Hello 2021! This is the year to simplify, make beautiful, create your plan for life. I’ve been obsessed with YouTube videos about minimal moms and other people that have taken a penchant for getting rid of stuff and having a home filled with only items they love. It’s very Marie Kondo.
Design and Life
I also like design that contains clean lines, comfy, plush and luxe living areas, natural elements: wood, stone, rattan, linen, bamboo. I have a vision I can’t quite conceptualize because I can’t find it, but it’s my future home, how I want it designed and built. Being in an area that is obsessed with big homes, I actually want a modern, cozy, luxurious but small place to call home base. That may mean rebuilding on a lot I already own in So Cal, or building in another state with less serious income tax and less political turmoil.
Either way, I’m grateful that 2021 feels so fresh and new. Like it’s filled with possibilities.
Money Creates Your Life’s Design
You know what creates possibilities? Money. Over the course of your life, whether you’re an W-2 employee, a contractor, a side hustler or an entrepreneur, put money away each and every month to a retirement account. If you don’t have access to a 401K or other pre-tax retirement option, do the better gig, a ROTH IRA. Max it out every year: $6,000 per year (under 50 years old) as of the date of this post.
Who do I recommend opening a ROTH with? Fidelity or Vanguard. What investments do I recommend within the Roth? 70-90% index funds (S&P 500 index, some NASDAQ index, or Total Market index funds). You’ll be diversified with any combo of those options. Other places for diversification are international funds (10-15%), REITs (10-15%), intermediate bond funds (10-25%). That said, don’t invest in anything that you don’t understand. Whatever you decide, the most important thing is to be consistent. And when the market is down and everyone is running out, that’s the best time to run in and buy. Bad news days are good stock buying days. I like a sale, and buying on a “red day” is always my preference.
Simplicity Grows from Consistency
However, even in good times, keep buying, be consistent. The faster you get money set aside, the sooner it can start doing its bunny behavior. Which means, multiplying while you’re not looking. Money getting 10% returns (which is very doable in the stock market if you leave it alone over the course of years and decades), will DOUBLE every 7.2 years. Money getting 7% return will DOUBLE every 10 years. (Take 72 and divide by interest rate.) You’re money getting 1% in that bank CD? That will double in exactly 72 years.
Luxurious Cushion
Money in the bank is for surviving if you lose your job or have other life crises. It should be there like a nice, luxurious cushion, but it is money intended to be lazy and on call, not actually working. An emergency fund should be pretty accessible (I like ally.com–it’s easy enough to get to and earns more interest than a brick and mortar bank).
Make 2021 the year you (i) purge, clean and simplify your living space, and (ii) embark on a few spending freezes and use the money to knock out your last debts and get that ROTH account opened and funded with the first $100 (Fidelity has no minimum, Vanguard may). Future possibilities are counting on your good habits now. Love today’s you and tomorrow’s you. They both deserve it.
