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Investing in the Stock Market Using Index Funds – Pros and Cons – Part 2 5 Reasons To Avoid Index Funds
I see many money coaches promote investing in the Stock Market using Index Funds.

As I shared with you in Part 1 of this articles’ series, the main reasons some people choose to invest using Index Funds are the ‘passive nature” and relatively low cost of this kind of investing.

That’s why IRA and 401K accounts offer options to invest in index funds. If you missed Part 1 training in this series, you can also catch up with it on my Youtube channel Millen Livis Channel Wealth.

While Index Fund investing has its merits if you want to take a broad and passive approach with your investment portfolio, there are many reasons (and I’ll share with you top 5 of them in this article) why it may NOT be the best way to achieve your investment goals.

5 Reasons To Avoid Index Funds

1. Lack of Downside Protection.

Over the long term, the Stock Market has proved to be a great investment. However, ALL financial markets go through “bumps and bruises” periods. We’re witnessing a VERY bumpy phase in the Stock Markets right now.

Investing in index funds, for example, in the fund that tracks the S&P 500 index, will give you the upside when the market is going up, but it will leave you completely vulnerable to the downside when markets crush or go through correction.

Remember, Index Funds are Mutual Funds and you cannot place a stop-loss order or a trailing stop order, which would trigger a sell of a stock to limit your losses on certain stock positions.

In other words, limit orders do not apply to the trading of mutual funds. So, you kinda stuck with your Index Funds position unless you decide to sell it manually.

2. Lack of Ability to Adjust Asset Allocation.

Index investing does not allow for Asset Allocation adjustments.

One of the risk management tools is not to invest in any specific stock position more than 5%.

If a particular stock in a fund becomes overvalued, it actually starts to carry more weight in the index, increasing your portfolio exposure to that stock.

So even if you have a clear idea of a stock that is overvalued or undervalued, if you invest through an index fund, you will not be able to adjust – no be able to act on your knowledge.

3. No Control Over Index Fund Holdings

Index Funds are creates as a basket of stocks that are included in some market indexes.

When investors buy an index fund, they have no control over the individual stocks in the portfolio.

You may have specific companies that you like and want to own, and other companies that you couldn’t care less about…

For instance, you may dislike some companies in the Index fund for moral or other personal reasons.

It could be issues with the way some companies treat the environment, or their employees, or the products they make.

The components of index funds are out of your control.

4. Limited Exposure to Different Strategies

There are various strategies that you can use to invest in the Stock market.

Unfortunately, buying an index fund doesn’t give you access to a lot of these strategies.

Yes, Index Funds’ investing will give you diversification.

But that can also be achieved with as few as 10-20 stocks, instead of the 500 stocks that the S&P 500 Index would track.

If you do a bit of research yourself or subscribe to good investment research letters, you may be able to find the best value stocks, the best growth stocks and the best dividend-paying stocks, and use other investing strategies.

And based on your research, you can combine your stocks into a smaller, more targeted portfolio, that is better positioned than the overall market, or one that’s better suited to your personal goals and risk tolerances.

Because different investing strategies can be combined to provide investors with better risk-adjusted returns.

5. Diminished Personal Satisfaction

Frankly, investing can be worrisome and stressful, especially during the times of market turmoil like we experience right now.

It’s true that selecting specific stocks may leave you constantly checking quotes, and can keep you awake at night…

But investing in an index funds will not ease these worries.

You can still find yourself constantly checking on the stock market and feeling worried about losing money.

On top of this, you will diminish the satisfaction and excitement of making good investments and being successful with your money.

The Bottom Line:
- While Index investing is a popular investment strategy, there are reasons why some investors (myself including) might want to avoid index funds.
- Although index funds may be low cost and diversified, they prevent seizing some great investment opportunities.
- Finally, index fund investing does not provide protection from market corrections and crashes.
In the next week’s article – the Part 3 of this series – I’ll talk about costs of investing using Index Funds.

To your Health, Wealth, and Freedom!

