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7 Best Short-Term Investments to Save Money (2022)

January 1, 2022 by Rob Berger

There are a lot of good reasons to hold cash. An emergency fund is a must. Then there’s saving for a home or vacation. Whatever the reason, the big question is where are the best short-term investments to park your money.

We’re in an historically low interest rate environment. In a Consumer Reports article from just two years ago, June 2019, it shows interest rates ranging from 2% at Sallie Mae to 2.75% at First Internet Bank.

Unfortunately, those days are behind us. They’re probably ahead of us too. I’m going to make a prediction that eventually we’ll get back to those rates. But right now, most big banks are paying about one basis point (0.01%).

You can do better. Here are 7 of the top short-term investments for your money.

Best Short-Term Investments for Saving Cash

1. Chime

Chime is what I would call a cash management app or a cash management account. It’s effectively a bank account, except that Chime is not a bank. There are a number of technology companies who have built incredibly easy to use mobile apps. They come with a debit card and they partner with an FDIC member bank. So Chime isn’t a bank, but it partners with an FDIC member bank so that your money is protected up to the FDIC insurance limits. 

Chime has both a spend account and a savings account. It also comes with a debit card. This could be your everyday checking and savings account. It’s currently paying 0.50% APY on the savings account . Overall Chime has had very good reviews on both the iPhone and Android platforms.

And for those trying to build their credit, Chime also offers the highly rated Chime Secured Credit Card.

2. Axos Bank Savings Account

For those who want a straight up savings account, Axos Bank is the top choice. Founded in 2000 as Bank of Internet, they rebranded as Axos Bank, an FDIC-insured financial institution with over $14 billion in assets. As of today, they’re paying 0.61% APY on their savings account. Like most online banks, it charges little in the way of fees.

3. Axos Bank Rewards Checking Account

Axos Bank gets another mention in our list, this time its Rewards Checking Account. They have five different checking accounts, including accounts designed for teenagers and seniors, and even a cashback checking account. For parking cash, the rewards checking account is an excellent option.

You can earn up to 1.25% on this checking account. You do, however, have to jump through some hoops. The starting point is you have to have a direct deposit of at least $1,000 a month. That by itself gets you an APY of 0.41%. Then use the debit card at least 10 times in the month on transactions of at least and your interest rate jumps to 0.82%. Finally,  use it another five times for a total of 15 or more transactions a month, and it all adds up to 1.25% APY. 

4. OnJuno

OnJuno account

OnJuno, like Chime, partners with an FDIC-insured bank for its customers. It offers an excellent app and currently allows you to earn 1.20% on deposits and 5% cashback with its premium metal card at select merchants.

Whenever you see something like that, you ought to know there’s going to be some qualifications because no one pays 2.15% on an unlimited amount of money. And nobody pays 5% cash back on all transactions. And that’s particularly true with debit cards. The first is the 2.15% is limited to either the first $5,000 saved, or if you go with their Plus account, it can go up to $30,000 saved. While the standard account has no monthly fee, the Plus account is free he first six months, then $9.99 per month. 

I did the math, the Plus Account makes sense if you save the full $30,000 in the account. After the monthly fee, you’re still earning about 1.75%. The 5% cashback is limited to five retailers of your choosing within their list. 

5. Varo

Working at Varo Bank | Glassdoor

Varo is another cash management account, not a bank, but partners with the bank. And here you can earn up to 3%. To do that you’ve got to make five qualifying purchases each period with your debit card, and you have to have a direct deposit of $1,000 or more, and your balance can’t exceed $5000. So this is obviously limited. For some of you, if you’ve got more than that, you’re saving for a home, these sort of options may not be ideal, on the other hand, could be a good way to save your emergency fund. 

It’s not a large balance that you can keep but the interest rate is so much more. I mean, if you compare this to say a traditional bank that’s paying just a couple of basis points, you’d have to put 100 grand in the bank a couple of basis points, maybe more, depending on the exact rate to earn the same rate you’d earn with just $5,000 in this account. So I think it’s worth considering and that’s why I included it in the list.

6. Bluevine

Business

For small business owners and freelancers that have a business, Bluevine is an excellent choice. Bluevine is very similar in a way to Chime or OnJuno except it’s for small businesses. It pays 1% on balances up to $100,000. There is no interest earned on balances over 100,000.

Update: Bluevine has currently paused new applications for its business checking account. I’ll update this post when they reopen the application process.

7. Fitness Bank

Fitness Bank

The last one on our list is called Fitness Bank. They tie in the interest rate you can earn by how many steps you walk each day. They pay up to 0.65% APY. You have to average 12,500 steps a day to earn this rate. If you get at least 10,000, you get 0.55%. Even if you sit in a barcalounger all day you’ll earn 0.25% APR

If you’re a senior citizen at least 65 years of age they cut you a break. You get the 0.65% APY at 10,000 steps. You do have to download their app and wear an approved fitness tracker, which include Garmin, Fitbit, Google Fit and Apple Health.

Filed Under: Investing

Personal Capital vs Mint: My Ratings After Using Both for Years

December 16, 2021 by Rob Berger

Personal Capital and Mint are two of the most popular personal finance apps today. I’ve used both for many years. In this article we’ll compare Mint vs Personal Capital to see which one is best.

As is often the case, both Personal Capital and Mint have pros and cons. In some cases Personal Capital is the best option. In other cases Mint is the better choice. And because both are free, there’s even an argument to be made for using both. So let’s dive in.

Personal Capital vs Mint
  • Overview of Personal Capital and Mint
    • Personal Capital
    • Mint
  • Personal Capital vs Mint Comparison
    • Similarities
    • Differences
  • Who is Personal Capital Best For
  • Who is Mint Best For
  • Should You Use Both Personal Capital and Mint?
  • Can Personal Capital or Mint Track Bitcoin and Other Crypto?
  • How do Personal Capital and Mint Make Money?
  • Final Thoughts

Overview of Personal Capital and Mint

Both Mint and Personal Capital are online tools designed to help us manage our money. The both enable users to connect their financial accounts for automatic download of transactions and balances. And they are both free.

Personal Capital

Personal Capital is owned by Empower Retirement, which itself administers more than $1 trillion in assets through retirement accounts. Personal Capital is a registered investment advisor in the business of managing investors’ portfolios. For our purposes, we will focus on the free financial tool that if offers, regardless of whether or not you use its investment management services.

