Tuesday, October 13, 2026Newsletter · Community
GetRicherTogether
Evidence based money, for a richer life

Tips

A fountain pen on a notebook
Photo: CC0, via Openverse

Short, practical ideas for US savers, adapted from the Swedish RikaTillsammans tips. Items marked US review depend on US tax, lending or market facts and need a check before publishing.

Mindset and a rich life

Think of money as life energy

When you work, you are not selling hours on a calendar. You are selling life energy: your time, attention, health and creativity. That makes every purchase a question of priorities. Is this $200 gadget worth an hour of my life? Is it worth ten extra hours of work to save an extra $2,000 a month? Is a nicer car worth working one extra month every year?

The goal is awareness, moving from "by default" to "by design." Once you manage your energy as carefully as your dollars, your decisions line up with what a rich life means to you. Life energy decides much of the quality of our lives.

Collect memories, not just things

What we do now becomes our memories later. Look at what we talk about when we meet old friends, parents or grandparents: shared stories. So ask what memories you want, and spend time and money on them on purpose. Which core memories have you made lately? What do you want your children to remember about you?

Give your memories a structure too. Make the photo book, sort the pictures on your phone, back them up, or keep a journaling app. This is not about maxing out anything. A modest trip with people you love can beat an expensive one.

Quality time with kids is a myth

Children do not want quality time with their parents, they want quantity time. "Quality time" is something adults invent to rationalize. A missed soccer game or school play does not come back. Children give us the most obvious time windows in life, and they are short.

Money is for using, and often the best thing to buy is time. Paying for help so you can be present during the years your kids are home is money well spent.

Structure makes things easy or hard

Structure shapes what we find easy. Try holding a serious meeting in swimwear at a pool, then try it in a conference room. It is easy to talk about money in the second one. Structure can also be a friend: it is far easier to go to the gym or review your budget with someone doing it alongside you.

Look at your home environment. Does it support the life you want, or is it full of things that work against you? Change the structure and your attitude, actions and results often follow. Sometimes the easiest place to start is structural.

Experiment more

Many big, emotional questions cannot be solved by thinking. You have to try. If you do not know what a rich life looks like for you, run small experiments where the downside, cost and time are limited.

Dreaming of early retirement? Take an unusually long vacation and see how it feels. A house abroad? Rent one for a month first. Thinking of starting a business? Ask about a leave of absence or try it as a side project. Cheap experiments give you feedback to make better informed decisions.

How do you want life to feel?

At some point we reached a big savings milestone, were saving more than ever, and felt oddly empty. We could have set a bigger number, but why? The shift came from a friend's question: what if you set goals in the wrong area? Instead of a number, ask which feelings you want to feel.

What does a life look like where you feel playfulness, belonging or creativity? Goals built on feelings give you a new playing field, and a reason to use your money rather than only grow it.

Health is your most important asset

The healthy have many wishes, the sick have one. It is a cliche, and it is true. We have seen people save and dream and then suffer a sudden stroke or heart attack. A diagnosis should not be what wakes you up to what really matters.

Treat health as your most important asset and invest in it regularly and for the long term. Two useful questions: what can I do now that I may not be able to do later if my health is worse? And what would I regret not having done?

It takes time to get good at money

There are no shortcuts to becoming a good investor, just as in any other skill. Martial arts have centuries of belts and agreed standards. Personal finance has none of that, so we suggest empathy with yourself: dare to be a beginner, make mistakes early, and laugh at them later.

Getting a large sum of money before you have the knowledge to handle it tends to hurt more than help. You see it with children given money, and with lottery winners; one commonly cited figure says around 30% end up bankrupt US review. You need to earn your lessons.

The 0.01% rule for a richer life

On average, a net worth grows about 0.01% per day, or roughly 3.7% a year. So as long as you spend less than 0.01% of your net worth per day, it does not shrink. That also means you can now and then spend that small amount on something that adds a golden edge to daily life.

The rule comes from Nick Maggiulli's book The Wealth Ladder. It ties spending to wealth instead of income, which matters because income varies over a lifetime and "spend less than you earn" can leave you under spending. If counting retirement accounts feels wrong, apply it to the liquid part only. The point is to use your money without guilt.

