My Income Streams and Where I Put My Money Investments,

tylorbell

NYC, Entrepreneurship, & Healthy Living   Howdy, I'm Taylor. I'm a 20 something former management consultant and ivy-league grad from California turned solopreneur in New York City, and I love making videos that follow all of the above. Stick around 😊

Transcript

00:00Hello from New York City, this is Taylor, and today we're going to talk about money.

00:06An updated video from my last one where I discuss my investments and overall money strategy is

00:11long overdue, and a lot has actually changed since I recorded that video even though it's

00:15only been one year. The main difference being that I am now a working woman with multiple

00:20income streams. So buckle up for some investments, Roth 401k, Roth IRA, health savings account,

00:25and liquid assets discussion. I promise it will be more fun than it sounded just now.

00:31Alrighty, for some context, what income streams do I even have coming in? In order of magnitude,

00:36my main income stream is from my full-time job as a management consultant. Did you know I was a

00:41consultant, by the way? Did you know that? And those paychecks come in twice a month. Now, of course,

00:47a substantial portion of them would go into my Roth 401k, my health savings account, etc., but we

00:53will go over those things soon. My next largest income stream comes from YouTube ad revenue, and

00:58it is becoming slowly a larger portion of the pie, I'm very happy to say, and that paycheck comes in

01:03once a month. After those two income streams, which by far make up the largest bulk of the pie,

01:08my next largest stream is what I still make for my reselling business. For those who don't know,

01:13I used to actively thrift clothes and flip them online for profit. This was a super fun side hustle

01:19that I started during quarantine, and even though I've now sold off a large majority of my inventory,

01:23I still make sales every single week that my mom packages up for me and ships on my behalf from

01:29California. Thanks, mom. So that's not a steady paycheck like my first two income streams. I just

01:34request a direct deposit after each and every sale, so I have quite a few little $15, $20, $30 direct

01:40deposits hitting my account pretty frequently. And of course, this income stream will eventually taper

01:44off as I in time sell off most, if not all of my remaining inventory, but at this point, it is nice

01:50passive income. And my smallest income stream at the moment, which will eventually surpass my reselling

01:55income stream, is from affiliate marketing. So this isn't a very big chunk of my income yet, but it isn't

02:01nothing, and I assume it will grow as my YouTube channel grows as well. Oh, and my final income stream,

02:05I can't believe I forgot this one. It's from you guys hitting the like button. Sorry. Okay, but also not sorry.

02:14Okay, so where do I put this money once I receive it? That's what this video is about. So I sort of

02:18think of this whole process in terms of filters. So I get paid this whole amount. This amount goes

02:23into various retirement accounts. This much goes into my liquid assets and whatever is left over

02:29after my expenses gets invested. Okay, so with that, I'm starting with my Roth 401k, which is a type of

02:35retirement savings account that's offered through my employer. The difference between a Roth 401k and a

02:40traditional 401k is that the Roth 401k is funded with after-tax contributions. So when I start taking

02:46out that money when I'm 72 years old, it's a tax-free withdrawal, which I think is pretty cool

02:51because at that time, I hope to be in a higher tax bracket. And even if I'm not, for whatever reason,

02:55it is still a tax-advantaged account. So last year in 2021, the maximum contribution was $19,500,

03:02and I maxed that out. Even though I actually started working in April of 2021, so four months into the

03:07year, I elected for a disproportionately large percentage of my paycheck to come out each

03:11month. So that way I would hit that $19,500 threshold by the end of the year. This year in

03:162022, the maximum contribution is now $20,500. So now I have a little less than 20% of my base

03:23salary paychecks coming out each month to go into my Roth 401k. Now, this is important. Would I

03:28recommend that everyone max it out? It really depends on your situation. If you need to have more liquid

03:34assets at any point in time to cover your expenses, to take care of your family, whatever it may be

03:39for you, then obviously no, I would not suggest to max it out. I would, however, strongly recommend

03:44that anybody put in at least as much as your employer will match because that is literally

03:49free money and one of the perks of working a corporate job. So this relatively large chunk of

03:53money that I have sitting in my Roth 401k, is it just sitting there, you ask? You probably aren't

03:58asking that. But what do I have it invested in? When I chose how much of my paychecks I wanted to go

04:02towards the Roth 401k, my employer's interface gave a list of options on how you want that money

04:07invested. And I just chose to put 100% of it into an index fund that tracks the S&P 500. That's just

04:12how I roll, okay? I stick with the basics and I'm not touching that money for what, 48 years? So

04:17moving on to the Roth IRA, this is an individual retirement account that like the Roth 401k is funded

04:24with after-tax dollars. The max contribution in 2021 for folks under 50 years old was $6,000. And I

04:31maxed that out as well. And this money sits pretty much in the same exact investments that my personal

04:36investments do. And we will go over what those are soon. Next is my health savings account or HSA,

04:41which is another type of individual savings account, which lets you set aside money on a

04:45pre-tax basis to pay for qualified medical expenses as long as you are under a high deductible health plan.

