Emergency Funds -- Schwab Account -- Brokerage Account -- Checking Account -- Step-By-Step Instructions

It seems every time one gets into a discussion with regard to "personal finance" and how to go about developing a "financial plan," the "financial advisor" always starts with the usual pyramid, with emergency funds as the foundation. 

Most advisors seem to suggest that one needs to have enough cash to survive for six months if one loses one's income, or something to that effect. You know what I'm talking about.

The problem, like everything else, everyone is different. 

Unmarried college kids who are being supported by their parents, who have a very good relationship with their parents (and grandparents), and whose parents/grandparents are financially well off don't need emergency funds. 

Their parents need emergency funds. Their grandparents have additional funds. 

But even for their parents, I don't like the phrase "emergency funds." That suggests a pool of money that is sitting idly in some "savings account" earning no interest, or dividends, or capital appreciation.

For me, I prefer the "easy access to capital." In some cases, that may mean access to capital via loans or grants or gifts, but the bottom line, is that the foundation of one's financial plan, is "access to capital." 

For the breadwinner of a family that foundation, or bottom later of the pyramid, would be "emergency funds." 

But again, for college kids that don't need emergency money but do need quick, easy access to money, I suggest "parking money" in a Schwab account for easy access.  

Where does one "park money" or where does one "place money" that is easily accessible that may not be included in "everyday expenses," like a car accident, or losing one's job, or being given an unexpected opportunity for that trip overseas one has always wanted. 

Where do you park that money? 

Assuming you have a Schwab account -- which for me is a no-brainer -- you park your money in an ETF and you have a Schwab checking account.

Use this prompt (or something similar) to ask Google: how does one go about opening a Schwab account; what should be part of the Schwab account; a cash account; a brokerage accout; a retirement account; etc. Walk me through the steps (with Schwab preferably, but any similar discount broker). 

So, stepwise:

    1. Go online to Schwab.  Fill out an application, the site will probably start with, "so let's get started." 

    2. Complete an online application (taking about 10 minutes) with your SSN, driver’s license, and employer info. 

    3. Key accounts to open:

• a Schwab One® Brokerage Account for investing; and,
•  a Schwab Bank High Yield Investor Checking® account for cash management. 

At the same time, you can set up a Schwab retirement account or do that later. But it will take a bit more time and I would do that later. Get the account opened first to see how it works.

That's all you need to get started. There are no minimum opening deposits.

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Take A Breather 

Once you have the account opened -- Schwab will send you a confirmation, an account number for the brokerage account and the checking account. 

You can then electronically deposit a personal check into the brokerage account (which will load as "cash") and a personal check into the checking account. 

From that point, you can simply move money back and forth between the checking account and the brokerage account. 

REVIEW: components of a Comprehensive Schwab Setup (account) --

• Schwab One® Brokerage Account: 

• The main account used to buy stocks, bonds, ETFs, and mutual funds. It is taxable, meaning you pay taxes on gains/dividends. 

• Schwab Bank High Yield Investor Checking:  

• A brokerage-linked checking account offering unlimited ATM fee rebates worldwide, high interest, and no monthly fees. 

• Retirement Account (IRA):  

• You can open a Roth or Traditional IRA for tax-advantaged retirement savings at the same time or you can wait until later. 

Never, never, never open a traditional IRA; always open Roth IRAs. (Plural: you can have as many Roth IRAs as you want, but the total contributed to all Roth IRAs in any single year cannot exceed the Federal maximum. In 2026, that maximum is $7,500.)

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Okay, That's It -- Take A Breather

Wait for the confirmation information from Schwab.

Once you have that account information (for two accounts -- the brokerage [investing] account and the checking account: write two checks, one check for each account for $100 each and electronically deposit each check one at a time into each of the two accounts. This is to give you practice and to see if it works.

The checks will be deposited immediately and you can check later (same day; 24 hours later) to see that the deposit took place.

If everything works successfully, then deposit $5,000 into your brokerage (investing) account.

Once you receive confirmation that the $5,000 is in your brokerage (investing) account, then you take the next big step. Wait one or two days to make sure the $5,000-check has cleared and is in your Schwab account.

So, a couple of days later, 

BUY an ETF.

Process:

• Trade: go to the top of the page and look for the word "trade." 
• Click on "trade."
• type in SCHB in the equity to be bought;
• type in BUY;
• type in $1,000; 
• review and submit.

