Financial Independence

in today's market, one should be able to find everything one needs without any fees or expenses
if you're being charged for something, take another look
exceptions

annual tax preparation

Leave it to the professionals:

I doubt (m)any of us can max out our company retirement programs; individual retirement accounts
IRAs: professionally managed
only after maxing out these options, then does one begin to think of investing on one's own

Life insurance

I took out permanent life insurance (two flavors: whole vs universal; see below) when I was young; turned out to be a great decision but I did it as a way of forced savings/investment

however, no one recommends permanent life insurance as an investment vehicle -- so, again for me, it was a way of forced savings (and early forced investment which turned out for the best) -- but not a recommendation in general.

not a recommendation but what we did:
as parents

we insured ourselves to the max we thought reasonable
we took out moderately good whole life insurance programs on our children when they were born

incredibly inexpensive if bought within first two years of life; premiums don't increase; and option to add insurance later on possible; younger the age when first bought, the lower the premiums, and again, the premiums don't increase;

we took out basic, but not great, whole life insurance programs on our grandchildren (for same reasons as above)

as young adults, our children and grandchildren have at least basic life insurance;

whether to buy more as they grow older is case specific and their choice
but for now, not an additional expense

whole life vs universal insurance.

Comments

IRAs? Establish only Roth IRAs; no traditional IRAs

The Ideal Schwab Account

Two portfolios within same account:

cash management portfolio (checking, savings, and record-keeping)
investment portfolio

Cash management portfolio

a Schwab checking account

Schwab includes a debit card; personal choice: I didn’t activate; won’t use a debit card;
limit $500 for a college student
limit $1,000 for most others

a money market fund (MMF) sub-account

in lieu of a standard savings account
a place to "park" money until invested or needed for expenses

a bond fund

not recommended for cash management
optional; I generally prefer not using bonds for cash management

an account aggregator

Rocket Money heavily advertises their app to do this
an app that links to all outside accounts like magazine subscriptions, etc, for easier management;
very, very optional; Schwab broker will be able to help;

Investment portfolio with the following sub-accounts:

at least one margin account (a typical brokerage account)

max: ten individual tickers (stocks)
least important but standard in a Schwab account

ETF sub-accounts: at least the following three; no more than five: link here:

SCHD
SCHB
SCHG

a self-directed IRA sub account in which multiple investment vehicles can be placed;

self-directed but professionally managed
only Roth IRAs

education fund: 529s
investment portfolio professionally managed — one of either:

Schwab Intelligent Portfolios:

free; minimum: $5,000

Schwab Intelligent Portfolios Premium:

one-time set-up fee: $300
monthly advisory fee: $30 / month

Sunday, September 29, 2024

Final Advice -- Dynamic -- First Published September 29, 2024

See also "starter kit."

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Final Advice

Minimize the number of financial institutions with which you have to deal:

local bank: for depositing cash; physical checks
discount broker

cash management (checking account)
brokerage account

life insurance: to be discussed elsewhere

My recommended one-stop shopping financial institution: Schwab. These are the components one should have in one's Schwab's account:

checking account: minimum amount, maybe $1,000. Max depends on history.
money market account: SVWXX -- park your cash until you decide on other investment options
ETFs:

SCHD
SCHG
SCHB
Schwab ETFs: list here.

529s (where applicable: parents and grandparents)
IRAs (where applicable; must have active income)

Roth IRAs
max out
don't forget spousal IRAs
self-directed sub-account;
no-load, no-fee mutual funds; all listed ETFs, stocks

Account aggregator

link external subscriptions for better monitoring, easy-to-cancel subscriptions no longer used

Federal and state income taxes:

if you have a "relatively simple" financial plan, filing your own taxes is fine;
however, once you get into "more complicated" situations, it behooves you to go through a professional tax preparer.

