no gradient in 2018

Founded on September 26 2017, 2018 has been the first full year of operation for no gradient. Let’s see what went down.

Viewership in 2018

  • 9,632 site views
  • 5,711 site visitors
  • 1,211 YouTube podcast views (1,296 all time, 1,324% increase)
  • 2,309 podcast downloads (2,742 all time, 433% increase)
  • 169 hours watched by viewers on YouTube (173 all time, 4,125% increase)
  • 2 Patreon supporters

Content Posted in 2018

Top Posts

Top Episodes


In 2018, two of my predictions proved correct. Five proved incorrect. Bringing my predictions scoreboard to 3 out of 12, for a batting average of .250.





  • Traffic to no gradient is entirely reliant on my reddit submission gaining traction. Viewership to no gradient is very low on regular basis.
  • Even when posts do well on reddit, this converts to few email subscribers or followers on Twitter and Facebook. All of which would help create a more consistent readership of no gradient.


  • Notable names on the no gradient podcast. I would love to get an over the hill b or c list celebrity with some name recognition to come on the show. Give them a low stakes way to riff in public and hopefully bring no gradient new viewership.
  • More guest contributors. There are many people I know with gold inside them without an outlet. I hope to encourage more people to come on and share.
  • More investigative posts with original research like Yang2020 Presidential Campaign and how not to Accept Cryptocurrency.

Make Peace with the Distance

People hate distance; that is, they are predisposed to want to close the gaps of difference amongst themselves that announce and protrude in everyday encounters with each other. In other words, as human beings, we hold ubiquity not only as the standard to which all acts are measured, but as the highest end to which all acts are ordered. This unyielding desire for ubiquity becomes manifest in two ways: either by pushing others into it, or else by redirecting our own actions to meet it. But it is important to note that this twofold character of de-distancing need not be cognitive, i.e., thematic to internal reflection. In fact, it is so pervasive to and throughout our being that most of the time it either goes unnoticed, or else it gets passed off and disguised as something else. But in either case, the ensuing destruction is no less devastating.

One might find oneself engaged in a certain activity deemed worthwhile for the simple reason that it brings with it a beloved joy. But this joy becomes quickly qualified, not by its holder, but by others. The greater the distance between this activity and the current state of ubiquity, the more this joy becomes leveled down and ultimately destroyed, which brings the inevitable abandonment of the activity altogether. Do not let the things that you love be torn apart by others: make peace with the distance.

David C. Abergel is a philosopher studying at Marquette University.

Yang2020 Presidential Campaign and how not to Accept Cryptocurrency

Yang2020 - Standard Logo

Update: The Yang2020 campaign appears to no longer be accepting cryptocurrency donations. A partner of mine filled out the form in December 2018 and never heard back. If you have any information please contact me here.

In July 2018 Andrew Yang’s campaign made headlines (the original story I linked to was removed but is still available on the Internet Archive) by being the first presidential campaign to accept cryptocurrency contributions. Myself and a partner tested their process for accepting cryptocurrency and discovered a severe deficiency that exposes the Yang2020 campaign to bad actors. Let’s walk through their current contribution process, point out the issue, and recommend better alternatives to ensure Yang2020 and other political campaigns doing this in the future do not expose themselves.

Yang2020 Cryptocurrency Contribution Process

  1. Complete their form by supplying name, address, employment info, and the amount and type (Bitcoin or Ether) of cryptocurrency you will be contributing.
  2. Book a 15 minute call with a member of their compliance team.
  3. On the call confirm you will not share the wallet address they give you and also answer the following questions: Are you an American citizen? Are you donating money free of coercion? How did you hear about Andrew Yang? Is there a specific reason why you prefer to donate cryptocurrency over traditional money?
  4. Via email receive the wallet address to send the contributions to.
  5. Send cryptocurrency to the wallet address.
  6. Via email receive a receipt from the campaign.
  7. Yang2020 transfers the cryptocurrency to their Gemini account where they convert it to US dollars.

