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How I Save and Invest My Money

Learning how other people save and invest their money is very fascinating. I always learn something new about how to make my money work for me more effectively. I'm so glad I read this, there are lots of good insights.

With all of the work pressures and stress I’m under every day I give retirement a lot of thought. Because I’m only 34 years old, married to a 30 year old, and in the attempts of starting a family, I know that retirement is more than a long ways off. Regardless, I’m going to do everything I can to make sure I’m as financially stable as I can be by age 53. Why 53 you ask? Because last year I told myself (any my wife) that I was going to retire in 20 years one way or another. Maybe that means I still blog and earn some extra side income, or maybe I take up a part time job somewhere, but whatever it is it will be on my own terms…out of choice instead out of need. So the first thing I did was refinance my house to a 20 year mortgage. After all, chances are I won’t be able to afford a mortgage payment in retirement so I figured I’d better do away with that first. Next I just need to figure out how to save money, invest money, and pay down all remaining debt so that I optimize my total net worth by that age. I think this is where people often struggle the most. I watch people work hard and scrimp and save money and then throw it all in a bank account over their entire lives. Inflation is silent, but still very real, and it kills your money. It is effectively a negative savings rate, and while I advocate having some easily liquidated funds earmarked for an emergency you should really be investing or paying down debt. Let me explain.

I’m by no means an investment and financial professional, so take my advice for what it’s worth. However, I do a pretty good job of saving money and maximizing my returns, at least when compared to national averages. My strategy is actually quite simple, I do the opposite of what most everyone else does.


I have two different savings accounts. One of my accounts is an online account that earns a 1.00% APR. Pitiful but about the best you can do for a risk free shelter for your money. You will be hard pressed to find a brick and mortar bank that can offer a rate anywhere near that. I keep 6 months worth of monthly payments stored up in this account. This is my emergency / rainy day fund should I ever lose my job and I still want to pay my mortgage. My second account is with a credit union. I like having an actual bank location near me that I can walk into when desired. Also, they have desirable loan rates and it’s easy to walk in and fill out paperwork. In fact, I own a pontoon boat that I financed through my local credit union at a 1.99% interest rate…try finding that anywhere else! Normally I don’t like to take on consumer debt, but I enjoy boating, and I can easily invest and get a higher rate of return than 1.99%.


This is how you will truly achieve financial independence. It’s amazing how few people understand that investing your money is the only way to secure a comfortable retirement in a reasonable amount of time, at least without winning millions in the lottery. I have close friends who are afraid to put their money into anything other than money market funds and CD’s. They tie up money for years in a market that has been sky rocketing. These are gains that you will never get back. Compounded interest that you will never earn. Years of your life that could’ve been spent building your asset base. Stop being afraid of the market and start investing in it. I’m not talking about penny stocks, I’m talking about a balanced and diversified portfolio that is comprised of fixed income assets and proven equity stocks. I hold several blue chip stocks that pay healthy dividends, and thus a source of income that I can build for retirement. However, it’s my method of investing that I’m most proud of, and I feel has helped me leverage my savings the most. First, I utilize dollar cost averaging. Every month I take $500 and have it automatically deposited into an online brokerage account that only charges me $6 a trade. I then evenly distribute that $500 among the investments I hold. Because I do this with the same amount at the same time each month I am utilizing dollar cost averaging. Meaning, sometimes I buy a stock for higher and sometimes for lower, but in the end it all averages out. I don’t concern myself with the daily ups and downs, rather I built my investments over a lifetime, and because they are safe investment my net overall return will surely be positive. My second investing method is also quite simple, I literally do the opposite of every one else. I always keep a stash of money in my brokerage account that sits there as cash holdings. It’s just as easily liquidated as a bank account if I need the money, yet it is able to be invested on the drop of a dime when desired. On those days that you read about the DOW losing 200+ points is when I immediately rush to a computer to invest that cash! I love when the market panics over stupid media concerns and healthy reliable stocks like ADP or JNJ lose 5% in one day. Does anyone really think these tried and true companies are going bankrupt? Then why are you selling? And more importantly, why aren’t you investing? A stock either goes up or down, and if daily drops in stock price are merely an opportunity to buy at a bargain price. When stocks like that drop 5% I know that EVENTUALLY they will increase, and that 5% is a built in return that I know I will eventually get.