Comments:

once you have active income, best place to invest within the Schwab account, is in a self-directed IRA;
you can re-balance your diversification at any time without tax consequences
money is fungible: as long as you have active income, you can place "up to that annual amount" in an IRA regardless of where the money come from
in other words: if you earn $30,000 in one year, you would need all of that income to cover your living costs;
however, if your parents, or grandparents, or others "gift" you money, you can place that money ("up to your total income") in your IRA
it is unlikely that you can generate more income than your allowable IRA contributions -- think about that

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Comments

Why Schwab over others?

most important

the only discount broker with physical branches in larger cities
has checking sub-account as well as brokerage sub-account in one Schwab account

physical checks: free

all discount brokers

no fees
incredibly easy-to-use websites

Account aggregators:

I know almost nothing about account aggregators except what I see Rocket Money advertise on television
it appears Schwab offers the same service
to learn more: suggest googling Rocket Money vs Schwag vs Empower -- Reddit will provide some interesting observations

From Reddit, link here:

I use Schwab for aggregation and have 30+ accounts linked. It works fine if you just want to see balances, your net worth, and positions for investment accounts. You can use the Portfolio Checkup Tool to run portfolio reports on your Schwab plus non-Schwab investment accounts. Also, the linked accounts flow through to your financial plan at Schwab, which is primarily what I use the aggregator for.
I was a devout Mint user for 10+ years, and I'm currently looking for a replacement for that. Schwab is nice if all you need is aggregation of balances and for running holistic portfolio reports and financial planning. But Mint was good at the micro-budgeting level--like aggregating transactions, too, and I used Mint's budgets and goals tools, so that's what I'm looking for. No brokerage firm is going to have the level of detail Mint had, since that's a full-time business keeping up with all the software issues for customers (and it doesn't make Schwab or any brokerage firm any money), so I imagine this needs to be a standalone budgeting site that's meant for this like Mint was.

IRAs: Roth IRAs, not traditional IRAs.

this article just coincidentally popped up today: ROTHs IRA for children.

Schwab ETFs: list here.

Schwab tools: link here.

Friday, September 13, 2024

Best Cash Management Options -- Updated September 16, 2024

This Is Why One Wants A Full-Service Brokerage Account

-- banks cannot do the above

-- mutual funds cannot do the above

-- credit unions cannot do the above

Can one buy Vanguard mutual funds for an IRA through Schwab? Yes. Link here.

Cash Management / On-Line Banking / Investing
September 16, 2024

Three options:

Schwab
Sofi
Robinhood

After spending quite a bit of time researching on-line banking and investment platforms, Schwab, by far, is the best option.

Observations:

physical branches/offices: only Schwab has physical branches
physical checks: Robinhood does not have physical checks; Sofi does
two separate accounts required by Sofi: one for banking; one for investment

Schwab:

only one account needed: banking and investment
physical branches in larger urban areas
physical checks

Ease of use, on line:

I don't have experience with Sofi or Robinhood, but it's hard to believe that either is significantly different in ease of use or presentation than Schwab.

Mint: no longer exists. Transitioned to Credit Karma. Jury is still out on Credit Karma.

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Original Post
August 19, 2024.

Link here.

Discussed:

Wealthfront: robo-advisor
Fidelity
Charles Schwab
Bettermen: robo-advisor
Interactive brokers

I am only familiar with Schwab. I like the ability to work face-to-face with a broker.

Bruce and May: Schwab
Laura: Schwab

At the end of the day, my hunch: there is very little difference among the five. Choose whomever you feel most comfortable.

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Sofi Vs RobinHood
September 15, 2024

I'm incredibly partial to Schwab.

But after doing a bit of research .... Schwab has some great competitors ....

Sofi caught my attention recently. As did Robinhood. For different reasons.

So, I was curious: Sofi vs Robinhood.

Video: link here. From 2020 -- things have changed since then. Only eleven minutes long. A must-see/hear. Mint is mentioned. But Mint has disappeared; it is now Credit Karma and with regard to Mint / Credit Karma, the jury is still out. Google mint cash management now what.

Vidoe update: This 2020 video was updated in 2024: link here.

As a personal account.