Flow of Money

(Read time: 5 minutes)

Good morning y’all,

Something interesting happened after my Tuesday email… I changed my format a bit, including adding my name to the top of each email.

A handful of people reached out asking if it was intentional.

Not an accident, people! I added my name because I’m proud to put my name on this newsletter and on my website.

I’m a real person and I stand behind the content that I’m writing for you.

I have your best interest in mind when I write every word. I want to help you get better at money so you can live a more fulfilled life with less stress and more flexibility.

Respond to this email and I’ll respond to you. Shoot me a message on Twitter and I’ll respond. Connect with me on LinkedIn if you want.

Without further ado, your Thursday newsletter.

“When choosing between investments, ask yourself, ‘where is my dollar going to work the hardest?’ ”

Read This 👀

Certificates of deposit, treasury bonds, and I-bonds are safe havens for cash (Marketwatch)How to “invest” time to build wealth, meaning, & happiness (WSJ)Why you should prioritize income and action (Of Dollars and Data)Coinbase reaches $100M settlement with NY regulators (NYT)Why investing is harder than it looks on paper (Young Money)18 lessons from my favorite financial writer (Motley Fool)Southwest sends bonus points to customers they screwed over (USA Today)

Not That 🙅🏼‍♂️

Could Ethereum Hit $2500 in 2023? (Motley Fool)Famed Investor Michael Burry says US headed for recession & more inflation in 2023 (Fox Business)JPMorgan’s top picks for 2023, including two that may surprise you (CNBC)

Tip 🔥

“Your money should flow in a particular order. Start with saving, then tax-advantaged accounts, then taxable brokerage. As you make more money, advance to the next step.

Start with an emergency fund Get your 401K match – free money from your employerPay down high interest debt (credit card debt especially)Max out an IRA (generally Roth for young people and Traditional for older people)Max out 401K (my preference, but some prefer to save for a down payment first)Check out a Health Savings Account – triple tax-advantaged!Invest in a taxable brokerage account

Notice how far down the line the traditional brokerage account is.

If you’re skipping the emergency fund, you may need to sell investments to come up with cash. If you’re skipping the tax-advantaged accounts, you’re paying more taxes than you need to.

Extra Fun 🤪

Sam Bankman-Fried just plead not guilty to federal fraud charges, but he’s sooooo sorry.

oopsie doopsie

— k1cks (@itsk1cks)
Dec 28, 2022

Announcements 🔈

Want to check out previous editions of Junto? I just launched the archive. Tips on buying a house, financial advisors, earning market returns, & handling stock market declines.

Q&A 🤔

Q: “Thoughts on DCAing into index funds? Small amount daily.”

Cole: I love low-cost index funds for their low expenses, market returns, and tax efficiency. I only buy low-cost index funds and ETFs, but to each their own.

I use dollar-cost averaging (DCA) as my primary investment strategy, except when I receive a lump sum which I invest immediately.

If you can find a platform that allows daily buys to be automated, this sounds reasonable. Otherwise, for me, investing automatically on a weekly, bi-weekly, or monthly basis makes more sense.

To me, financial automation is crucial for two reasons:

It reduces the chances that I mess something up based on emotional decisionsIt reduces the time I spend managing money

TLDR: I think dollar-cost averaging into low-cost index funds is the simplest way to build wealth, especially if you can automate it.

Have a question for me? Respond to this email and I’ll include it in a future newsletter.

Deals 🤝 (Sponsored)

If your top spending category is groceries and dining, then you may want to consider the American Express Gold Card.

This is my favorite credit card.

I earn 4x points at the grocery store, on food delivery, and out at restaurants. I also get access to the Amex travel portal where I earn 3x on flights (though I use my Amex Platinum for flights).

If you’re looking for a new credit card and you spend a good chunk on food & dining, consider using my signup link to receive a 60,000-point welcome bonus after you spend $4,000 in 6 months.

The annual fee is $250, so make sure you’re going to get enough value out of the card to justify that. For me, it’s a no-brainer.

 Hack 💡: Buy gift cards from a grocery store using this card to get 4x back on gifts.

If you’re enjoying these newsletters, thank you.

Consider shooting me an email, referring a friend or family member, or sending me stupid financial articles you see out in the wild.



PS: Hold some cash, but not too much.

Disclaimer: This newsletter is strictly informational. It is not investment advice, tax advice, financial advice, or a solicitation to buy/sell any assets. Please do your own research. You’re an adult and you’re responsible for your own decisions. This newsletter may contain affiliate links, meaning I get a commission if you decide to make a purchase through my links (at no cost to you).