During the call the representative of the campaign said:

I’m going to share our public address after the call, I’ll email it over to you and we need to make sure you don’t share that. If you were to share that out and people were to send us unsolicited money then we would kind of be screwed just because how strict the FEC guidelines are we wouldn’t be able to account for it.

I then asked if they were giving a different wallet address to each contributor and was told their team is “doing it on a case by case basis to be on top of who’s donating what.” Concerned, I asked what would happen if another contribution was made after mine to the same wallet address. The rep replied:

Based on what the FEC said all the funds in that wallet would become invalid because we wouldn’t be able to account with any certainty what came from where.

The Issue

After the call, the Ethereum and Bitcoin wallet addresses I received were the same exact ones my partner received. Besides the fact that I was told each contributor would be receiving different wallet addresses, sharing out the exact same wallet address to multiple contributors is bad practice if your goal is to keep track of where funds are coming from. Especially given tracking the source of cryptocurrency payments is much more difficult than payments made with a credit card. Furthermore, this increases the chance that a rogue contribution would be sent, thus making all funds in that wallet “invalid.” Suppose a bad actor wanted to invalidate contributions made by others, all they would have to do would be to send another payment after their initial one. This would be further complicated if some of those funds from the wallet had already been converted to US dollars.

Recommendations for Improving the Process

The simplest way for Yang2020 and other campaigns to accept cryptocurrency is to use a payment processor like Coinbase Commerce or CoinGate. This will save campaigns the trouble of having to manage their own wallets and make it much easier to keep track of donations. The other option is to generate a new wallet address for each individual donation, send the funds to your exchange (Yang2020 used Gemini), and never use the wallet again.

Cryptocurrency greatly reduces barriers to entry by opening finance to anyone with a smartphone, but that doesn’t mean it is a silver bullet. Especially for campaign contributions and other transactions where non-anonymity is vital, at least right now fiat currency is going to be safer. I have no doubt that in time it will be very easy to send cryptocurrency transactions that can easily be verified as coming from a specific individual. And on top of that, it will be much easier to determine that the funds an individual is sending are clean. Until then, we are in an in between stage where we must tread carefully.

The Results are in, the US Financial System is Stable

federal reserve


The Federal Reserve recently published its first financial stability report, which summarizes the Fed’s framework for assessing the state of the US financial system and presents the Fed’s current evaluation. This is important because the findings outlined in the Fed report are used in the design of future stress tests on the nation’s largest financial institutions and in setting the amount of liquid assets that banks and other financial institutions must have set aside in the event of an emergency. It is also highly informative about the current health of the US financial system and the vulnerable areas that may warrant future monitoring. The report is intended to increase public understanding of the Fed’s processes and transparency about its current view of the financial system, which informed stakeholders can use to predict and prepare for future actions taken by the Fed.

The Framework

The Fed’s framework for assessing the resilience of the financial system focuses on monitoring the vulnerabilities that can build up over time. Vulnerabilities are unstable aspects of the financial system that may lead to more widespread concerns in the event of a downturn or an adverse “shock”, such as a trade war or a debt crisis in the Eurozone. There are four broad categories of financial vulnerabilities that the Fed outlines in its report:

Elevated valuation pressures: High asset prices relative to fundamentals or historical norms, which is generally caused by high investor risk tolerance. When asset prices are elevated, there is a higher likelihood of large drops in asset prices.

Excessive borrowing by businesses and households: Too much borrowing can make businesses and households unstable. Falling incomes or asset values will then lead to deep spending cuts affecting overall economic activity and defaults on loan payments will impact financial institutions’ and investors’ performance.

Excessive leverage within the financial sector: In the event of an adverse shock, highly levered financial institutions are less capable of absorbing losses. This in turn reduces their ability to lend and may force them to sell off assets to offset losses.

Funding risks: The possibility that investors will run on the financial system by withdrawing funds. When a run occurs, financial institutions that do not hold enough liquid assets may have to sell assets quickly, forcing prices down and incurring losses.

