Tag Archives: rainy day fund


The Case Against Maxing Out Your 401(k)

2012 IPOs: High Expectations, No Assurances

Most every personal finance blog I have ever read recommends maxing out your 401(k) contribution. They tell you to “just do it” – contribute as much as you can, as early as you can. I couldn’t disagree more. Forced savings I believe most bloggers (and many financial planners and low-quality investment advisors) recommend maximizing 401(k) contributions as a way to enforce a savings discipline. They believe that without automatic deductions, people won’t save at all. Our readership tends to be more disciplined and intelligent than the average personal finance blog readers, so I don’t think they need such a brute force recommendation. For our clients and readers, we emphasize transparency, rational decision-making and the use of mathematical tools. We recognize […]

Managing A Silicon Valley Windfall

Sudden money – such as comes with an IPO or an acquisition – is a good thing, right? Yes, but it’s often accompanied by stress. People who have been working within a constrained budget, steadily paying off college loans and sizable Silicon Valley mortgages, suddenly find themselves with a seemingly limitless number of options for spending their money. In this recent Quora post, Wealthfront Director of Research Jeff Rosenberger answered the question: “What advice would you give to someone who has the opportunity to cash in some of his private company stock in the low seven digits?” Jeff offered a three-step plan. Divest your stock “Unless you have an informational advantage that tells you your company stock is meaningfully under-valued […]

People in Their 20s & 30s: Become a Savvy Investor

People in their 20s or 30s, you face some of the biggest challenges and the biggest opportunities of any investor. (See Preventive Medicine for One Young Doctor’s Growing Portfolio). If you have a solid income stream, you face a bewildering array of demands on your money. You may want to save to buy a house; you probably have college loans to pay off; and you’re already thinking about socking money away for “big ticket” items in your future like cars, vacations and kids’ college! One crucial realization you’ll have as a young investor is that different goals will require different investment vehicles. Key Investment Vehicles The Rainy Day Fund There’s no clear consensus among experts as to exactly how much […]

How Much Cash Do You Really Need Before You Start Investing?

The convention wisdom is that you need 3 to 6 months’ worth of cash on hand to cover emergencies BEFORE you start investing. There is no substitute for the reassuring feeling of fast, hard cash on hand. Sounds rational, right? But it’s not quite so simple. A growing number of experts say that there’s more wiggle room in this question of cash reserve than you might think. The latest thinking suggests that there are five things that you should take into account when deciding how much cash you need before investing: your monthly expenses the kinds of crises you want to prepare for your job skills and your industry whether you have equity in your home to be tapped the […]