Does your calendar match what matters?

A coach once told one of us: show me your calendar and your bank statement and I can tell you whether you will reach your goals. It was irritating, and then it was obvious. It is hard to say "friends matter" or "fitness matters" and have no time in your calendar for either. If something is important, it should show up in your statement too, in gym fees, sports gear, dinners out or whatever applies.

Hand on heart: if you showed your statement and calendar to a stranger, could they tell what matters to you?

Use your windows of time and opportunity

Some things can only be done in certain periods of life. Traveling with kids is much easier before school starts. A teenager at home means a limited number of years before they move out. A missed game does not come back. Backpacking is easier at 20 and single than at 40 with a career, a partner and children.

Ask yourself: what can I do today that I will not be able to do tomorrow? In our experience, people rarely regret money spent on a window of time.

Buy happiness with your money

Yes, money can buy happiness, and the research does not show a point where it stops. But knowing how to get the most happiness per dollar takes practice. You have to try things and learn. The studies offer clues: buy experiences, focus on others, favor many small pleasures over a few large ones, and pay now and consume later.

Avoid the saving trap

Money is personal, emotional and not always rational. Many of us who are in a good position got there by saving and being frugal for a long time. But what if you are stuck in an old habit, rooted in a past situation, that keeps you from giving yourself and the people you love the rich life you could have?

Try seeing money as a resource like any other, one that is meant to be used to make life richer, particularly because its usefulness tends to shrink as we age.

Explore the die with zero idea

The value and number of things you can spend money on shrinks with age. However healthy you are at 65, you will not ski as many days as you did at 25. So what is the point of being the richest person in the cemetery? Bill Perkins, in his book Die With Zero, argues that more of us should aim to end life with nothing left.

This is not about overspending or leaving your children nothing. Quite the opposite: children benefit more from a smaller inheritance early than a larger one late. Plan the math carefully, and keep a margin for long life and health costs US review.

Understand opportunity cost

Opportunity cost compares what you choose with what you give up. It covers time, energy and options, not just money. Imagine a new car that costs $1,100 a month all in, counting payment, insurance, fuel and depreciation. A used car might cost $450. You can afford the first, but the real question is: is it worth working several extra weeks a year just to fund the car?

Do not only ask "can I afford it?" Ask "what am I choosing instead?" It leads to more conscious choices.

Win the important games

Many people do the wrong things the right way in their finances. The most important things to get right can be counted on two hands: housing, car, income, saving, retirement and the right insurance. After that, most of it is about a richer life. Living the life you love and loving the life you live.

Start with an emergency fund

Before you start saving and investing, build an emergency fund. It protects you against bad luck, lets you sleep at night and makes it easier to sit still when the market storms. It lets you walk away from situations you do not want to be in, helps you make better decisions and creates options.

Keep it in an FDIC insured high yield savings account, and aim for three to six months of expenses US review. Later on, other strategies can stand in for part of it, such as a home equity line of credit or a brokerage credit line.

Hold a kickoff with your partner

We have all been to a work kickoff, listening to the boss say "here we are, here we are going, and here is what we will do." How many of us have held a kickoff with our partner or family? Everyone should. It does not need to be complicated. It can be over coffee, a dinner or a weekend. Try it. What do you have to lose?

A rich life is about balance

We believe a rich life is a balance of time, money, energy, health and other resources. What is the point of a lot of money without time, or relationships? Or plenty of time and no money to do anything fun? In a sense, a rich life is the lowest common denominator among your resources and areas of life.

Time buckets and the seasons of life

One way to think about windows of time and opportunity is as different periods of life, in 5 to 10 year chunks. Some common ones: student years, living together or DINK (double income, no kids), career building years, the child years (toddlers, school age, teenagers), children moved out, the peak of the career and the years before retirement, and the go go, slow go and no go years with grandchildren.

Each period has its own opportunities and challenges. What they share is that they rarely come back. You can never recreate the toddler years or the student adventures, no matter how much you save. A nice conversation to have with your partner: draw these time buckets on a timeline and think about what you would like to do in each.

Income and career

Your income is the perceived value you create

Your income is set by the value other people feel you deliver. A useful, if imperfect, model: income equals unique skill plus leverage plus level of responsibility.

