Tag: financial independence

  • Best Money Mindset Book? My 9 Favorite Picks

    Best Money Mindset Book? My 9 Favorite Picks

    On my journey to financial independence, I’ve read close to 100 personal finance books. My favorite books motivate me to think about the relationship between life and money. I think of this type of book as a “money mindset book.”

    In today’s post, I’ll show you my nine favorite money mindset books. These books share a common theme: they will inspire you to use money to build a life that you’re proud of.

    One of the ways these books do that is by exploring the emotional side of money. In other words, they don’t just talk about the numbers and math of personal finance.

    That not only makes the books more interesting to read, it also makes them so much more practical in the real world.

    See, I am striving to build the best life possible for my family. To do that, I need to learn more than just the numbers.

    That means I need to be good at not only making money, but also using that money to build a life on my terms. That requires finding a balance, which can be tricky.

    To help strike that balance, I’ve studied how others have done it. Then, I can take what I learn and implement those lessons into my own life.

    As a personal finance teacher, I can also share these lessons with my students.

    And, that brings us to my favorite money mindset books.

    Each one of these books has helped me develop my core life philosophies. Importantly, these books have helped me acquire and use money in alignment with those core beliefs.

    Of course, when I review my Tiara Goals for Financial Freedom, I can feel the influence of each of these books on my most important values.

    I recommend that you check out each of these money mindset books. You will learn not just how to acquire money, but also how to use that money to live your best life.

    Let’s take a look at my favorites, in no particular order.

    1. Rich Dad Poor Dad by Robert Kiyosaki

    There’s a reason Rich Dad Poor Dad is the best selling personal finance book of all time. Its message is so powerful and simple that I’ve been recommending this money mindset book for years.

    If you read Rich Dad Poor Dad, your entire money mindset will be changed. Kiyosaki brilliantly shares the stories he learned about money while growing up in Hawaii.

    His Rich Dad was really his best friend’s dad, who was a very successful real estate investor and business owner. His Poor Dad was his actual dad, a highly educated and hardworking man who followed a traditional career path.

    Using these two role models in his life, he makes a very compelling case that most of us go about life and money all wrong.

    This is the money mindset book you want to start with.

    Read Rich Dad Poor Dad. It’s the money mindset book that will light a fire under you like no other book I’ve read.

    2. The Psychology of Money by Morgan Housel

    In The Psychology of Money, Housel writes about how people make decisions with their money in the real world. Housel agrees with one of our main themes at Think and Talk Money:

    Money is emotional.

    We can all be shown data and spreadsheets and understand what we should do. But, that’s usually not enough to change our behavior.

    Housel is here to help with that. In The Psychology of Money, he takes core personal finance lessons and translates those lessons into regular life concepts.

    Additionally, Housel teaches us the different ways people think about money. Then, he offers his perspective on how we can make better sense of money through our own life experiences.

    Read The Psychology of Money. This money mindset book will help you understand the relationship between money and happiness.

    3. Think and Grow Rich by Napoleon Hill

    Think and Grow Rich is another classic money mindset book that will shift your entire viewpoint on earning a living.

    I first read this money mindset book in college when I learned my friend’s dad offered him $50 if he read this book.

    $50 to read a book?

    I needed to see what this book was all about.

    At the time, I didn’t appreciate how much this money mindset book would change my life.

    Originally published in 1937 and later updated, Think and Grow Rich, will convince you that you can be successful.

    Initially, Hill studied innovators like Henry Ford and Thomas Edison. In the updated version, you’ll learn about modern figures like Bill Gates and Mary Kay Ash.

    Books on a brown wooden shelf, which includes a money mindset book to help learn about the balance between life and money.
    Photo by Susan Q Yin on Unsplash

    Hill’s book is so good because of what he reveals about these legendary figures.

    The secret?

    There was nothing mystical about any of them. Before they became legends, they were just like you and me.

    You can be successful in any walk of life if you just stop sleepwalking through life like everyone else and do something.

    Read Think and Grow Rich. This money mindset book will motivate you to do that thing you’ve been saying you would do, but haven’t yet.

    4. The Richest Man in Babylon by George S. Clason

    The Richest Man in Babylon is a third classic money mindset book originally published nearly 100 years ago.

    This book is a quick read. It’s ideal for anyone still not convinced that they have to pay attention to their personal finances.

    Clason wrote a simple collection of fables set in the ancient city of Babylon. Each fable illustrates the importance of a key money habit, like saving and investing.

    Through his stories, you’ll see how you can get ahead in life by practicing strong financial habits.

    It’s not enough to just be good at making money. You need to be good at keeping that money, too.

    Read The Richest Man in Babylon. This money mindset book will introduce you to the building blocks of a healthy financial life.

    5. Your Money or Your Life by Vicki Robin and Joe Dominguez

    Your Money or Your Life is the complete package when it comes to money mindset books.

    Vicki Robin and Joe Dominguez are often credited for laying the groundwork for the Financial Independence Retire Early (FIRE) movement.

    While I prefer the term Financial Independence Pivot Early (FIPE), I share their viewpoints on the relationship between money, work, and time.

    Spoiler alert: when it comes to life and money, most of us are doing it all wrong. We chase money at the cost of our precious time.

    First, you’ll learn to think of money as nothing more than a tool to build your ideal life. Next, you’ll learn how to specifically use that tool to achieve financial independence.

    Read Your Money or Your Life. This money mindset book will motivate you to start valuing your time for what it’s really worth.

    6. The Millionaire Next Door by Thomas Stanley and William Danko

    It can be difficult to ignore the temptation to keep up with our neighbors. Whether we like it or not, we are concerned with our social status. Part of our self-worth gets tied to comparing ourselves to others.

    One of my favorite money mindset books, The Millionaire Next Door, discusses this concept in detail.

    To start, you need to adjust your perception of how real life millionaires behave.

    You may be surprised to learn how most millionaires have made their fortunes. Also, you may be surprised to learn about their modest lifestyles.

    Read The Millionaire Next Door. This money mindset book will help you if you’re struggling with comparing yourself to others.

    7. Die with Zero by Bill Perkins

    No money mindset book has led to more passionate conversations with my friends and family members than Die with Zero.

    First, Perkins encourages us to think about whether we are working too many hours. In Perkins’ view, the problem is that we are sacrificing the best years of our lives. Instead, we could be creating lifelong memories.

    In that same vein, Perkins makes a strong case that many of us are saving too much for retirement.

    Also, Perkins questions the conventional wisdom of waiting until we die to pass money onto our kids. Instead, he suggests helping our kids earlier in life when the money will be more meaningful.

    Read Die With Zero. This money mindset book will motivate you to book that vacation you’ve been putting off.

    8. Millionaire Milestones by Sam Dogen

    In Millionaire Milestones, Dogen covers his journey from finance bro in New York in his 20s to present day life as a writer, investor, and husband and father.

    What separates Millionaire Milestones from other personal finance books is that Dogen’s still on his journey.

    Girl reading a money mindset book to learn about the balance between life and money.
    Photo by Joel Muniz on Unsplash

    He’s not a newbie, and he’s not preaching from the rocking chair on his patio.

    Dogen’s presently raising kids. He’s focused on his website and his investments. Like you and me, he can relate to the present day challenges of personal finance because he’s still on his journey.

    You can read my full review of Millionaire Milestones in my separate post here.

    Read Millionaire Milestones. This money mindset book is the Goldilocks of personal finance books.

    9. The Simple Path to Wealth by JL Collins

    The Simple Path to Wealth by JL Collins is the best money mindset book on investing I’ve ever read.

    It is a must-read for anyone trying to figure out why and how to invest in the stock market.

    If you’re a new investor and don’t understand how to invest in the stock market, Collins will set you on your way.

    If you’re a seasoned investor unsure what to do in times of economic uncertainty, Collins is here to help. 

    Maybe you just need a bit of motivation or a reminder of how simple it is to build long-term wealth. There’s no one better than Collins to provide that pep talk.

    Collins is sometimes described as “the Godfather of Financial Independence” in the personal finance community. He has a popular blog where you can read more about his story.

    The short version is that he wrote a series of letters to his then teenage daughter about money, investing, and life. He wanted to impart the wisdom he had accumulated during his lifetime and help her avoid the mistakes he had made.

    Those letters eventually led to his blog, which then led to his bestselling book, The Simple Path to Wealth, first released in 2015.

    Since then, Collins has been a thought-leaders in the financial independence community. He has inspired thousands, if not millions, of people around the world to accumulate massive wealth by following a few simple rules. 

    What makes Collins so transformative is his ability to make seemingly complex topics (like investing) into easily digestible and actionable information.

    If you have any intention of becoming financially independent and haven’t read The Simple Path to Wealth, now is the time to do so.

    I’ve read his book cover-to-cover twice and constantly refer back to his lessons.

    Each time I read his book, I’m reminded how simple it is to reach financial independence if I can just follow a few simple tips.

    You can read my full review of The Simple Path to Wealth in my post here.

    Read The Simple Path to Wealth. It is quite simply the best money mindset book on investing I’ve ever read.

    What is your favorite money mindset book?

    So, these are the money mindset books that I recommend most often.

    Wherever you are on your personal finance journey, there is something for everyone in one of these books.

    If you have read some of these money mindset books in the past, I suggest you read them again. As our lives and priorities change, so does our relationship with money.

    You’ll get something new and different from reading these books again. Personally, I didn’t fully appreciate these money mindset books until I was years into my career and knew what it felt like to work for money.

    • Have you read these money mindset books?
    • What money mindset books am I missing?

    Let us know in the comments below.

  • Why Target Date Funds: The Easy Way to Invest

    Why Target Date Funds: The Easy Way to Invest

    Don’t be fooled. The easiest option can also be the best option.

    You already know I’m a big fan of making things easy, especially investing.

    And, there is no better example of making things easy than investing in target date funds.

    Maybe we’ve been brainwashed into thinking that the harder something is, the better it is. Of course, there’s that often-repeated phrase, “If it were easy, everybody would do it.”

