Achieve Liftoff
5… 4… 3… 2…1
5…
First get out of bad debt.
Investing is a topic only for people without bad debt. Do you pay for your cars with cash, have zero debt that rolls over from month to month and pay off your credit card bill? Good; put that first. If someone has not already gotten there, there is no point in discussing investing. If you have a credit card charging 20% or — even worse — a payday loan, all of your energy needs to be dedicated to getting rid of debt. Revolving credit card debt and payday loans are almost always mistakes. If you are paying off high interest debt, consolidate it at a lower rate. Get your rate as low as possible then get your balance as low as possible before you do anything else.
It is okay to borrow, but a reasonable rate is ~5%. That’s what I pay for my portfolio line of credit at Frec. I can borrow up to 70% of my portfolio value, which is what I tap for all major liquidity needs while staying fully invested and never creating taxable events to get cash. If you’re within 1% of 5%, not a worry, but if you borrow at over 6%, you are stealing from yourself.
4…
Earn ~4% on your cash. Robinhood (HOOD) Gold offers exactly that. This doesn’t need to be perfected, but if you’re off by more than 1%, you’re underpaid. Do something about it (unless you’re a depositor in a bank I own then by all means forget I ever said anything).
3…
Get 3% cash back on your credit card. You can get that with Robinhood and, more recently, Aven. Airline miles suffer from hyperinflation. US dollars are better. Caveat: bitcoin could be better yet.
2…
Two is one and one is none. Have two of everything when it comes to services. In a crisis, there is no time to establish a new relationship. Have backup broker, lawyer, accountant, administrator, and security ready. Don’t let a problem at a primary service provider become your problem. Even if your money is insured, collecting it can take a while. Have somewhere else to instantly wire funds. Have a backup country for yourself and your money.
1…
Buy one bitcoin. More is better. But one is better than none. If the US dollar collapses, diversification is wise.
Caveat
Interest rates and crypto prices fluctuate; none of this is perfectible.
Conclusion
The goal isn’t perfection — the goal is to not interrupt compounding by getting underpaid or by overpaying.
TL; DR
Borrow sparingly at low rates, save extravagantly at high rates, cash > miles, have a plan B, and owning bitcoins > owning a bitcoin > owning none.