Millen Livis
September 3, 2023
Investing in the Stock Market Using Index Funds – Pros and Cons – Part 1: 4 Main Reasons to Use Index funds

The other day, I saw an eye-catching Headline in the Wall Street Journal…“Index Funds Are the New Titans of Wall Street!”

Are they, really?

Well, many “financial coaches” teach “Index Funds’ Investing” as a “Passive Investing” Revolution in the stock market.

If you ask me… I believe that EVERYTHING has a front and a back… Pros and Cons.

In this and the next 3 articles, I am going to cover the good and the not so good of the “Investing in the Stock market Using Index funds” strategy.

So, first of all, Investing in Index Funds is considered to be passive investing as opposed to Investing in Stocks, which is active investing.

Even though Index Funds have a great success in the U.S. Stock Market, they still contribute to only 15% of total holdings. So, whatever you may think of them, Index Funds are not a dominant force of the stock market as a hole.

But let’s start with defining what index funds are.

Index funds are mutual funds that contain a basket of stocks or securities that track the components of an existing financial market index. For example, there are index funds that track the Standard & Poor’s 500 Index (referred to as S&P 500).

Although investors can’t buy an index per se, they can invest in index funds that are designed to mirror the index.

In other words, an index fund tracking the S&P 500 index, would have all 500 stocks from the S&P 500 in the fund.

Therefore, index funds tend to provide investors with

1. fairly broad market exposure,

2. relatively low operating expenses, and

3. usually low portfolio turnover (which helps decrease taxes on capital gains).

So, basically, an average index fund investor is buying all of the S&P 500 companies or other market indices at a low cost.

So far, so good, right?

Now… For beginner investors, hands-off long-term investors, and those who don’t want to spend much time managing their investment portfolio, index funds offer a relatively low-risk way to gain exposure to a wide range of equities.

People who have retirement accounts are likely to invest in index funds because they are considered “ideal holdings” for individual retirement accounts (IRAs) and 401(k) accounts.

I’ve been asked whether index-only investors can lose everything.

Frankly, I don’t think so, because this would entail that ALL stocks in an underlying index effectively go to zero, which is highly unlikely.

As a matter of fact, the total book value of all the underlying stocks in an index fund is expected to increase over the long term.

So, here are again, the 4 main reasons to use Index Funds to invest in the stock market:

1.    Index funds offer broad exposure to stock market since they track particular market indices. In other words, Index fund investors are effectively buying all of the underlying index companies (e.g. S&P 500 companies).

2.    Index funds’ Investors buy the companies in the underlying market indices at a lower cost than they would pay for actively managed mutual funds.

3.    Index funds’ investing is considered a passive investing and they are suitable holdings for tax-deferred retirement accounts such as individual retirement accounts (IRAs) and 401(k) accounts.

4.    Since Index funds have inherent diversification feature, index funds’ investors will not lose everything, even during the time of market corrections.

That’s all for Part 1.

Share it with people who could benefit from this information.

In the next week’s article, I’ll talk about 5 Reasons To Avoid Index Funds.

Until next time…stay blessed, stay in your power.

To your health, Wealth, and Freedom.

Millen Livis

September 2, 2023
The Risks of CBDC & How to Protect Your Money

For centuries, cash and traditional banking services have been the go-to for financial transactions. But now, central banks want to change it and offer their own digital currency.

The official idea behind CBDC is to provide a digital alternative to cash and traditional banking services, and to increase financial inclusion for people who don’t have access to banks.

But this is NOT a complete picture!

As you may know POWER and MONEY are closely interconnected.

Power implies control and CASH is not easy to control…. Government-controlled digital currency implies full control over your financial life…

There’re some serious dangers to this whole CBDC thing!

Let’s go over some of the dangers together:

1.   The risk of cyberattacks.

Digital currencies are prone to being hacked, and central banks would need to invest a ton of money in cybersecurity to prevent their CBDC from being hacked.

With all transactions taking place in a digital environment, hackers and other malicious actors have greater opportunities to steal funds or personal information.

Cybersecurity breaches could lead to significant financial losses and personal harm.