    We’ve been programmed into thinking that “hard work” automatically means “better results.”

    I certainly agree that hard work pays off when it comes to things like career and exercise.

    As another example, baking cinnamon rolls comes to mind. With cinnamon rolls, the harder way is probably also the better way.

    My daughter and I bake pre-made cinnamon rolls every week. We have fun with it and it’s quick and easy.

    She loves how they taste, so that’s all that really matters. But, they don’t come close to tasting as good as homemade cinnamon rolls, which are certainly harder to make.

    So in the context of cinnamon rolls, I think “harder” does mean “better.”

    On the other hand, I don’t agree that investing has to be hard. I don’t believe that just because something is easy, it must not be that good.

    And, that brings us to target date funds.

    There’s nothing easier than investing in target date funds.

    My wife and I have been investing in target date funds for years. Target date funds have been both easy and effective for us.

    That’s important because we’re also at the stage in our lives where we are trying to make things easier, not harder.

    The idea behind target date funds is that your portfolio automatically rebalances as you move closer to your predetermined life event, like retirement or your kid’s college start date.

    That means over time, your target date fund will gradually become more conservative to protect all the money you had saved and earned over the years. It typically does so by reducing exposure to stocks and increasing exposure to safer assets, like bonds.

    You do not have to do a thing. 

    It simply cannot get any easier than this.

    Today, we’ll take a closer look at how target date funds work. The goal is to help you make an informed decision on whether they are the best option for your situation.

    Before we jump in, if you need a refresher on some key investment terminology, check out my post on the language of investing:

    What are target date funds?

    Target date funds are a form of mutual fund. When you invest in target date funds, you are essentially getting a complete portfolio in a single fund.

    Target date funds are typically comprised of broad stock index funds and bond index funds.

    That is one of the keys to remember about target date funds. They automatically provide investors with strong diversification and optimal asset allocation based on their chosen time horizon.

    Target date funds are ideal for long-term investment goals. They are designed to help you manage risk as you move closer to your pre-determined goal.

    Typically, target date funds invest more heavily in stocks in the early years in an effort to earn greater returns. As you move closer to your pre-determined goal, the fund will automatically shift to buying safer assets, like bonds.

    What types of investments are typically in target date funds?

    Most target date funds are made up of index funds. That means that when you buy a target date fund, you are getting exposure to a wide variety of stocks and bonds through index funds.

    An index fund is a type of mutual fund that seeks to track the returns of a market index, like the S&P 500 Index.

    As explained by Vanguard:

    An index mutual fund or ETF (exchange-traded fund) tracks the performance of a specific market benchmark—or “index,” like the popular S&P 500 Index—as closely as possible. That’s why you may hear people refer to indexing as a “passive” investment strategy.

    Instead of hand-selecting which stocks or bonds the fund will hold, the fund’s manager buys all (or a representative sample) of the stocks or bonds in the index it tracks.

    It’s very hard, even for professionals, to beat the returns of the S&P 500. Historically, the S&P 500 has averaged an annual return of 10%.

    Hit your Target by investing in target date funds, whether that target is saving for retirement or something else, like your child's college.
    Photo by Artur Matosyan on Unsplash

    I Invest in target date funds because they give me a great chance to match those historical average returns without any effort on my part.

    What are the advantages of investing in target date funds?

    Target date funds share the same benefits as investing in index funds. That’s because, as we just discussed, most target date funds are comprised of index funds.

    In addition to the benefits of index funds, target date funds offer one additional major benefit we’ll discuss below.

    By the way, you already know 7 things I love about index funds:

    1. Anybody can do it
    2. No wasted mental energy
    3. Low fees
    4. Automatic diversification
    5. The closest thing to predictability
    6. I don’t have stock FOMO
    7. Good enough for Buffett, good enough for me

    For a more in depth look, check out my post here:

    Target date funds automatically rebalance

    In addition to sharing the 7 benefits of index funds, target date funds offer one additional, major benefit:

    automatic rebalancing

    Importantly, target date funds automatically rebalance to continuously maintain your optimal mix of stocks and bonds.

    That means as time goes on, you don’t have to worry about rebalancing on your own. That’s one less stressor on your plate.

    What do I mean by rebalancing?

    Let’s say an investor’s optimal asset allocation is 50% stocks and 50% bonds. After a year of impressive stock market growth, this investor’s portfolio now consists of 60% stocks and 40% bonds. That’s because his stocks increased in value at a greater rate than his bonds.

    As a result, he’s now weighted more heavily in stocks than his optimal asset allocation. To rebalance his portfolio, he could take a variety of steps. He could sell some stocks or purchase more bonds to get back to where he wants to be.

    With target date funds, he would not have to worry about this situation. That’s because target date funds automatically rebalance for you.

    That’s a big load off an investor’s plate. It’s the main reason why I like investing in target date funds.

    Target date fund or build your own?

    After you open an investment account, you can select a combination of index funds on your own or choose a target date fund.

    There’s nothing wrong with buying index funds on your own instead of through a target date fund.

    You will actually save money on fees if you go that route, but not very much.

    For example, the popular Vanguard Total Stock Market Index Fund (VTSAX) charges a fee of .04%.

    Vanguard’s Target Retirement 2065 Fund presently charges a fee of .08%.

    Just remember to rebalance your portfolio from time-to-time to stay within your preferred asset allocation.

    If you don’t want that added responsibility, you can invest in a target date fund that automatically chooses the index funds for you.

    Then, the target date fund will automatically rebalance your portfolio over time to maintain an optimal balance of stocks and bonds.

    As you saw above, you will pay slightly more in fees for the added convenience. To me, that extra .04% in fees is absolutely worth it.

    In the end, both options are good ones.

    Investing with target date funds is the easiest choice.

    How can you invest in a target date fund?

    Most employer-sponsored retirement plans, like 401(k) plans, now offer target date funds. In fact, target date funds are usually the default investment option for new plan participants.

    You can also invest in a target date fund outside of your employer-sponsored plan. Most major investment companies offer target date funds in a variety of account types.

    In addition to retirement accounts and traditional brokerage accounts, 529 college savings plan providers usually offer target date funds based on when your child will start college.

    If you’re curious about my favorite investment account types, you can read more here:

    Regardless of the account type, the process for selecting the right target date fund is the same.

    Generally, you’ll see various target date fund options based on your personal time horizon.

    For example, if you are currently 25-years-old and plan to retire in 40 years, you would select the target date fund corresponding to 2065. This fund will automatically rebalance as your career progresses towards that retirement date.

    Typically, there are target date funds offered in 5-year intervals. Choose the one closest to your preferred retirement year, even if there isn’t one that matches your exact year.

    The same concept applies to a 529 college savings plan. If you have a newborn, like I do, you would select the plan that corresponds with your child starting college around 2043.

    After you make this one decision, there’s nothing more to do it.

    Your focus should be on adding as much money to that account as possible without worrying about things like rebalancing.

    I personally invest in target date funds.

    My wife and I invest in multiple target date funds. We have various target date funds for our retirement savings and for our kids’ college education.

    At this stage in our lives, we’ve placed a premium on doing things the easy way.

    We have full-time jobs as attorneys, manage our own rental properties, and have three kids at home. The last thing we need is to add more complication to our lives.

    Our personal accounts are with Vanguard, which has long been known as an investor-friendly company that prioritizes low fees.

    Why target date funds?

    Just because something is easy doesn’t make it wrong.

    Investing in target date funds is as easy as it gets. By taking the easy option, you can have exposure to a broad range of index funds that automatically rebalances over time.

    Are you doing things the easy way?

    If you’re a busy professional like I am, don’t sleep on target date funds.

    You’ll always have people that look down upon target date funds as too basic. Ignore them. Let them stress about picking the next hot stock, rebalancing, and timing the market.

    • So, are you doing things the easy way? Are you a target date fund investor?
    • Do you agree that target date funds are an easy and effective way to invest for the long term?
    • Has anyone ever looked down on you for investing in target date funds?

    Let us know in the comments below.

  • 7 Things I Love About Index Funds

    7 Things I Love About Index Funds

    For my money, there’s no beating index funds.

    More important, than my money, for my sanity, there’s no beating index funds.

    In today’s post, I want to highlight 7 things I love about index funds.

    My 7 reasons range from the low costs and automatic diversification to the minimal mental effort required for long-term wealth.

    If you’ve been a consistent reader of the blog, you know that money is as much emotional as it is rational. I don’t want to be worried about my money any more than you do.

    That’s why the reasons I love index funds take into account both the numbers and the emotions of investing.

    Let’s dive in.

    7 Things I Love About Index Funds

    1. Anybody can do it
    2. No wasted mental energy
    3. Low fees
    4. Automatic diversification
    5. The closest thing to predictability
    6. I don’t have stock FOMO
    7. Good enough for Buffett, good enough for me

    1. Anybody can do it

    I’ve said it before, and I’ll say it again:

    Investing is actually the easy part.

    And, when I say investing is actually the easy part, I’m talking mostly about investing in index funds.

    You don’t need an MBA or a financial background. You don’t need to read the Wall Street Journal.

    All you need to do is consistently fuel your investment account and to let compound interest work its magic.

    Oh wait, one more thing:

    You also need to read Think and Talk Money. I post three times every week.

    Oh, and tell your friends about Think and Talk Money!

    2. No wasted mental energy

    It goes without saying that most professionals are busy people. On top of working our day jobs, we’re also doing our best to stay healthy, be good family members, and have some semblance of a social life.

    Some of us even have side hustles that occupy our time and mental energy.

    Hot stone bath in the mountains because this man read Think and Talk Money and invests in index funds.
    Photo by Robson Hatsukami Morgan on Unsplash

    The last thing we need is another stressor in our lives, like actively trading stocks.

    I invest in index funds to take this stressor out of my life.

    Yes, I could pay someone a lot of money to manage my money for me.

