be starting my Career in Banking in the next few weeks. I guess it's time I actually apply all you've taught me (through your Channel) in full force, because I'm sure I'll be able to reach greatest of heights with them Again, Thank you Nischa💪🏾💪🏾
Great video 👍 The only point I'm not sure of is where paying off your mortgage fits into the order. There are lots of variables as you say, but something which is hitting lots of people at the moment is mortgages jumping from fixed rates on very low percentages, to much higher rates when their fixed rate ends. The bank base rate is out of your control and you could easily get caught by a significant jump in your repayments. So what was low interest debt could suddenly become a high interest debt literally overnight. Main issue then would be that because houses cost much, much, more than cars and other cheaper items of debt, you're suddenly paying huge amounts of interest debt to the bank to keep the roof over your head. I'm using a combination of investing but also making significant mortgage overpayments at the same time while my fixed rate is low, so I can mitigate the impact when higher rates hit. There's no perfect answer as everybody's situation is different, but I'd be interested to hear how other people are handling this. Thanks again for the great video!
Agree with your point - the last year has seen the largest increases in mortgage rates in history and it throws a curve ball into the traditional advice that mortgage debt is good debt and not to focus on repayment. As well, in America the terms are often fixed for 15-30 years vs the 2 and 5 year terms in the UK and Canada, so the advice can differ considerably!
Agree, my mortgage has gone from 2% fixed to over 6% variable. Reducing that is my number 1 priority.
It doesn't make sense to overpay your mortgage if you're on a low fixed rate. You're better off putting the overpayment into a high interest savings account and using it to pay towards your mortgage when you come off your low rate.
Mortgages are still one of the lowest interest debts. Unless you over pay a significant proportion you’ll find your overpayments will not reduce the interest owed by very much. Current rates are not historically high we have just been used to very low interest rates for a long time. Long term the stock market should outperform mortgage interest rates.
you explain your ideas very clearly, thank you for a great video.
Yes!! Don't wait to start investing...but still pay extra on mortgage.. Thank You
This is just fantastic.. Summarised amazingly
Hi nischa, I came across your channel happy with your content lots of good information
Thank you. I took notes and am happy to try out your order of investing.
NISCHA Thanks a million very nice video God bless you 🙏
Nischa, Thanks for updating us every Sunday..
It's a pleasure!
really love this
Fantastic video as always
This video & knowledge is invaluable! Thank you so much for sharing! Sincere Regards, Marsha
Amazing Information Nischa.
Excellent info 🙏🏻
Congrats on 500K, Nischa.
Solid general advice for sure. I feel someone desperately needs to make a UK specific/maybe Canadian/regarding remortgage rates. Its certainly to the point where large increases to mortgage rates and repayments really sqews the numbers for these personal finance recommendations.
Loved this!
Thank you so much for sharing your knowledge! I've been on the path to financial literacy for a little while now. I'm finally going to stop procrastinating and make my money work for me and not the other way around. Your guidance has definitely inspired me and boosted my confidence to do so. Thank you so much again for your selfless service. Do you offer virtual consultations? Please let me know when you get a moment!
I drove my first car in my dad's name and later went to get a truck in mine after I paid off my first one and drove off the lot with the truck I wanted, its mostly about a good credit score and a loan portfolio helps as well...lenders like to see various forms of loans in your name to be less of a risk and yes you might have to put money down but not HALF of the car loan Your exactly right I screwed my credit as a young man now I own a detailing company and can't get anything with out the full amount of cash. I'm working on my credit to get better with , Love the knowledge keep it up *VRI TOKEN*
Hi Nischa. I love your channel and admire your gradual approach in teaching us how to be smart with money/finances. Could you suggest high interest saving bank in EU please. Thank you.
Thanks Nischa!
Great insights nischa....
I really enjoy listening to you talk about finances. You are very intelligent, and your British accent is comforting. I really love the British accent. You are a beautiful woman. Your smile is reassuring.
This advice/order is basically the gold standard in the personal finance world. I'm glad you are passing it along Nischa, it is fantastic advice to everyone and I definitely recommend following it.
No it is not. She forgot about Taxable investment accounts. If you max out on your tax advantaged accounts, its smart to invest your money in a taxable account as long as it is tax efficient assets like low-fee unmanaged index funds or non-dividened paying assets.
@@VS257why non-dividend paying assets?
Great video as usual much appreciate your fine work and communication
Thank you
Options for paying off mortgage will also depend on age and job security. If your job situation is precarious, if you are fearful of losing your job and are not confident about getting a commensurate job with the same level of pay and benefits, if you are a slightly older worker who is competing in an age-unfriendly job market, I would suggest paying off your mortgage. The psychological benefits are enormous. It gives you more control over your situation.
We usually have 1 month of income in an emergency fund. As for the larger 3-6 month additional fund we do not have because instead we pay $15 a month for income protection which will give me 90% of my income for up to 5 years. Also having your emergency fund sit in a mortgage interest offset account will provide a higher return in long run than a normal savings account.
Wow, I love your uploads Nischa! Congrats on half a million subscribers, you fully deserve this!! 🤗 Lia
This is a very good way that's both optimal in freeing up funds and saving money in the long run. For me personally between the debt avalanche and snowball I prefer the snowball because as I see the number of debts go down and more of my monthly expenses being cleared it motivates me to continue to clear all of my debt. To clarify, if you have no problem with motivation or financial discipline her priorities are the best I've heard and explained. Happy days everyone!