The report notes that these vulnerabilities can interact with one another, having cascading effects across the financial system. For example, a severe drop in asset prices and income that impedes a business’ ability to pay back its debts could lead to high default rates, causing losses for investors and financial institutions that may be more difficult to absorb if the banks are highly levered. This could then lead to banks selling off assets, further exacerbating asset price declines.

The Fed’s Findings

Given the Fed’s framework and the broad categories of vulnerabilities, the high level view of the Fed’s findings are as follows:

  • Asset valuations are high relative to historical standards and investors exhibit high risk tolerance.
  • Household borrowing has grown in line with income, but corporate debt relative to GDP is high and there are signs that credit standards have been deteriorating.
  • Financial institutions are well capitalized, leverage is below pre-crisis levels.
  • Funding risks are low. Bank assets are liquid and banks rely more on higher quality capital (core deposits) to fund loans than before the crisis.

Overall, the report paints a positive picture of the US financial system’s health. While there are some vulnerabilities present, as there will be in any economy, the Fed does not deem them to pose a serious threat to the country’s financial stability. After providing a high level overview of the framework and the current assessment of the nation’s financial stability, the Fed report goes into detail on the various vulnerabilities outlined in its framework. Here, we examine some of the most interesting findings.

Asset Valuation Pressures
Not too much of what the Fed had to say about elevated valuations was very surprising or concerning. It does point out that current metrics show that corporate debt, leveraged loans (a riskier form of debt), equities, commercial real estate, farmland and residential real estate are all overvalued. However, while valuations are high relative to historical averages, they are still lower than before the crisis and seem to be somewhat in line with what can be expected during a normal business cycle. There will be a correction at some point, but this really only impacts investors in the short term. What’s more, the resilience of other aspects of the financial system reduces the likelihood that a drop in asset prices has a significant impact on the health of the financial system.

One piece of this section that was interesting, however, is the Fed’s conclusion that spreads on high yield corporate debt remain low despite signs that credit risks are increasing (though they have widened considerably in the weeks since the report’s publication). Spreads on high yield bonds reflect the compensation that investors require for the added default and liquidity risk of high yield debt versus investment grade debt. The fact that spreads remain low in the presence of rising credit risks and deteriorating lending standards may present a market inefficiency as investors are not being compensated for the excess risk they are taking.

Borrowing by Households and Investors
Household debt does not seem to pose much of a threat to US financial stability, with debt mostly growing in line with income. While the report notes that some households still struggle with debt and that student loan delinquencies are still above their long run trend (though decreasing lately), the findings seem mostly positive.

Among businesses, however, the Fed report highlights some troubling credit trends. Business sector debt as a percentage of GDP is high relative to historical trends. There are signs that credit standards are deteriorating for many business loans, with a high level of new loans issued to high leverage firms. In fact, the report notes that the leverage of some firms is near its highest level in 20 years and that firms with high leverage, low earnings and low cash holdings have increased their debt burden the most. However, this is contrasted by the fact that default rates remain at the low end of their historical range. In general, the deteriorating credit standards are a sign that the economy is strong and lenders believe low default rates will persist for the foreseeable future. Of course, lenders have been wrong before and in the event of a slowdown this could present more cause for concern.

Another interesting development highlighted by the Fed report is in the distribution of investment grade debt. The share of investment grade bonds near junk status (otherwise known as high yield) has reached near-record levels. This is important because in the event of a downturn, deteriorating business fundamentals could cause this outsized share of business debt to be downgraded to junk status. Many investment funds have mandates that prohibit them from holding junk bonds, so broad downgrades to junk status would force funds to sell off this risky debt, putting further downward pressure on bond prices.

Of all of the vulnerabilities highlighted in the Fed’s report, those affecting business credit seem to warrant the most continued monitoring.

Leverage in the Financial Sector
Financial institutions were largely vilified for their role in the 2008 financial crisis. They were highly levered and held insufficient assets, both in terms of amount and quality, to cover their liabilities when the downturn in the housing market first hit. Since then, reforms by US government agencies, including the Fed and the SEC, have significantly improved the health of the nation’s financial institutions. The report notes that leverage is generally low. The results of the Fed’s most recent stress tests show that banks would be able to continue their normal lending activity even in the most severe scenarios, which include a steep drop in asset prices, a deep recession and general deterioration of business credit quality.