    Or, I could invest in index funds and rest comfortably knowing that I’m going to be in great financial shape down the road.

    Why am I confident I’m going to be in great financial shape?

    For three main reasons, discussed next.

    3. Low fees

    Because index fund are passively managed, the fees are significantly lower than actively managed mutual funds.

    My favorite index fund is Vanguard’s popular fund called the Vanguard Total Stock Market Index Fund (VTSAX). This fund currently charges .04%, which is just about the lowest fee you will ever see.

    Compare that to the 1% fee commonly charged by investment advisors. Also, don’t forget it’s very difficult for even the professionals to beat the returns consistently generated by the S&P 500.

    If you don’t think that difference in fees matters, check out my post on what a 1% fee really costs you:

    While I can’t control what returns I may earn, I can control the fees I pay.

    I’d rather pay .04% than 1%.

    That’s especially true when there’s no guarantee that an advisor can perform better than the returns I earn through index funds.

    4. Automatic diversification

    By investing in an index fund, like an S&P 500 index fund or a total stock market index fund, my stock portfolio is by definition diversified.

    For example, when I invest in an S&P 500 index fund, I essentially own a piece of 500 large companies.

    Some companies may go up in value, others may go down. I’ll never know which ones are going to make money or lose money. By investing in an S&P 500 index fund, it doesn’t matter. I’m covered either way.

    That’s the point of diversification: smooth out the ride so I’m less susceptible to the fortunes of one particular company.

    Man with fresh organic coconut relaxing because he invests in index funds as learned on Think and Talk Money.
    Photo by Artem Beliaikin on Unsplash

    As another example, I also invest in Vanguard’s total stock market index fund (VTSAX). This fund offers exposure to nearly the entire U.S. stock market, which consists of 3,598 companies.

    Now, that’s really good diversification.

    5. The closest thing to predictability

    The S&P 500 has historically earned an average annual return of 10%.

    By investing in an index fund that tracks the S&P 500, like I do in my 401(k), I have a pretty good chance of earning consistent returns in the long run.

    Sure, there may be ups and downs.

    But, check this out:

    Since 1996, the S&P 500 has ended the year in positive territory 23 times and negative territory only 7 times.

    In other words, the S&P 500 has generated positive returns three times more frequently than it generates negative returns.

    And even with those 7 negative years, with the exception of 2000-2002, the S&P 500 returned to positive territory the following year.

    What this all means is that while the S&P 500 will drop occasionally, the down periods are historically short-lived.

    Because of this historical consistency, index funds give me the best shot at predictability.

    Note that predictable returns does not mean guaranteed returns. There are no guarantees in the stock market. That’s why my preference is predictability.

    I’m very happy with consistent returns and a smoother ride.

    6. I don’t have stock FOMO

    Depending on the index fund you choose, you may own pieces of a handful of companies or as many as 3,598 companies.

    I invest in S&P 500 index funds and total stock market funds. That means I own pieces of lots of companies.

    It also means I never have stock FOMO.

    You know what stock FOMO is, right?

    Stock FOMO is when you find yourself in a conversation talking about something fun like your favorite new show. Then out of nowhere, someone volunteers the hot stock he bought that’s up 20%.

    If you have stock FOMO, you feel like you’re missing out by not owning that stock. You think to yourself, “Oh man, that guy’s going to be so rich and I missed the boat!”

    You might even run back to your desk so you can buy that hot stock, not realizing that you’ve probably already missed the train.

    Stock FOMO can cause a lot of stress. I don’t want that stress.

    So, I invest in index funds.

    When a stock jumps 20%, I feel good because I already own every company in the U.S. stock market.

    No stock FOMO here.

    7. Good enough for Buffett, good enough for me

    In 2013, Buffett famously instructed that after he dies, his wife’s cash should be split 10% in short-term government bonds and “90% in a very low-cost S&P 500 index fund.”

    Good enough for Buffett, good enough for me.

    It’s not just Buffett, though. One of my favorite authors on investing, J.L. Collins, wrote about the advantages of investing in a total stock market index fund in his seminal book, The Simple Path to Wealth

    In fact, Collins makes a compelling argument that the Vanguard Total Stock Market Index Fund (VTSAX) we discussed above may be the only stock fund that you’ll ever need.

    Buffett and Collins are smart guys. Taking advice from smart guys seems like a good idea to me.

    I highly encourage you read The Simple Path to Wealth.

    You can read my full review of The Simple Path to Wealth in my post here.

    What do you think of the 7 things I love about index funds?

    To recap, I love index funds for these 7 reasons:

    1. Anybody can do it
    2. No wasted mental energy
    3. Low fees
    4. Automatic diversification
    5. The closest thing to predictability
    6. I don’t have stock FOMO
    7. Good enough for Buffett, good enough for me

    My reasoning combines the emotional side and the rational side of investing.

    Like you, I want to earn a nice investment return. At the same time, I don’t want to be worried about my investments 24-7.

    Index funds give me the best of both worlds.

    What am I missing?

    Help me grow my list of 7 into a list of 10 by leaving a comment below on why you invest in index funds.

  • My 4 Favorite Investment Accounts for Long-term Wealth

    My 4 Favorite Investment Accounts for Long-term Wealth

    We recently talked about that to start investing, there are really only two main steps

    • Step 1: Open an account.
    • Step 2: Pick the investments for inside that account.

    Today, we’ll discuss my four favorite investment accounts. These accounts are all tax-advantaged and match my evolving priorities, like saving for retirement and paying for college.

    To help explain why you may want different investment accounts, I’ll show you how I went from a single account in my 20s to 14 investment accounts today.

    Even if you’re just starting out in your career or new to investing, it’s likely that you’ll eventually have multiple types of investment accounts.

    You’ll almost certainly have different goals and priorities as life moves on.

    Before you do anything else, you’ll need to decide what type of investment account matches your investment goals. As we’ll see, investing is about more than just saving for retirement.

    By understanding the type of accounts to use that match your evolving priorities, you’ll have a better chance of reaching your goals.

    Let’s begin by looking at how my investment accounts have changed from the time I started investing in my 20s to the present day.

    My investment accounts in my 20s.

    When I started working in my 20s, I had one investment account:

    1. My 401(k).

    In my 20s, I was just starting my career and was proud to be investing in a 401(k). Back then, tracking my net worth was pretty easy.

    Part of the reason I only had one investment account was because I didn’t really know there were other types of accounts.

    It wasn’t until I prioritized learning about personal finance that I realized what else was out there.

    Quick side note: during law school, I did have a traditional brokerage account with a financial advisor. But, I closed that account when I learned we had set $93,000 on fire.

    There were two other main reasons I only had one investment account back then.

    First, I had student loan debt to pay off. I didn’t exactly have the means to invest in other accounts.

    If you’re in a similar boat and have student loan debt, be sure to check out my post:

    Second, in addition to student loan debt, I also had credit card debt.

    It was only after a year of working and seeing my credit card debt grow each month that I decided to do something about it. In a lot of ways, my experience with credit card debt is what led me to start Think and Talk Money.

    If you’re likewise dealing with credit card debt, check out my post:

    As time went on, a few things happened that led me to opening more investment accounts.

    First, I educated myself and learned that there were other investment accounts I could take advantage of.

    Then, as my career progressed, I started making more money. Because I had paid off my student loan debt and credit card debt, I had money leftover to invest.

    Finally, I got married and had kids. That meant my investment goals evolved.

    To match my evolving goals, it was beneficial to open different types of investment accounts.

    My investment accounts at age 40.

    Fast forward about 15 years, and my family’s balance sheet looks a little bit different than it did in my 20s.

    Between my wife, our three kids, and me, we now have 14 investment accounts:

    1. My 401(k)
    2. Wife’s 457(b)
    3. Wife’s Roth IRA
    4. My Roth IRA
    5. Wife’s Traditional IRA
    6. Wife’s Pension
    7. Daughter’s UTMA
    8. Son’s UTMA
    9. Baby’s UTMA
    10. Daughter’s 529
    11. Son’s 529
    12. Baby’s 529
    13. HSA
    14. Traditional Brokerage Account
    Just like life gets more complicated, your investment account lineup also gets more complicated as you make more money and have a family, which is why these are my 4 favorite investment accounts..
    Photo by MIGUEL GASCOJ on Unsplash

    The point in sharing my various account types with you is to give you an idea of how your investment priorities will change over time.

    The most savvy investors know how to match their investment accounts to those changing priorities.

    With this context in mind, let’s now take a closer look at my four favorite investment account types that help me maximize tax benefits.

    With these tax-advantaged accounts, I have a better chance of reaching financial freedom.

    Favorite Account No. 1: 401(k)

    A 401(k) is likely the first investment account most people will have.

    401(k) plans are employer-sponsored retirement plans. Employees can elect to participate in their company’s 401(k) plan and choose from a variety of investment options, usually mutual funds and index funds.

    There are four major reasons to invest in a 401(k) plan.

    1. You can invest with pre-tax dollars.

    That means more of your money gets invested rather than going towards your taxes. When you have more money invested, you can earn more in returns.

    2. Your contributions are automatic.

    Once enrolled, your employer will automatically deduct money from your paycheck and invest it directly into your investment selections.

    Because the money never hits your checking account, you won’t be tempted to spend it on things you don’t really care about. You’ll be used to living without this money because it never hits your account.

    You also don’t have to worry about consistently making transfers into your account because it will happen automatically.

    3. Your earnings grow tax-free.

    In addition to not being taxed on your contributions, you also won’t be taxed on your earnings. That’s a double tax advantage that acts to magnify the power of compound interest. You will be taxed when you make withdrawals.

    4. Your employer may offer a match.

    Many employers today offer a match to incentive employees to contribute to their 401(k) plans. To qualify for the match, you must be participating in your company’s plan and make contributions yourself. The match is usually a percentage of your overall salary, usually between 3-6%.

    For example, if you contribute 5% of your salary, your company may match you with an additional 5% contribution.