If you own a business, befriend your banker

Business owners rarely fit the template. A bank hands you an umbrella when it is sunny and wants it back when it rains. Build the relationship in good times. It can be worth paying for a premium banking service to have someone to email who knows you, which helps when you change home or need credit.

A tip: meet your personal banker and your business banker together. It helps when they can talk to each other, for example about a higher income than you currently take out of the company. Some larger banks have dedicated private bankers for business owners US review.

The 1% rule for income opportunities

In simple terms: say yes only to income opportunities that can raise your net worth by 1%. The aim is to keep your focus on what is worth your time and energy, which is opportunity cost. Taken to the extreme, collecting bottles for deposits is worth it at age 6 and not at 43.

Linking income to net worth keeps you from getting stuck in old patterns and shows when to change strategy. The rule comes from Nick Maggiulli's The Wealth Ladder.

What to get right when you are young

Five big wins in your twenties or early career:

  1. Raise your income and human capital through education, overtime and side jobs.
  2. Track income and spending.
  3. Automate saving the surplus, for example straight into your 401(k) and Roth IRA.
  4. Focus more on pay and career than on saving.
  5. Use the window of time you have now.

Money and wealth follow as you grow older.

Increase your income

Raising your income is one of the biggest improvements most people can make. Pay drives how much you can save, the size of your Social Security benefit and employer retirement match, and more. Until you are quite wealthy, higher income and savings rate make a bigger difference than better fund choices.

The strongest lever is often changing jobs, which according to the source often raises pay by 5 to 35%, combined with saving part of every raise US review. Cutting spending matters too, but you can cut at most 100% of it. Income has no ceiling. We lay out hours comparing funds and chasing fees of hundredths of a percent, while the larger prize is income.

Spending and everyday money

Buying something new? Buy the cheapest first

If you start running, the most important thing is not the shoes, it is whether you like running. When you try a new hobby or exercise, buy cheap first. If you stick with it, then buy the best. The same goes for kitchen gadgets. A cheap and an expensive bread machine bake the same number of loaves if neither gets used.

Your brain is easy to fool

You are about to pay $200 for a lamp when you learn the same lamp is 50% off at a store two miles away, saving $100. Most people drive over. Now you are signing papers on a $35,000 car and hear the same car is $34,900 at a dealer two miles away. Most people would not go, though the saving is exactly the same $100.

The brain judges the saving as a share of the price, not as the dollars it is. Knowing this helps you spend your effort where it counts: big decisions, not small percentage discounts on big prices.

Break Parkinson's law

The law says a task takes exactly the time you set aside for it. Two hours means two hours; ten minutes means ten minutes. In personal finance it reads: your expenses grow at exactly the same pace as your income. Success depends largely on watching this and making sure your spending grows more slowly than your income.

The value of a saved dollar

A saved dollar is worth double. It is a dollar less leaving your finances, and it is a dollar that can work and earn new dollars. Saving $100 a month for ten years at a 7% average return, an assumption and not a promise, grows to about $17,300, against $12,000 you put in US review.

That is why it pays to keep an eye on your spending and borrow smart life hacks from others, especially early in the journey.

Increase your income: sell things

Most of us have unused things in the garage, closet or storage unit. Selling them on an online marketplace can bring in a few hundred dollars or more. Do not leave money locked up in objects when it could work as hard for you as you worked for it.

Even the cheapest car costs a lot every month

A car is one of the three biggest cost drivers in a household budget. Many people look only at monthly items such as fuel, parking and insurance, and miss depreciation, opportunity cost, repairs, tires and small costs. Add them up and a new car can easily cost several times what you expected. Consider an example where we found our own car cost far more than the monthly payment suggested.

Seeing the true cost leads to smart choices, such as skipping the second car and paying more for a home where you do not need one. AAA publishes a yearly cost of ownership study, a useful benchmark US review.

Be unfaithful to your bank

Most people bank where their parents did. We suggest at least two banks: one for everyday finances (bills, cards, loans) and one for savings, where your funds live and money moves automatically on a schedule. At higher levels of wealth, some people add a third account purely for fun spending.

The big banks differ little for daily banking. One of the most important criteria today is choosing an app you like and understand. Separating savings from checking makes it harder to dip into your investments by accident. Make sure each account is FDIC insured, and keep within the limit per bank US review.