THAT could lead to major financial instability and possibly even collapse of the whole system. Yikes!

2.   The risk of privacy violations.

CBDC would be a centralized currency, which means that every transaction would be recorded by the central bank.

This would give the central bank access to everyone’s financial data, and this personal financial data could be used for surveillance…. similar to Chinese Communist Party’s social credit score system.

Government may influence how you spend your money… if you buy too much alcohol or donate to associations that are not supported by the government, you can be fined or, worse, your access to digital money can be blocked.

Yes, Digital currencies allow for transactions to be tracked and monitored, which can give governments unprecedented access to your financial information.

This raises concerns about government surveillance and the potential for abuse.

It could lead to serious invasion of privacy, and it could make people lose trust in the financial system.

Nobody wants the Big Brother watching their every financial move, right?

3.   The risk of financial instability.

If CBDC leads to a significant shift away from cash and traditional banking services, it could create a scenario in which people would rush to withdraw their funds from banks.

The whole banking system may collapse, which will create a major financial chaos.

The central bank would need to manage the transition to CBDC very carefully to make sure this doesn’t happen.

You don’t wanna end up with no money to buy your overpriced eggs and veggies, right? LOL

4.    The risk of centralization.

As I mentioned earlier, CBDC would be a centralized currency, meaning that the central bank would have total control over the monetary system.

This could lead to a loss of financial freedom and, pretty much, complete government control over your financial life.

That would be a serious threat to your individual rights and freedom and would clear the path to government overreach and the potential for abuse.

You don’t wanna lose your financial freedom, right?!

Here’s the thing…

Time is running out!

The implementation of the Central Bank Digital Currency is on the horizon, and you need to prepare yourself NOW.

Here’s HOW:

1.   Educate yourself about the risks and benefits of CBDC.

Learn about the cybersecurity risks, the privacy concerns, and the potential impact on financial freedom.

There’s a ton of information out there, so start doing your research now. Watching this episode of my show is great start!! J

2.   Make sure your digital security is top-notch.

Use strong passwords, keep your antivirus software up-to-date, and avoid clicking on suspicious links or downloading unknown software.

Also, protect yourself by using two-factor authentication when you login to data-sensitive sites.

CBDC is a digital currency, so you’ll need to make sure your digital assets are secure.

3.   Diversify your financial assets.

Don’t put all your eggs in one basket – spread your money across different types of assets, investments and accounts. Diversify your money among cash, value / dividend-paying stocks, gold and silver, cryptocurrency, or other assets….

For example, investing in precious metals offers a tangible, reliable, and stable investment option that can be easily bought and sold.

Whether you’re a short-term or long-term investor, investing in precious metals is an excellent way to safeguard your financial future.

And by spreading investments across multiple assets, you reduce your risk by being exposed to any single asset class.

This will help you minimize the risk that CBDC can cause on the banks in a form of financial instability.

4.   Consider using alternative payment methods.

While CBDC may become the new norm, it’s still important to have other payment options available.

Make sure you’re familiar with different payment methods and have them set up and ready to use (e.g. debit cards, PayPal, or cryptocurrency).

5.   Become financially savvy – stay informed and engaged.

Advocate for policies that protect financial freedom and privacy, and stay up-to-date with the latest developments on CBDC.

By being financially savvy, by staying informed and engaged, you can help shape the future of CBDC and ensure that it’s implemented in a way that benefits everyone… as much as possible.

So, there you have it – some actionable steps you can take to prepare for the CBDC implementation.

Don’t wait until it’s too late – start taking action now.

To win the money game you’ve got to know your available options and choose them strategically!

Financial ignorance is VERY expensive!

if you want to have a PRIVATE money strategy call “Never Worry About Money Again” (Value $500), you can schedule it at speakwithmillen.com. NO COST TO YOU!

It’s on me, MY GIFT to you!

You can also sign up for my youtube channel Millen Livis Channel Wealth to watch the More Money with Millen weekly show.

To Your Health, Wealth, and Freedom!