The Personal Capital tool enables you to link your financial accounts. You can link bank accounts (checking, savings, money market accounts and CDs), credit cards, student loans, mortgages, car loans, retirement accounts (e.g., 401(k) and IRAs), taxable investment accounts, crypto coins and tokens, and real estate.

Once linked, Personal Capital provides a wealth of tools to monitor, manage and analyze your money. A glimpse of its dashboard reveals the power of this tool:

Personal Capital Dashboard

Beyond the dashboard, Personal Capital offers the following features:

  • Track income and spending by category
  • Track your net worth
  • Evaluate the asset allocation of your investments
  • Evaluate your investment fees
  • Calculate whether you can retire
  • Plan your retirement with multiple scenarios
  • Track upcoming bills
  • Have Personal Capital analyze your portfolio and make suggestions

Of all of these features, those related to investments are Personal Capital’s strongest features.

Try Personal Capital

Mint

Aaron Patzer founded Mint more than a decade ago, and Intuit purchased it for $170 million in 2009. Mint was the first personal finance app to aggregate a user’s accounts all in one place. While that’s commonplace today, it was unprecedented 15 years ago.

Mint Dashboard

As with Personal Capital, users can link virtually all of their financial accounts to Mint. Once linked, Mint provides tools to manage and evaluate your finances. Some of its key features include:

  • Budgeting by category
  • Create savings goals
  • Create goals to get out of debt
  • Check and monitor your credit score
  • Track your investments
  • Track upcoming bills

Of all of these features, those related to budgeting and goal setting are Mint’s strongest features.

Personal Capital vs Mint Comparison

Similarities

Both Personal Capital and Mint share a number of similarities:

  • Account Connections: Both enable users to connect to just about any financial institution with an online login. You’ll need to provide your username and password to create the connect, but both sites uses strong security features to keep user’s data protected. And at no time can either company control the money in any of a user’s accounts.
  • Financial Dashboard: Both apps offer a financial dashboard where user’s can get a high level view of their investments. Personal Capital’s dashboard shows your net worth, budget, cash flow, investment portfolio balance, retirement savings and emergency fund. Mint’s dashboard shows your upcoming bills, any goals you’ve created, spending, your credit score, monthly budget and investments.
  • Cost: Both apps are free, although as described below, the way they each make money is different and does affect the user experience.
  • Budgeting: Both apps offer budgeting tools to track your income and expenses. As noted below, however, Mint’s budgeting features are more robust.
  • Investing. Both apps offer tools to track your investments. As noted below, however, Personal Capital’s investing features are more robust.
  • Connecting Accounts: Both Personal Capital and Mint enable you to connect your financial accounts to the app. While this feature is similar with both services, I’ve found Personal Capital’s connection to more reliable. There are still some accounts I cannot connect to Mint no matter how often I try.
  • Bill Tracking: Both apps track your monthly bills and alert you when they are due.
  • Mobile Apps: In addition to their websites, both offer apps for smartphones, tables, and Apple watch.

Differences

Here are the key differences between Mint and Personal Capital:

  • Investing Tools: While both apps offer tools to track your investments, Personal Capital is by far the better option. There are several critical features it offers that Mint does not. First, it can show you details of your asset allocation, down to the specific stocks of fund you own. It automatically calculates your investment expenses and how those fees will eat away at your wealth over time. And it can analyze your portfolio and make recommendations based on your risk tolerance.
  • Budgeting Tools: When it comes to budgeting, Mint is the winner. Personal Capital will track your expenses, categorize them, and present spending data with useful graphs. What it doesn’t do, that Mint does, is allow you to create a budget with spending goals by category. Having said that, if budgeting is your primary focus, there are better options than Mint.
  • Goals: Here Mint is the better option. You can create savings goals or a goal to get out of debt. Mint offers tools to determine how much extra, if any, you should pay toward your debt or savings goal. It also tracks your progress. Personal Capital doesn’t offer this feature.
  • Retirement Planning: Personal Capital offers a robust retirement planner. Using Monte Carlo simulation, it can estimate your retirement readiness. You can plan for income (e.g., social security or a pension) during retirement and expenses (e.g., monthly expenses, vacation, home purchase). You can also create multiple retirement scenarios and run them against each other. Mint doesn’t offer this feature.
  • Credit Score: You can monitor your credit score through Mint. Personal Capital doesn’t offer this feature.

Who is Personal Capital Best For

Without question Personal Capital is best for those with investments. It can track retirement accounts (e.g., 401(k), 403(b), TSP) as well as taxable accounts and even HSAs. Earlier this year it also adding support to track crypto prices.

Personal Capital Asset Allocation

Once tracked, it offers some of the best tools available to retail investors. You can drill down into the details of your asset allocation across all of your investment accounts. It offers an excellent fee analyzer to evaluate your investing costs and their effect on your wealth over time. And its retirement planner is one of the best available today.

Unlike Mint, Personal Capital could serve as the only financial tool you use. While it doesn’t offer some of the budgeting features Mint does, its cash flow tracking and automatic categorization of expenses have been more than sufficient for our purposes.

Who is Mint Best For

Mint is a better option for those with little or no investments who want to manage their budget. Mint’s lack of investment tools is not an issue if you have no investments. And Mint’s budget tools, including its savings and debt payment goals, are more robust than what Personal Capital offers.

One might also add Mint’s ability to track your credit score. I find this feature less compelling. Today you can track your credit score through just about any credit card you have as well as many other financial institutions.

Should You Use Both Personal Capital and Mint?

Because both apps are free, many people do use both. One could use Personal Capital to track investments, while using Mint for budgeting. The downside is that it does require you to log into two different apps to manage all of your finances. So while it is one option, sticking to one app or the other if possible is ideal.

Can Personal Capital or Mint Track Bitcoin and Other Crypto?

Personal Capital can track Bitcoin, Ethereum and other crypto coins and tokens. It can track meta tokens such as SAND and MANA, as well. That said, Mint allows you to connect your Coinbase, Coinbase Pro, Gemini or BlockFI accounts, while Personal Capital does not. Instead, with Personal Capital you create a manual account and add your Crypto and balances.

How do Personal Capital and Mint Make Money?

While both apps are free, it’s important to understand how they each make money. Their revenue models have a direct affect on your use of each tool.

Personal Capital makes money from those users who decide to use their wealth management services. As a result, they do require your mobile number as part of the signup process and they will call you. They offer to run a free analysis of your investment portfolio and how they believe their services can help you.

You are not required to accept this free analysis or use them to manage your investments. Either way, you can continue to use Personal Capitals financial tool for free.

