Personal Finances

This is a self-improvement post.  See all here: https://starandlotus.wordpress.com/2016/05/29/self-improvement/

A fascinating topic is money.  Now, it isn’t so much greed or the thought of luxury that makes it interesting.  To me, it’s the security having money brings that lets you take more risks and enjoy life fuller, just knowing that it’s there.  I certainly feel much more secure at work because I know I literally don’t need to work for 5+ years if it came to it, which makes me more comfortable and helps my work performance.  Money doesn’t buy you happiness, but not having money to take care of the ones you love certainly can make you unhappy.

I started pretty late on the saving/personal investing side, and kick myself now.  It’s really only been about the last two years or so that I got serious about saving.  Easily could have had a net worth $100K greater, but suppose some life lessons can only be learned the hard way.  Luckily, as I have strategically avoided (hmph) marriage, have spent long periods of time deployed where I can’t spend money, no longer drink, and am a mid-career professional I do enjoy a solid net worth compared to my peer group.

Anyways, I had a pretty big growing nest egg from owning my own house and condo and selling them both (will discuss properties in another post, highly recommend it, just the military forces you to be an absentee landlord which is less than ideal), so figured it was time to get started.  Like most things, I turned to reading to learn about personal investing.  Moving from some get rich quick let’s beat the market books (good luck if you want to try…) I settled on an approach that seems to be pretty widely supported by successful individual investors.  Big credit to my younger brother who pointed me to this stuff.

The general idea is to practice great saving (play good defense) so that you live well within your means.  Afterall, if you get in the habit of spending all your money, it doesn’t really matter how much you make.  Next, play smart offense by investing in what has, on-average, provided the best returns, which is a portfolio of minimally-correlated index funds/bond funds, optimized for your risk tolerance, and rebalancing at a reasonable rate through the market highs and lows.  In general, you want funds that minimize cost and taxes.  Nowadays this is relatively simple to do.  If this sounds crazy or confusing, let me suggest a few resources that really helped me out.

The first suggested resource is “If You Can, How Millennials Can Get Rich Slowly” by the personal investing author William Bernstein.  You can get it for free here: https://www.etf.com/docs/IfYouCan.pdf  –  This paper does a great job outlining the basics of living thrifty and slowly growing wealth, and points you to many excellent books for further reading.

The next resources is the popular blog “Mr. Money Mustache”  http://www.mrmoneymustache.com/  – This is written by a thirty-something self-made retired millionaire with some great points on living thrifty and investing.

The last suggested resource to use if you are completely scared to handle your money is one of the new “robo-investors” that have started popping up.  I like http://www.betterment.com – It uses an algorithm to basically invest in the way that Bernstein and Mr. Money Mustache encourage.  It also makes doing your taxes a lot easier, and has a lot of other really nifty features such as autodraft that make saving pretty mindless for a fee that is a small fraction compared most other investment help.  Thinking about my money less a great thing for me, because I’m pretty egotistical and I’ll probably try to beat the market otherwise.   Personally I have well over 100k in betterment – it’s my go-to slush fund outside of anything I’m not forced to put into a specific account (like our military TSP account).

There will be another post specifically on the saving piece, I’m still working that self-improvement project.

Good luck on your journey to financial security!

~Dmitri

My new post on saving:

https://starandlotus.wordpress.com/2016/09/07/saving/

 

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