However, there was one slightly concerning finding. Issuance of collateralized loan obligations(CLOs), a security comprised of a basket of loans, hit $71 billion in the first half of 2018. CLOs are largely backed by a form of risky debt known as a leveraged loan, the quality of which has been deteriorating according to the Fed. So, you have high levels of issuance at the same time that credit standards and credit quality are weakening. If economic conditions worsen, leading to increased default rates, the value of CLOs could fall dramatically. Likely for this reason, the Fed points out that CLOs are a vulnerability it will continue to monitor moving forward.

Funding Risks
There was really nothing to see here in the Fed’s report. Funding risks are low. Banks are relying less on capital that has proved susceptible to runs and more on stable sources of funding such as core deposits. Core deposits are those deposits held by the bank that typically come from local customers that are believed to have low risk of being withdrawn, making them a stable funding source.  Banks also hold a larger number of liquid assets to act as a buffer in accordance with regulatory reforms since the crisis.

Near Term Risks to the Financial Sector
After going in-depth on the various vulnerabilities to the financial system, the Fed report points out some of the notable international developments that could pose a threat in the form of adverse shocks. The main threats pointed out in the report are Brexit, a looming debt crisis in the EU (particularly Italy), problems in China and other emerging economies, trade tensions and geopolitical uncertainty. The importance of China in global economic activity warrants it some extra attention. Growth has been slowing and non financial private debt is now 200% of GDP. The Fed report points out that anything that may impede the ability of Chinese households and businesses to repay their debt could “trigger adverse dynamics.” A downturn that reduces income could increase default rates, further reducing growth and leading to economic and political turmoil in the region. The resulting spillover could reduce global growth and strain the US economy, though the impact would not be nearly as severe in the US as in other regions due to the overall resilience of our financial system as highlighted in the Fed report.


The Federal Reserve’s Financial Stability report shows vast improvements across the US financial system since the 2008 financial crisis. Yes, there are some vulnerabilities within the financial system that could undermine its resilience if left unchecked. Yes, there are some external threats that could affect the broader US economy, such as uncertainty around Brexit, currency crises in emerging markets and global trade tensions. However, the fact that the Federal Reserve is not only aware of these vulnerabilities and threats but has publicly released its findings is an extremely positive sign. The Fed will continue to monitor these vulnerabilities and threats, as will investors, financial institutions and other government agencies, and will be able to take mitigating actions before they can pose a serious risk to the economy. Subsequent financial stability reports, which are expected to be published twice a year, will further inform the status of these vulnerabilities and whether or not any future developments warrant monitoring.

Pat Daly is a regular contributor to no gradient, both as a guest on the podcast and now as a writer.

no gradient 2.0 Debuts at the World Series of Poker



Justin Dunn- previous podcast guest– debuts the new no gradient look as he competes in the 49th annual World Series of Poker No-Limit Hold’em Championship in beautiful, hot, transactional, Las Vegas, Nevada. Qualifying by winning a smaller tournament, he has survived day one and starts today with 16.5k in chips. We talked game plan and he is in full predator mode telling me “I need to steal what’s on the table before anyone puts any money in by getting them to fold when I sense weakness.” With a short stack, not being aggressive will simply bleed him dry, it’s all in or fall in.

Logan Faerber is the creative genius and illustrator behind the new look, wrapping it up just in time for the shirt to get shipped out to Justin. He recently started his own design firm, Clade Design, and if you need work done, look no further.

You will see the new look rolling out as the podcast album art and on Twitter, Instagram, YouTube, Patreon, LinkedIn– wherever no gradient is found.

Update: J Dunn went for it and was knocked out on his second day of competition. Best believe no gradient will be sponsoring him next year.




The Lowest Hanging Fruit: Getting Rich Slowly

Post updated December 2019.