Investing principles

Process matters more than results

A falling market does not mean your decision to invest was wrong. Never judge your strategy by short term results, especially in a panic. In the short run the market is unpredictable. In the long run, a robust process tends to beat speculation and hype.

Invest or spend your money within three years

Cash in a bank account carries risk too, mostly inflation eating it over time. Put every dollar to work with a clear purpose. Money for the long term belongs in global stock index funds. Money you will use within three years belongs in a savings account with interest and FDIC insurance.

Simplicity almost always wins

Complexity is easier to sell, but the more complicated a plan or portfolio gets, the harder it is to stick with. Any deviation from the index creates behavioral risk: you will question yourself and regret it when things go differently than planned. Clearly defined, simple strategies work better over the long run.

Simple is not easy, though. We have to actively work to keep things uncomplicated, and to believe in our own strategy. You read an article, follow someone online, talk to a bank rep or an opinionated uncle, and suddenly you are asking "what should I do?" again. Simplifying is mostly a mental exercise.

Raise your income before your returns

A common early mistake is spending energy on optimizing the perfect portfolio and arguing over a fund that is 0.1% cheaper. Until your investment returns exceed your monthly saving, raising your income and savings rate matters more.

Take a $1 million portfolio. Improving returns or lowering fees by 1% is worth about $10,000 a year, or roughly $833 a month. For most people, watching costs, choosing a cheaper car, negotiating a raise or cutting a few expenses will add up to more than that long before a portfolio gets that large. Most households have far less invested than $1 million US review, so for most of us the savings rate is the bigger lever.

Focus on what you can control

There is a lot in investing we cannot control: the market, interest rates, what others do and what the media writes. We can control how much we save, whether we stay put, where we put our attention, whether we log in and what we do day to day. Especially in turbulent markets, put your focus there. Easier said than done.

Just say no

This is a tip we wish we had landed on earlier. We would be richer today. The lesson: you always regret emotional, thoughtless investments far more than missed opportunities on investments that went well. Especially when you acted for bad reasons such as "everyone is doing it," "someone said," "you must act now" or "I saw it online."

Risk: what to know

There is no need to fear risk. Risk is the entry ticket we pay to earn a return on our money over time. You cannot avoid it, only swap one type of risk for another. But risk can be managed and reduced. In the short run, the stock market is close to a coin toss. Over long periods, history shows stocks come out ahead in the large majority of cases, though never guaranteed US review.

Nine reasons to love index funds

Index funds:

Make decisions slowly

One of us has made the mistake more often than we dare admit: deciding under stress. The worst case was agreeing to an investment before boarding a flight because "everyone else is doing it." No investment is so good it cannot wait a week, a month or even a year. Even that private company raising money right now will have other chances to get in.

Avoid illiquid investments

It is tempting to invest in something other than a robo advisor, an index fund or a bank account, especially since those three are painfully boring. We have tried most things: private companies, solar panels, timber and wine. Returns can be great, but then you may be stuck with six bottles of wine nobody wants, or private shares you cannot sell.

We would take a lower return and high liquidity over the reverse. A higher return can always be had with leverage, at its own risk. For most people the answer is no to private stock, physical gold and alternatives like peer to peer lending, crowdfunding or collectibles. Stay with a bank account or what you can buy through a normal online brokerage.

Stop chasing the better investment

One of the biggest mistakes in a long investing career: chasing the better investment. Always thinking you are missing something, and that more time, the right room or enough connections will get you to it. After 30 years of chasing, the answer is no. To 99% of people we can say with a clear conscience: until you have a very large net worth, skip everything that is not (1) an FDIC insured bank account or (2) a global index fund or robo advisor. Following that would have made us richer.

Let your money work hard for you

Most of us work long and hard for our money, yet money is far better at earning more money than we are. It can work 24 hours a day, 365 days a year, and if managed well, for our children too. The mental shift is from "work and save to get rich" to "own your way to rich."

That is why we keep nagging: start early with a regular, automatic, long term monthly investment, ideally in a 401(k) up to the match and then an IRA, so that compounding grows your money faster than you expect.