In contrast, Mint uses an advertising model. As a result, you will be presented with targeted offers for bank accounts, credit cards and investment accounts. The integrate these offers into the user invoice, so it’s impossible to avoid them.

In either case, I find these revenue models to be benign and well worth the free tools.

Final Thoughts

For me, Personal Capital is better than Mint because of its investment tools. Further, its budgeting tools are more than sufficient for our needs. For those just starting out and with minimal investments, however, Mint may be the better option.

Filed Under: Investing, Personal Finance

7 Best Net Worth Calculators in 2022 (#1 is Free)

December 15, 2021 by Rob Berger

There are plenty of free net worth trackers on the internet. For most of them, you enter the value of your assets and liabilities, and the calculator does the simple math to show you how much you’re worth. The best net worth calculators, however, do far more than simple math.

They enable you to connect accounts to automatically pull in data. They can connect bank accounts, credit cards, investment and retirement accounts, and even the value of your home. These calculators then regularly update your net worth and keep track of changes over time.

With that in mind, what follows is a list of what I think are the top net worth apps available today.

Editor’s Top Picks

There are countless free and paid tools you can use to track your net worth. Here are the two I think are the best of the best.

  1. Personal Capital–This free tool is my top pick for tracking your net worth. You can connect bank accounts, credit cards, investment accounts, retirement accounts, crypto and even real estate via Zillow. Beyond tracking your net worth, Personal Capital also offers a wealth of tools and charts to evaluate your finances.
  2. Kubera–For those that just want to track net worth, Kubera offers a very clean interface. It links with just about every financial institution out there, including crypto accounts. While it doesn’t offer portfolio analysis tools at present, it does give you visibility into individual holdings. Kubera does cost $150 a year, but they offer a 14-day trial for $1.
Net Worth Apps
  • Editor’s Top Picks
  • Top Net Worth Calculators
    • 1. Personal Capital–Editor’s Choice
    • 2. Kubera
    • 3. Tiller
    • 4. YNAB
    • 5. Mint
    • 6. Quicken
    • 7. New Retirement
  • Final Thoughts

Top Net Worth Calculators

Household net worth has grown substantially over the last few years, as tracked by the Fed.

Net Worth

The growth has largely followed the increase in real estate prices and stocks. Of course, net worth doesn’t always go up, which is one reason I have tracked our net worth for about 20 years.

Here are some tools that can make tracking your net worth easy and informative:

1. Personal Capital–Editor’s Choice

Best for investment management

Personal Capital is without question the best net worth tracker available today. Apart from being free, no other tool offers more features.

Personal Capital Net Worth

With Personal Capital, you link all your financial accounts (it secures your data with AES-256 encryption). You can also add accounts without online logins manually (e.g., art work or vehicles). Once linked, it automatically pulls in all transactions and balances and tracks your net worth over time.

Why Personal Capital is my top pick, however, goes far beyond tracking your balance sheet. It enables you to track all of your income and expenses by category. It offers excellent tools to evaluate your investments, including an asset allocation inspector, fee analyzer and retirement planner.

2. Kubera

Best for just net worth tracking

Kubera is a relatively new app designed specifically to track net worth. You can link just about any type of account to Kubera. In addition to bank, credit card and investment accounts, you can link cars using the VIN, the value of real estate via Zillow, and even the value of domain names.

The user interface is clean, and the tool allows you to organize your assets and liabilities as you wish.

Kubera Net Worth Tracker

In addition to keeping tabs on your net worth, Kubera can keep track of your insurance policies and securely store important documents.

Kubera costs $150 a year, which is one reason Personal Capital earns the top spot. That said, they are offering a $1 14-day trial.

3. Tiller

Best for budgeting with spreadsheets

Tiller brings the world of budgeting to Google Sheets. It enables you to connect all of your financial accounts and then download the data into Google Sheets. It’s ideal for those who prefer to work with spreadsheets rather than an app.

It comes with countless templates. The main templates track your budget on a monthly and yearly basis. For our purposes, it also comes with a net worth template.

Tiller Net Worth Tracker

I use Tiller to monitor our budget. While I use Personal Capital for everything else, including net worth, Tiller could serve that purpose for those who want everything in spreadsheets.

Tiller offers a 30-day free trial. After that, it costs $79 a year.

4. YNAB

Best for budgeting with an app

If spreadsheets aren’t your thing, YNAB (You Need a Budget) offers one of the best budgeting apps you’ll find anywhere. I used it for years and found it to be an excellent tool, particularly for those struggling to live paycheck to paycheck.

One feature YNAB offers is a high level view of your net worth.

YNAB Net Worth

YNAB offers a 34-day free trial. After that it costs $14.99 a month or $98.99 a year.

5. Mint

Mint is one of the oldest budgeting apps still around. I used it for years when it came out, but more recently have found alternatives to Mint, like Personal Capital, to be a better option overall. Still, if you primary goal is budgeting (not tracking investments), Mint is a solid option.

Among other features, Mint tracks your net worth. You can link virtually all of your financial accounts to Mint. Once linked, you can track your net worth over time.

Mint Net Worth

Mint is free, but does use an advertising model. As such, expect to see offers for financial products peppered throughout the user experience.

6. Quicken

One of the first budgeting tools, and one that I remember using when it first came out, is Quicken. It is responsible for bringing personal finance into the digital age. Today, it seems to be a lot less popular, possibly because it moved to a subscription pricing model. Nevertheless, it is a solid budgeting tool that will track your net worth.

Quicken Net Worth

Quicken can provide a wealth of data about everything from spending to investments. On the downside, the user interface is not the best. As a result, Quicken is best for those who care more about data than how that data is presented. It’s also why many have looked to Quicken alternatives.

Quicken’s cost depends on the type of subscription you get, and ranges from $35.99 a year to about $100 a year.

7. New Retirement

The last net worth calculator on our list is New Retirement. This app is designed to help you plan for retirement and manage your money during retirement. It offers a wealth of tools covering everything from when to take social security to whether to convert a traditional IRA to a Roth IRA. And it tracks your net worth.

New Retirement Net Worth

New Retirement is not the best choice if your only goal is to track your net worth. But if you also want to plan for your retirement, it’s one of the best.

New Retirement offers a free plan. To take advantage of all of its features costs $96 a year.

Final Thoughts

Tracking your Net worth is simple. It’s just a matter of adding up your assets (everything you own) and your liabilities (everything you owe). The different is your net worth.

You could use a simple spreadsheet to keep tabs on your assets and liabilities. I’ve done that for years. The tools listed above, however, make it much easier and offer additional tools to help you manage, track and evaluate your finances and investments.

