Personal Values, Backdoor Roths, & SVB

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Welcome to Junto, a weekly newsletter where I share tips and strategies from financial experts that you can apply to your own life.

Today’s Topics

Why you should prioritize values over goals

How to use a Roth IRA if you make more than $144K

What the hell happened with Silicon Valley Bank

Read This

Should you pay someone to do your taxes? (WSJ)

Even if you’re “rich,” this will make you miserable (Ben Carlson)

Does more money make you happier? (Barry Ritholtz)

Should you ask GPT for personal finance help? (Morningstar)

Is your money safe in banks? (Wealth of Common Sense)

New from Junto

How to Achieve Greater Satisfaction, Persistence, & Performance

Goals are forward-looking. When the deadline hits, you either succeed or fail, celebrate or mope, and then life continues. The satisfaction derived from goal-setting comes in the future, assuming you achieve your goal. But values, they’re always present.

Prioritizing personal values over goals means you:

Live in the moment rather than focusing on some future date

Don’t depend on external events for self-esteem, giving you greater resilience when facing challenges

Achieve deeper fulfillment that is more consistent than quick dopamine hits after arbitrary goals are met

What sounds better?

I want a net worth of $100,000+

I want to enjoy my life now while also setting myself and my loved ones up for a better future. I want to be able to take care of myself and my loved ones, travel frequently, tip generously, explore habits, and contribute to causes that matter to me.

Build a life around your personal values rather than arbitrary goals meant to impress other people who actually don’t give a shit about you.

Read the article

My Interview

Great guest. Unfortunate “compliance team.”

I hope to publish the interview at some point.

This week, I’ll take a reader question instead.

Reader Question

“Can you not do a Roth IRA if you make over $144k?”

You can’t contribute directly to a Roth IRA if you make over $144,000/yr, but you can contribute to a Backdoor Roth IRA.

This sounds fancy, but it’s not. It’s actually quite dumb.

Step 1: Make a non-deductible contribution to a Traditional IRA (no tax deduction for contribution) – It’s simplest to max out the Traditional IRA without investing the funds ($6,500 in 2023)

Step 2: Convert that Traditional IRA (or roll the contributions) into a Roth IRA

Step 3: Fill out IRS Form 8606 when you file taxes (TurboTax does this for you)

You need to know a few other details, but that’s pretty much it. Do your own research and you can figure it out.

Why does the US government require high earners to take this extra step rather than simply letting them use Roth IRAs? No clue.

Would I be happier if I didn’t have to take this mundane step? Yes.

Should Congress focus instead on preventing its members from using privileged information to invest in individual stocks? Also yes.

I digress.

What is happening with banks?

Silicon Valley Bank update

— Dan Toomey (@dhtoomey)
Mar 13, 2023

Silicon Valley Bank collapsed last week.

They were the go-to bank for start-up founders, holding about $190 billion in deposits.

SVB invested $80 billion in mortgage-backed securities (the financial instrument at the heart of the 2008 financial crisis) when interest rates were low. SVB faced a liquidity crunch and chose to sell those investments at a loss, which scared the shit out of people.

Why would a bank with $190 billion in deposits need money?

Investors got spooked, SVB’s stock tanked, and notable VC influencers like Peter Thiel and Jason Calacanis called for founders to pull their money from the bank, causing a bank run.

On Sunday, the Biden administration announced that everyone with money at Silicon Valley bank would be made full, even if they held over $250,000 with the bank (the FDIC insurance limit).

The financial support comes from insurance funds, and taxpayers will not foot the bill.

My thoughts:

I wouldn’t hold over $250K in cash at one bank. These customers are (fortunately) getting all their money back, but they were only insured up to $250K.

Risk is what’s left when you think you’ve planned for everything – how could anyone have predicted that the largest bank for startups would suddenly collapse?

Thank you for reading!

As always, feel free to email me with questions or comments. I respond to every one.

Enjoy your weekend.



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Disclaimer: This newsletter is for information and entertainment purposes only. I am not an investment or tax professional. 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).