Loans and savings are like a time machine

Borrowing moves money from your future self to today, for example to buy a home earlier than you could by saving everything up first. Saving does the opposite: it moves money from today to your future self. The price or reward of moving money through time is interest. Need money from the future today? You pay for it. Can you spare money now? You get paid interest.

The takeaway: loans are not always bad, since few of us could buy a home when we have children if we had to wait until we were 70. But borrowing has a cost, so be deliberate about it.

Extend your investment horizon on purpose

Instead of asking when you might need the money, ask how you can avoid needing it, and so lengthen your horizon. Strategies that make a high stock share possible even when the future is uncertain include being flexible about the timing of planned purchases such as a home, counting on future paychecks as a cushion, and keeping a solid emergency fund so you are never forced to sell during a downturn.

The idea turns the traditional advice upside down. It does not remove risk, and short term money should still sit in savings.

Avoid private companies and angel investing

Short version: private shares and angel investing are a very poor way to make money. It is closer to charity. Research cited by the source shows that 1 to 2 of every 20 companies account for essentially all the profit, while the rest return little or nothing. Expect double the time to exit, double the capital you first planned, and liquidity near zero US review.

Our recommendation: only do it if your net worth is well into the millions, you see it as paying it forward, and you keep it inside your sandbox. Consider buying whole companies instead. Remember that it always takes longer than expected and needs more funding rounds.

Start saving the right way in ten minutes

Then do nothing for ten years. Being passive is one of the most important success factors in investing. This assumes you have an emergency fund, do not need the money for at least five to ten years, and understand the risks.

If so, one of the best things you can do is open an account with a robo advisor, which is what we do ourselves. If you prefer your own brokerage, pick a broad, low cost global or total market index fund and set up an automatic monthly purchase. Use your 401(k) up to the match and then an IRA first, if you qualify.

The 7% a year that almost never happens

The historical average return of the stock market over long periods is roughly 7% a year after inflation in the US US review. But a single year almost never ends near 7%. Expect individual years anywhere between about minus 40% and plus 50% with 95% probability, based on the Swedish market history in the source, and check the same spread for the S&P 500 US review.

The easiest way to see it is to look at the distribution of yearly returns. Plan for the average, and prepare yourself for the swings.

Let your savings horizon decide everything

The most important factor in choosing how to invest is your time horizon: when do you need the money? The longer you save, the greater the chance of ending up ahead. In the short run the market can lose 30% in 30 days, so the shorter the horizon, the safer the investment must be.

A classic rule of thumb is 10% in stock index funds for each year of horizon.

When in doubt, use the 50/50 rule

When you cannot choose between two options, see if you can pick both. Two good global funds? Put half in each. All at once or spread out? Half and half. Pay down the mortgage or invest? Do both. The rule works surprisingly often and above all reduces regret.

Every decision has two answers: what the calculator says and how you feel. The spreadsheet answer can look logical and still be incomplete. Blending the two lets you live with the outcome.

Do not be afraid to buy at the top

Media and experts get attention by being doomsayers: "the fall is coming," "the market is too concentrated." The data say that is not the most likely outcome. The market does not go up like a sun and down like a pancake. The most likely result after a new record is more records over time.

Studies compare returns 1, 3 and 5 years after starting at a record high with starting on any other day, and the conclusion is that buying at a record high was not worse. It holds for the S&P 500 too US review.

The rule of 72

A simple rule for how long it takes your money to double: divide 72 by the annual return. At 10% on average, 72 divided by 10 is 7.2, so your money doubles about every seven years. At a 7% average it doubles roughly every ten years.

It doubles at every step: 2 times in 10 years, 4 times in 20, 8 times in 30. Add monthly saving and it goes faster. A fun exercise is to count how many doublings you have left until age 85. For most people, quite a few.

Time is our best friend

"The longer you save, the greater the chance of ending up ahead" is one of the few reliable relationships in investing. The source quotes Swedish market data: about a 50% chance of a gain over a one year horizon, and over 90% over ten years. The expected return also evens out over time, though the risk in any single year remains the same.

Check the equivalent S&P 500 figures before quoting numbers US review.

