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.

Best Cash Management Options -- Updated September 16, 2024

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.

As an investment.

App economy.

Lesson 6 -- BYU -- September 16, 2024 --September 23, 2024

Home loans, mortgages, auto loans.

Chapter 7 -- Debt: avoiding debt like the plague: link here.   [166 of 352; page 155]. [60 minutes]

Begins on page 155 or 166 of 352.

Objectives:

• understand our leader's counsel on debt.
  
• understand the principles of using debt wisely. 
• understand how to develop and use debt-reduction strategies.
• understand plans and strategies for debt reduction.
  

Lesson Five -- BYU -- September 8, 2024 --September 15, 2024

Home loans, mortgages, auto loans.

Chapter 6 -- Credit: understanding and using it wisely: link here.   [138 of 352; page 127]. [60 minutes]

Begins on page 127 or 138 of 352.

Objectives:

• understand consumer loans, principles, characteristics and costs.
  
• understand mortgage loan types, characteristics, and costs. 
• understand the key relationships for borrowing.
• understand and create your Consumer Loans and Debt Plan
  

One Stop Shopping: Schwab Vs SoFi -- Cash Management Accounts -- September 11, 2024

With regard to savings, checking, and investing, one word of advice: work with as few financial institutions as possible. 

Personally, I have not found anything better than Schwab when it comes to cash management, savings, checking, and investing.

A possible exception, about which I know nothing, is SoFi.

 At wiki:

I then googled: is schwab's biggest competitor sofi -- and this was the top return:

Having read all that, I would now strongly suggest choosing either Schwab or SoFi as your one-stop financial institution. Period. Dot.

In the Stanford area, it might come down to easiest physical access to a Schwab office or a SoFi office. I don't know if SoFi has physical offices; Schwab does. 

Later: well that was easy -- SoFi has no physical offices. That does it for me. Schwab over SoFi.

 

Cash Management

PERSONAL FINANCE COURSE

CASH MANAGEMENT 

BYU Course: chapters 3 and 4.

Part 1 of 3

Cash Management

 

Cash management is NOT Investing. 
Basically it’s record-keeping.

BYU course: chapters 3 and 4.

• Record keeping
• Cash management

“Cash management” is different from investing; cash management IS NOT investing.

What cash management is:

• Tracking income.
• Tracking expenses.
• Setting up a budget.
• Accounting for “every” dollar.
• Developing a record-keeping system.

That’s it. Nothing about investing.

That doesn’t mean we won’t talk about interest rates in savings and checking accounts, but we don’t use savings or checking accounts for investing.

Part 2 of 3
Budgeting

When your life changes, your budget will change.


When starting a new job, starting a new year at college, when planning for retirement, your life changes; budgets change.

Your budget may change monthly. Don’t worry about that. Once things settle down, one’s budget will start to fall into place.

What’s important: developing a budget format that works for you.

I would start with a “notional budget” using percentages at first, and then over time develop your actual budget using percentages and dollars.

One cannot successfully budget without knowing your income (and income sources) and your expenses. Your first budget can only be developed by tracking income and expenses for a period of time.

BYU says one must account for “every” dollar. Taken to extremes that does not work for everyone. My own dad did not do that. I had an uncle who did. My dad did very, very well financially; my uncle did not. But my uncle did know where every dollar went.

I would recommend a “miscellaneous” category where a given amount of money each month is unaccounted for. It might be as little as $10 or as much as $100 depending on your income.

Your income should be known to the penny.

Your expenses should have a dozen or so specific line items.

But if you have a line item for the dollar you gave Sophia last month while shopping, you’re going to go nuts tracking each dollar. If you routinely give Sophia $10 each month for spending money, that needs to be an expense line time. If you give her a dollar or so every six months or so, that needs to be “lost in miscellaneous.”

It’s easier to talk about this than to write it all out, so if this doesn’t make sense, we can talk about it later.

Part 3 of 3
Cash Management

 
For me cash management is simply figuring out what to do with your income or your money that doesn’t go out the door to pay expenses. If it’s something else, let me know. Cash management is not investing. We’ll talk about investing later.

For me, cash management is figuring out where to put your money (cash or electronic) while waiting to pay expenses, spend it, or invest it.

In the context of cash management, I don’t like the concept of a “savings account,” but it is what it is.

I think of a “savings account” as a place to keep money for unexpected short-term expenses.  Whatever amount you put in this account needs to be immediately available, and immediately accessible. I would hope that a student would need to keep very little money in any account for emergencies. Students are still dependents and generally speaking, the dependents’ guardians and extended family members will have their dependents’ “backs” for major emergency expenses.

Saving money for a one-time large expense such as a computer might be placed in a “savings account” but should not be thought of as “savings.” Putting money aside each month for six months for a new computer is an expense.

Cash for monthly expenses — expected, planned, and budgeted — might as well go into a checking account. I can’t think of where else I would put cash that will be used to be pay budgeted expenses.

Money that does not go into your “savings account” — unexpected expenses — or into your checking account then needs to get to a third location, and that third location now starts to get into short-term cash management and long-term investing.

Short-term cash management vs long-term investing in excess of what you need for budgeted items and unexpected expenses.

At this point in your life, “all” of your money may be tied up in budgeted items and unexpected expenses.

I can’t imagine college students having that much money that they need to be thinking about interest rates on money in “savings accounts.”

But once you start talking about money market funds (MMF); savings bonds (I-bonds); Treasuries, etc, you have moved into investing. (BYU won’t necessarily agree with that.)

We will be talking about investments in future chapters.

Unless you have — pick a number — I would pick $2,000 — unless you have $2,000 in your checking account or savings account that you will absolutely not need in the next year or so, then we can start talking about investing.

Right now, your money needs to be readily available to pay your bills and unexpected expenses while you set up your budget.

One expense item: investment. PAY YOURSELF FIRST.

Have one expense item called “investing,” or “financial independence” or something to that effect. Whether it is $1 or $10 or $100 / month, make that an expense item and put that amount into your “investing account” or “investment portfolio.

Once that “account” reaches $2,000 or more then you can start worrying about interest rates. Today, 5% in a money market fund nets you $50 on $1,000. But that’s $50 over the course of a full year. I have never been impressed with interest rates credit unions or banks pay their customers. USAA is an exception: they partner with Schwab to pay you a better rate.

I did not know about the relationship between USAA and Schwab. I was quite impressed. If you can find a better investment firm than Schwab, let me know. For one-stop shopping for cash management and investing, I’ve not found a better financial option than Schwab.