Filed Under: Personal Finance

The 7 Levels of Financial Freedom

December 9, 2021 by Rob Berger

The Financial Independence, Retire Early (FIRE) movement has underscored the power of financial freedom. It’s the central theme in my book, Retire Before Mom and Dad. Indeed, financial freedom is the guiding principle of how I manage money.

While financial freedom sounds good, however, many see it as a destination that’s at best 30 or 40 years away. To them, it’s just a fancy way of describing retirement.

I couldn’t disagree more.

While it’s true that we can and should define what ultimate financial freedom looks like (see below), we can begin to reap the benefits in a very short period of time. Financial Freedom is more of a journey than a destination.

It’s for this reason that my book walks through what I call the 7 Levels of Financial Freedom. And that’s what we’ll cover in this article. Be sure to check out the free financial freedom calculator near the end of the article.

Table of Contents
  • 4 Key Foundational Principles of Financial Freedom
  • The 7 Levels of Financial Freedom
    • Level 1: One Month of Expenses Saved
    • Level 2: Three Months of Expenses Saved
    • Level 3: Six Months of Expenses
    • Level 4: One Year of Expenses
    • Level 5: Five Years of Expenses
    • Level 6: Ten Years of Expenses
    • Level 7: Twenty-Five Years of Expenses
  • A Simple Financial Freedom Calculator

4 Key Foundational Principles of Financial Freedom

First, there’s value to money that you never spend. This is counter to what must people think. Even retirement savings will eventually be spent, even if it’s decades later. Until the money is spent, and even for money we never spend, however, there is tremendous value.

What’s the value? Our freedom.

Second, the benefits of financial freedom are experienced much sooner than retirement. The ability to retire is an empowering feeling, but it’s not the only kind of empowerment that savings can afford. Lesser tiers of financial freedom can change someone’s mindset and options for the better. The seven levels below will explain this more clearly.  

Third, the levels of financial freedom are calculated based on monthly expenses, not income. The focus should be on how many months of living expenses our savings can cover. That’s real freedom. As a result, we focus on what percentage of our income we can save.

Finally, we use Bill Bengen’s 4%  withdrawal rule when calculating Level 7 Financial Freedom. In other words, we achieve the ultimate financial freedom when are savings equals 25x our annual expenses. For example, a retiree who spends $54,000 a year in retirement would need $1,350,000 to reach Level 7.

The 4% rule has come under fire lately. Some say that given high stock valuations and low bond yields, it’s no longer viable. Morningstar recently released a report claiming 3.3% is the new “safe” withdrawal rate. Time will tell who is right. For our purposes, we’ll continue to use 4% for planning purposes only.

The 7 Levels of Financial Freedom

For each level you’ll find how many months it will take to reach the level if you save 10%, 15%, 20% or 30% of your income. Keep in mind that the number of months won’t change for different income levels. In each case, it’s your savings rate that determines your time to each level.

You can run your own numbers with the financial freedom calculator here (described in more detail below).

Level 1: One Month of Expenses Saved

Level 1 might not seem like Financial Freedom, but it’s an important start to your journey. It’s here that you stop living paycheck-to-paycheck. You may only have a one-month cushion, but that’s a big deal. It gives you breathing room for when—not if—the unexpected happens.

Studies show that most people cannot come up with $400 for an emergency. According to a study by the Federal Reserve, 4 in 10 Americans couldn’t cover a $400 emergency with their savings. In other words, most Americans have not achieved Level 1 Financial Freedom.

Time to Level 1:

Savings RateMonths to Level 1
10%9
15%5.5
20%4
30%2.3
Assumes a 5.0% Rate of Return (very conservative)

Note that saving 20% cuts by more than half the time to Level 1 as compared to saving 10%. That’s because as we save more we spend less. We thus get the double benefit of saving more money and need less money to meet our goal of one month of expenses. I call this the Boomerang Affect in my book.

Also note that compounding has very little to do with reaching Level 1. We haven’t yet saved enough money over enough time to see the benefits of compounding. That comes around Level 4 and after, when the majority of our wealth is from compounding.

Level 2: Three Months of Expenses Saved

At Level 2, we reach what most financial gurus say is the minimum emergency fund you should have. You now have enough money in the bank to handle most emergencies. The money could even help you survive during a short-term job transition.

Reaching this point should taste sweet. If an unexpected expense pops up, there isn’t a need to borrow money to cover it. This is important given avoiding high-interest debt is essential to reaching financial freedom. 

Time to Level 2:

Savings RateYears to Level 2
10%2.1
15%1.4
20%1.0
30%0.6
Assumes a 5.0% Rate of Return

The effect of compounding interest is still in its nascent stage by Level 2. The example shows that around 5% of the ending balance comes from investment returns. Building wealth takes time.

The numbers do change when the savings rate changes. Changing the savings rate in the example to 20% instead of 10% halves the time it takes to reach Level 2. As an investor lives further and further below their means, their journey toward greater financial freedom becomes exponentially faster.

Level 3: Six Months of Expenses

Level 3 is simply the upper bound of an emergency fund, with 6 months of expenses. The balance should be able to cover the unfortunate possibility of all insurance deductibles coming due simultaneously. An extended unemployment period also would be manageable. Compound interest begins to become noticeable.   

Time to Level 3:

Savings RateYears to Level 3
10%2.1
15%1.4
20%1.0
30%0.6
Assumes a 5.0% Rate of Return

Level 4: One Year of Expenses

Level 4 is when things start to get interesting. Two things happen.

First, with one year of expenses saved, you can handle a significant bout of unemployment. Today the average person will change jobs 12 times during their lifetime. While we hope these transitions go smoothly, Level 4 Financial Freedom will help you ride out any bumps in the road.

Second, we start to see the benefits of compounding, something I call the Money Multiplier in my book. As we now know, most of our Freedom Fund doesn’t come from putting aside money each month. That’s how it starts, of course, when we are trying to reach Level 1, 2, or even 3.

Eventually, however, the money we save starts to earn a nice return. In fact, if done right, our investments will produce far more income than our jobs. That takes time, and it’s here at Level 4 that we start to get a glimpse of the power of the Money Multiplier.