Every deviation from the index adds behavioral risk

This was an insight from a Bogleheads conference in the US in 2023. By buying the whole market through an index, you accept that the market decides. Pick your own investments and it is very easy to regret, second guess and tinker. Few people have the stamina to wait out periods of underperformance that can last years, even for the most successful strategies, which you only know in hindsight.

Past returns say nothing about future returns

Nobody can predict the future, so we use history as a guide. That works in many activities. A sports team that has won many games is the favorite in the next, because sports are more skill than luck. But expecting a lottery winner to draw another winning ticket is risky. The market is more lottery and randomness than sports and skill, so looking at last year as a guide to next year is a very common mistake. The research is clear that there is no link.

Do not try to time the market

We like to think we can predict the market, buying at the bottom and selling at the top. The reality is that the market is more random than we like to admit. The research shows most people who try to time it lose to simply sitting still. Sometimes the wisest thing to do is nothing at all: actively choosing to be passive. (And yes, we have tried timing the market more times than we care to admit.)

Your value will go up and down

The moment you invest, the value will rise and fall. In a single year it can swing between about minus 40% and plus 70% on a stock market, and that is not unusual. In a typical year the market drops around 14% at some point, and still most years end positive US review. So risk is something to be aware of, not afraid of. It is the entry ticket we pay for a good return over a long time.

In the short run, the market is random

People say the market is like a casino, and over a single year there is a point to that. Year to year it behaves quite randomly. A year up or down tells us nothing about the next. Over the long run it is much more predictable. The Swedish source noted that no ten year period since World War II lost money there; US history has had flat or negative ten year stretches, so check before quoting US review.

The 12-12-12 principle

Save $12 a month for about 12 years, and then get about $12 a month for the rest of your life. Because it works for any amount, it is an easy rule of thumb to remember. Another way to see it: start your money machine by saving monthly for 12 years. Then stop saving and use your money for other things. The machine now has enough fuel to keep growing, and its returns have replaced your monthly saving.

It is a memory aid, not a guarantee, and it depends on the return you assume US review.

Just keep buying

The tip that has worked for nearly every kind of asset, in every era and every market: keep buying things that produce income. Buy when the market rises. Buy when it falls. Do not try to time it, because it is very hard to beat someone who saves continuously.

Save the way the research says

Saving in line with the research is much simpler than you think. Contrary to what banks, media and experts say, it is easy to save right. You can start in ten minutes and then do nothing for ten years. The lazier, more passive and less interested you are, the better you tend to do.

Instead of searching for needles in the haystack, finding the winning stocks and avoiding the losers, the research says: skip it, buy the whole haystack, and you get all the needles too. It is cheaper, and it gives you a better result than most.

Nine timeless principles of investing

No rule always works in the market, or everyone would follow it. But these principles have held across long periods, as summarized by the writer Ben Carlson:

  1. Diversification helps against extreme events.
  2. Diversification will never help you win, but it makes sure you do not lose big.
  3. Your biggest advantage over others is self awareness and behavior.
  4. The market is hard to beat.
  5. A risk can only be swapped for another.
  6. A longer horizon raises your chance of success.
  7. The market will crash regularly.
  8. Fear and greed steer more than we think.
  9. The pendulum almost always swings back (mean reversion).

The activity paradox

It is a common myth that more knowledge or more time spent gives a better return than an index fund. On the contrary, the person with an index fund who then stays lazy, passive and uninterested usually wins.

Tinker with at most 1% of the portfolio at a time

We are our money's biggest enemy. One rule: change at most 1% of the portfolio per week. When you want a change, move at most 1%, and only after that 1% is reinvested may you move the next. This tends to work out around 1% a week, giving a slow but structured change and avoiding silly, unnecessary mistakes. In a taxable account, remember that selling can create capital gains tax, so changes cost more than the percentage suggests US review.

Appreciate the Lindy effect

The author and investor Nassim Taleb describes the Lindy effect in several of his books: the longer something has been relevant, the more likely it is to remain relevant. Our own version is that many things in life get better and better with time, while others just disappoint you, and rarely does something flip from one to the other.

The term comes from Lindy's, a New York deli where comedians gathered in the 1900s and joked about how long shows and performers would last. In investing, ideas, books and technologies that have lasted for decades, like broad index investing, tend to keep lasting.