The single greatest point of leverage for reaching your financial goals is simply understanding how to do it. I’m not asking you to learn new skills, build relationships, or start a business. Though all worthy endeavors, I’m asking you to do something much, much easier. I’m asking you to take advantage of one of the greatest tools accessible to everyone — investing in the stock market. Nothing takes less time and yields greater results. If this is true, why isn’t everyone doing it? Simple.

No one wants to get rich slowly.

Warren Buffett

However, getting rich slowly is the easiest way. The stock market is risky, you say? It’s only risky if you are trying to get rich quickly. Year to year it might lose value, but over a long enough time horizon it consistently marches upward. Below shows the performance of $10K invested in the S&P 500 (a basket of the 500 largest companies in the United States, indicative of the market as a whole) starting in 1926. By 2017 the value of that initial investment is $1.7M . And, with dividends reinvested that initial investment grows to $59.1M. The global financial crisis of 2008 is but a blip in the grand scheme of things. True investors, which is what you are, are not concerned with market downturns in the short term because they are long-term thinkers.

Dividends are payments you receive as the shareholder of a company. Remember, when you own stock in a company you are part owner of that company and are therefore entitled to reap its profits. Investing in broad market index funds means you are part owner of companies all over the world (“The Steps” I discuss below will outline how you utilize this investment philosophy). All those executives and employees are working FOR YOU, and you barely have to lift a finger. “Dividends reinvested” means more shares are purchased with the dividends you receive, which then receive dividends themselves. This is the power of compounding interest. It is why time is the single most important fuel that powers the money duplication machine that is the stock market. To illustrate this, if you save only $1K per month from age 25 to 35, assuming a 7% growth rate, you will have almost $1.5M by the time you are 65. However, if you wait until you are 35, and save $1K per month until you are 45, you will only have about $750K by the time you are 65. In each scenario you’ve made the decision to invest the same amount of money, but the time you decide to start doing this (age 25 vs. 35) yields dramatically different results. By starting at age 25, you can make double the money you would if you chose to begin investing at age 35. This is staggering. Time more than anything else is the key to unlocking your financial goals. Let’s get started.

The Steps

These should be treated as a solid starting point and will not apply to everyone perfectly. This is why I am such a proponent of becoming as financially literate as possible. How you save your money is an expression of how you wish to live your life, and no one can make that decision better than you.

The enemy of a good plan is the dream of a perfect plan.

Carl von Clausewitz

These steps are meant to be done sequentially. Complete each one before moving on to the next. I explain each step in more detail below.

  1. Save two months worth of expenses in your checking account.
  2. Pay off high interest debt.
  3. Save two months worth of expenses in a low-risk, interest bearing account.
  4. Save two months worth of expenses in an emergency fund.
  5. If your employer offers a 401k (or 403b) match, contribute enough to take full advantage of the match each paycheck.
  6. Max out your IRA contributions every year.
  7. Max out your 401k contributions every year.
  8. Contribute as much as you can to a regular taxable investment account.

The Steps Explained

  1. Save enough in your checking account so that if all of your sources of income stopped, you could sustain yourself without a change in lifestyle for two months. You never know what will happen, so it’s best to be prepared. This will also give you breathing room to make large purchases without having to dip into savings.
  2. Paying off high interest debt is a guaranteed return on investment. Paying off a $1K loan with a 20% interest rate is the same as making $200. Since not all debt is created equal (a credit card is going to have a higher interest rate than a mortgage), I recommend reviewing this guide to help you determine how you should pay off your debt.
  3. Saving two months worth of expenses in a low risk account will offer you greater  financial peace of mind and will partially protect you from the cost of inflation. The value of the dollar goes down over time, which is why keeping all of your net worth in cash is actually costing you money. I recommend opening a Smart Saver account Betterment which has a 100% bond allocation. This means your money is far less susceptible to market conditions, which for you means if the market is down you will be able to access your funds if needed with little to no losses on your initial investment.
  4. An emergency fund is just that — emergencies only. This is not for spending on vacation, a new car, etc. Ideally you will never need to dip into this account. Treat it as the backstop for your life. I recommend Betterment’s “Safety Net” account, which is made up of 60% bonds and 40% stocks. Bonds are safer and typically earn less than stocks;  stocks are riskier and typically earn more than bonds. A portfolio split 60/40 will ensure your money grows, but in a way that offers some protection against market conditions.

