> you should be monomanically focused on the interest spread between cash balances in brokerage accounts and high-interest bank accounts or money market funds. That is the cost that does not call itself a cost.
If you're keeping a large cash balance sitting uninvested in your brokerage account, sorry but that's on you.
* Use 2 credit cards, alternate between them on a weekly basis
* keep as little money as possible in your checking account, keep a book balance of $100, transfer # from savings on a weekly basis to cover what is due.
* have at least 2 savings/MM accounts at 2 banks that are not the same bank as your checking account.
* Keep your investment portfolio in at least 2 accounts at 2 different companies
This only makes sense if you have positive-risk-adjusted-return investments you've been waiting to make. If you already have too much cash with no where to put it, borrowing more cash makes no sense.
aim for 5% annual return, leave 2,5% for inflaction, and you'll be forever free with 25K/year
yea you should carefully pick up your bank or your freedom could vanish in the next credit crunch :)
> My 12-person startup gets a $10M series A and my first priority should be to find 40 banks to put it in? CDs don’t work — my job is to spend that money in the next 18-24 months, not save it.
You just ask your bank to place the money using IntraFi. You can get a little more interest by locking up some of the money on a 9-12mo ladder, which makes sense if you have 18 mos of runway.
If you have an unanticipated expense or opportunity and need to spend some early, it's a small penalty to get the money out-- usually 6 months of interest, so as long as the probability of having to spend a bunch more is low you're ahead.
Sitting on tens of thousands of dollars of cash (six months of income!) in a zero interest rate environment is a mistake that really compounds over the years -- to the point of a few $100k in lost appreciation over your career.
Equities are no longer hard to turn into cash in an emergency. You can pull money out of your investment account the same day using a debit card if need be, no need to even sell your equities.
Keeping access to credit, but not using it unless it's needed, is the better plan. But after several years of saving you won't need it anyway.
> Put your money in a broad index fund and don't look at it for 10 years.
You should check on their investments accounts on a regular basis.
If your bank or brokerage makes an error, there is likely a limited period of time during which it can be fixed.
Also, if you do not have activity on your bank or investment accounts for a period of time, the contents may be escheated by a state and investments may be sold automatically.
Planet Money had an episode about escheatment a couple of years ago: https://www.npr.org/transcripts/799345159 They mention that Delaware, where the person's broker was incorporated escheats investments after three years.
Yeah, my parents got in trouble with this cause they had to sell their investments at a loss to live on. This is why I plan on keeping a significant amount of cash on hand (don't want to ever have to sell at a loss).
That is true. Best thing to do is start with small changes so that you don't even notice it and all of a sudden, your bank account has more money in it.
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