Keep an investment journal

An underrated tip early in your journey is keeping an investment journal, especially when the market is falling. Write down what is happening in the market and in your portfolio, and above all how it feels and which decisions you made or did not make.

The value shows up later. The market always goes up and down, and a journal lets you look back and see that you have already ridden out a storm once. That makes better decisions in the next one more likely.

Portfolio and risk

The 5 plus 25 years of expenses principle

A simple mental model for those who have won, or are close to winning, the financial game. Put 5 years of expenses in a savings account and 25 years of expenses in a robo advisor or index funds (for example 70/30 or 100/0 stocks and bonds). The 25 part will likely generate a year of expenses annually, refilling the 5 part (the 4% rule). The rest of your wealth can then be invested however and at whatever risk you like.

In Money Path terms: 5 years in the Runway, 25 in the Bridge, and the rest in the Engine. Adjust the numbers to your situation. The 4% rule comes from US research on retirement withdrawals by William Bengen.

Match every dollar to the date you need it

Too much risk is as wrong as too little, and finding the balance is one of the hardest jobs in personal finance. A good mental model is three horizons, each with its own purpose:

Review the horizons once a year. Read more in the Money Path.

Look at the whole picture when choosing risk

A common mistake is to look at only part of your assets when choosing risk, for example only the brokerage account, without counting your home, retirement and what researchers call human capital, meaning your future earnings.

Research on life cycle investing says: early in life you have little financial capital but a lot of human capital, which behaves like a bond. So a young person can usually take more risk in their 401(k), seen together with Social Security, which is very low risk. A low mortgage balance can also let you take more risk elsewhere. Otherwise you drive with the handbrake on, for no reason US review.

Shift focus from income to assets

Early in your journey, success comes from focusing on your income statement: income, spending and what is left. The further you get, the less income matters and the more assets matter. The shift happens by itself with your money, but you have to keep up so you do not live in an old reality.

Do not misunderstand. Income matters a lot, especially growing it, because the surplus decides how much you can save. But as assets grow large enough that their returns rival your pay, shift your perspective. This is drawn from the wealth ladder idea in The Wealth Ladder by Nick Maggiulli.

The 4% rule

The 4% rule is a simple rule of thumb: you can with high probability withdraw 4% of your portfolio per year for about 30 years, adjusted for inflation. It is handy when you start living off your capital. It rests on research by William Bengen and many studies since.

Example: with $100,000, you take $4,000 in year one. In year two you take $4,000 plus an inflation adjustment, and so on. Done this way, the money has lasted more than 30 years in over 90% of historical cases US review. This research is also the basis for other rules of thumb such as the 0.01% rule and the 5 plus 25 principle. If you plan to stop work very early, a lower rate is safer.

Love some assets more than others

Think of assets as nourishing or draining. If what you own makes you richer over time through appreciation or dividends, it is nourishing. If it costs you money and falls in value, it is draining. Funds are nourishing; cars, boats and gadgets are draining.

To move up the wealth ladder, focus on buying nourishing assets. The less you have, the larger the share of your wealth sits in draining assets, and early on that is normal because you need things to run a household. But get going with the principle "just keep buying" assets that create value.

Different levels need different strategies

Circumstances matter. With $50,000 saved, every extra thousand makes a difference. With $5 million, the portfolio moves more in a day than many people earn in a month. Advice that suits one level can be pointless or harmful at another, and what is a catastrophe at one level barely registers at another. That explains why advice can seem contradictory. The wealth ladder is one of our best answers to that challenge.

Net worth and the big picture

Track your net worth to see real progress

Add up everything you own (home, savings, retirement accounts, car) and subtract everything you owe. That one number gives a clear picture of where you stand. It is especially useful after a home purchase, when it can feel as if all your money just disappeared. Net worth shows that each mortgage payment that reduces principal raises your wealth.

A simple habit works well: once a month, write the number in a spreadsheet and watch the line over the years.

Work out your net worth

Your level on the wealth ladder is the sum of all your assets minus the sum of all your debts. Assets include the home, retirement accounts and everything else. Because the levels are broad, a rough estimate is usually enough. If you are two in the household, count you both. In The Wealth Ladder by Nick Maggiulli, the levels step up by factors of ten, from under $10,000 at the bottom to over $10 million at the top US review.