    If your company offers a match, it’s a no-brainer to take advantage of that match. It’s often described as “free money.”

    I don’t like the term “free money” because it implies that you have not earned that money as an employee for your company. I prefer to refer to the company match as a bonus you’ve rightfully earned.

    The key is to accept that earned bonus by ensuring you are meeting the minimum requirements to qualify.

    401(k) Contribution Limits and Penalties

    Keep in mind there are annual limits to how much you can contribute to your 401(k) plan. The IRS regularly increases the contribution limits. In 2025, you may contribute up to $23,500.

    If you are between the ages of 50 and 59, or 64 or older, you may contribute an extra $7,500 per year. If you are between the ages of 60 and 63, you may be eligible to contribute up to $11,250.

    Also, remember that 401(k) plans are intended for retirement savings. To discourage early withdrawals, a 10% penalty on top of regular income taxes apply to people under the age of 59 ½.

    Because of these contribution limits, early withdrawal penalties, or other strategic reasons, you may benefit from another type of investment account.

    Let’s look at our next popular type of investment account called a Roth IRA.

    Favorite Account No. 2: Roth IRA.

    A Roth IRA is another type of retirement investment account that also provides double tax benefits.

    Unlike a 401(k), you make after-tax contributions to your Roth IRA. Your earnings then grow-tax free, and your withdrawals are tax-free.

    Another major advantage is that you can withdraw your contributions tax-free and penalty-free at any time.

    There are penalties if you make withdrawals from your earnings before the age of 59 1/2.

    Roth IRA Contribution and Income Limits.

    Because of the amazing tax advantages associated with Roth IRAs, there are income limits that apply. In 2025, individuals must have a Modified Adjusted Gross Income (MAGI) of less than $150,000, and joint filers less than $236,000.

    On top of the income limits, there are annual contribution limits, as well. In 2025, the contribution limits are $7,000 if you’re under age 50, and $8,000 if you’re over age 50.

    Why think about opening a Roth IRA?

    For many investors, it’s not a bad idea to consider opening a Roth IRA in addition to your 401(k).

    For starters, we mentioned the contribution limits to each account. You may need more money in retirement than just what your 401(k) plan will provide.

    For another reason, 401(k) plans and Roth IRAs are treated differently from a tax perspective. It may be wise to have some tax-free income in retirement from a Roth IRA to go along with your taxable income from a 401(k).

    You can open a Roth IRA with any number of investment companies, like Vanguard, Fidelity, and Charles Schwab.

    Favorite Account No. 3: Health Savings Account (HSA)

    A Health Savings Account (HSA) is another tax-advantaged account that you can use to pay for eligible medical expenses.

    HSAs are linked to employer-sponsored health insurance plans. Oftentimes, employers will make an annual contribution to help fund your HSA.

    Physical examination by a Children's Doctor. Teddy's medical check up, illustrating that years from now you can use your HSA to reimburse yourself for prior medical expenses after benefiting from triple tax benefits.
    Photo by Derek Finch on Unsplash

    One of the trade-offs to having an HSA is that you’ll need to enroll in a high deductible insurance plan. You are still covered by insurance, but you’ll pay more out-of-pocket each year for medical treatment.

    But, if you’re relatively healthy and/or have the means to pay for your present day medical care, you stand to benefit immensely down the road.

    That’s because you can choose to invest your HSA contributions just like you might invest in a 401(k) plan. 

    If you do so, your contributions, earnings, and withdrawals are all tax-free if you follow some basic rules.

    Because of these triple tax benefits, HSAs are my absolute favorite investment account.

    Remember, 401(k) plans and Roth IRAs only offer double tax benefits. HSAs are even better because they offer triple tax benefits.

    What are the key rules to follow with HSAs?

    To get the triple tax benefits, you need to follow some basic rules.

    One of the key rules is that you must use your withdrawals for eligible medical expenses. The good news is that “eligible medical expenses” is a very broadly defined term.

    You can take a look here for a comprehensive list of eligible medical expenses. Some examples include prescriptions, contact lenses, and flu shots.

    Another key rule to know is that there are no time limits for when you have to use your HSA funds. As long as you keep your receipts, you can reimburse yourself for eligible medical expenses years, or even decades, later.

    If you put these two rules together, you’ll see why HSAs are so beneficial.

    As long as you have the means to pay out-of-pocket for your current medical expenses, you can allow your pre-tax HSA investments to grow tax free for years.

    That means you can take advantage of the magic of compound interest for decades, tax-free.

    Then, years later, you can withdraw those funds to reimburse yourself for eligible medical expenses you paid for years prior.

    HSA contribution limits.

    Like 401(k) plans and Roth IRAs, there are annual contribution limits for HSAs.

    In 2025, the contribution limit for an individual with self-coverage is $4,300 and $8,550 for family coverage.

    Favorite Account No. 4: 529 College Savings Plan

    529 college savings plans are state-sponsored, tax-advantaged investment accounts.

    While there are certainly other ways to save for college, 529 plans are hard to beat because they typically offer triple tax benefits.

    To read more, check out my in-depth post on 529 Plans for Sky High College Costs:

    What do you think of my 4 favorite investment accounts?

    There are certainly others, but these are my 4 favorite investment account types. Each comes with tax advantages that will help me reach financial freedom sooner.

    As your life and priorities change, you may also benefit from opening multiple investment account types.

    So, what do you think of my four favorite investment accounts?

    Did I miss any?

    Let us know in the comments below.

  • What is Your Magic Retirement Number?

    What is Your Magic Retirement Number?

    Have you thought about your number recently?

    According to a recent study by Northwestern Mutual, Americans expect they will need $1.26 million to retire comfortably.

    When you first hear that retirement number of $1.26M, does that sound impossibly high? Does it sound way too low?

    Or, maybe your reaction was like what my five-year-old says when questioned about who made the mess:

    “No clue.”

    I think it’s safe to say that, at some point, most professionals accept that they need to save for retirement. Hopefully, you are in that group and have been investing early and often.

    However, I suspect most people have never thought about how much they’ll actually need to retire comfortably. That’s understandable since retirement can seem like such a far-off goal.

    Still, it’s a good idea to start thinking about how much you’ll need to retire comfortably. We’ll refer to that amount as your magic retirement number.

    That way, you can start taking the necessary steps today to reach that magic retirement number.

    Today, we’ll learn how to calculate your magic retirement number.

    So, how do I figure out my magic retirement number?

    To answer that question, let’s turn to the “4% Rule.”

    The 4% Rule is one of the most popular ways in the personal finance community to ballpark how much money you’ll need in retirement.

    Of course, your personal answer depends on a variety of factors, like when you want to retire and how much you expect to spend in retirement.

    You can imagine how someone hoping to achieve FIPE (Financial Independence Pivot Early) may require a different amount than some retiring in his 70s.

    Your answer may also change after reading a book like Die with Zero, where author Bill Perkins brilliantly argues that most of us are actually saving too much for retirement.

    In any event, the 4% Rule can give you a good idea of where you currently are. Then, you can decide what changes you may want to make to ensure you hit your magic number.

    Let’s dive in.

    What is the 4% Rule?

    The 4% Rule suggests that you can safely withdraw 4% of your investments each year, adjusted for inflation, and expect your money to last for 30 years.

    Without getting too technical, the 4% Rule is based off of research looking at historical investment gains, inflation, and other variables.

    For simplicity, let’s say you have $1 million in your portfolio. According to the 4% Rule, you can safely withdraw $40,000 per year (4% of your portfolio) and not run out of money for 30 years.

    Using the magic retirement number of $1.26 million, you could safely withdraw $50,400 and not run out of money for 30 years.

    These simple examples show how you can take your current retirement savings and project how much you can safely spend so your money lasts 30 years.

    The 4% Rule also works in reverse.

    By that, I mean you can use the 4% Rule to ballpark how much money you’ll need in retirement to maintain your current lifestyle. We’ll look at exactly how to do that below.

    In either case, the 4% Rule is an effective and easy way to start thinking about a magic retirement number.

    Use the 4% Rule as an easy projection tool, not an actual withdrawal rate.

    I view the 4% Rule as a tool to ballpark your magic number, as opposed to a strict withdrawal rate once you actually retire.

    I point that out because there’s some debate in the personal finance community as to whether 4% is still a safe withdrawal rate in today’s economic environment.

    For our purposes, I’m not too concerned about that debate.

    Once you get to retirement, your actual withdrawal rate may be higher or lower than 4% depending on a variety of factors.

    Regardless, the 4% Rule is a great way to start thinking about how much you’ll need in retirement.

    So, let’s practice using the 4% Rule.

    Our goal is to help you project a magic retirement number based on your current spending habits.

    How to use the 4% Rule based on your current savings.

    We mentioned above that the 4% Rule works two ways.

    First, you can take your current retirement savings and calculate how much you can safely spend so your money lasts 30 years.

    If you have $1 million invested, the 4% Rule says you can safely spend $40,000 annually and expect your money to last 30 years.

    $1,000,000 x .04 =$40,000.00

    That’s a useful calculation, especially if you’re nearing retirement age and just want to know how much you can spend each year.

    The 4% Rule works two ways, meaning you can calculate how much you can spend in retirement based off of your current savings or you can reverse it and calculate how much you need to maintain your current spending levels.
    Photo by Hugo Delauney on Unsplash

    But, what if you don’t exactly know when you want to retire?

    Your main priority may not be to retire by a certain age. Instead, your aim may be to retire with enough money to maintain your current lifestyle. You’re determined to continue working for as long as it takes.

    To calculate that magic retirement number, you can once again use the 4% Rule.

    How to use the 4% Rule based on your current spending habits.

    The second way to use the 4% Rule is to start with your current spending habits to project how much money you’ll need to maintain that level of spending in retirement.

    This may seem obvious, but to do so, you’ll first need to know your current spending habits.

    If you don’t know how much you’re currently spending on a monthly basis, take a look at our budgeting series here.

