Why I DON'T Have A Brokerage Account On My Path To Financial Independence? (F.I.R.E)

Today I’m gonna answer a question that I get all the time from not only YouTube subscribers but my friends as well do we really need a brokerage account for me it’s a topic that I’m really torn about as you know I have a Robin Hood account I have a brokerage account which I will be closing and people ask me all the time why am i closing my brokerage account here are the questions that I ask myself as well as ask others when they ask me if they need a brokerage account before we dive into it if you are new my name is Brad I make videos with tips and motivation on how to get a debt save money invest for retirement all in the hopes of reaching financial independence through my own personal experiences I got introduced to brokerage accounts while just sitting around the BBQ table with the boys it was kind of like back in high school when we were sitting around trying to test our manhood with things like hey man how much do you bench I heard one of my friends ask another friend hey how’s your portfolio going and this conversation started and I had no idea what the heck they were talking about they were talking about Robin Hood’s and capital gains and dividends I’m pretty sure a bull got in a fight with a bear I had no idea what they were talking about I was waiting for talks of Sherwood Forest and Little John so I could get into the conversation but when it got to me I was completely tongue-tied I pretty much gave them the whole yeah the portfolio’s going great but I had no idea I don’t tend to be the guy that’s left in the dark for long I have no problem asking people questions so I asked him what the heck is a brokerage account and in the weeks following I downloaded Robin Hood I had ten thousand dollars invested I was up all night reading reports about companies this that and the other thing I was all in I wanted to be one of the boys and I thought that this was something that I needed to accomplish to prove my manhood and this was all before my debt free journey but still when I was investing into Robin Hood into this brokerage account something just didn’t feel right to me I had a hundred and eighty nine thousand dollars worth of debt and I just was living paycheck to paycheck and I didn’t feel like I was doing the right thing but I kept on doing it anyway so that I’d fit in with my friends about three months to Robin Hood I found out about Dave Ramsey I focused on my debt I sided I was gonna stop spending money I was gonna start budgeting which was not gonna make me any friends but I knew that that was gonna be the right thing moving forward and with that debt free journey my deposits into Robin Hood stopped and all that ties into right now I’ve been in my debt free journey for two years now I’m about to be debt free next month my income is up I’m gonna be debt-free this would be the prime time for investing this is when I should be firing up the old Robin Hood encounter getting into the new glamorous M one finance now would be the perfect time to do this so I was all excited to start investing again I wanted to start investing back into my brokerage account but then I thought back to the conversations that I have with my friends when they asked me if they should have a brokerage account because really in the back of my mind I see all these online investment apps and brokerage accounts for most people just a way to sit around and talk with the boys about how much they bench and what their portfolio looks like and how much dividends did they receive this quarter when I feel like there’s some other things that we could think about before we even get to a brokerage account not to say that a brokerage account doesn’t fit in with some people’s needs but for me and for most I don’t think it really does so here are the questions I ask my friends when they ask me if they need a brokerage account number one do you have any high interest debt I don’t care who you are whether you like Dave Ramsey whether you do you don’t I don’t care if you have high interest debt and we’ll call it anything over six percent you you need to get rid of the debt there’s no debate I think on that side when you talk to even the financial independence movement they talk about investing while in debt this and the other thing once you start pushing that 6% interest rate I think everyone can agree you have to get rid of that debt you are setting yourself so far back if you are maintaining debt paying minimums and paying interest to banks and some be honest this is where I lose most people at step number one because people don’t want to get out of debt they’re used to debt they like the comfort if that they like using credit cards and things like that if you have any debt that’s above 6% interest I’m sorry I’m a firm believer you got to get rid of that debt before you start worrying about any investments let alone a brokerage account an employee match would be the only thing that I would ever entertain because that’s free money that’s like a guy saying hey bring over a hundred dollar bill and I’ll give you $100 bills so though the employee match is definitely a need regardless but get rid of that debt please the next question after debt is have you maxed out your employee match do you have access to an employee match through your 401k now not everyone does I don’t so I can skip right past this but if you have an employee match opportunity or 401k you need to be putting money into that like I said it is free money you have to take advantage of that it’s going to compound it’s it’s it’s just the most amazing thing for retirement accounts please please please use your employee match if you have it so right there I have those first two things out of the way don’t have any debt and don’t have access to an employee match the next thing I would ask is do you have your Roth IRAs maxed out this is where the first bit of my savings is gonna go for 2020 and the same with my wife that’s $12,000 that