I’ve been revisiting the way I handle my personal finances in recent months and thought it would be good to list out my “personal finance stack” – the different accounts, tools, and workflows I have in place to handle my finances.
Back in March 2015, I wrote about how I had missed golden opportunities in my twenties to invest earlier (see blog post). It was only when I turned thirty that I seriously considered putting my money to work through various purchases of stocks and index funds. In the 2.5 years since I wrote that post, I’ve continued to put aside the majority of my income into various investments, but the allocation of these funds have changed somewhat.
First, I took all my money out of Betterment, an investing service that promises to manage money in a smart way for very low fees. I did not like the idea of constant tinkering and rebalancing that Betterment did on a weekly basis. I came to feel, whether rightly or wrongly we’ll see in time, that placing big bets on a handful of companies that I felt strongly about would be the way to go. In my mind, I thought about what Warren Buffett has said about a 20-slot punch card when investing: imagine that with each stock purchase, you punch a hole in the card, and after 20 punches, you can never buy again–how would that change the approach to the way you pick your stocks?
Without going into exact details, I bought a good chunk of shares of a tech company that I felt was still capable of long-term growth, not too different than what Microsoft was before the release of Windows 95. Later on, I would identify for myself another tech company that I felt very bullish about and allocated a good amount of my income to its stocks. My plan, and this is what Buffett was essentially preaching, is to believe in and hold on to these stocks for a very long time–maybe 10, 20, or even 30 years–and not worry about the choppy swings of the short-term.
In addition to my one-off purchases of stocks that I believe in for the long-term, I have a few automated investments in place. One of them is called Acorns. It looks at my credit card and bank transactions and looks for opportunities to “round up” and pulls those amounts into an investment account, where the money is used to buy various funds. So for example, my $4.25 purchase at a cafe would mean I have $0.75 in round up money. Once the total number of round-ups hit $5, there is a deposit from my bank account to Acorns. I’ve set transactions that end in $.00 to round up to a whole dollar. I’ve also set up the account to pull $5 from my bank account every single day. It’s been exactly 2 years since I opened an account, and I’ve put in an average of $160/month. I like Acorns because it’s got a fairly low fee structure ($1 per month for all accounts with a balance under $5,000 and .25% of the balance per year on accounts over $5,000) and it’s something I rarely even think about.
The other automatic investment I have in place is Motif Investing, which I recently started up again. It allows you to create a bundle of stocks–your “motif”–that you can then invest in as if it’s your own fund. I had some fun making my own motif consisting of companies that I think are make a lot of headway into AI and integrating AI into their businesses and felt comfortable enough to subscribe to Motif’s Blue program, which costs me $9.95 to automatically invest in my motifs each month. This is nice because a single share of some of the companies in my motif are close to the $1,000 range, so Motif allows me to own partial shares while charging me a flat $9.95 fee to get exposure to 8 different companies (whereas buying shares individually would cost me $6.95 per transaction in my brokerage account).
In recent months, I’ve also started making small bets into cryptocurrencies. I have a Coinbase account where I’ve set up two automatic investments–a weekly investment into Bitcoin and a biweekly investment into Ethereum. I understand that things are pretty speculative right now, but I’m not expecting to make a quick buck. I do think, from what I understand, that cryptocurrencies can be a disruptive force in the coming years, so I don’t think it’s the worst use of my money to have a little stake in the upside.
Since 2015, I’ve dipped my toes in some real estate. With a group of friends, we purchased a couple properties in West Philadelphia that have become very good rental income generators. Melanie and I also purchased a co-op in Sunset Park recently where my parents reside. That means a big chunk of our monthly income will go towards a mortgage, but we’re very bullish on the neighborhood and it’s great to have my parents nearby. With rising interest rates and the general hassle of buying properties, I don’t know if I’ll be doing many real estate deals in the coming years, but I learned a great deal by going through the property-buying process.
I don’t spend much time looking at my personal finances. I’ll occasionally look at stock prices as I might look up sports scores of my favorite teams, but I don’t fret if the market is down or get too excited if the prices jump. I do like looking at the overall picture every 10-12 months to see how things have grown. I’ve linked up all my accounts to Mint and Openfolio to get a high-level view of my net worth (at least where my stock investments are concerned). I haven’t spent any time trying to get real estate values into the mix yet. In writing this post, I was pleasantly surprised that since 2015, my net worth has increased by nearly 60% not counting any real estate holdings. This despite the fact that my earnings have stayed generally flat during that time.
I love the idea of steady, sustained growth in personal wealth. Sure, we might hit lucky breaks or land a big score that can make a huge difference, but that doesn’t mean we can’t be slowly rolling our snowball while we pursue our big payday. The nice thing is that if the big payday never comes, you can still be perfectly happy and comfortable with what you have.
Tools/Services in My Stack
Here are the tools/services mentioned above as well as others I use regularly:
- Capital One Investing: What I use to buy most of my stocks.
- Fidelity: I use this for my IRA retirement accounts.
- Robinhood: Used for speculative stock purchases and also a way to put affiliate income from Buys with Friends to use. We’ve invested in some real estate stocks that pay nice 8-12% dividends each year.
- Acorns: Automatic micro-investments using round-ups on credit card and bank account transactions.
- Motif Investing: Ability to create your own fund and invest across various stocks for a flat fee.
- Coinbase: Service I use to buy Bitcoin and Ethereum.
- Mint: Popular tool that pulls in data from various accounts and shows trends and reports.
- Openfolio: Mobile app that shows investment performance across various accounts and also provides performance benchmarks vs. other types of investors.