Time to Level 4:

Savings RateYears to Level 4
10%7.5
15%5
20%3.7
30%2.2
Assumes a 5.0% Rate of Return

Level 5: Five Years of Expenses

At Level 5, you’ve already exceeded the savings that most will achieve in a lifetime. Assuming $50,000 in annual expenses (the round number makes the math easier), for example, you’ve amassed $250,000 in savings and investments. At a 9.3% return (the average return of an 80/20 portfolio over the last 90 years), your Freedom Fund will generate almost $25,000 in returns over the next 12 months. In other words, your investments are generating income approaching 50% of your annual spending.

Level 5 also represents a danger point. It’s here that some may become complacent. With so much money saved, it’s easy to return to old habits or to lose focus. Knowing that now will help you avoid this danger when you reach Level 5.

At this point you may be wondering what Level 5 Financial Freedom feels like. After all, one could say this is nothing more than traditional retirement savings. Oh, but it’s so much more!

Let me tell you a story.

In the middle of my career, I had a job that at times was very unpleasant. I have a vivid memory of a meeting with the boss. He was yelling at an employee on the phone. He was out of line. It was then I understood the true power of Financial Freedom.

While my wife and I hadn’t reached Level 7 at that time, we were right around Level 5. I knew I could walk out of that job if I needed to and we’d be fine financially. I wasn’t stuck. And it was a great feeling.

Less than a year later, I took a pay cut to pursue a new opportunity. I took that risk because I could; I wasn’t chained to my job or to the salary. It turned out to be the best career move of my life. And it was made possible because of Level 5 Financial Freedom.

This is an example of how money saved and never spent can have a profound effect on our lives.

Time to Level 5:

Savings RateYears to Level 5
10%23.6
15%17.7
20%13.9
30%9.2
Assumes a 5.0% Rate of Return

Level 6: Ten Years of Expenses

Level 6 is an important milestone. It’s here that your investment income will begin to equal and then exceed how much you are spending each year.

Let’s again assume you spend $50,000 a year. At Level 6, you will have a Freedom Fund totaling $500,000. A 9.3% return will generate returns of $46,500 over the next 12 months, bringing your Freedom Fund to $546,500. The following year, with a Freedom Fund totaling almost $550,000, you will on average generate just over $50,000 a year.

Talk about a great feeling! You are working hard, earning an income, and spending $50,000 a year. At the same time, your Freedom Fund is generating returns equaling the same amount. Like a snowball rolling downhill, your wealth is multiplying before your very eyes.

Time to Level 7:

Savings RateYears to Level 6
10%34
15%26.9
20%22
30%15.5
Assumes a 5.0% Rate of Return

Level 7: Twenty-Five Years of Expenses

Level 7 is the Ultimate Financial Freedom. It’s here that you can completely retire from work if you so choose. Or, if you’re like me, you can work on projects you love while still earning an income. The choice is yours.

Level 7 enabled me to retire from the practice of law at 49. Following my retirement, I continued to run my personal finance blog, newsletter, and podcast. Two years later I sold my blog, but I still record a podcast each month, and I became a Deputy Editor at Forbes for a couple of years. These activities generated income. But I did them because I’m passionate about personal finance and investing.

When you reach Level 7, you can pursue your passions. That may mean keeping your job. There’s nothing wrong with that if that’s what you love. It may mean starting a business. Here’s the point—you decide for yourself what you’ll do when you reach Level 7. It’s a beautiful feeling.

Time to Level 7:

Savings RateYears to Level 7
10%50
15%41.9
20%35.9
30%27.4
Assumes a 5.0% Rate of Return

A Simple Financial Freedom Calculator

I’ve created a free financial freedom calculator in Google Sheets. The tool is simple to use. You simply input the following four things:

  1. Rate of return
  2. After-tax income
  3. Savings rate
  4. Current savings

From there the tool estimates how long it will take you to reach each level of financial freedom.

The tool has an investment rate of return of 5% input by default. This roughly represents the historical post-inflation return of a 60-40 stock/bond portfolio. You can change the assumption to whatever you like.

Debt is conspicuously missing from the spreadsheet. This is because debt payments are accounted for in the after-tax income section. Debt repayment is considered a recurring monthly expense. It’s possible to be financially free while having some debt and the calculations reflect that.

The baseline savings rate is listed at 10%. That number is in line with conventional retirement advice. Over an average 40-45 working life an investor would be on track to retire at 65 given a 10% savings rate. Again, that figure can be changed in the spreadsheet.

Finally, be sure to alter the current savings section. Many will be starting at more than zero. The number should include emergency short-term savings as well as retirement or brokerage account balances.

Final Thoughts

Financial freedom is the best thing money can buy. As I was working toward the goal, I viewed every dollar I saved as buying my financial freedom. At first it starts off slow, but it quickly builds to the point that compounding generates far more money than we could ever make at work. The key is to get started now.

And for those that want to track their progress with a more sophisticated tool, check out Personal Capital. It’s free and the best overall net worth, investment and retirement planning tool available today.

Filed Under: Investing, Retirement

4 Best Target Date Retirement Funds in 2022

December 2, 2021 by Rob Berger

Target date retirement funds make investing in a 401(k) or IRA easy. Simply pick a fund that corresponds with when you plan to retire, and the fund does the rest. In this article we’ll look at several of the best target date retirement funds available today.

Table of Contents
  • 4 Best Target Date Retirement Funds
    • M1 Finance Target Date Retirement Funds
    • Vanguard Target-Date Retirement Funds
    • State Street Target Date Retirement Funds
    • Fidelity Freedom Index Funds
  • Target Date Retirement Funds in 401(k) Accounts
  • Backtesting Target Date Funds
  • Not All Target Date Funds are Good Investments
  • How Target Date Retirement Funds Work
  • The Downside of Target Date Funds for Retirees
  • Are Target Date Retirement Funds Diversified?
  • Final Thoughts

Target date retirement funds can be great tools for long-term investors. There are, however, factors that differentiate great target date funds from others I would not recommend. I’ve researched dozens of funds to identify the best options, as well as an example of a target date fund you should avoid.

4 Best Target Date Retirement Funds

For each of the target date funds below, we’ll explore the 2050 version. A 2050 fund is designed for those retiring around the year 2050. Each of these fund families offer funds in five-year increments (e.g., 2020, 2025, 2030).

M1 Finance Target Date Retirement Funds

M1 Finance retirement funds make the top of my list for several reasons. First, for each retirement year (e.g., 2020, 2025, 2030), M1 Finance offers three different funds. All of the other options below only offer one. Specifically, M1 Finance offers investors Aggressive, Moderate and Conservative options for each retirement year.