04:52Now I know that sounded complicated and boring, but I will say that the kicker of an HSA is that the

04:57earnings on the account, as well as withdrawals for eligible medical expenses are also tax-free.

05:02It's like double tax advantage. So in that way, it is superior to 401ks, Roth IRAs as a retirement

05:08vehicle. Even still, despite these lovely tax advantages, I was still a little unsure on how

05:13much I should contribute to it when I was first starting my job and making these decisions because

05:17the maximum contribution of $3,600 for self-coverage felt just a little high. However, after more research,

05:23I did decide to max it out. A quick interlude to say that, again, as I sit here talking about maxing

05:30out these accounts, I feel a little douchey because you got to remember, I do not have kids to take

05:35care of. I don't even have a dog to pay veterinary bills for. Although I do FaceTime my dogs every day,

05:40so it kind of feels like I'm financially responsible for them, but I'm not. My parents are. I also lived at

05:45home with my parents working from home for the first six months of my job. So my expenses were rock

05:51bottom. I didn't have to pay rent, and I just saved a lot of money. So that is a huge reason why I was

05:55able to set aside this much without any problem. And now that I've moved to New York, I am still

06:00planning on maxing out these accounts because I do actually live quite cheaply besides my rent,

06:04which is not cheap. But it's not as much of a no-brainer that I max out these accounts now

06:09than it was when my expenses were basically zero. Okay, moving on to something a little more fun,

06:14if I may say so. The final filters. Liquid assets and investments. So whatever is left of those

06:20paychecks after some of it goes into those various retirement accounts that we talked about,

06:24ends up in my checking account, which is what I consider my liquid assets. Easily accessible.

06:29Money that I make from YouTube ad revenue, reselling, and affiliate marketing also gets directly

06:34deposited into that account. With that chunk, that chonk. I'm thinking of the chonk meme. Okay,

06:40sorry. With that chunk that is left in my checking account, so my liquid assets, I leave enough in

06:45there for two things, which can pretty much be summarized to my needs and my wants. So starting

06:50with my needs, I leave enough in there to, of course, pay off my credit cards, to pay for rent,

06:55to pay for food, anything that I need. And then the second thing, the wants. I leave enough in there

06:59if I want to take a spontaneous weekend trip to pay for a flight. Anything that is just slightly more

07:05pricey than my usual expenses. You could call it a travel fund, I guess, whatever you want, but I just

07:09like to leave enough in my liquid assets to be able to cover things like that. And that brings us to

07:13the final filter, investments. Whatever amount of liquid assets I decide does not have to be

07:19immediately liquid, I invest. I don't have a set amount that I invest every single month, but I do

07:24have an absolute minimum of $1,000 per month, which I know because I set up an automatic transfer for

07:30a thousand to go from a checking account into my Charles Schwab brokerage account. On any given month

07:35though, if my checking account is looking normal, then I won't take out anything additional besides

07:40that $1,000. On other months, if my checking account is looking a little thick, then I will

07:44take out even more to invest. When I get my end of the year bonus, for instance, I will take out a lot

07:49more than that. So it just depends. And of course, if my liquid assets ever fall behind for some reason,

07:53then I can at any point stop that $1,000 automatic transfer. And what do I invest this money in?

08:00You are probably wondering. I invest almost all of it in VU. VU, for those who don't know,

08:05is the Vanguard ETF that tracks the S&P 500. I used to invest in SPY, which is another ETF that

08:12tracks the S&P 500. But upon learning that VU has a lower expense ratio of 0.03% compared to SPY's

08:190.09%, I just switched over to VU and have never changed. Besides VU, I do hold equities in a fair

08:26share of individual stocks as well, which for the most part are also solid blue chip stocks that are

08:30definitely part of the S&P 500. But I just want to own a higher concentration of those stocks. The two

08:35individual stocks that I buy the most are Apple and Microsoft. I also bought some Coca-Cola recently

08:40and I actually do have some Tesla, which is probably the riskiest thing that I have. And for

08:45those who I know will ask, I have $0 invested in crypto and I don't expect that to change anytime

08:51soon, but quite all right if you disagree with me. So as you can tell, I generally stick to the basics

08:55and like to put my money in safe positions, things that follow the S&P 500 and then leave it for years

09:02and years and years and don't touch it until I absolutely have to. That being said, while the

09:06risk profile of my actual positions is pretty risk averse, I am aggressive in terms of having 100%

09:12of my investments in stocks versus, you know, bonds or something a little less volatile. I'm young,

09:17you know, I'm 24, so I don't think that's a problem. But as I get older and start thinking about,

09:22you know, things like buying a house, buying a car, that is something that I will consider. Wow,

09:27that's an aggressive light change. I know what we can do. Hope you guys liked this personal finance

09:32update. Let me know what you guys want to see next and I will respond to your comment and I will see

09:36you very soon. Bye. Base salary paychecks. Okay. Oh my God. Are you done? You done? Nope.

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