Millen Livis, MS, MBA

Holistic Financial Independence Mentor

August 26, 2023
5 Tips to Overcome Fear of Investing

I was recently asked in my private Wealth Building For Powerful Women group: “How can I overcome the fear of investing?”

And because it’s such a common block for many people, especially after experiencing huge “paper losses” in the recent markets’ swing to bear territory, I feel that this topic deserves a closer look.

By the way, I suggest that you also check out the 3 Common Misconceptions about Investing.

Tip #1: Get Solid Knowledge About Strategic Investing

It’s natural for us to feel fearful about doing something we don’t understand well or don’t have solid knowledge about.

Remember your math or science classes at school? The subjects seemed complicated and even scary sometimes…until you learned and understood them.

Even driving a car at first, when you were just getting started, felt like a complex skill, right? And now you can drive it with your eyes closed… well, almost. LOL

The exact same approach applies to becoming knowledgeable about investing – the more you learn and practice, the more competent, confident, and discerning you become about making financial decisions.

In addition to learning about different investment strategies, different financial instruments available to you, and various ways to manage investment risk, you can also learn how to deal with market cycles, how to plan for retirement, and how to create a solid investment portfolio that will carry you over market downturns and economic recessions.

You can read books (e.g., Tony Robbins: “Money” and “Unshakable”, or Millen Livis: A Shift Toward Abundance: Pathway to Financial Freedom) , read financial publications (e.g., Wall Street Journal) and financial articles on the Internet, listen to financial podcasts (e.g., The Investing for Beginners or The Investor’s Podcast), take online or LIVE investment training (e.g. Grow Wealth with Stock Market Investing and Grow Wealth with Real Estate Investing), watch financially-inclined youtube channels (e.g. MillenLivisChannelWealth)

*When it comes to investment training, it’s very important that you trust and connect with the instructor/guide.

Tip #2: Think LONG Term

Think LONG term – don’t worry about “making it happen” and “getting it right” in a short time. All strategic investors have a long view investment horizon.

Having a longer timeframe helps mitigate risks from cyclical financial markets, but it also gives you time to test your strategies, make adjustments, and decrease pressure to hit “home runs” with each investment.

So, don’t judge your investment portfolio’s performance after just a month… or even a year.

Investment portfolios can sometimes take a decade or two to produce that long-term 9% + returns. Be patient and let your portfolio grow into its full potential.

Tip #3: Start Small

Allow yourself to screw up at the beginning. That’s normal with just about anything, right? That’s how we learn.

So start small, give yourself room to learn through experience. You can even start by using “paper-trading” options that some brokerage companies offer….

Also, decide how much you can stand to lose (it’s called “risk tolerance”). You can use “trailing stops” to control your losses.

What I like about stock investing is that it doesn’t require large sums of money upfront (if you’re planning to invest on your own instead of hiring an investment advisor to manage your money, which usually requires a large minimum – from $250K to $500K).

There are a number of micro-investing services out there on the Internet that can help you get started investing when you don’t have a lot of cash to allocate. Do some research and read users’ reviews before opening an account.

Tip #4: Adjust and Refine

We learn the most from our mistakes. If what you were doing at first isn’t working out – PAUSE. You can always adjust and refine your strategies as you learn and become more experienced.

It’s totally OK to change your strategies if you realize you made a mistake. The worst mistakes are made when we panic.

When you make up an investment portfolio, you want to take into account the amount of money you have to invest, your investment goals and timeframes, and your risk tolerance.

Your investment portfolio needs to have an adequate asset allocation that takes all of these factors into account.

Always think about striking a balance between GROWING your money and PROTECTING it at the same time.

And if your financial situation or needs change, you can always adjust your portfolio’s asset allocation. So, there’s no need to be frightened about making a mistake – you can always course-correct.

Tip #5: Keep a Bigger Perspective

Let’s say you lose money on some of your investments.

First of all, if you do your research and know what you’re doing, you can NEVER lose 100% of your invested money.

Secondly, you’re not going to jump into financial markets with ALL your investable funds, right? And so, since you’re not investing the cash you need to survive tomorrow or next month, it’s OK to allow some “paper losses” while markets go through temporary corrections.