Practical advice from an expert! Nischa's breakdown of the optimal order of investing money is invaluable for financial planning. Can't wait to implement these strategies!
Brilliant video!
Great video! This is nearly exactly what I do. I love paying myself first and automating everything
VERY well done ! I say this with 40+ years in mortgage finance & banking working with credit bureaus. Different models and parameters are used by different industries but *VRI TOKEN* info is pretty much universal. If you're trying to max your credit scores, there is a happy medium between too many credit cards and none. Too many cards with zero balnce may actually hurt you in some cases. Even if you do not use them, you have a potential. To always pay cash & still have cards doesn't help your scores as well
Wise advices, I love that.
Came for the content, stay for the beauty.. and content!
Hi Nisha! Great content. Could you please upload more Investment & stock markets videos? 🙏🏼
Yea Navy federal gave me a really high limit. I applied and was denied at first so I got a *VRI TOKEN* , and I was approved for a capital one. The limit was so small lol but I took it and worked on it. Because if that it helped my credit and I believe that’s what made me finally get approved for navy fed with such a high limit. they're still working on increasing the capital one since it was so low. All in all I’m satisfied.
Love the small nod to Fight Club at 1:47
As a CPA, I agree with all your points. I appreciated your insight on mortgages, as most people fail to understand how paying off your mortgage early is a very poor use of cash. That cash can assist you in furthering your journey to accumulate wealth. It doesn't make sense to forgo 6% or more of growth in the free market to avoid more interest on your 4% mortgage that is backed by a very valuable asset.
Hello! Thank you so much for the video and all the valuable information. I currently live in Spain. I was wondering if there is an ISA account alternative in Spain or Europe? Thanks :)
Thanks for giving sound financial tips, so we hard working folks can make the best of our hard earned money. If Nischa say's it, then surly you can take it to the bank. I will be sure to share your content with friends. #investing #savings #moneytips
Nischa’s baby steps! Mr Ramsey eat your heart out sir 😂🤣😂🤣
I don't find their steps (or those of other entities like The Money Guy Show) very different, just shuffled a bit. In the end, we obtain sound common-sense financial advice from a variety of sources to make informed decisions that are best for our own financial situations. And all the channels get views. I call that a win-win. 🏆💰
Nice video - what kind of account would you recommend holding your safety net and additional fund in?
Excellent video Sister.
Week 5! Let’s get it!
Great video per usual, thank you! ✊🏾🌹
I’d love one day for you to do a personal video! Maybe like a day in life or something more personal. But as always god excellent excellent videos. Love from Miami!
Would love to see an investment portfolio video
Me watching this as a phd student- ah yes I base my decisions in life off financial decisions. In all seriousness, my first year has been a bit of a shock since I've moved to a very expensive city at the same time as prices getting absolutely insane. All the money I saved up whilst in undergrad I pissed up the wall and I'm worse off now even though I'm technically getting more. Think at the worst I've been £750 into my OD. Tbf I'm putting money into a monthly saver atm so by next year I should have the emergency fund covered (which tbf I might use to learn how to drive instead...)
Great job Nischa! Your content and video edit quality is amazing...you are a great motivation for me! Much love
Would you recommend paying off student debt in the uk or should I just consider that as a graduate tax?
another great video keep them up Do you do one 2 one paid sessions ? also would love to see a video about buying property for retirement as a investment how to best way ect
@Jesse-eckel stop spamming this channel
Standard advice but it’s much more pleasant coming from her!
I haven’t even watched the video but saw the thumbnail while scrolling and saw that you put the list right there and didn’t do this whole bait title, yammer on for 4 hours and finally get to the entire reason I wanted to watch the video. I’m so tired of that but I also understand that they need engagement and that’s a tactic/trick that’s taught. So I’m here liking and typing this rambling reply to give you the engagement you need to say thank you for giving us the dang info up front.
Which banks do you prefer: physical od mobile banks and which Ines? Thank you gor all your advice and honesty❤
In India, there is an exemption upto 200k of debt payment on housing towards income tax. But, very good work Nischa. Am a regular watcher now
Great Video Nischa! Whats your thoughts on paying off mortgages now? since the markets interest rates continue to rise! Surely once a mortgage product comes to a end its worth (If you have the money) to pay off the mortgage? I maybe stating the obvious here...
Hi Nischa love your videos but were can i find more information on all the points you have touched on as I’ve heard these points and they are great but I would love a breakdown
Thanks.
First of all i have to thank you in advance, your channel is so informative. Im only starting out with my own finances and your channel will definitely help me in the future, your one of my favourite financial KZheadrs. I do have questions for this plan, whats the difference betweeen the small emergency fund and large emergency fund? Why not have one account thats an emergency fund? I am planning on opening more than one savings accounts for different purposes, one for emergencies and one for big financial goals like buying my first house or first car. Should i open up another one for wants(mainly becuase i dont want my money sitting in a bank account) and another one for investing in myself things like skills i can learn etc? Also i am planning on opening an isa account, how much should go towards that and my other savings accounts? Could you also make a video on pensions in the uk, and whats the earliest age to make contributions in one?
Keep up the amazing work and good luck with the launch!
I am very happy here in Australia to have Superannuation where your employer must contribute 12% of your income into a super fund. Although you can contribute more up to $27,500 per year pre-tax there is no employer matching.
As a woman how do you define a man success financially etc, because our financial circumstances change over time, thankyou very much lady😃
Great video, It has been proven long term that the stock market has always outperformed the housing market. Cheers