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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
ONE Skill You Must Have to Be Financially Successful

Most people think that if they only had a lot of money, they will feel financially secure…

NOT TRUE!

HAVING money doesn’t mean you know what to DO with it.

MANY high-income earners live paycheck-to-paycheck and are NOT financially free.

During my complimentary money strategies sessions, I speak with a lot of women from all walks of life. And MANY successful high-income earners…live paycheck-to-paycheck and are not financially free!!

And that’s not all.

While over 63% of Americans are currently living paycheck-to-paycheck, many are now worried about safety of their money at the banks!

NOW, more than EVER before, you’ve got to be financially savvy, so that you can make better financial decisions.

We all wear many hats in life – parents’ hat, spouse hat, employee or entrepreneur hat, and… money manager hat – your money manager.

Each “hat” you wear requires certain skillsets – like communication skills, parenting skills, specialized skills in your area of expertise as an employee or entrepreneur…

Some skills are “nice to have” and some skills are necessary.

And there is ONE particular skill that everyone – regardless of your education, type of work, your upbringing or your natural talents – must have to be financially successful.

This skill is… Savvy money management.

And since it’s such a foundational skill, it’s outrageous that it’s not taught at schools and colleges…

You’ve got to be financially savvy!!

You must know your numbers – what’s coming in and what’s coming out.

You must have a healthy relationship with your money.

Yep, you’ve got to know how to be intentional with your money – how to manage it, how to grow it and how to protect it.

Whether you manage your retirement funds yourself (like I do) or outsource it to financial advisers, you’ve got to be an informed consumer!

Money is like a game and, sadly, many people lose it before they even start….

Financial ignorance is very expensive.

Everybody wants to be financially free, yet most people don’t know HOW to WIN the Money game OR don’t believe it’s possible for THEM to be financially free… so, they don’t even start!!…

And that’s where I come in…

When I work with clients, I use the MILLENaire Method – my holistic system for becoming financially independent.

This method addresses 4 areas of life that influence financial success the most: money mindset, money management, money investing, and… spirituality.

This is the exact method that I used in my life to become financially independent in 7 years….

Financial Freedom doesn’t happen by accident.

You must have a clear intention, commitment and a plan.

I was the least likely person to become financially free… was divorced, depressed, and broke… yet now I’m financially free for over 13 years and own homes in South Florida and in the South of France.

And I can help you become financially savvy and grow your money with less stress and less risk, so that you too create your best rich life and never have to worry about money again.

Message me privately if becoming financially independent is one of your “non-negotiable” goals.

To your Health, wealth and Freedom!

Millen Livis

August 29, 2023
Is Your Stock Portfolio Safe? Watch Out for CRE Fallout.

Do you have your retirement investments in mutual funds, ETFs, or bond funds in your retirement accounts like 401Ks, IRAs, or pension funds?

If so, keep on reading so that you get informed and prepare to adjust your investments, if needed!

You may remember that the 2008 market crash was primarily caused by the collapse of the residential real estate market, specifically due to massive issuance of subprime mortgages and the subsequent default of those mortgages by borrowers.

These defaults triggered a chain reaction throughout the financial system, causing widespread panic and eventually leading to a global recession.

This time around, a possible recession will be caused by commercial real estate fallout… As businesses shut down or downsize their operations due to the high inflation, the demand for commercial real estate, especially, office space, is declining…

While the 2008 crisis was caused by the residential real estate market, the current risks are mainly associated with the commercial real estate sector, which has been heavily impacted by high cost of money (aka inflation) and limited access to financing (fallout of smaller regional banks).

While the latest rate of inflation is slightly lower than in the previous months, it’s still a long way to go down to the 2% that Federal Reserve targets as a goal.

And high inflation can cause a major fallout among regional banks, as we’ve witnessed recently with several regional banks…

Regional banks are typically more exposed to local economic conditions and industries, which makes them more vulnerable to the effects of inflation.

National banks are larger and more diversified, with having operations across the country and even globally, which can provide some insulation from regional economic volatility.

Now…

Regional banks play a critical role in financing commercial real estate projects, particularly for small and medium-sized businesses.

When regional banks experience losses or defaults, this can have several impacts on the commercial real estate market…

For example, Problems with Regional Banks cause:

1.  Reduced Lending: Most commercial real estate holdings are heavily leveraged… Losses or defaults among regional banks can lead to a reduction in the amount of money that regional banks have available to lend to commercial real estate projects. (CRE).

2.  Tighter Credit Standards: Banks already have tightened their credit standards in response to losses or defaults, making it more difficult for individuals and businesses to qualify for loans. This also causes a slowdown in the commercial real estate market (CRE), as businesses are unable to secure the financing they need to sustain or expand existing operations.

