March 24, 2017

WTOP Interview: Investment Soup - A Recipe For Financial Success

LISTEN NOW: Building a successful investment plan is a lot like making soup. Just follow these directions.
Nina Mitchell, Principal, Senior Wealth Advisor & Co-President, Colony Sports & Entertainment

Interview Transcript:

Shawn Anderson: Let's talk about making some money. Investing can seem very complicated, but like making a good soup, it all comes down to finding a terrific recipe and using the proper ingredients.

Hillary Howard: My grandmother would’ve been awesome. Here to share her recipe for investment soup Nina Mitchell; senior wealth advisor and partner at 'Her Wealth from Bridgewater Wealth in Bethesda. Nina it’s great to have you with us.

Nina Mitchell: Thank you very much, great to be here.

Hillary Howard: Tell us how to find the best recipe for our own investments soup?

Nina Mitchell: Some of us and especially women find that investing is very complicated, so these same women are great chefs and love to follow recipes. We wanted to relate building a soup or building a successful investment plan with making a soup and just like you need to do a little bit of pre-planning for your recipe, answering a few questions such as what are your investment goals, what’s your risk tolerance and your time horizon will help determine your investment plan or your recipe.

Shawn Anderson: You're one of our financial contributors on the wtop.com and you have included the recipe for carrot ginger soup. Tell us what carrot ginger soup when it comes to the investing soup version of what you having to say?

Nina Mitchell: This is one of my favorite soups; like our soup, our investment recipe has five key ingredients;

1. The first and the main ingredients are the vegetables which are the stocks and just like you have different vegetables in your soup you're going to have different types of stocks. You're going to have domestic, international, different sized companies. You're going to invest in different industries; it could be technology, financial, healthcare and the largest part of the soup with the portfolio is going to be the stocks because that’s the growth engine.

2. The second ingredient is the broth and that’s the bonds and that provides the income and stability.

3. The third ingredient is a little bit of a dose of ginger and that’s really the multi-strategy funds or provides the lower risk and it tends to be a bit more market neutral.

4. And next you want to add a little brown sugar, that’s your real estate, your commodities like gold, your oil and gas infrastructure, but you don't want to add too much because that might make it a little bit more risky than you want.

5. The last; you're going to add some butter or cash. Who doesn’t love butter right, so the fatter the better. Here you go and holding that cash is going to allow you to be a bit more opportunistic with the market, so if the market does go down and you've got some cash available to basically buy stocks at a discount.

Hillary Howard: Alright let’s talk spices, because I love spicy soup; do you put a lot of spice in, what’s the spice you have for us?

Nina Mitchell: Spice is great, but you've got to be careful and I like to think of too much spice is greed and too little spice is fear. So, some investors think that they can kind of like outsmart the market and so therefore they are going to maybe over-concentrate their portfolio on one stock and that's going to add a little bit too much spice or too much risk. And on the other hand, you can’t fear every market downturn, because investing involves risk and you need to stay committed for the long-term and just accept the fact that you're going to have risk in your portfolio.

Shawn Anderson: How do you know when investment soup is ready?

Nina Mitchell: Well, just like having a soup that simmers for a long time, you need to let investing take its course. You need to be patient and have a long-term commitment and we say money grows on money by compounding every year. We've got a number of different charts in the article as well as on our ''her wealth'' website. I can give you a quick example just you know; if you'd invest $10,000 a month for 40 years, it's 480,000 and you earn 6% then that portfolio would grow to $2 million at the end of a 40 years and that’s a pretty great recipe.

Hillary Howard: Well, so it’s not just like soup, it’s like rice.

Nina Mitchell: It just boil over, just grows.

Hillary Howard: Thanks so much Nina.

Nina Mitchell: Thank you.

Hillary Howard: That's Nina Mitchell; senior wealth advisor and partner at Her Wealth from Bridgewater Wealth in Bethesda. Check out our website WTOP.com/search Her Wealth.

Read Nina's article for all of these details: Investment Soup: A Recipe For Financial Success

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Shawn: Now you hear all kinds of deals about leasing cars, how can you negotiate a better deal if you want to lease?

Nina: Okay, well many people don't realize that they can actually negotiate the sticker price on a leased car in the same way that you would do that if you're buying a car. And since when you lease -- when you're, you know, your lease payments basically cover the depreciation, the difference between the sales price and the residual value. So it's definitely in your best interest to try to reduce that sales price as much as possible because then you'll pay you know, smaller dollars over the life of the lease. Make sure you pay attention to the down payment at the lease signing. And so here's an example, you might see an ad that says you know, lease payment is only 1.99 a month and that sounds like a great deal for thirty six months. The catch is, is that it might require a $3,600 down payment. So, if you amortize the down payment, then actually that 1.99 special, becomes 2.99. So, you really have to kind of look at total costs. 

And then lastly, dealerships use the term, money or lease factor, when they're calculating your financing costs and a lease factor is not the same as an interest rate. So, you have to make sure the dealer converts that lease factor into a comparable interest rate so you know what your financing charges are. 

Shawn: At the end of the day, does one method wind up being more expensive more often than the other, or can we tell that?

Nina: You know what, it really depends on how long, if you're going to hold the car for a long time, you're better off buying. But if you know, and if you're not, if you just really enjoy driving and you want to have a new car, then go ahead and lease. I mean, there's pros and cons to both, to be honest with you, it's not one size fits all.

Shawn: Alright Nina, great. Happy Thanksgiving to you. Alright, Nina Mitchell is with The Colony Group, for more go to wtop.com and search Her Wealth.

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Nina Mitchell, Principal, Senior Wealth Advisor & Co-President, Colony Sports & Entertainment

With over 25 years of finance, tax and investment advisory experience, Nina advises an elite group of professional athletes, executives and high net worth individuals. She is a driving force behind Her Wealth, Colony's initiative to empower women with financial knowledge, resources and confidence.