M1 Finance Target Date Retirement Funds

For example, the M1 Finance 2050 Aggressive Target Date Retirement Fund allocates just 3% to bonds, while its 2050 Conservative fund allocates 19% to bonds.

Second, each of M1 Finance’s funds (they call them Pies) include broad stock and bond exposure across more than a dozen low cost ETFs. Here, for example, are the ETFs used in the 2050 Aggressive fund:

M1 Finance 2050 Fund

Third, unlike the other funds in my list, there is no elevated expense ratio to pay. M1 Finance doesn’t charge a fee. The only fees are those associated with the low cost ETFs M1 uses in each portfolio, and these are lower than the fees a target date fund charges.

Finally, the fund for those now in retirement (the 2020 fund) is in my view the best option available. The Aggressive 2020 fund is approximately 60/40 stock to bond allocation a reasonable approach for retirees following the 4% rule. Without exception other retirement funds become far too conservative at this stage.

M1 Finance target date funds are automatically updated and rebalanced quarterly. There is no minimum initial investment required.

Summary

  • Expense Ratio: 0.08%
  • Dividend Yield: 1.831%
  • Minimum Investment: None
  • Website: M1 Finance

Vanguard Target-Date Retirement Funds

Vanguard’s 2050 offering, ticker VFIFX, is another solid option.

Vanguard Target Retirement 2050 Fund

The expense ratio for the fund is extremely reasonable at only 15 basis points (0.15%). Important to note given low fees often predict the later success of a fund. VFIFX checks that box. 

Turning to the Portfolio tab on Morningstar gives us a better look into the asset allocation of the fund.

Vanguard 2050 Fund Asset Allocation

Vanguard’s 2050 fund is 54% invested in US stocks and about 37% invested in international stocks. The remaining 9% of the fund is allocated to bonds. This aggressive investment mix makes sense given that it’s tailored for an investor with 30 years left to build their Portfolio. Keep in mind that this allocation will become more weighted toward fixed income as we get closer to 2050.

Vanguard implements this asset allocation plan using five Vanguard funds:

Vanguard 2050 Fund Portfolio

Five holdings doesn’t seem diversified. Here it’s important to understand that the number of funds in a portfolio tells us nothing about its overall diversification. We need to know what each of the funds owns. In this case, the holdings include thousands of stocks and more than 10,000 bonds. It’s well diversified.

Vanguard requires a $1,000 minimum initial investment.

Summary

  • Expense Ratio: 0.15%
  • Dividend Yield: 1.41%
  • Minimum Investment: $1,000
  • Website: Vanguard

State Street Target Date Retirement Funds

State Street’s 2050 target date retirement fund, ticker SSDLX, makes a strong impression with only a 9 basis point (.09%) expense ratio. It’s one of the least expensive options available today.

State Street Target Retirement 2050 Fund

Its asset allocation is similar to Vanguard’s.

State Street Target Retirement 2050 Asset Allocation

The Portfolio tab shows us the fund is invested 51% in U.S. stocks, 35% in international stocks, and about 10% in bonds. The holdings of the fund reveal more similarities to its Vanguard counterpart. It invests the fund in six index funds.

State Street Target Retirement 2050 Portfolio

Three stock funds and two bond funds substitute for the inverse with Vanguard’s offering. The U.S. stock portion of the fund is split into an S&P 500 large blend fund and a mid-cap growth fund. Still, State Street’s fund should perform in line with Vanguard’s, with the added benefit of the lower expense ratio we saw earlier. 

Summary

  • Expense Ratio: 0.09%
  • Dividend Yield: 1.32%
  • Minimum Investment: None
  • Website: State Street

Fidelity Freedom Index Funds

The final fund is Fidelity’s Freedom Index 2050 Investor, ticker FIPFX. The exact naming of this fund is important to note. FIPFX has the word index in the fund name. Fidelity offers another Freedom 2050 target-date fund, but the underlying holdings consist of actively managed mutual funds.

As a result, that fund charges 75 basis points (.75%) in fees. In contrast, the Freedom Index fund only charges 12 basis points (.12%). That expense ratio puts the Fidelity fund in between State Street’s and Vanguard’s options.

Fidelity Freedom Index 2050 Fund

The asset allocation of this fund is nearly identical to the Vanguard, State Street and M1 Finance Moderate funds.

Fidelity Freedom Index 2050 Fund Asset Allocation

Nothing surprising jumps out–53% of the fund is allocated to U.S. stocks and 37% to international stocks. Bonds fill out the remaining 10%. 

The holdings of the fund shouldn’t shock anyone either. Fidelity uses Fidelity index funds to implement its asset allocation.

Fidelity Freedom Index 2050 Fund Portfolio

Overall, another sensibly arranged portfolio–Diversified, low-cost, and convenient. 

Summary

  • Expense Ratio: 0.12%
  • Dividend Yield: 1.18%
  • Minimum Investment: None
  • Website: Fidelity

Target Date Retirement Funds in 401(k) Accounts

If target-date retirement funds are starting to seem like attractive options, it might be worth considering holding a target date fund in a 401k if one is available to you. Since company 401(k) plans often invest hundreds of millions at a time, mutual fund providers may offer companies an expense ratio discount to attract their business.

For example, ticker FRLPX is the Fidelity Freedom Index 2050 option offered in my 401(k) at Forbes. This version of the fund has the same asset allocation, holdings, and glide path but charges half the fees of the non-401(k) investor class fund. 

I mention this industry convention not only to highlight the fee difference but also to prevent any confusion when picking funds in a 401(k). If there’s any doubt as to whether one fund mirrors another, it’s best to check the Portfolio tab on the Morningstar listing for both funds and make sure the only difference is the expense ratio.

Backtesting Target Date Funds

For a performance comparison of the funds, we’ll be using Portfolio Visualizer. This site is great for backtesting portfolio options and provides a number of useful metrics for weighing funds. The data set will be limited by the age of the newest target-date retirement fund, but we have a reasonable length of time to compare the funds. 

Target Date Fund Performance

The 3 funds compete very closely with one another. The Fidelity fund ultimately wins out by only a couple hundred dollars. The standard deviation of the funds, a measure of portfolio volatility, is fairly uniform from fund to fund. The same goes for the maximum drawdown period of the funds. Safe to say, any of the three funds are reasonable and comparable options.

The M1 Finance fund has had similar return and risk characteristics.

Not All Target Date Funds are Good Investments

I’ve chosen one fund that exemplifies some suboptimal aspects that should signal investors to steer clear. I do this not to belittle the mutual fund company or fund in particular, but to illustrate what potential negative qualities of target date funds can cost investor’s future returns.