At this point you have high interest debt paid off and 6 months worth of expenses that are easily accessible. This is an amazing achievement and knowing you have funds to fall back on will give you peace of mind. Now, onto the fun part. Let’s really put your money to work!

5. A 401k is a retirement account that may be offered by your employer, allowing you to contribute up to $19K per year in 2019 and $19.5K in 2020. Not only are contributions to your 401k not taxed (except for Roth contributions, which you should consider making if you are young and your 401k plan allows it — more on that in the FAQ below), they also grow without being taxed. You will only pay taxes when you begin to withdraw from your 401k account in retirement (more on withdraw restrictions in the FAQ below). If your company will match a percent of your contributions, make sure you at least contribute the maximum percent your employer offers each paycheck. For example, if your employer matches up to 3%, contribute at least 3% of each paycheck to take full advantage of the match. This is free money! You will have multiple investment options in your 401k. Be sure to do your research on which fund you choose. This guide is a good place to start (refer to the FAQ below for additional resources).

  1. An IRA is an Individual Retirement Account which, like a 401k, encourages you to save for retirement by allowing you to deduct your contributions on your taxes (except for Roth contributions or if you make over $137K as of 2019– more in the FAQ below) and also allows your contributions to grow tax-free. An IRA, unlike a 401k, is not something provided by your employer. Anyone can contribute up to $6K in 2019 and 2020 (if you have earned less than $6K in a year, you can only contribute up to the amount you have earned). I recommend opening an IRA account on Betterment. Depending on your estimated retirement age, Betterment will recommend an appropriate mix of stocks and bonds. If you are young, it will likely be 90% stocks and 10% bonds, and as you get older Betterment will automatically transition more of your portfolio to bonds to avoid risk.
  2. Now that you have maxed out your IRA contributions it’s time to increase your 401k contributions beyond just what your employer matches. Contribute as much per paycheck as you can and if you are able to max out your contributions ($19K in 2019 and $19.5K in 2020)- do it! The reason I recommend only contributing enough to your 401k to get the match, and then maxing out your IRA, is because generally the fees you pay will be lower and the quality of investment options will be higher in an IRA. It is extremely important to be mindful of investment fees as these will eat away at your potential earnings over time.
  3. At this point you have taken advantage of the two main retirement accounts in the United States, a 401k and an IRA, which allow your investments to grow tax free. Your remaining option is a regular taxable investment account. This account is different from a 401k and an IRA in two important ways. Your contributions will not be tax deductible and the dividends you receive from the stocks and bonds in this account will be taxed. The good news is there are no restrictions on when you can withdraw this money from your account. However, stocks you sell before a year after purchase are taxed at a higher rate than stocks held for longer than year. This is the government encouraging you to invest for the long term. How you invest your money in terms of what percent of your portfolio is made up of stocks versus bonds depends wholly on what you plan to do with the money. Betterment makes it very easy to choose a portfolio that is appropriate. For example, if you are saving for retirement, just like an IRA account, Betterment will recommend a portfolio that is mostly stocks and transitions to a higher percentage of bonds the closer you get to retirement. However, if you are saving up for a major purchase that you plan to make in a year, Betterment would recommend a portfolio made up mostly of bonds because they are less risky over the short term. If you would like to save for a big purchase as well as save more for retirement, simply make two separate taxable accounts. Whatever you do, I highly recommend using Betterment’s Smart Deposit feature that allows you to automatically transfer funds to Betterment when your checking account reaches above a certain amount.


What are the key takeaways?

  • Not investing your money is actually costing you money.
  • Low cost, broad market, index investing is the surest way to reach your financial goals.
  • The stock market fluctuates, but over time it marches ever upward.
  • Financial literacy gives you control of your life.
  • Time is your greatest ally for reaching your financial goals. Start as early as possible. Start right now.