If you don’t panic and don’t sell when everybody panics, your paper losses can recover…

When you’re investing for long-term goals, you don’t need that money for a decade or more. And in the long run, the markets tend to go up.

The Bottom Line

The fear of investing is not easy to overcome. It is especially hard if you lost a lot of money in the past. Nobody likes losing money…even if it’s just temporary.

So, I understand that making that first leap into the markets may feel hard and scary. But just because it feels hard and scary to you right now doesn’t mean that you should avoid investing altogether.

Think about all those times in your life when you felt scared before you learned how to do it well. Biking, swimming, driving, speaking a foreign language(s)… And once you learned the skills, it became natural for you…

And so, use the 5 tips shared in this article, learn about investing, and practice until investing becomes another natural skill for you.

To Your Health, Wealth, and Freedom!

PS: Click below to DOWNLOAD the free Wealth Planner
https://daretochangelife.com/wealth-planner and start taking simple steps on your road to Personal Freedom and Financial Independence.

July 20, 2020
Odd Holiday Message
I believe you’re reading this because you’re not where you want to be financially in your life.

Because there’s a gap between your aspirations and your current financial reality.

Yes?

And I also suspect you have tried to change your financial situation before. Probably a few times….

Tight budgeting? Done.

Money mindset program(s)? Done.

Dabbling with stock investing? Done.

Investing in your own business? Done.

You may feel like you’ve tried so many things already yet without a dent in your bank account’s balance, let alone an improvement in your financial new worth.

Does it sound a little like you or someone you know?

You’re so not alone!

I certainly can relate…

It was December 2008… I was sitting in front of my computer in my small rental apartment…after massive losses in my investment business, car accident, divorce…

Feeling hurt, scared and overwhelmed, looking at my bank account balance (after paying the divorce attorney)…and thinking:

“How the hell did I get here? How did I get to this financial mess?? And is there a way out from here?“

Well, I now know that the answer is an unequivocal YES!

I just couldn’t see things clearly at that time – I was too close to my troubles, really stressed and focused on what wasn’t working in my life (which felt like EVERYTHING during that time).

Look…whatever your financial situation may be right now, it’s NOT the end of your life story. It’s just a chapter and…likely, a wake-up call.

There is always a way out and way forward if you choose to make real change, instead of ignoring the need for change by putting another Band-aid on the situation…

Change is not something that most people seek or welcome when there is not enough “pain.”

Change is often uncomfortable, unpredictable, and even scary (because it’s unknown).

And it seems that human nature is such that we delay/avoid/ignore a need for changes in our lives until things get really ugly.

Until we get so uncomfortable/hurt/disturbed that we can no longer go on with businesses as usual.

Why am I talking to you today, during the holiday season, about the real change?

Because I see too often that people wait…and wait…and wait until they lose their health, relationship, money, hope…

Because this is the time of the year (Hanukkah, Christmas, New Year) to MAKE TIME and reflect on your life experiences.

It’s the time of the year to make plans and contemplate what you want to let go of, what you want to have more of, and what you want to accomplish next year…

So, I encourage your to MAKE TIME for yourself, print and use my Wealth Planner (click HERE to download it right now) and really immerse yourself into “your mind’s journey” that this Wealth Planner takes you on.

Create a BIG picture for your journey to Financial Independence:
1. Start with WHAT you want to create/experience;
2. Dig out the skills and experiences you already have and those you may need to upgrade/acquire;
3. Outline money habits you’ve got to change, old thinking patterns that must stop and the new ones you want to practice more;
4. Assess your environment and inner circle (what/who do you want to keep and what/who to let go?);
5. Decide what changes you want to see in your physical and emotional body.
If you feel like “I know it already”, consider that this Wealth Planner is a tool to “re-mind” your old conditioned mind so that you allow yourself to snap from “survival” or “just enough” state and leap to elegant joyful State of Creation.

So, yeah, this is my “odd holiday message” to you.

Let me know how it lands on you. What resonated? What frustrated? What inspired?