Two days later or at your convenience, look to see what your Schwab account looks like. It should look like this:

• in your brokerage (investing) account
• SCHB: $1,000
• Cash: $4,000

• in your checking account:
• Cash: $0.00 

Now, just for the practice, transfer $1,000 of the cash in the brokerage account and "transfer" it to your checking account. It might take a little while to figure out how to do that depending on whether you are using your laptop or a mobile device. 

But the key word you are looking for is TRANSFER.

Once you find that page, it's easy. Use the drop down menu, transfer from your brokerage account (the one with $4,000 in cash) to your checking account, $1,000 which you type in.

Review and submit the transfer. It may take as many as two clicks to confirm; Schwab gives you a chance to correct mistakes. But if you did it correctly, the transfer will happen instantly. 

And that's it. 

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Checks 

You will receive checks in the mail in a couple of weeks from Schwab and you can then write checks. Just make sure you successively transferred that $1,000 into your Schwab account.  

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Advice Regarding Checks

I use Schwab checks only for major purposes. I don't think I used my Schwab checking account for months after I opened the account, and I will use Schwab checks very, very infrequently.

Use the local banking / checking account you used before you opened a Schwab account. 

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Emergency Funds / Access To Unexpected Need For Cash

Over time, gradually (or all at once), go to your brokerage account and buy as much SCHB as you can. From the steps above, you should still have $4,000 in cash in your brokerage account.

With that $4,000, buy $2,000 worth of SCHB  and transfer $1,000 of that cash to your checking account.

Process:

• trade
• in your brokerage account, click on trade
• type in SCHB
• type in BUY
• type in $2,000 (that $2,000 will come out of cash from that same account)
• submit.

• transfer
• in your brokerage account find the page for "transfer"
• click on transfer
• type in transferring from brokerage account
• type in transferring to checking account (you might have to check a couple of agreement boxes)
• type in $1,000
• submit.

You will now have:

• Brokerage account:
• SCHB: $3000 in value; number of share depend on price at time you bought
• Cash: $1000 + the original $100

• Checking account:
• $1000 + the original $100

You should have the hang of it by now. If now, give me a call. 

Letter To Olivia — Financial Advice — April 20, 2026

Within a Schwab account you can have several subaccounts -- one for your IRA, one for cash, a checking account, an investing account.

This is what your investing account should look like in the future: https://milliondollarwayfinancecourse.blogspot.com/2024/09/best-cash-management-accounts-september.html. 

Once you have the various accounts set up you can move the move from one account to anther with one simple click.

For now, I would recommend, you put the bulk of the money into a Schwab ETF, (either SCHD, SCHB, or SCHG). But put the rest into the checking account for quick access. 

So, your Schwab account would have a:

• a checking account;
• an IRA;
• and, a brokerage account.

The Schwab account lets you do that all by yourself but if you have questions, call Schwab directly, or talk to me at your convenience this weekend. There is no hurry. 

I have found the checking account really, really useful. I doubt you use checks very much so you may not need this but it makes your cash readily available. Again, we can discuss. 

Don't spend a lot of time on this now, you have too many other things to do, but once you have everything in place, I think you will find it very rewarding and very, very interesting. 

For initial investments, even inside an IRA, the most recommended vehicle right now is an ETF. There are thousands of ETFs, but Schwab ETFs are really highly recommended.

• SCHB:  broad group of US Fortune 500 companies focused more on growth; probably as close as you can get to a “QQQ-like” ETF.
• SCHG: growth group of US Fortune 500 companies.  Probably the best of the three for a young investor.
• SCHD: focused on dividend-paying companies. Won't appreciate much but pay a nice dividend, but geared for those who need income and probably older individuals nearing retirement.

That's a start. 

Current Investing -- In Progress -- Subject To Editing And Updating -- April 7, 2026

Investing In Individual Stocks

Many caveats.

Simply a list for my extended family members. Not for my general readers.

Personal portfolio of directly-held stocks.

To be considered must be on the lists below:

• three sectors only;
• ten picks in each sector.

Monthly:

• allocate new money to any of the equities on your list
• no selling of current positions to add to other current positions
• can only add new money to current positions

Annually:

• reassess entire portfolio
• can sell any or all holdings in any position but must have strong rationale to do so
• must completely sell an existing position if one wants to add a new position (this is by far the hardest rule to follow).

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Fourth Industrial Revolution (AI): Pick Ten Only

Fourth industrial revolution: 

• Amazon
• Apple
• TSMC
• the "magnificent 7" -- take your pick to round out your top ten AI investments, AND/OR
• see below -- take your pick to round out your top ten AI investments. 

AI prompt:

For investors: related to AI; Fortune 500 companies only or projected to be a Fortune 500 company within five years; a good 30-year holding; top ten.