    The good news is that once you’ve created a Budget After Thinking, this next part is easy.

    To calculate your magic retirement number based on current spending, simply follow these steps:

    1. Add up the amount your’re spending each month in Now Money and Life Money.
    2. Take that number and multiply it by 12 to see how much your lifestyle costs per year.
    3. Divide that yearly spending by .04

    That’s your magic retirement number.

    One note related to your Budget After Thinking: for this exercise, ignore your Later Money (with one caveat). Only use your Now Money and Life Money totals.

    The reason is that since you’re retiring, you likely won’t be focused on saving for future goals anymore. Presumably, you’ve already reached your goals. If you include your Later Money in your monthly spending, you’re magic retirement number will be artificially inflated.

    The caveat is for those people pursuing FIPE. In that case, you should include your Later Money in your calculations. That way, you have a buffer in place to cover you over a longer retirement period.

    Now, let’s use some real numbers to help illustrate how to use the 4% Rule to project your magic retirement number.

    Here’s how to use the 4% Rule to forecast your magic retirement number.

    Let’s look at an example using the 4% Rule to forecast your magic retirement number.

    Let’s say that you reviewed your Budget After Thinking and learned that you spend $6,000 per month in Now Money and $4,000 per month in Life Money.

    Combined, that means your lifestyle costs you $10,000 per month, or $120,000 per year.

    To figure out how much you would need in investments to cover your current lifestyle for 30 years, divide $120,000 by .04.

    $120,000 / .04 =$3,000,000.00.

    That means to maintain your current lifestyle of spending $120,000 per year for 30 years, you would need $3 million in investments.

    In other words, your magic retirement number is $3 million.

    If that number seems impossibly high to you, you now know to make some adjustments to your current spending.

    Let’s look at how your magic number changes with some tweaks to your spending habits.

    Assume you’re open to cutting some expenses in retirement to reduce your magic number. That might mean spending less money on transportation, meals out, your wardrobe, and whatever else.

    Let’s assume that by making those cuts, you shaved $1,000 off your Now Money expenses.

    As a result, you only need $9,000 to cover your retirement lifestyle each month. That’s $108,000 per year.

    Using the 4% Rule, your magic retirement number has now shrunk to $2.7 million.

    $108,000 / .04 =$2,700,000.00.

    That means that by reducing your spending by $1,000 per month, you have reduced your magic retirement number by $300,000.

    It also means you have just sped up your timeline to retirement by reducing your lifestyle expenses.

    A surprising note about people’s magic retirement number in 2025.

    At the beginning of this post, we learned that according to a recent study by Northwestern Mutual, Americans expect they will need $1.26 million to retire comfortably.

    What’s most interesting to me is that this year’s magic retirement number dropped from $1.46 million reported in the same study just last year.

    Think about that for a minute.

    Because of inflation (and now tariffs), things are only getting more expensive year over year. If anything, you would think that people would say they need more money to retire comfortably in today’s enviornment.

    Except, the study found the opposite happened. Instead of wanting more money to pay for all these more expensive things, people think they can retire comfortably on nearly 14% less money.

    How does that make any sense?

    For starters, I doubt many of these respondents used the 4% Rule to project their magic retirement number based on their current spending habits.

    If they had, they would have seen that their spending has likely gone up this year, unless they’ve made big cutbacks. Then, they would have seen that their magic retirement number also went up to account for those higher expenses.

    Besides ignoring the 4% Rule, my other takeaway relates to one of our major themes at Think and Talk Money:

    Money is emotional.

    If our money thoughts were strictly rational, there would be no way that someone could say he needs less money to survive when everything is more expensive.

    The reality is that our decisions don’t always make rational sense.

    And, that’s OK.

    Recognizing that our money decisions are not always rational, what can we do about it?

    We can think and talk about money.

    Talking to our people about our money decisions, like we would anything else, is the best way to find a balance between our emotional side and our rational side.

    So, what is your magic retirement number?

    Now you know how to use the 4% Rule to calculate your magic retirement number.

    Be sure to use the 4% Rule as a tool to help you think about making adjustments to your current spending or savings habits.

    Knowing how to use the 4% Rule, does a magic number of $1.26 million seem too high, too low, or maybe just right?

    Let us know in the comments.

  • 2 Easy Steps to Start Investing for Long-Term Wealth

    2 Easy Steps to Start Investing for Long-Term Wealth

    By now, I hope I’ve begun to convince you that investing is actually the easy part. The more challenging part is consistently coming up with money for your investments.

    If you’ve been worried about the risks associated with investing, we covered that, too. At the end of the day, reasonable risk is the cost to invest.

    Because of inflation, the reality is that it’s more risky to not invest than it is to invest. Take a look at what happened to our pretend friend Terry who chose to play it safe.

    At a bare minimum, investing is a way to play offense and defense. Investing to do fun things later on is playing offense. Investing to counteract inflation is playing defense.

    We’ve also previously covered three great ways to minimize investment risk:

    1. Invest early and often. Take advantage of the power of compound interest by starting early and being consistent. Over time, compound interest will lead to wealth.
    2. Minimize fees. One of the few things we can control when we invest is what we choose to pay in fees. Keep fees to a minimum to maximize your long term gains. Even a fee of only 1% can do significant damage to your future prosperity.
    3. Learn the language. Investing can seem intimidating when you hear phrases like “asset allocation” and “diversification.” Once you learn the language, you’ll realize that practicing asset allocation and diversification is actually not that hard.

    With this backdrop in mind, there should be no more excuses for why you can’t start investing.

    So today, we’re going to talk about the two main steps to get started investing.

    How to start investing in 2 steps.

    If you’ve never invested before, are you nervous about how complicated the process is going to be?

    Don’t be.

    To start investing, there are really only two main steps involved.

    • Step 1: Open an account.
    • Step 2: Pick the investments for inside that account.

    There really isn’t much more to it.

    But, don’t forget to complete both steps.

    Step 1: Open an account.

    The first step to investing is simply to open an account.

    There are endless investment companies available where you can easily open an account online. Some of the more popular companies are Vanguard, Fidelity, and Charles Schwab.

    I personally use Vanguard.

    Once you’ve chosen an investment company, you’ll next select the type of investment account to open.

    There are two main types of investment accounts and some other popular accounts I’ll highlight below.

    Before you do anything else, you’ll need to decide what type of account matches your investment goals. Once you know the type of account that best suits you, you will need to open that account before moving on to step 2.

    It really is that easy to start investing.

    BIG EASY, reflective of how easy it is to actually start investing.
    Photo by Jay Clark on Unsplash

    You don’t need a financial advisor or a broker to open an account. Like most things these days, as I mentioned above, you can easily open an account on-line by yourself.

    In fact, most of us begin investing in employer-sponsored retirement accounts, like 401(k) plans. When you start a new job, your HR department will provide you detailed instructions on how to enroll.

    So, what are the main types of investment accounts to choose from?

    Tax-advantaged retirement accounts.

    The most common tax-advantaged retirement accounts include 401(k) plans, Roth IRAs, and traditional IRAs. “IRA” stands for Individual Retirement Account.

    We’ll soon take a deep dive into the advantages and disadvantages of each type of account.

    As a whole, the primary difference between tax-advantaged retirement accounts and traditional brokerage accounts relates to taxes.

    The government wants us to save for retirement. To encourage us to do so, retirement accounts come with major tax advantages. That’s why most investors begin investing in these types of retirement accounts.

    Traditional brokerage accounts do not have the same tax advantages.

    In addition, tax-advantaged retirement accounts, like a 401(k) plan, are commonly offered by employers. That makes it easy for employees to invest.

    You may be wondering: with these great tax advantages, why would someone open a traditional brokerage account?

    Let’s take a look.

    Traditional brokerage (non-retirement) accounts.

    There are two main reasons to open a traditional brokerage account.

    First, tax-advantaged retirement accounts have caps in place for how much someone can invest per year.

    While the government is happy to encourage investing for retirement, its generosity only goes so far. Uncle Sam still depends on tax revenue and can’t afford to give us an unlimited free pass.

    Once you reach those caps, and still have money that you want to invest, you’ll need to open a traditional brokerage account.

    Most investors try to max out their retirement accounts to receive the full tax advantages before moving on to investing in traditional brokerage accounts.

    The second reason is that tax-advantaged retirement accounts are intended for long-term retirement planning.

    If you withdraw from your account before reaching a certain age, typically 59 1/2, you’ll be subject to penalties and taxes.

    Of course, Think and Talk Money readers know that there are other reasons to save and invest besides retirement.

    You may be investing to buy a home in 10 years. Maybe you have reached financial independence and rely on your investment income to fund your life.

    Whatever the case, traditional brokerage accounts provide flexibility for people to withdraw their money when they want to.

    Other types of investment accounts.

    Besides tax-advantaged retirement accounts and traditional brokerage accounts, there are two other popular investment accounts to highlight.

    529 Savings Plans for College: 529 college savings plans are state-sponsored, tax-advantaged investment accounts. While there are certainly other ways to save for college, 529 plans are hard to beat because they typically offer triple tax benefits.

    To read more, check out my in-depth post on 529 Plans for Sky High College Costs.

    Health Savings Accounts (HSA): An HSA is a tax-advantaged account that you can use to pay for eligible medical expenses.

    These accounts are typically linked to employer-sponsored health insurance plans. You can choose to invest your HSA contributions, similar to how you might invest in a 401(k) plan.

    Like with 529 plans, the reason to invest in an HSA is to receive triple tax benefits that are hard to beat. Your contributions, earnings, and withdrawals are all tax-free if you follow some basic rules.

    We’ll explore this further in a future post.

    You are not limited to just one type of account.

    To recap, the first step to investing is simply to open an account.

    There are two main types of investment accounts to consider: tax-advantaged retirement accounts and traditional brokerage accounts.

    There are also other investment accounts intended to help with specific goals, like saving for college or medical expenses.