we are gonna contribute into our Roth IRA twelve thousand dollars of savings that will never see a brokerage account twelve thousand dollars that has access to the same investment funds as a brokerage account but at a lower cost and with all the benefits of the Roth IRA the next question I ask on top of the employee match now that you’ve maxed out your Roth IRAs have you maxed out your 401k or your 403 B now for my wife and I not only do we have a 403 B but we have a 457 as well this gives us an insane amount of money that we can save tax deferred lower our w2 and put that money back in our pocket assuming a 25% tax bracket every single time you put money into a 401k a 403 B or 457 every dollar you put in you’re putting 25 cents back into your pocket that you would have given the IRS I see no need to be putting money into a brokerage account if you have access to a 401k or 403b or 457 it just doesn’t make tax sense to me after my wife and I max out for three B’s and four 57s if that’s even possible that will be a total of eighty seven thousand dollars saved for the year nineteen thousand for each 403 B 19 thousand for each 457 and twelve thousand for both of our IRAs combined and with the savings goal of a hundred thousand dollars I still have about thirteen thousand dollars to go so is this where I might want to access my brokerage account for me not really because I have access to some other things that I think should come before the brokerage account the next thing that I would put money towards if I had the money and for me I should is my HSA account my health savings account the benefits of the HSA are incredible I’ll just give you the real brief overview essentially you put money in tax-free the money grows as an investment also tax-free and if you use the money for qualified health expenses that is also used tax-free so the HSA has a triple tax advantage right now for married I could put seven thousand dollars into that and you can look for a full list of all of the qualified health benefits you’re gonna use them and the beautiful thing is you don’t have to use them right now you can save the receipts and let that investment compound over time and then later in life then put in all those receipts and get all that money back later it doesn’t have to be used right now so now with that seven thousand on top of the eighty seven I’m at ninety four thousand dollars saved for the year my IRA is acting as my emergency fund I could take those contributions out penalty free at any time that’s twelve thousand dollars and I have my one two three months of emergency fund in my Capital One money market 360 account so here’s where my friends would say okay you have $6,000 left to get to 100 does that six thousand dollars go into a brokerage account and for them maybe for me I don’t know in this continent is the beauty of personal finance but let me give you a couple of different ideas and places that I might put that six thousand dollars before I think about a brokerage account number one I might want to put that to the principal of my mortgage now I’ve come on here and said that I don’t plan on attacking my mortgage I have a 15-year fixed-rate mortgage at under 4% interest it’s gonna be gone I put 20% down so I’m kind of happy with where my mortgage is at and I know I could probably get a better return than my interest rate over time and I know that’s a debatable topic but once again that’s how I feel I could take that six thousand dollars and I could put it into my money market account let it grow at 2% save it for things like front-loading my Roth IRAs for next year or saving for a possible real estate investment or saving for a possible business venture I could just keep that money a little heavy in cash and use it for things that I might need right away or hell I saved ninety six thousand dollars I have a huge emergency fund I don’t have any debt I don’t know maybe I’ll go to six thousand of a keishon I mean I don’t know but for me I just don’t see where the brokerage account and the need for that is ever going to come into my hands until I’m in excess of a hundred thousand dollars that I’m going to be able to save over the course of a year and I know for most Americans a hundred thousand dollars saved is a lot of freaking money for me a hundred thousand dollars would be pretty much 50% savings rate which for right now on that sixty nine percent or so for the year so it’s pretty attainable every situations gonna be different right you might be in a position where you don’t have all those four or three B’s and 457 you might not have access to an HSA and now you have all this money and you’ve maxed out your Roth and you’ve done some things and the brokerage account might be right for you I just wanted to show you a couple different investment vehicles that I think about and then I will take advantage of before I think about using a brokerage account and building my portfolio and buying all these stocks just so I can sit around the barbecue of my friends and tell them how my portfolio is doing I would much rather tell them that I’m out of debt I have a Roth IRA that I could use for an emergency fund if I need to I’m maxing out my retirement accounts I’m building a health savings account and I got a little bit of money left over to save for business real estate or a possible vacation that just sounds like the best plan for me and it’s the plan that I’ve built over the last two years of my debt free journey because I know my way is not perfect get down in the comments below give me your thoughts of a brokerage account let me know if what I just told you is completely far-fetched you kind of agree with me you disagree with me that’s fine just because you disagree with me doesn’t mean that you’re right I’m wrong doesn’t mean anything I would love to hear your feedback because that’s how I learn until I see on the next one guys stay positive work really really hard always be kind to others I hope you have yourself an amazing day and a better tomorrow