 Reply: 

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US Infrastructure: Pick Ten Only 

US infrastructure:

• UNP
• GE Vernova 
• GE Aerospace 
• SCCO --> Corning
• see below -- take your pick to round out your top ten US infrastructure investments.
• AI prompt:
• For investors: Fortune 500 companies; pay a dividend; a good 30-year holding; US infrastructure; top ten.

Reply:

Energy:

• CVX
• SRE
• LNG
• see below -- take your pick to round out your top ten energy investments:

AI prompt:For investors: Energy (oil and natural gas only); Fortune 500 companies; pay a dividend; a good 30-year holding; US infrastructure; top ten. 

Reply:

 

Perspective For The Grandchildren -- December 2, 2025

From an investment perspective, I don't think the grandchildren could be in a better position.

My first / primary goal is to ensure that each of the five grandchildren leave college with no tuition debt.  

Once the grandchildren started having earned income -- including summer jobs during high school — we began to fully fund their IRAs (traditional or Roth IRAs). Our plan is to that until they reach age 29. 

This is why I think the grandchildren cannot possibly be in a better investing position.

Early years: 18 years of age to 28 years of age:

• the grandchildren can take risks
• inheritance from grandparents will result in huge backstop for each of the grandchildren
• at a minimum, the grandparents will provide minimum annual support until age 29
• in addition, grandparents will fully fund IRAs on an annual basis for each grandchild, through age 29
• the grandchildren have multiple IRA vehicles from which to choose, e.g.:
• Vanguard
• Schwab ETFs
• individual stocks

Middle years: 29 years of age to 49 years of age:

• the grandchildren can gradually take responsibility of their annual IRA funding for themselves
• by their early 30's they will have seen how their various IRA options have performed
• they can compare the IRAs that have been funded for the past ten years
• they can then adjust annual IRA funding based on that information
• once their annual IRA contributions have maxed out, they can start to consider non-IRA funding 

Later years: > 49  years of age

• it's very possible, the grandchildren will now have more cash available for investing than the IRS  allow;
• having established investment accounts (Schwab accounts) over twenty years, grandchildren will have had a chance to get real world experience in investing.

Investing Large Amounts of Money: Guidelines -- September 28, 2025

 Investing Large Amounts of Money: Guidelines

September 28, 2025

Documents 

General comments. 


Keep records of everything.

Scan everything.

It takes time. If you don’t have time, keep documents in a shoebox and scan / file when you have time. Devote one hour per weekend to do this. Pay bills on the weekend when you have time and the energy. 

Minimize saving hard copies. If documents are readily available electronically and not particularly important, don’t scan or save. But know how to access electronically. 


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Inheritance

General comments. 

Upon Bruce’s or May’s death, the heirs could inherit a fair amount of money.

When the second of the two (Bruce/May) has died, the heirs will inherit the rest and it could be a fair amount of money.

There is no inheritance tax in Texas or Oregon. Kiri’s family and Laura’s family will not pay any inheritance taxes.

There is no estate tax in Texas. This only affects Bruce and May’s estate. This simply means Bruce and May’s estate will NOT be reduced by any state estate taxes.  Bruce and May are not affected by Oregon’s estate tax.

The federal (IRS) estate threshold for estate taxes is $14 million (rounded) per individual (May or Bruce) and $28 million (rounded) for couple (Bruce and May together). That number may adjust for inflation.

After the first spouse dies, the surviving spouse must file Form 709 (portability form) with the IRS. That should be an easy form, but the tax preparer will help. This form does not generate any tax liability. 

So, with that preamble, how should the heirs manage a large sum of money?

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Managing Large Amounts Of Money 

Until you sort it all out, this is what we recommend: 

The heirs: primarily the five grandchildren, but also Kiri, Laura, Tim, and Josh.

Each of the heirs should have a Schwab account established to make it easier to move assets from Bruce and May’s Schwab accounts to the heirs’ accounts.

Jargon: each heir should have a Schwab account; in that Schwab account there will be sub-accounts: a broker account (for traditional investing); a Roth IRA account; a checking account; etc. 

The surviving spouse can gift $19,000 per year per individual. No forms need to be filed with the IRS. No tax liability for either the donor (the surviving spouse) or the heir.

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Specifics 

First: 

• surviving spouse:
• use as much of the $19,000 for each heir to max out their Schwab Roth IRAs
• they may also have a matching program with their employee that is separate, e.g., a 401(k)

Second:

• each heir should establish a checking sub-account with their Schwab account
• keep around $5,000 in that checking account, but understand that money from other Schwab accounts can be moved to the checking account “immediately.”