Advice and professional help

Do not be stingy about financial advice

Many people would benefit from a financial advisor. Not for better funds or investments, but for managing risk and balance, which matter far more. People often think an advisor charging 0.5 to 1% a year is expensive, while a portfolio mistake is costing them 2 to 3% a year, or exposes them to losing a large share of their capital.

If you have a few hundred thousand dollars or more, treat yourself to two or three meetings with advisors and hear what they say. The first meeting is almost always free. Look for a fee only fiduciary, someone legally required to put your interests first US review. Everyone needs a second opinion.

Consider a good financial advisor

We almost always recommend meeting a good advisor. Not for hot tips, because those do not exist, but for someone to bounce ideas off, to help you avoid mistakes, keep to your plan and take on your financial worries. An advisor has seen more situations than you or we have, and can help with questions the industry avoids, such as getting the balance right between your goals and the life you want, or when to stop saving and start spending.

Some studies suggest people with advisors do better on returns and wellbeing US review. When choosing, ask how they are paid and whether they act as a fiduciary.

Housing and debt

Private bank mortgages and lines of credit

For wealthier households, some private banks and brokerages offer mortgages or securities based lines of credit with relationship pricing, rates tied to a benchmark and a flexible credit line to raise or lower the loan without new paperwork. They usually require a low loan to value (around 50 to 60%) and a large asset base, which can include the whole household's savings US review.

Remember that a loan backed by investments can be called in a market drop. We see this as a niche option, and its only real benefit is the relationship pricing. Capacity for new clients also varies.

Adjustable versus fixed rate mortgages

In the US, the 30 year fixed rate is the norm, and a fixed rate works like insurance: you pay a premium for predictability. Historically an adjustable rate was often cheaper, but not always, and the gap is the price of that security US review. If you do fix, think about whether the period is long enough to function as insurance. A short fix mostly delays the question.

There is also a do it yourself alternative. Work out what you would pay if the rate rose to about 5%, set the difference aside in a savings account each month, and use that pot if rates go up. The only catch is the discipline to actually do it. And in the US you can refinance if rates fall.

Extra mortgage payments can raise your risk

It can be safer to be able to pay off the whole mortgage tomorrow than to have actually done it. Paying down principal reduces liquidity: once cash is in the house, you cannot easily get it back without selling or borrowing again. We have seen long debates on this, and the leaning is that flexibility is often worth more than a lower balance.

In the US, mortgage interest rates and your tax situation matter a lot here, as does whether the mortgage rate is below what safe savings pay. Compare the rate you pay with what the cash could earn, and keep a healthy emergency fund before sending extra to principal US review.

How to live almost free

If we wanted to live very cheaply, we would buy a duplex in a small town, rent out one unit and live in the other. The rent would cover most or all of the costs, so we would live almost for free. This is often called house hacking. In the US, owner occupied multi family purchases of up to four units can qualify for low down payment loans US review.

Family and estate

Estate planning with children from an earlier relationship

A common and costly mistake: not planning for children from a previous relationship. In Sweden, such children inherit directly by law, which can strain a new partner. The US works differently, with no forced share for children in most states, but blended families face the mirror problem: everything can pass to a new spouse and nothing to the children, or the reverse US review.

Say you own a $600,000 house with a $300,000 mortgage and a spouse, and you have three children, one from an earlier relationship. Without a plan, your wishes may not match what the law or your beneficiary forms do. Write a will, check beneficiary designations on retirement accounts and life insurance, and consider a trust. Life insurance can cover what the surviving partner would otherwise have to find. See an estate attorney.

Consider a smaller early inheritance

The benefit of dying the richest person is small. It is more rational to aim to die with zero. Many misread this as leaving the children nothing. Nothing could be further from the truth. Because the usefulness of money declines with age, it is smarter to give a smaller amount at 35 than a larger one at 60. A young family with small children has more holes to fill than an established 60 year old.

In the US, gifts above the annual exclusion can require a gift tax return, so check the current limit and talk to an advisor US review.

Skipped items

Tips from the Swedish source that only make sense in Sweden, duplicate another tip, or cannot be adapted without naming people or inventing figures. Listed by Swedish source id.