Keep It Simple.

Making a financial plan can be/is a daunting task. When else in your life are you asked to make a plan that must be executed for 4 decades to assure your success and survival for 4 more decades? Additionally no one can agree on the best path for that plan and no one really knows the endpoint. I’ll take you down my intellectual journey.

Here is where my journey began (listed in the order of reading)

• The Intelligent Investor

• White Coat Investor

• Random Walk Down Wall Street

• The Little Book of Common Sense investing

• Boglehead’s Guide to the Three Fund Portfolio

• Four Pillars of Investing

• Money Master the Game

• The Book on Rental Property Investing

• Intelligent Asset Allocation

• Extreme Ownership

• Principles Life And Work

• Millionaire Real Estate Investor

• Cash Flow Quadrant

• The Black Swan

• The Misbehavior of Markets.

• Rich Dad Poor Dad

• Antifragile

Ok. Wow. That’s a long list and quite a few say similar things in very different ways. What’s even more confusing is many books say very different things in similar ways so you can easily get lost in the weeds. For instance, Tony Robbins book Money Master the Game reads a lot like Atlas Shrugged. You read the entire book trying to figure out “Who is John Galt” and unlike Atlas Shrugged you never really find the answer. He uses hundreds of pages working up to some investing breakthrough that doesn’t even really exist. Experiences like this make this planning process very frustrating for many investors. Many of these books conclusions are based on back testing portfolios or the living surrogate for back testing: past life investing experiences.

My recommended reading list and order:

1. Antifragile

2. Random Walk Down Wall Street

3. The Little Book on Common Sense Investing

Start and Keep it Simple

Step 1- The Real Asset Allocation

• Taxes- 37% (variable based on your income level)

• Savings/Investing- 25%

• Mortgage/Land/Debt- 15%

• Charity- 3%

• Everything Else- 20%

The Real Asset Allocation and diversification of your portfolio begins even before you invest anything. Paying yourself first, savings rate, investment percentage- whatever you want to call it must be intentional and automatic. The example allocation above must be automatic. Make the numbers your own, don’t save or invest less than 20%, and be intentional. If you’ve had a raise recently or make more now than you did 5 years ago this will be easy. I call my implementation a reverse raise. I automated the withdraw of 25% pretax of every paycheck and at first I noticed a difference but then my life adapted. Let lifestyle creep and discretionary spending work in your favor for once!

Step 2- Learn the Basics

• Read 4 Books a year and don’t be afraid of online course. I recently signed up for chart coach and enjoyed his course. Seek out knowledge that peaks your interest and don’t be afraid to invest in yourself. Also, there is an endless amount of free information, podcast, tweets, youtube videos, etc. Sometimes all the investment requires is your time. Your life is the journey; love it!

• Quarterly accounting

  • Where is your money?

  • What is it doing?

  • How’s the plan?

• You and only you are responsible for your money.

  • Money managers, accountants, attorneys have dozens/hundreds/thousands of clients. Statistically 85% underperform the SP500TR and half are below average

  • You control your destiny

Step 3- Assemble your team

• You and your spouse

  • Save Money

  • Protect your marriage/relationship

  • Don’t overspend and follow the plan!

• CPA

• Attorney

• Insurance brokers

  • Life/disability

  • Property/liability

Step 4- Protect!

Insurance is boring and meeting with an attorney for estate planning is not a ton of fun. But, you need to make sure you protect yourself, assets, and relationships. Why is this step 4? Well, if you are married then you may need to put all your brokerage accounts in a Joint Tenancy by Entirety Account and changing this later is painful. I personally felt hiring a CPA and attorney to help me through this process was worth the money.

Step 5- Open the accounts

1. Local bank- I personally love my local bank and use them for all my traditional banking and lending needs

2. Brokerage Account

   1. Schwab- Great place to start and I really like how they track all my accounts

   2. TD Ameritrade- Thinkorswim app is awesome for investing and options trading

3. Savings account

   1. Marcus- by Goldman Sachs- not a bad place to keep your emergency fund. It really is a cash savings account as the rate is soooo low. I intentionally keep emergency fund money here because it takes several days to get it out.

   2. I get the whole rats eats cash argument but we all need a stash of cash.

Note: I use to have a vanguard account but I closed it recently because of the interface and their ETFs are freely available on all trading platforms.

Accounts to open

• Basic Accounts

  • Checking account- where your direct deposit or money transfers go

  • “High yield” savings account- An emergency fund is vitally important and I’m not sure “high yield” savings accounts actually exist anymore. They are pretty much cash accounts that get chipped away at by inflation but serve a vital purpose of being able to quickly deploy capital

• Tax advantaged accounts first

  • Maximize work accounts- 401k,403b,457,401a etc…

  • My 403b/457/401a are all invested in VINIX through my employer

  • Open Investment retirement account (IRA): Look at your income level because you may have to Traditional IRA —> Roth IRA (ie Backdoor Roth)

  • 529 Account for the kids colleges

• Brokerage account

Important to note- Tax-deferred accounts do make the assumption that you are going to make less in retirement than you do now. This is why some people do not contribute to these accounts

Step 6- Fund the Accounts!

• The key is automation. Never let investment money hit your checking account.

• Invest 25% of your earnings

• At least 40% of your money goes to equity/investments/mortgage principal/debt principle!

Step 7- Invest

Keep it simple

Auto Diversify

Start by buying the Vanguard Total Stock Market ETF ( VTI ) and re-invest the dividends. VTI tracks close to the S&P 500 Total return. You can drive yourself crazy on all the decisions surrounding indices (VOO/SPY/VFIAX/VBR/SPY/TSLA/AAPL/AMZN/etc). Just start simple, get in the game, and then make your own decisions as you grow as an investor. It is very important to note that very few people made their fortunes through diversification. But you need to start somewhere.

Step 8 - Creating your own plan!

I’ll soon be sharing my plan but the key is devising a plan that is right for you.

BOOM! You did it!

Disclaimer: I’m not giving financial advise. I’m not a financial advisor. You are responsible for your money. Not me. Consult a professional.