The fund is called the American Century One Choice 2050, ticker ARFMX. I would avoid the fund for two main reasons. 

American Century One Choice 2050 Fund

First off, the fund’s expense ratio is simply too high. American Century charges over 1%, making it more than 10 times as expensive as the fund options we’ve looked at. Unfortunately, that isn’t the end of the fees associated with investing in the fund. ARFMX has a front load fee, meaning there’s a sales charge paid every time you buy into the fund. Purchasing through a 401(k) would bypass that fee. Otherwise, and I can’t caution against this enough, that fee would recur every time a contribution is made.

ARFMX Fees

The second reason why I’m not a fan of this fund is its asset allocation.

American Century One Choice 2050 Asset Allocation

Remember that American Century’s target date is a 2050 fund just like the 4 funds we explored. That means the typical investor in the fund is 30 years away from retirement. Nevertheless, the fund allocations 22% in bonds. For some investors, that conservative approach might be attractive. But in my estimation, that is too cautious a strategy for investors with such long time horizons.

An 80/20 split between stocks and bonds is perfectly reasonable in a vacuum, but remember the fund will increase its bond allocation over time. Overall, the fund is a suboptimal choice given its fee burden and asset allocation. 

The American Century fund performance in comparison to Vanguard’s offering should bear out my concerns. 

American Century One Choice 2050 Performance

That data for this backtest in Portfolio Visualizer goes back to 2009. The fund’s fees and asset allocation drag on the ugly duckling fund to the tune of almost a full percent less in returns.

The key point is to recognize that not all target date funds are created equal.

How Target Date Retirement Funds Work

Target date retirement funds feature a date in their name. For example, the funds we’ve discussed are 2050 funds. The date corresponds to the investor’s planned retirement date. Somebody seeking to retire in about 30 years would be especially interested in 2050 funds.

Target date retirement fund offerings are typically spaced out in 5-year increments, meaning there are 2045 and 2055 versions of the funds we’ve explored. Picking a retirement date is not an exact science and things do change. Still, having a target date in the fund name provides some useful information about the fund’s asset allocation today and in the future. 

Target date retirement funds hold a combination of U.S. stocks, international stocks, and bonds. The specific weighting of those asset classes adjusts over time and can vary between mutual fund companies. The expense ratio associated with target date funds goes, in part, toward paying for these adjustments. Allocation adjustments are made based on “glide paths”, which are predetermined rebalancing plans that each target date retirement fund follows.

As investors get closer to their chosen retirement date, target date funds shift more heavily toward bonds and away from stocks. This shift is meant to reduce portfolio volatility during investors’ retirements. An attractive approach in theory but one that can create some pitfalls, which we’ll address next. 

The Downside of Target Date Funds for Retirees

Target date funds are a reasonable approach to investing for retirement. Once you reach retirement, however, these funds have a downside. They become far too conservative.

These funds follow a declining glide path. That simply means that as we get closer to retirement, the funds move stock investments over to bond investments. That in itself is reasonable. The problem is that they become far too conservative.

For example, the Vanguard Target Retirement 2015 fund is only 30% invested in stocks. A retiree six years in might want the security of a healthy bond allocation, but I would argue there’s such thing as being too safe. Granted, I’ve shifted my own investments into safer investments in retirement. Still, I wouldn’t recommend divesting a portfolio of stocks past the 50% mark.

In fact, Bill Bengen, the father of the 4% rule, found that a retiree’s portfolio should have 50% to 75% in stocks. Anything less and their odds of running out of money early go up.

With the exception of M1 Finance, each of the target date funds mentioned above fall well below the 50% equity floor.

Are Target Date Retirement Funds Diversified?

Diversification is important to any investor. Investing in a single mutual fund seems counter to that idea, but not in the case of target date retirement funds. Target date retirement funds provide ready-made diversified portfolios that hold thousands of domestic and international stocks and tens of thousands of bonds of various credit qualities. So yes, these funds are well diversified.

Final Thoughts

While I don’t personally invest in target date retirement funds, they are still reasonable and effective options. I advocate that investors start their wealth-building plans with a 3-fund portfolio. That said, the solid target date fund options we’ve discussed are all reasonable approaches to retirement investing.

Filed Under: Investing, Retirement

How to Invest $1 Million | A Step-by-Step Guide to Investing a Windfall

November 23, 2021 by Rob Berger

Investing $100 a month is simple. Many use one or more low cost index funds. So why does investing $1 million or more seem to require a more complex portfolio? In short, it doesn’t.

In this article I talk about how to invest large sums of money. I’ll share my own personal experience of investing a windfall. And I give you some specific portfolio ideas that I believe are ideal for invest even tens or hundreds of millions of dollars. Finally, I’ll share some books and other resources you may find helpful.

Who Has $1 Million to Invest?

At first it may seem like this article is for just a select few. There are several ways to find yourself with a lot of money at one time. These include inheritance, life insurance, the sale of a business or from an IPO or other liquidity even. But let’s face it, those who receive a windfall like this are few in number.

There is, however, a more common way many find themselves investing a large amount of money at one time–retirement. After a lifetime of work, workplace retirement accounts can exceed $1 million. Rolling a weighty 401k over into an IRA can be nerve-wracking. That’s why so many retirees hire expensive investment advisors to manage what they had managed on their own in a 401k for decades.

And that raises an important question–why is investing a large amount of money so psychological challenging?

FACTOID: Ryan Cohen, of Chewy and GameStop fame, chose to stay the course with his fortune. He experienced a massive liquidity event to the tune of $3.4 billion when he sold his stake in Chewy. How did he invest his windfall? He put it all in just two stocks–Apple and Wells Fargo. Cohen accepted a lot of volatility by choosing to park his funds in only two stocks. I don’t recommend this approach, although with billions of dollars one can afford to take some risk.

How to invest a windfall

Investing a Windfall is Psychology Difficult–Here’s Why

There are three main reasons why investing a windfall presents unique challenges.

Small-Big Dichotomy

The first reason is what I call the Small-Big Dichotomy. “Small” refers to the idea that most people reach a $1 million net worth after years of monthly investing. Small, steady contributions to a 401k don’t feel daunting. You invest the best way you know how and watch your net worth grow.

Reaching $1 million gradually over time may be cause for celebration. When the second comma pops up in the account, you might celebrate or tell your significant other. But you don’t have to ask yourself “how am I gonna invest $1 million?” You just keep doing what you’ve been doing.