    For almost all investors, it makes sense to first open a tax-advantaged retirement account before considering the other types of accounts. For many of us, that means participating in our employer-sponsored 401(k) plan.

    Keep in mind, you are not limited to just one investment account. Many investors have various accounts for different goals. My wife and I have multiple retirement accounts, 529 plans for each of our kids, an HSA, and others.

    Once you’ve opened an account, you’re ready to move onto step 2. The next step is choose what investments you want inside that account.

    Step 2: Pick the investments for inside that account.

    Now that you have an account opened up, the next step is to pick what investments you want inside that account. By that, I mean selecting what mutual funds, index funds, individual stocks, or bonds you want to buy.

    Each major investment company offers a variety of investments to choose from, including target retirement date funds that are as easy as it gets.

    Picture the account you just opened as a bucket. Now, you need to fill that bucket with something.

    What you fill that bucket with are your investments.

    This second step is crucial. It’s also easily overlooked.

    More often than you might think, when people new to investing complete step 1 by opening an account, they mistakenly believe that their job is done. That’s not the case.

    When you first open an account (other than employer-sponsored plans), you will need to fund that account with a minimum required deposit.

    The key to remember is that once you make that transfer, your money will sit in your new investment account, not earning much or any interest, until you choose how to invest it.

    Until you complete this second step, your money sits in your account and you don’t reap the benefits of investing.

    As a side note, you’ll likely need to complete this second step every time you make a transfer into your investment account. You can link your checking account to your new investment account to make transfers easier.

    One other side note, I mentioned that employer-sponsored plans, like 401(k) plans, operate a little differently. That’s because when you first enroll in your 401(k) plan, you will make your investment selections right then and there.

    Because your contributions are automatically deducted from your paycheck, they will automatically be invested in your preselected investment choices.

    Don’t laugh about people forgetting to choose their investments.

    When I first taught my financial wellness course to law students, I thoughtlessly made a joke about people who forget to complete this second step. At the time, it seemed obvious to me that once an account was opened, the next step was to select the investments.

    Boy, was I wrong.

    In that first class, a student raised her hand and said she had made that mistake before. Her money sat in her investment account, without earning any interest, for more than a year before she realized her mistake.

    She was not laughing at my joke.

    Nor was she the only person in my class who had made that mistake. It turned out nobody was really laughing.

    Since that first class, I’ve realized that it’s actually a common mistake.

    That’s why I now emphasize there are two steps to start investing. The first step is to open an account. The second step is to pick investments for that account.

    listen up yall illustrating professor Adair teaching personal finance to law students.
    Photo by Kenny Eliason on Unsplash

    And, guess what?

    I recently made the exact same mistake.

    My HSA had been with one provider for years before that provider changed. My money was automatically transferred over to the new provider.

    However, somehow I missed the announcement that my money would not be invested until I chose the investments for that new account.

    It took me about six months of earning no interest to realize what was going on.

    That’s what I get for making a joke about step 2!

    How do I pick the right investments to fill my account?

    We recently discussed the importance of learning the language of investing. In that post, we talked about stocks, bonds, mutual funds, and index funds. When you’re selecting investments, you’re choosing between these types of options.

    We also talked about the importance of asset allocation and diversification. These terms make investing seem more complicated than it really is.

    Ultimately, you’ll need to do your homework or pay an advisor to do it for you. Before you make your decision, be sure to check out my previous posts on investing so you have a good understanding of your options.

    Personally, I invest in index funds to keep my costs down and to ensure a certain level of diversification. If I don’t have the option to invest in a total stock market index fund, I invest in an S&P 500 index fund.

    I also invest in target date retirement funds since these funds automatically rebalance for me as time goes on. It doesn’t get any easier than this.

    Now you know how easy it is to start investing.

    If you were ever hesitant to start investing in the past, now you should be feeling more confident in how to get the process started.

    There are really only two steps:

    1. Open an account.
    2. Pick investments for that account.

    It doesn’t have to be any more complicated than that.

    As always, leave a comment below if I can answer any questions as you get started.

  • Money on My Mind: Read Millionaire Milestones

    Money on My Mind: Read Millionaire Milestones

    On my journey to financial independence, I’ve read close to 100 personal finance books.

    This week, Sam Dogen of Financial Samurai fame, released Millionaire Milestones: Simple Steps to Seven Figures.

    I pre-ordered my copy of Millionaire Milestones and read it cover-to-cover in three days. You may have noticed my posts this week have been slightly delayed. Now, you know why.

    You can find a breakdown of my favorite money mindset books here. I recently added Millionaire Milestones to my list. It was that good.

    If you’re serious about becoming financially independent, I highly recommend you read Millionaire Milestones.

    Who is Sam Dogen aka The Financial Samurai?

    Dogen has been a leader in the personal finance space since he launched Financial Samurai in 2009. Since then, he’s shared his experience and knowledge for free with three posts per week. I do my best to read every post.

    Millionaire Milestones is his third book. Dogen’s also written the Wall Street Journal Bestseller Buy This, Not That and the bestselling e-book How to Engineer Your Layoff.

    What separates Millionaire Milestones from other books?

    As many of you know, I’ve been on my journey to financial independence since 2010 when I was drowning in credit card debt. Since then, I’ve read every personal finance book I can get my hands on.

    Allow me to over-generalize and separate the books I’ve read into two broad categories.

    The first category of books are written by authors who are at a very early stage in their personal finance journeys. These authors tend to be in their 20s and early 30s. They are intelligent people, good writers, and have a lot of valuable advice to share. I certainly gained a lot of insight from these books.

    The second category of books are written by authors who had not only achieved, but also sustained, financial independence. Contrary to the first category, these authors are typically in their 60s and 70s. They have decades and decades of experiences and knowledge to draw upon. They are absolute legends in the financial wellness space.

    person holding book sitting on brown surface illustrating the need to read Millionaire Milestones by Sam Dogen
    Photo by Blaz Photo on Unsplash

    With those overly broad categories in mind, do you see where I’m going with this?

    Category 1: Too young.

    Category 2: Too old.

    Enter Dogen AKA The Financial Samurai.

    AKA… Goldilocks?

    Millionaire Milestones is the Goldilocks of Personal Finance books.

    Yup, Dogen is part samurai and part golden-haired girl.

    Let me explain.

    Dogen is in his mid-40s. He’s not too young. He’s not too old. His book hits just right.

    In Millionaire Milestones, Dogen covers his journey from finance bro in New York in his 20s to present day life as a writer, investor, and husband and father.

    What separates Millionaire Milestones from other personal finance books is that Dogen’s still on his journey. Don’t get me wrong, he’s been financially independent for more than a decade. He certainly has accumulated decades of knowledge since his time working on Wall Street.

    But, Dogen’s still in the thick of things. He’s not preaching from the rocking chair on his patio overlooking his immaculate yard.

    Dogen’s presently raising kids. He’s focused on his website and his investments. Like you and me, he can relate to the present day challenges of personal finance because he’s still on his journey.

    To recap, Dogen’s not wet behind the ears. You don’t have to question his credentials.

    At the same time, he’s not so far removed from his peak earning years that his advice is outdated.

    That’s why I think Millionaire Milestones is the Goldilocks of personal finance books.

    In Millionaire Milestones, Dogen doesn’t pull any punches.

    Now, Dogen might be part Goldilocks.

    But, make no mistake. He’s still all samurai.

    If you read Millionaire Milestones, Dogen will tell it to you straight. He’s not going to sugarcoat anything for you. The journey to financial independence is hard. Most people don’t have it in them to make the sacrifices that Dogen recommends.

    The fact that Dogen doesn’t run away from that reality is what separates his book from others I’ve read.

    If you want the truth about what it takes to become a millionaire, Dogen will give it to you.

    Throughout his multiple decades studying and teaching personal finance, Dogen has seen many ups and downs. He’s not shy about sharing his mistakes in hopes that we can learn from those mistakes.

    He opens up about his relationship with his wife and his young kids. This is key because it helps understand why money even matters to him in the first place.

    Dogen has felt the pain.

    Importantly, Dogen has felt the pain. I’ve previously expressed my opinion that personal finance education is best suited for people that have already begun their careers or are just about to start.

    This is why I teach personal finance to law students and launched Think and Talk Money for lawyers and professionals.

    I know that personal finance education didn’t matter to me until I felt the pain. By feeling the pain, I’m talking about that struggle that comes with balancing rent, debt, and a social life for the first time with your own money.

    I don’t know Dogen, and I wouldn’t presume to put words in his mouth. But, my impression after reading Millionaire Milestones is that he would agree that personal finance education is best suited for people that have felt the pain.

    Dogen is not shy about sharing how he’s felt the pain at various stages of his life.

    In fact, he will tell you that if you want to be truly independent, you’re going to have to feel the pain, too. And, it won’t come easy.

    But, he’ll also convince you that it’s well worth it.

    Read Millionaire Milestones to the very end to see why it’s all worth it.

    Reaching financial independence is hard. If you make excuses, Dogen will be the first to tell you that you aren’t going to get there.

    But, if you take responsibility for educating yourself about money, Dogen will also be the first to tell you that it’s all worth it.

    Read Millionaire Milestones to the very end. If you think you might not be cut out for the journey, seeing what it looks like at the finish line may persuade you otherwise.

    Dogen does an excellent job of not only showing you how to amass wealth, but also what you can do with that wealth you’ve worked so hard for.

    That was my favorite part of the book.

    At this point in my personal finance journey, I know the steps I need to take to become financially independent.

    What I’m still sorting out is what to do with myself once I’m there.

    Reading Dogen’s perspective on what is possible once you’ve amassed enough wealth was fascinating.

    I found his conversation about how much to spend each year once you’ve left full-time employment especially valuable. As he puts it, there’s a sweet spot between spending too much and spending too little. He gives you the tools to find that sweet spot.

    Dogen also talks about spending money in ways that boost your happiness. That could mean something as small as leaving a generous tip or as large as a once-in-a-lifetime trip for your friends.