3.  Increased Lending Interest Rates: Losses or defaults among regional banks can also lead to increase in interest rates for commercial real estate loans, as banks try to mitigate their risk. This can make it more expensive for businesses to borrow money, which can result in a slowdown in the CRE market.

4.  Asset Write-Downs: When banks experience losses or defaults, they may be forced to write down the value of their assets, including their commercial real estate loans. This can result in a decline in the value of these loans on the bank’s balance sheet, which can impact their profitability and their ability to lend in the future.

All of these factors related to instability among regional banks can contribute to a slowdown in the commercial real estate market, as businesses are less able to secure financing, and have to deal with higher interest rates.

Why would YOU care about the potential commercial real estate fallout today and how it relates to your stock market investments via mutual funds, or ETFs (exchange-traded funds), or municipal funds, etc.?

Here’s why…

Commercial real estate fallout can trigger a recession and overall financial fallout because it plays a crucial role in the economy.

The commercial real estate market is closely tied to many other sectors of the economy.

A significant downturn in the commercial real estate market can have several damaging economic effects, like:

Damaging effects of the CRE downturn:

1.  Job Losses: The commercial real estate market provides jobs for construction workers, architects, engineers, property managers, and other professionals. These job losses can result in a reduction in consumer spending and a further slowdown in the economy.

2.  Reduced Consumer Spending: When commercial properties like shopping malls, restaurants, and retail stores experience vacancies or closures, it can lead to a reduction in customers’ traffic and consumer spending in the surrounding areas. This can result in a slowdown in the broader retail sector and a further decrease in economic activity.

3.  Further Credit Tightening: Losses in the commercial real estate market can also lead to further credit tightening, as banks become more cautious about lending money. This can make it more difficult for businesses to secure the financing they need…

As you can see, the commercial real estate market is closely tied to the broader economy, and a significant downturn in this market can have several negative effects.

These effects can lead to a recession, job losses, reduced consumer spending, credit tightening, and can impact your stock market investments, whether you’re invested via mutual funds, Exchange-traded funds (aka ETFs), index funds, municipal funds, bond funds, etc. in your retirement accounts (401K, IRAs, or pensions.)

Ways You Can Protect Your Investments

There are at least 5 ways you can protect your investments in mutual funds, ETFs, bonds, and index funds against a potential fallout in commercial real estate:

1.  Diversify: One of the most effective ways to protect your investments against a downturn in commercial real estate is to diversify your investment portfolio. By investing in a variety of asset classes, such as value dividend-paying stocks, precious metals (gold & silver), and residential real estate investment trusts (REITs), you can spread your risk and reduce your exposure to any one market segment.

2.  Avoid Concentration in Commercial Real Estate Funds: If you are concerned about the impact of a commercial real estate downturn on your investment portfolio (like I am), you may want to avoid investing in funds that are heavily focused on this commercial real estate sector.

Instead, consider diversifying your holdings across different sectors, such as technology, healthcare, commodities, and consumer goods.

3.  Know What You’re invested in and Monitor Your Investments: If you are invested in the stock market via Mutual Funds, ETFs, Index Funds, or Bond Funds in your retirement accounts or pensions, know what assets these financial instruments exposed to.

Very often people have no idea what their mutual funds are investing in… If you work with a financial adviser, ask questions about the specific assets you’re invested in!

It’s essential to keep a close eye on your investments and monitor any potential risks or red flags.

Review the performance of your funds with your adviser and analyze their exposure to different sectors and asset classes, especially Commercial Real Estate (CRE).

4.  Consider Low-Cost Index Funds or ETFs not related to CRE: Low-cost index funds and ETFs (Exchange Traded Funds) are popular investment options that provide broad market exposure while minimizing costs. These funds typically track benchmark indexes like a S&P 500, and also provide exposure to a diversified range of stocks across different sectors and industries.

5.  Be a Strategic Investor: Stay Invested for the Long Term. Strategic investing is a long-term strategy, and short-term fluctuations in the market are to be expected.

By staying invested for the long term, you can ride out market volatility and benefit from the compounding effects of long-term growth.

Here’s the summary of what I shared with you today:

In order to reduce your risk and achieve your long-term investment goals, you’ve got to protect your investments against a potential fallout in commercial real estate by creating a well-diversified portfolio, knowing what assets you’re invested in, monitoring your investments, and staying invested for the long term.

Remember, financial ignorance is VERY expensive…

To Your Health, Wealth and FREEDOM!

Millen Livis

August 28, 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
🔥Why Banks’ Failures Are Your Wake up Call

Two major regional U.S. banks – the Silicon Valley Bank in California and Signature Bank in New York – collapsed a couple of weeks ago….

Right away our government announced that it will NOT bailout the failed banks BUT that ALL banks’ customers can be assured that they will get their deposits back…..