Where can I learn more?

How much should I save?

This is a very personal question and really comes down to what your goals are, which is why I encourage you to become as financially literate as possible. Only YOU truly know what your goals are. Having said that, a good general rule is to save 20% of your pre-tax income every year. As for how much you should save based on your age, if you plan on retiring in your 60s a solid rule is your annual salary saved by age 30, twice your salary by 35, three times your salary by age 40, and so on. But don’t fall for the 40 years of work 9 to 5 trap. If you save diligently, and start when you are young, you can easily reach your financials goals while you still have some life in you.

I’m young. Why should I worry about saving now?

Because time is your greatest ally. To illustrate this, if you save only $1K per month from age 25 to 35, assuming a 7% growth rate, you will have almost $1.5M by the time you are 65. However, if you wait until you are 35, and save $1K per month until you are 45, you will only have about $750K by the time you are 65. In each scenario you’ve made the decision to invest the same amount of money, but the time you decide to start doing this (age 25 vs. 35) yields dramatically different results. By starting at age 25, you can make double the money you would if you chose to begin investing at age 35. This is staggering. Time more than anything else is your key to unlocking your financial goals.

How long before I can enjoy the benefits of investing?

On the order of a decade, not several decades. If you save diligently starting in your early 20s, by your mid 30s your investments can can be large enough such that the magic of compounding interest can do the rest of the work. This will allow you to save less and spend more even before you stop working.

Why Betterment and what are some alternatives?

I recommend Betterment because it has low fees, an investment strategy that exposes you to the entire market, is easy to use, and has advanced financial features like Tax Loss Harvesting. Betterment is what is known as a “robo-advisor,” which means a sophisticated computer algorithm, rather than a human, tailors your investment strategy based on your goals. I am a big fan of robo-advisors in general, and there are others like Wealthfront and Wealthsimple that are solid options as well.

If I don’t make a lot of money, can I really reach financial independence/retire early before my 60s?

YES. It all comes down to how much you save, that’s it. Cutting cable TV and your morning Starbucks run can help you retire 8 years earlier. Yes, I’m serious.

It’s not what you make it’s what you have left over.

Bob T., Legendary Family Friend

I’m having trouble cultivating a saving mindset, what do I do?

First, realize that $100 you spend today is thousands you could have spent in the future had you invested it. Second, understand the simple fact that humans get used to things very quickly. Purchasing a luxury car, designer clothing, and other unnecessary things give you a temporary happiness boost. However, soon that happiness boost becomes the new normal and you are right back where you started– except with less money in your pocket. I’m not telling you to save all your money. I’m telling you to truly think about how you spend it. I’m telling you to spend money on the right things when you are young and save the rest for when you are old.

What is the magical 4% rule?

This refers to the maximum amount you can withdraw from your investments while still sustaining you for your entire life. If you can survive off $25K per year, you only need to save $625K to reach your financial goals and retire. Estimate the amount you need per year to live a comfortable life, multiple this by 25, and that is your goal. This is backed by hard data and even takes into account having to withdraw when the market is down

The market crashed. What do I do!?

Stick to your investing strategy. Absolutely nothing changes. You are investing for the long term, so market downturns in the interim are pointless to worry about. Refer to the chart at the top of this post.

The market is hot right now. Why shouldn’t I wait for a crash to buy in cheap?

It’s always possible a crash is on the horizon, but it’s also possible the market goes up another 20% then crashes only 10%. The reality is no one can predict this consistently, not even professionals. Time in the market is always better than timing the market. Keeping your money in cash while waiting for a crash instead of invested in the market will make you lose out not only gains in the market, but also those precious dividends. Timing the market is extremely difficult to do. Even professionals can’t do it consistently and they do this for a living.

I just read an article about the hottest stocks/funds. Why shouldn’t I purchase them?