To your Peace, Power and Prosperity!

P. S. Some REALLY cool Wealth trainings are coming your way in 2020. But I have something SPECIAL FOR YOU RIGHT NOW!

Something that would help you JUMP START Your Investing Journey OR RE-CALIBRATE it for better RESULTS.

I am talking about The Wealth Collection Holidays’ Special – a bundle of my most transformational and insightful programs that focus on helping you make your money work for you.

AND you can own LIFETIME access to these programs with the incredible 70% OFF (SAVING $700) if you ACT by January 1, 2020!

Wanna look what’s inside?

Check it out here: WEALTH COLLECTION HOLIDAYS’ SPECIAL
December 13, 2019
13 Money Lessons your Kids are NOT TAUGHT in Schools.

Did you have a great experience in school when you were young?

I had a mixed one… and very little of what I was taught was important for my success in life.

You see, some kids have a great experience in schools. But, sadly, many feel that it was some of their worst experiences.

Not only some kids experience bullying and social pressure as “unpopular”, but many also have their individuality and genius crushed. No wonder homeschooling is so popular these days!

And what bothers me a lot is how little practical skill-sets our kids get in schools and colleges.

Specifically, I am referring to basic financial education.

Not only our kids are not taught about the history and origins of money, the basics of financial literacy and financial responsibility, but they are also often get conditioned to fear money and/or to perceive the desire to be wealthy as a bad or unworthy pursuit.

So, if I could propose the basic financial education to our kids or even young adults, here’re 13 Financial Literacy Tips I would include:

1. Money is not a “thing” – it has the meaning YOU assign to it. So, it could be something that has a positive and empowering role in your life. And the best part is that it’s YOUR choice how you perceive money – a friend or a foe.

2. Wealth is not something you acquire…It’s what you create in your life. It’s also not the destination but a journey. This journey will build your character, test your strength and teach you important lessons.

3.     Money is a form of exchange of value. In the old days, people traded commodities (e.g. grains or chickens, etc.) for things they needed. Then they invented money (e.g. gold/silver coins and later notes) as a more convenient token of exchange. The more people you serve and satisfy the demand they have, the more opportunities you create to earn more money.

4.     You must know your cash flow – how much money is coming IN and how much money is coming OUT. And cash flow coming IN MUST BE MORE than cash flow coming OUT. If it’s the other way around, you’re bound to be a slave to money.

5.     You’ve got to understand your personal financial statements. That includes your bank statements, credit card, and mortgage statements, etc. Ignorance is expensive.

6.     You must understand different kinds of debt. “Good debt” is the leverage that helps grow wealth. “Bad debt” is high-interest consumer debt (credit cards’ debt) that hinders your efforts to grow wealth.

7.     You’ve got to know the difference between assets and liabilities.  For example, a house with a mortgage is a liability, not an asset.  A car with a car loan is a liability, not an asset. More liabilities = less money for you. More assets = more money for you.

8. There are three types of income: Earned (paycheck from a job), Capital gain (when you sell the asset that appreciated in value), and passive income (when you receive money without exchanging your time for money).

9.     Savings are seeds of your wealth. Investing is the fertilizer for growing your wealth. Strategic investing is how you make your money work for you.

10. To accelerate your wealth growth you must have multiple sources of income. Multiple Sources of passive income is how you become financially independent.

11.   You can create wealth by building a business that offers products and services that people need, want, and are willing to pay for; OR by investing in various assets that provide value appreciation/growth and income (e.g. real estate, stocks, etc.)

12.   It’s not about how much money you make but how much you keep. Understand how to manage it and how to minimize your investment risk. Know when to act and when to wait. Be mindful of fees and taxes. Invest in your knowledge – THAT’s the investment that has high returns.

13.     NEVER put all your eggs in the same basket. Diversify your investments, develop skill-sets in different areas you want to invest in. Take responsibility for your financial sovereignty.

What do you think about these tips? Which ones you’d share with your kids? Which ones resonated with YOU the most?

To your Health, Wealth and Freedom!

December 6, 2019