Not only those who are covered by the FDIC insurance (which has a max of $250K per each depositor), but also those with millions of dollars deposited to this bank, which were mostly wealthy elites, venture capitalists and Chinese companies (although, supposedly, only U.S. citizens can be insured by the FDIC insurance).

If this is not a bailout, I don’t know what is…

And in order to bailout failed banks, government has to come up with more money… which means more printing money, even higher national debt (according to the U.S. Treasury Department, the current national debt of the U.S. is $31.3 trillion, which translates to roughly $94,000 per citizen), even higher inflation, and lower purchasing power of U.S. dollar….

Auch….

Then last Monday stock shares of “rock-solid” Credit Suisse bank plunged and Swiss authorities helped cut a deal with its bigger rival, UBS, to acquire the troubled Credit Suisse bank at a marked-down price to calm the troubled financial markets and to re-instill investors’ trust in this “used-to-be” premier financial institutions….

If you ask me, I don’t think these “superficial” government-arranged bailout-like actions can help restructure financial markets.

Here’s why.

As more facts started to come out about the Silicon Valley Bank’s operations and priorities, more and more people feel outraged with unconceivable incompetence and corruption of the SVB’s management and board of directors…

They had less than 10% of deposits covered by banking insurance!

Apparently, risk management was not SVB’s priority – its management didn’t have a director of risk management but had a director of equity and inclusion…

They were donating millions of dollars to their preferred political supporters (from both political parties but mostly democrats), who were influencing financial laws and regulations.

SVB didn’t have solid ethical and reliable operational guidelines….

Senior managers dumped millions in SVB’s stock just a few weeks before its collapse…. BIG red flag!

But that’s not all…

In the lead-up to Silicon Valley Bank’s historic collapse in March this year, insiders at this California-based lender scooped up a record $219 million worth of personal loans (according to the Bloomberg News).

Can you trust bankers with your money after such revelations??

I cannot.

And to be fair, NOT all regional banks are so corrupt and incompetent… but once you experience a rotten apple, it’s wise to be more careful and discerning.

And there’re more reasons for you to be alarmed right now.

Yesterday, the Fed (U.S. Federal Reserve) raised its key short-term interest rate by 0.25%, pushing ahead with its aggressive campaign to control inflation despite financial turmoil following Silicon Valley Bank’s collapse.

This move will further constrain banks’ lending and weaken the economy.

high Inflation + weak economy = stagflation

There’s not sugarcoating the challenging times we’re in right now….

But I am writing this NOT to stress you out but to wake you up and shake you out of complacency and status quo.

It’s not the time to choose what’s convenient, or familiar, or comfortable.

In the recent article about the banks failures, I shared the 5 Practical Lessons that will help you get well equipped to prepare for unexpected.

These banks’ failures are a wakeup call….

Be vigilant. Be observant. Be financially savvy.

NOBODY cares about your money more than you do.

And having money doesn’t make you good with money.

You can see it by all the millionaires who were not managing their risk by having cash deposits that exceeded the required FDIC insurance amounts at the bank that was not managed responsibly (to say the least.)

To your Health, Wealth and Freedom! 🙏💕

Millen Livis

P.S. let me know your insights from these banks’ failures…

Are you going to make some adjustments to the way you manage your savings?

August 24, 2023
How to Overcome Fear of Investing

As you may know, I believe that developing a wealth mindset and understanding the metaphysical laws of money and abundance are the essential elements of creating Financial Independence.

However, being savvy about managing and investing your money is another essential aspect of creating Financial Independence.

If you don’t save and don’t invest your money strategically, no matter how much you may be earning right now, it’s unlikely that you’ll enjoy financial independence or have a comfortable early retirement.

Unfortunately, many women are afraid of investing because they are afraid to lose money…

And when they hear confusing advise (like “You should diversify!” and “NO! Don’t diversify!”) – they resign to doing nothing (and lose time and opportunities) OR choose to delegate managing their money to advisors, spouses, or partners…and often lose even more money.

That’s why, today, I chose to share this short video with you.

Now, I have a question for you.

What would your life be like if you could do what you want, buy what you want, have the amazing experiences you want…without worrying about money?

And if you’re ready to trade worries about money for complete freedom, why not get started now?

I’ve opened up a few slots for my PRIVATE Complimentary “Financial Freedom Lifestyle” sessions, where you can see your worry-free future unfolding in front of you.

Sound exciting?

Great!

Send me an email to Millen@DareToChangeLife.com with the subject line Financial Freedom Lifestyle, describe your current situation, financial goals and timeframes, and your level of commitment to your goals (on a scale of 1-10).

I look forward to hearing from you!

To your Health, Wealth, and Freedom!

September 8, 2020