    Most of all, his conversation about helping others through the knowledge he’s acquired really resonated with me.

    I started teaching personal finance and launched Think and Talk Money because of all the knowledge I have acquired from people like Dogen. My life has been greatly enhanced through this education.

    I’ll be nothing short of thrilled if I can carry the torch and share my personal finance journey in order to help others like Dogen has helped me.

    I highly recommend you read Millionaire Milestones.

    Wherever you are on your journey to financial independence, I highly recommend you read Millionaire Milestones.

    Dogen has not only done it all, he’s still doing it.

    Dogen won’t pull any punches. The journey to financial independence is not an easy one.

    But, as he makes clear, it’s well worth the sacrifice in the end.

  • How Much Money a 1% Advisor Fee Really Costs

    How Much Money a 1% Advisor Fee Really Costs

    I recently attended a “financial empowerment” workshop hosted by a financial advisor.

    The financial adviser was smart and very passionate about helping people plan for retirement. She shared a lot of valuable information, such as investing early and often.

    She also shared good examples on how compound interest works and how inflation eats away at our purchasing power.

    I liked just about everything she was sharing with the audience. It was solid advice, and her presentation included many informative charts and examples.

    I was not even bothered that she was frequently pitching her services in hopes that audience members would hire her to manage their money. It was her presentation and she earned the right to promote herself.

    The thing is, and I was not surprised by this in the least, the topic of fees hardly came up at all.

    In fact, the first mention of fees did not come up until the very last slide. In total, fees were addressed for maybe 30 seconds in an hour-long presentation.

    I don’t necessarily blame the advisor for not discussing fees until the very end. She’s trying to make a living and doesn’t want to scare people off before hearing what she had to say.

    I think most people in her situation would have structured the presentation the same way.

    That said, in my opinion, fees should be one of the first things discussed when it comes to investing. It should not be a throw-in at the end of a presentation.

    The amount we pay in fees is one of the main things we as in investors can control.

    There is not much we can control as stock investors. Markets are unpredictable. One of the only things we can control is the amount we pay in fees.

    There are two primary types of fees: transaction fees and ongoing fees.

    • Transaction fees are charged each time you make a transaction, like buying a stock.
    • Ongoing fees are charged regularly, like account maintenance fees.

    Whenever you are choosing how to invest your money, pay close attention to the fees associated with that investment option.

    You cannot avoid fees completely, but you can minimize the amount you pay depending on the investments you choose.

    Below, we will take a look at how even a seemingly small fee of 1% can have a huge negative impact on your account balance over time.

    As a general rule, passively managed investments like index funds, charge lower fees. Actively managed investments charge higher fees.

    If you choose to work with an investment advisor, be sure to understand all of the fees charged for those services. Pay particular attention to the ongoing fees, which can have a big impact on your investment portfolio.

    I am not on a crusade against financial advisors.

    Before all the financial advisors out there bite my head off, let it be known that I am not on a crusade against you.

    Believe it or not, I’m not here to tell anybody whether he should work with a financial advisor or not. That’s not for me to decide.

    I believe that advisors can offer significant benefits to a lot of people, including benefits that are difficult to quantify. For example, an advisor may help someone stay calm during market dips so that person stays invested for the long term.

    I view my role in the personal finance food chain as that of an educator. I am not a financial advisor, and I won’t be giving personal investment advice.

    My purpose in writing this post is to help you decide whether the cost of hiring an advisor is worth it to you.

    Dapper Professional wearing a blue plaid suit, a custom shirt and a silk knit red tie, illustrating a financial advisor ready to charge you "only 1%" in fees.
    Photo by Benjamin R. on Unsplash

    I do the same thing when I teach personal finance to law students. I try my best to present options and information so they can make the best decisions.

    When it comes to investment fees, it’s hard to know exactly what we’re paying. What does a 1% fee even mean?

    By looking at the examples below, you should get a better idea of what a 1% fee looks like over the long term. Then, you can be better equipped to make a thoughtful decision on whether to work with an advisor.

    In the end, I’ve done my job if I’ve helped you acquire enough personal finance knowledge to make educated choices with your money.

    So today, we’re going to talk about fees.

    Remember, none of us can control the market, and that includes financial advisors. The best any of us can do is project what may happen in the future based on what has happened in the past.

    Since we can’t control the market, let’s focus on what we can control, like fees.

    To help us understand how fees can be a drain on our investment returns, let’s revisit our friend Sally.

    Sally earns 10% a year and pays no advisor fees.

    Remember our friend, Sally?

    While in her 20s, Sally funded her retirement account with an initial contribution of $2,500. She then made contributions of $250 every month for 40 years.

    She was comfortable with reasonable risk and invested in the S&P 500, which has historically earned an average annual rate of return of 10%.

    After 40 years, Sally had contributed a total of $122,500.00. Her retirement account grew to  $1,440,925.81.

    After 40 years, a $2,500 initial contribution and $250 subsequent monthly contributions earning 10% average annual interest will be worth $1,440,925.81

    Sally set herself up to have a lot of choices come retirement.

    Now, let’s make one slight adjustment to our hypothetical to account for a fee of “only 1%.”

    Sally earns 10% a year and pays a 1% advisor fee.

    Let’s assume that Sally decided to work with a financial advisor that charges a 1% fee. That means every year, Sally pays her advisor 1% of her account balance.

    We’ll assume that her advisor also averaged a 10% annual rate of return for Sally. However, because Sally pays her advisor a 1% fee, Sally’s actual earnings rate drops from 10% to 9%.

    Let’s see how that 1% fee changes Sally’s performance over 40 years.

    After 40 years of earning 9% after paying a 1% fee to her advisor, Sally will have $1,092,170.89.

    The 1% fee resulted in Sally’s account dropping by $348,754.92.

    That’s 24% less money than she had in our example when she earned 10%.

    The impact of even a 1% fee is monumental.

    Through this example, you should be able to see that even a seemingly small fee can have major consequences on your long term gains.

    When people start investing, the 1% fee does not seem like a bad deal. In my experience, whenever a financial advisor has explained fees to me, he uses words like “just 1%” or “only 1%”.

    I think that language is misleading and deceiving. Sally would probably agree that words like “only 1%” do not accurately express a cost of $350,000.

    If you look at the very beginning of Sally’s investment profile, it’s true that the 1% fee seems to have little impact.

    In Sally’s case, the difference in her account in the two scenarios after 1 year is only $25.

    • Sally’s account after 1 year at 10% interest: $5,750.
    • Sally’s account after 1 year at 9% interest:$5,725.

    That’s a pretty marginal difference. However, it takes time for the impact of fees to materialize.

    The reason is because it takes time for the magic of compound interest to set in. That’s why we need to invest early and often.

    Let’s look at the difference in Sally’s account over time:

    Looking at these numbers, it becomes clear how much a 1% fee can impact your overall investments.

    One other consideration: the fee also typically gets taken straight out of your account. That can make it feel like the fee is relatively small or doesn’t exist at all.

    It would feel much different if each month you had to go through the process of writing a check to your advisor. Maybe feeling that pain would impact your decision to pay the fee.

    Decide for yourself if the real cost of an advisor is worth it to you.

    You can play with these numbers to match your personal situation. Maybe you have an advisor charing less. Maybe yours charges more.

    If you want to tweak the annual rate of return you expect to earn by working with an advisor, please do.

    Or, maybe you just want to ask your advisor or potential advisor about fees and how they may impact your portfolio over the long term.

    Hopefully, looking at these numbers gives you something to think and talk about.

    I personally do not work with a financial advisor.

    Let’s circle back to the financial empowerment workshop I attended the other day.

    At its conclusion, the advisor’s husband came by to collect the sign-up sheet. I happened to be the last person to receive the clipboard.

    Seeing that I had not signed up for a free consultation, he looked at me and said, “Oh, you forgot to sign up!”

    I chuckled.

    Uhh, no I didn’t “forget”.

    I respectfully declined to be added to the list. I’ve chosen not to work with an advisor.

    I shared my story about how I set $93,000 on fire when my former advisor pulled me out of the markets in 2008.

    In that post, I also shared that it wasn’t her fault. It was my fault for not being educated.

    Since then, I’ve been convinced by endless reports, such as this from Yahoo! Finance, that I’m better off without an advisor when considering the cost:

    Making matters worse is that the professionals, who the average investor might turn to for guidance, have poor track records. In the past decade, an alarming 85% of U.S.-based active fund managers underperformed the broader S&P 500. Those who invest in these funds are essentially paying for unsatisfactory results.

    How much does 1% matter to you?

    I recently calculated how much I would have paid an advisor by this point in my life. I determined that If I had been working with an advisor, I would have paid more than $100,000 in fees so far.

    When I think about all the things I could do with more than $100,000, I’m very happy that I chose to educate myself and keep that money instead of paying it to an advisor.

    Maybe I would have earned more if I worked with an advisor. Maybe that $100,000 would have been a worthwhile price to pay. Then again, maybe not.

    If you choose to work with an advisor, I won’t blame you. Hopefully your advisor consistently beats the returns of the S&P 500 or provides value to you in other ways.

    Whatever the case may be, you now should have a better understanding of what you’re paying when you hear the phrase “only 1%.”

    • Do you work with an advisor?
    • What fee does your advisor charge?
    • What are the top benefits you receive in exchange for the cost?

    Let us know in the comments below.

  • Why Successful Investing is Playing Offense and Defense

    Why Successful Investing is Playing Offense and Defense

    When you hear the word “inflation,” what’s the first thing that jumps to mind?

    Is it the price of eggs?

    Eggs really have it bad right now. If it’s not being the poster child for inflation, it’s the bird flu causing eggs problems.

    Eggs are even getting blamed for ruining Easter! Just look at this headline from AP News:

    “US egg prices increase to record high, dashing hopes of cheap eggs by Easter”

    Yeesh. I feel bad for eggs.

    I’ve certainly noticed the elevated price of eggs at the grocery store.