The flip side of the dilemma is a “big” event–$1 million materializing overnight. Those who receive a windfall from a business sale or inheritance naturally fear making an investment mistake. Even moving money saved over a lifetime from a 401k to an IRA can feel overwhelming and fraught with danger. That worry is perfectly reasonable. Bad portfolio management has consequences. But the dilemma is more the same than different. Taking the same approach in both “big” and “small” situations makes more sense than it seems.

The Road Less Travelled Dilemma

The second challenge is the Road Less Travelled Dilemma. Windfalls often occur in tandem with big life changes. That might mean no longer owning a business, a loved one passing away, or retirement. There’s often a lot of essential change swirling. “What am I going to do with this money?” often runs parallel to “what am I gonna do with my life?” The anxiety behind both decisions can compound.

Living Off Your Nestegg

The last dilemma is the fear of living off a portfolio. You can read all the retirement books out there and understand the 4% rule. It’s going to still feel strange. I can tell you from personal experience that living off a nest egg is a new experience. As with the other two dilemmas, working away the emotional weight of the change is the best approach, but it takes time.

The starting point is to ask three questions.

3 Questions to Ask Before Investing a Windfall

  1. How much cash do I need over the next 5 years?

First, think about how much cash you’ll need over the next five years. Factor in both month-to-month expenses and large one-time purchases like home renovations, traveling, or paying for a child’s wedding. As a general rule, one should not invest money needed over the next five years in the stock market (although one can argue in favor of investing for short-term goals).

Setting aside five years of expenses serves another purpose, too. It helps create mental preparation for the market potentially going sideways or down for that period of time. Historically, there have been a number of periods where returns stayed flat or gone down over a five year period. For that reason, cash is king over short time periods. 

  1. Do you invest in one lump sum or dollar cost averaging

My approach has always been to invest a windfall in a lump sum rather than dollar cost averaging over an extended period. It’s the approach I followed when I received bonuses at work. It’s also the approach I took when I sold my business a few years ago. Further, studies show that lump sum investing beats dollar cost averaging most of the time.

Notice I said most of the time. There will be periods of time when it would have been better to dollar cost average into the market. The key here is to accept that we cannot know the future, and therefore, we cannot know which approach would be the best at any given point in time.

If it makes you feel more comfortable to dollar cost average of say a 12 month period, that’s perfectly reasonable. Just put your plan in writing and follow it.

  1. What are your specific investing goals?

The last thing to consider is how hands-on you want to be with your portfolio. Many investors prefer to be hands-off and automate the management of their investments. Others enjoy investing and what to handle everything from fund selection to rebalancing on their own.

There is no right or wrong choice here. What you chose to do, however, may affect how you invest and where you keep your money. A DIY investor may open a standard brokerage account. Someone who wants an automated service, by contrast, might select a robo-advisor such as Betterment.

How to Invest $1 Million

Now let’s turn to the actual investing of a large sum of money. What follows are three simple, easy to manage portfolios that I believe are reasonable choices whether you want to invest $500 or $500 million.

Warren Buffett Portfolio

A few years ago Warren Buffett described how he thinks most people should invest their money. It’s become known as the Warren Buffett Portfolio. He advocates a portfolio that consists of 90% in an S&P 500 index fund and 10% in short-term U.S. treasuries. Buffett even instructed that his wife’s trust be allocated as such when he passes away.

The portfolio is attractive given its low-cost, broad market diversification, and mix of stocks and bonds. Here’s a snapshot of the portfolio implemented at M1 Finance.

Factoid: The Warren Buffett Portfolio is very similar to the 2-fund portfolio William Bengen followed in his landmark study that brought us the 4% Rule. The two key differences are that Bengen used intermediate term Treasuries and advocated no more than 75% in stocks.

3-Fund Portfolio

Buffet and Bengen’s 2-fund portfolios are perfectly reasonable, but there are more diversified strategies. The 3-fund portfolio adds international exposure and features a total bond market fund. There’s no guarantee it will outperform the 2-fund option, but the added asset classes should smooth out volatility over the long term. 

The Total Stock Market Index ETF (ticker: VTI) adds some welcome mid and small-cap exposure compared to the S&P 500. You can see my VTI vs VOO comparison here. The Total Bond Market fund diversifies bond risk across a number of types of bonds. The portfolio’s expense ratio remains low at just 5 basis points (.05%).

6 Fund Portfolio

The 3-fund portfolio works well for $1 million, $10 million, even $400 million. It’s a solid starting point for any investor. Investors looking for more granularity should consider the 6-fund portfolio, which is what I use. The 6-fund portfolio adds exposure to REITs, small-cap value stocks, and emerging markets. 

The additional asset classes in the portfolio are historically volatile. The theory is that the excess risk brings greater returns. Adding non-correlated assets to the portfolio can help ensure that if several sectors are going down, one is at least going up. 

Avoid Expensive Investment Advisors

An itch best left unscratched is the urge to seek out a high-cost investment advisor.  Commissioned brokers sell pricey financial products disguised as unique opportunities. They’re never going to recommend keeping fund expenses low because that’s not in their best interests.

After I sold my business, I talked with some investment advisors. They were recommending exotic investments like non-traded REITs, expensive insurance products, and private equity that enriches the brokers who sell them but rarely justify their expense to the investor.   

Getting Help

There are reasonably priced methods of getting professional investment advice. As a rule of thumb, avoid advisory fees that exceed 50 basis points (.50%). For example, Vanguard offers advisory services for 30 basis points (.30%). To the best option is an advisor who charges by the hour or a flat fee. There’s simply no reason to give away part of your wealth each and every year for financial advice.

Resources

I recommend a number of books that further detail the investing strategies outlined above. A few of the books either reference or were written by Jack Bogle. Bogle founded Vanguard and gave rise to the “Boglehead” approach to investing.

The Bogleheads’ Guide to Investing by Taylor Larimore is a great resource on investing and retirement. An older title, but one that is still relevant, is The Four Pillars of Investing by William Bernstein. The book is a great learning tool when it comes to portfolio construction and investing.

Another book by Jack Bogle worth your time and money is The Little Book of Common Sense Investing. It’s worth exploring the Boglehead forum as a supplement to picking up a book. The discussion on the site is quite interesting and evidence-based.

Final Thoughts

Investing a large sum of money at one time can feel daunting. It causes many to hire expensive financial advisors who put them in complex, expensive and unnecessary investments. I firmly believe that the best approach is a simple, low-cost portfolio constructed of index funds.

Filed Under: Investing

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