Third:


• heirs and surviving spouse: keep your money working for you; don’t keep money in cash
• easiest thing: invest / park your money in Schwab ETFs until you understand more about investing
• Schwab ETFs
• SCHB: large, safe companies that may outperform the market; dividends minimal;
• SCHG: large, safe companies that will grow with the market; dividends minimal;
• SCHD: large, safe companies that offer more dividends, but may not appreciate (grow in price)
• only when you have $100,000 in your ETFs should you consider investing in individual stocks

Fourth: 

• surviving spouse: the 529 -- see separate page regarding a “529.”

Fifth: 

• heirs:
• each of the heirs should be generous with gifting to their own children first, then friends / acquaintances; 
• don’t gift to political parties (unless you want to be put on a lot of mailing lists); minimize gifting outside of one’s own family and friends (you will understand some day) — let your own heirs get the joy of gifting
• I particularly enjoy gifting friends and family members with specific amounts of money for specific needs, like airline fairs, iPhones/laptops/iPads, etc.

Taxes:

• it’s likely you will be required to pay quarterly estimates to the IRS; prepare accordingly.
• your tax preparer will have the estimates.

Credit Card Debt

l

This is really, really cool.

From CNBC today:

There's nothing worse than credit card debt. Don't take that out of context.

Of our five grandchildren, one is now an independent adult. She is very, very frugal and manages her money well, but it must still be very challenging for her.

My wife and I want to ensure that our grandchildren do not get into credit card debt / trouble.

To that end, we will work with our grandchildren to pay off their entire credit card debt every six months. 

We also provide a monthly stipend for gasoline money for the two adult daughters who need dependable, personal transportation.

Side-Bar Discussion With Another Investor Friend -- Nothing New Here

This is what I tell my grandchildren (and have a blog for them on this very matter).

1. First of all, don't call it "investing for retirement." Call it  "investing for financial independence." Plan to be financially independent by age 30.

2. I don't care how you invest, just invest from day one (1), and be serious about it, but don't let it be all-encompassing.

2a. Invest in yourself: education, education, education.

3. Read, read, read. And not just business / investment. It's amazing where you will find investment ideas.

4. My father had a very, very challenging  time investing (for many, many reasons). Your generation (his great-grandchildren) and your parents (his grandchildren) had it (investing) incredibly easy compared to my father (your great-grandfather). My generation was caught during the transition (from guaranteed pensions to "on your own") and the transition was very difficult for some in my generation.

5. It will be many, many years before you can invest all the money you have to invest ... in tax-free vehicles. You need to max out tax-free vehicles before anything else -- IRAs, Roth IRAs, 529s, real estate (?).

6. Until you know what you are doing, everything should be professionally managed.

7. Taxes and fees are not trivial.

8. Once you get to investing on your own which can be very enjoyable, look at the big picture and have a long horizon. The big picture -- everything -- global and sector. Global: I don't see anything on the horizon better than the US for overall investing. Sector: the eye of the beholder. I like energy, AI, and communications.

9. Personal lifestyle and habits: don't live beyond your means; either marry once or don't get married. In other words don't lose half  your "estate" through a divorce.

10. Personal lifestyle and habits: invest on a regular basis -- i.e., put at least one dollar into your savings / investments every month. Taking even one dollar out of your savings / investments needs to be done for a very, very good reason and must be paid back as quickly as possible.

Now the fun part, or the challenging part.

1. Once you are comfortably on the road to financial independence, then and only then should you think about doing your own investment (rather than through a professional).

1a. If you do not feel you are on the road to financial independence, you are not ready to do your own investing.

2. But that doesn't mean that you don't want to control your own investment decisions.

3. Professional management: IRAs, Roth IRAs, 529s. With IRAs (to include Roth IRAs), you have control over what kind of IRAs in which to invest: very, very conservative -- low rate of return, but safe -- or very speculative -- possibly high rate of return, but very risky.

4. 529s: they sound good but by their nature, are probably poor investments -- or better said, very, very, very conservative investments. They have to be. By law. They have a fiduciary responsibility to have cash ready when folks need it for education. Which means some of the investors are very, very short term, investing at age 16 years of age and using it when they are are 18 years of age for college. Technically, no one's horizon is more than about 15 years. On top of that, the manager of the 529 has to have enough cash to pay out every every for those going to college, or forced to sell assets to pay those going to college. 529s are very, very close to a Ponzi scheme, if you think about it. Probably closer to term life insurance policies.

5. Anyway, that's a start.