    But, eggs are not the first thing that comes to mind when I think of inflation.

    When I think of rising prices, my mind immediately goes to lunch downtown during the work day.

    Now, please indulge me for a minute. I know I’m about to sound like the old man who yells at clouds.

    I try to bring my lunch most days. It’s partly trying to eat healthier. The other part is that I have a hard time justifying the cost and have decided that lunch is really not something I care about.

    Ever since I was a really lost boy in my 20s and started budgeting to create fuel for my investments, lunch was an easy thing to cut.

    Even so, there are days when I run out of time in the morning to get a lunch packed before I’m out the door. On those days, I’m usually looking for something relatively quick and healthy.

    I’ve noticed that no matter where I go near my office, it seems like the cost of a fast-casual lunch is between $15-$20. That’s true whether it’s a sandwich or a salad or a burrito.

    $20 for a lunch that is not even the least bit exciting! That’s hard for me to swallow (sorry, couldn’t help myself…)

    Am I yelling at the clouds alone here?

    Why does it matter that everything is getting more expensive?

    There’s no single explanation for why things are getting more expensive. For example, restaurants are facing higher costs for ingredients, labor, and even online reservation sites.

    Setting aside isolated explanations, the reality is that all things tend to get more expensive over time.

    The word for that reality is “inflation.”

    Specifically, inflation is defined as “ongoing increases in the overall level of prices.”

    If you were accustomed to paying $10 for lunch, and now that same lunch costs $20, that’s what inflation looks like.

    Evening clouds over the sea representing things we can't control, like inflation.
    Photo by Nick Scheerbart on Unsplash

    Why do we care about inflation?

    We care about inflation because inflation reduces the buying power of our hard-earned money. We can’t control or stop inflation. It’s going to happen.

    Ask your parents how much they paid for their first car.

    Or, you can ask my high school basketball coach. When we would complain, he would respond “That and $1.25 will get you a ride on the bus!”

    Don’t worry, none of us knew what it meant either. Although, I wonder if he’s updated his quip to “That and $5.50…”

    The point is, In order to counteract the drain of inflation, we need to invest our money.

    Investing to do fun things later on is playing offense.

    We’ve spent a lot of time in the blog talking about all the amazing things you can do with your money if you develop strong personal finance habits.

    Strong personal finance habits include budgeting, paying off debt, and saving. We do these things so we have fuel to invest.

    When you invest, your money grows without much effort on your part. You can then do those amazing things in the future.

    That’s playing offense.

    Look back at our friends Terry and Sally.

    Terry took no risk and kept his money in a savings account. Terry did not play offense.

    Sally took on reasonable risk and invested in the S&P 500. Sally played offense.

    What happened after 40 years in our hypothetical scenario?

    Terry, at a 3% interest rate from his savings account, had a total of $234,358.87.

    Sally, at 10% annual returns from the S&P 500, had a total of $1,440,925.81.

    As a result, Sally will have $1,200,000 more than Terry to do fun things with in retirement.

    Sally clearly played offense. Terry clearly did not.

    Investing to counteract inflation is playing defense.

    You may be thinking that at least Terry’s “safe” approach meant that he played good defense.

    Nope.

    Terry’s approach was bad defense just like it was bad offense.

    All because of inflation.

    Investing to counteract inflation is playing defense. It’s protecting your hard-earned purchasing power.

    Over the long term, it’s critical to invest your money and earn a return that exceeds the rate of inflation.

    Otherwise, you risk not being able to afford the same items you’re accustomed to buying today because those items will be more expensive.

    In our earlier examples of eggs and workday lunches, we’ve seen how things feel like they’re getting more expensive over time.

    It’s not just eggs and lunches that get more expensive. Everything does.

    Let’s plug some numbers into US Inflation Calculator to illustrate how things really are getting more expensive.

    Let’s say you bought something in 2000 for $100. Based on the actual inflation rates between 2000 and 2025, that same $100 item would could $185.71 today.

    That’s an increase of 85.7%!

    Inflation calculator showing how buying power decreases over time.

    So, by keeping his money in a savings account earning 3% interest, Terry may have thought he was doing the right thing because his balance was getting bigger.

    The problem is that while his bank balance was increasing, so was the cost of everything he might want to buy. So, he had more money, but he could buy less things with that money.

    That’s what inflation does.

    The only way to get ahead of inflation is by investing and earning a higher rate of return.

    So to return to our question: was Terry really playing good defense by keeping his money in savings?

    No, because his actual purchasing power diminished even though his balance grew.

    Investing is about playing offense and playing defense.

    By now, you should hopefully be motivated to invest as a way to play offense and play defense.

    It’s fun to think about what you can do with your money when it grows with very little effort on your part.

    It’s just as important to think about investing as a way to protect your ability to buy the very same things in the future that you buy today.

    Instead of being the man who yells at the clouds, you can be the one buying as many eggs and lunches as you want.

  • Money on My Mind: Financial Literacy Month

    Money on My Mind: Financial Literacy Month

    April is known as National Financial Literacy Month.

    That’s cool. It’s never a bad idea to pay a little extra attention to your finances.

    Of course, Think and Talk Money readers don’t wait until April to be reminded of all the things we should be doing with our money.

    With more than 50 posts already at our disposal, Think and Talk Money readers pay attention to our money year round.

    We know how important money is to reaching our ultimate goals in life. That’s why we like to think and talk money just a little bit every week.

    Think and Talk Money readers know that personal finance starts with getting our money mindset in the right place. That’s why we create our personal version of Tiara Goals for Financial Freedom.

    With the right mindset, we can stay on budget and consistently generate fuel for our investments.

    When other people get worked up over the stock market, we talk to our people and stay calm.

    We know that time is on our side.

    Plus, investing is actually the easy part.

    We control what we a control. That’s why we invest early and often to get the maximum benefit of compound interest.

    So, Think and Talk Money readers don’t need a national personal finance month.

    And, we’re happy that personal finance gets a little extra attention each year in April.

    aerial photography of flowers at daytime in April, personal finance month, which Think and Talk Money readers don't need.
    Photo by Joel Holland on Unsplash

    These credit card fees are getting out of hand.

    Is it just me, or are you also noticing more and more businesses charging fees to use credit cards?

    I wrote about my disdain for credit card fees recently. 

    In just the past couple of weeks, I’ve chosen to pay with cash instead of credit card on multiple occasions:

    • At the butcher shop, which charges a 3% fee, and is kind of smug about it.
    • At the local ice cream shop, which charges a 4% fee and misleadingly labels it a 4% discount for customers paying in cash.
    • For the garage door repair guy, who creatively indicates the fee in terms of cash instead of a percentage. In this instance, $11 instead of 3% of the total bill.
    • At the tree nursery, which also charges a 3% fee for credit cards. This one hurt the most. Trees are expensive! I really would have liked those points.

    By paying cash, I avoided hundreds of dollars in fees. Don’t get me wrong, I love credit cards points as much as anyone. But, I just can’t stomach paying these fees to earn the points.

    I even ran the numbers recently and determined that the points don’t make up for the added penalty of using a card.

    I know many business owners disagree, but in my opinion, these fees are bad for business.

    Fees act as a deterrent for me to spend money. I imagine they are a deterrent for others, as well. If I do shop at one of these establishments, I end up being more selective and spending less money than I otherwise would have.

    • At the butcher shop, I didn’t buy the side items to go with my skirt steaks. 
    • At the ice cream shop, I bought ice cream for my kids but not for myself. Luckily (or unluckily?), my son gave me his leftover, melty Superman ice cream with rainbow sprinkles.
    • I had no choice with the garage door guy- the garage was broken and needed fixing. You win, garage door guy!
    • At the tree nursery, I bought half as many trees and plants as I intended. 

    The way I see it, both the customer and the business lose out because of these fees. 

    For example, at the nursery, I didn’t get all the plants I wanted. That made me kind of sad.

    At the same time, the nursery lost out on more than $1,000 in plant sales. I don’t know how that made the business feel. Obviously, it’s not that sad since it continues to charge the fee.

    Taking a broader viewpoint, maybe these credit card fees are actually good for us consumers.

    In our consumer-driven society, we all spend too much money when we go out to eat or go shopping. Studies have consistently proven that we spend less money when forced to use cash.

    In that sense, a deterrent to spending, which is exactly what these fees are, is probably a good thing for us consumers. 

    I can’t imagine it’s good for business, though.

    What do you think?

    It’s OK that tracking your net worth is less fun during a market dip.

    I track my net worth once per month using a simple spreadsheet. Today was the first day I updated the spreadsheet since “Liberation Day” and markets dipped.

    Like so many others, my net worth took a hit this past month.

    That’s not fun.

    But, I’m not losing my mind over it.

    I’m not saying it feels good. I would much rather see my net worth steadily improving.

    A Yellow Warbler sits in a flowering tree on a sunny spring morning during financial literacy month, which Think and Talk Money readers don't need.
    Photo by Mark Olsen on Unsplash

    I’m just saying I’m not freaking out about it. Time is on my side. 

    I expect dips like this will occur multiple times throughout my investing timeline.

    One thing I’ve found is that it helps to talk about money when things aren’t going well. You realize that you’re not alone. Your friends and family are probably having the same feelings that you’re having.

    You don’t have to share how much money you have or how much you lost. You can still benefit emotionally by acknowledging to your loved ones that you’re thinking about the markets a little bit more these days.

    People are going bananas for The Bananas.

    A reader sent in a great story about a couple who went $1.8 million into debt to start The Savannah Bananas.

    If you haven’t heard of The Bananas, they might just be the best story in sports right now.

    Despite countless opportunities to cash in by taking on investors, the owners still own 100% of the team. They continue to do things their way, even if that means foregoing massive profits.

    I love stories like this. These owners bet on themselves and found success. Instead of cashing in at the first chance, they’re staying true to themselves.

    At the end of the day, they’re making money and seem to enjoy what they’re doing. 

    Is there anything better than that?