Why People Do What They Do

(Read time: 3 minutes)

Good morning,

A quick reminder that the Junto referral program is new and improved!

One referral: Access to my reading list (30+ finance & 100+ others)

Three referrals: I’ll send you any book on that list

Super easy! I’ll keep improving this as time goes on.

Without further ado, here is your Thursday newsletter.

Read This

The best articles I’ve read recently.

11 things that 0% interest rates caused (Young Money)

Why you want what you don’t have (Morgan Housel)

While you’re young, saving may move the needle more than investing (Ben Carlson)

Simple money rules to make your life easy and good (Humble Dollar)

Why your house might not be an excellent investment (J.L. Collins)

Not That

The type of shit you should ignore.

Ethereum Price Prediction as ETH Rallies Above $1,600

Tesla shares rose 30% last week. Here’s where Wall Street sees it going next!


In investing and in life, consider others’ incentives. That usually means understanding how someone makes money. The best situations come from aligned incentives.

People do what they are incentivized to do

Most incentives are money

Media is incentivized to get your attention

Financial advisors may be incentivized by commissions

Realtors are incentivized to tell you to buy a house/sell your house

People love Vanguard because the holders of the funds own Vanguard (Incentives perfectly aligned)


Reader: How do you determine how much you allocate to your 401k and IRA?

Cole: Great question.

Two things to note here:

If your employer offers a match on 401K contributions, start there. We love free money.

IRAs allow you to invest in a wider variety of options than 401Ks, and Roth IRAs allow you to withdraw your contributions without penalty if needed. We love flexibility.

For most people, it makes sense to contribute enough to max out your employer’s 401K match, then try to max out an IRA. If you have enough to keep it going, consider maxing out your 401K next or beefing up your savings account if you have a big expense coming (wedding, down payment, etc.).

Generally, it makes sense to take every tax advantage the government offers (401K, IRA, HSA) and then move to a standard taxable brokerage account.

In general, investing 10-20% of your income is the sweet spot, but if you can swing more (without too much sacrifice), then definitely pump those numbers.

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Pro tip – If Warren Buffet doesn’t know how the stock price of company is going to trend, its unlikely that you would! https://t.co/zDlsTFfkP2

— Graham Stephan (@GrahamStephan)
Sep 27, 2022

Warren Buffet is an excellent investor, but he’s also an excellent communicator. He paid to take a Dale Carnegie public speaking course in the 1960s and developed a muscle for written and verbal language.

All this to say, he’s deliberate with his language. That’s why I love to hear him say:

“I don’t buy stocks. I buy companies.”

Stocks are for trading, but companies are for buying and holding.

Note: Yes, Buffet buys individual stocks/businesses. That does not mean you should also. Trying to copy Warren Buffet’s investing style is like trying to play basketball like Michael Jordan, so best to keep in mind that you’re not like him in the slightest (and never will be).

That’s it for today. Another exciting interview is coming out next Tuesday, so stay tuned.



PS: Learn how to live smarter and act richer.

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).