I’ve heard someone say that you can only do four things with money:
Spend it
Save it
Give it
Pay Taxes
You work hard to earn what you have. Might as well make the most of your money. Today’s quick intros hit on ways to optimize your saving, giving, and reduce your taxes.
[1] A Checking Account that Actually Pays You
This isn’t some CD where your money is locked up for a year or a high yield savings account. It’s a checking account, meaning you have access to your money whenever you like (via electronic transfer or debit card).
Wealthfront is a robo-advisor primarily focused on investing, but also offers this incredible checking account. I’ve been using it for a years and have been super impressed: no minimum deposit required, the interest rate is incredible, and the interface was smooth and easy to use.
And, to top it off, so much of the automation I talk about in “How to Make Your Own Money Robot” is built in.
[2] Give: …Like a billionaire
Back in the day, the super rich had complex ways to reduce their taxes by being generous. It usually involved working with multiple teams of professionals, including tax experts and legal professionals to devise a compliant system that could batch and defer taxes that were meant for charitable giving. Now, you, me and everyone else has access to the same tools. One of them is called a Donor Advised Fund (DAF) — your own personal philanthropy account.
You can contribute money to it in one year, instantly get the tax contribution credit, and give the money away whenever you like to a 501c3. So, generous minded people can batch their giving to the DAF in one year to maximize their tax savings.
The following two institutions help you create a DAF in a few minutes. They’re super user friendly and easy to transfer money (cash, stock, crypto) into the DAF and distribute money out to charities.
Daffy: my current go-to. For a flat monthly fee, your can invest your non-distributed funds. For example, if you’re planning on keeping about $2,000 in the account, the interest earned covers the annual fee.
CharityVest: Free to use, but you don’t earn interest on funds that haven’t been distributed. If you want to invest, the fee is a percentage of assets held, which almost always ends up being more expensive than a flat fee.
[3] The Mindset of an Intelligent Investor
One of my favorite finance newsletters right now is a A Wealth of Common Sense by Ben Carlson. His thought below is similar to what I advocate here.
Intelligent investors realize effort is often inversely related to results in the market. Just because you do more or try harder doesn’t guarantee better results. In fact, doing more is more often than not damaging to your investment performance.
Doing less or doing nothing at all most of the time is the right way forward for the majority of investors.