Because what is hot today will likely be cold tomorrow. As John Bogle says, “Don’t look for the needle in the haystack. Just buy the haystack!” Investing in low fee broad market index funds (which Betterment does) is the only way to ensure you earn your fair share of stock market returns. Buying and selling individual stocks will cost you trading fees, higher taxes, and more energy. Not even the best Wall Street traders can consistently beat the market over the long run. Warren Buffet, the most legendary investor alive, famously won a $1M bet that the S&P 500 index would beat a basket of hedge funds over a ten year period starting in 2007. Buffet has also gone on record saying that he wants 90% of his fortune to be invested in an S&P 500 index fund.

What other services do you reccomend?

I recommend Personal Capital for tracking all your accounts in one place and Credit Karma for building a solid credit score.

How often should I check my investments?

No more than once a month. True investors, which is what you are, are not concerned with market downturns in the short term because they are long-term thinkers.

What are Roth contributions and should I make them?

“Roth” means that your money is taxed before you put it into your 401k or IRA. That means when you withdraw the money in retirement you will not pay any taxes on it. As of 2019, if you make over $122K the amount you can contribute to a Roth IRA begins to diminish until $137K where you are restricted from contributing at all (no such restriction exists on a traditional IRA). The general rule is you should make Roth contributions while you are young because your salary is likely the lowest it will ever be. However, the reality is no one has any idea what the tax code will be several decades from now when you withdraw from your retirement accounts, so I recommend a split of Roth and traditional contributions.

When can I withdraw from my 401k and IRA?

When you turn 59 ½, though a 401k and an IRA each allow you to withdraw before that under special circumstances. If you withdraw early without a special circumstance, you will pay a hefty fee. A Roth IRA offers more flexibility, and even allows you to withdraw contributions (not money earned on the contributions) without any penalty. Avoid withdrawing early at all costs because keeping your money working for you as long as possible is the surest way to reach your financial goals.

What happens to my 401k when I leave my employer?

You have several options, but likely you will want to (1) keep it where it is, (2) roll it into the 401k plan of your new employer, or (3) roll it into an IRA. Roll it into your new 401k plan if it offers lower fees and better investment options. If both your old 401k plan and new one have high fees, consider rolling it into an IRA. There are drawbacks to this, including funds in your IRA being less protected in the case of a lawsuit or bankruptcy.

Do I really need a six month buffer?

Everyone has different goals and risk tolerances, which is why I encourage everyone to become as financially literate as possible. Having less of a financial buffer will allow you to invest more of your money and earn more long term, but it offers less flexibility in the short term. The balance is up to you.

What about a dedicated financial advisor?

In a world where investing is a commodity and the internet provides information for free, most people don’t have a complex enough financial situation to justify an advisor. Don’t outsource your financial decision making. Take control of it yourself because it has never been easier. For those that insist, Betterment does offer dedicated financial advisors for a higher fee.

This all sounds great, but ultimately money doesn’t buy happiness so why bother focusing on it?

Don’t make the mistake of thinking money isn’t important. Money is power. It allows you to meet basic needs, support your family, donate to nonprofits, travel the world, fund your passion, and retire early. Money is what you make of it.

Money is a great servant but a poor master.

Francis Bacon

1000 Podcast Downloads, We Doing It

Brothers and sisters,

I’m pumped to announce that the no gradient podcast has hit 1,000 unique downloads. I’ve talked with a marathon world record holder, a shamanic healer, a Marxist who tried to join the marines, a married couple in an open relationship, and just plain great conversationalists. Seriously, thank you to everyone who has listened, reached out to me about an episode, shared it- you all are my gods.

Thank you to Chris Derr for getting me started, James Newhouse for his constant feedback, and Chris Hoog for the famous intro and outro music. Most of all thank you to the guests who have been willing to come on the show. Without you, well, you know.

If you haven’t listened yet, dip your toes in. I always tell potential listeners to read through the episode descriptions and find one that speaks to them. I try to make the descriptions and the quotes I pull from each episode emblematic, so you know what you are getting yourself into.

I’ve started posting photos of my guests on Instagram, follow the show there if you are in to faces.

Thank you people, next stop, 10,000.

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