Other than saving and investing money the only other thing you can really do to shore up your finances is to reduce debt. Most of us have some form of debt or another, some of us are just conditioned to classify debt into separate categories. Most people view credit cards and auto loans as expensive and wasteful debt. However, those same people view student loans as an investment, and mortgages as a healthy debt on an appreciating asset. Truth be told, any debt that you pay interest on is deterring you from a life of financial freedom, and most likely hurting your net worth. I want to be as debt free as quickly as possible, and certainly prior to retiring. But at what cost? If I have a 1.99% loan and I have enough money to either invest or pay down debt, I generally choose to invest. That is unless the market is going up…sounds crazy, huh? I told you before, I utilize dollar cost averaging and I take advantage of every downswing in the market. However, when the market is thriving I know eventually there will be pull back and losses will occur. Why buy the stocks after they become more expensive, I’m no predictor of the market, I only react. So when stocks appreciate and become more expensive I sit back and am happy with my current appreciating investments and I take my excess money and throw it down on my debt. I put extra on my mortgage or my boat. Those extra debt payments have built in savings as well, whatever the interest rate I have would be on the principal I just paid off.

Keep in mind that the above happens AFTER I utilize every last tax sheltered account available to me. 401k, IRA, 403b, etc. I like to pay as little in taxes as possible, then I put my plan into effect. So far it’s provided me a life time of double digit returns, so I can’t complain. Go against the grain, happy finances!



  1. The more taxes in our pocket the better-thanks for tips!

  2. Just wanted to comment a bit on your investment strategy. I am also not a professional, I started investing when I was 15 (thanks dad for giving me permission for that!) and now in my fifties I am financially independent since 10 years or so. I probably have made every possible mistake while investing and yet survived booms and busts and still love the stock market.
    In my opinion there are a couple of smallish issues with what you write: First there are no reliable stocks. There are companies with smaller risk and companies with a bigger risk. But EVERY company has risks. The critical thing to learn while investing is to overall make the risks smaller than the benefits. Try to understand the risks and strengths of individual companies and than make sure that in your portfolio you do not have to many companies with the same risks.
    Second you are not dollar-averaging when you buy after the market goes down. Dollar averaging is when you buy for a fixed amount on regular intervals. Thus ensuring that you buy the stocks cheaper than the average price over a given period. Your method of waiting till the market drops is in fact a form of market timing. Your presume, but do not know, that you get a better average price this way. The nice thing about investing is that afterwards you can always check whether your method was in fact better than another method. It would be very interesting when you could make a comparison to see how your method fared compared against pure dollar averaging.
    Thirdly you say that you divide your 500 dollar equally over your holding each month and that the trading cost is only 6 dollar. If this means that you do several trades each month from that 500 dollar than you have very high trading costs. In this case it would be better to concentrate and maybe buy once every 2 months for one holding.
    Keep up the good work though!! You will be able to retire sooner than you hope if you keep saving like you do!!

    • I agree with Jerome – you are basically trying to “time” the market. This generally does NOT work over the long term as no one knows where the market is going.

      If you can stand the increased risk, see if you can invest the same amount every month and leave your mortgage on auto-pilot.

    • Thanks for the comment Jerome. Just a couple points here. I never said “zero risk” stocks…like you pointed out, I said “reliable”. And I think there are truly reliable companies out there like ADP and JNJ that have retained value while increasing dividends year after year over a 25 year period….I consider that reliable.

      As for dollar cost averaging, you are right, but I only mention that I dollar cost average with that set monthly amount I put away in my brokerage account each month, no matter what. Also, I do the same with my 401k, as it receives the same amount each month and goes into a target date fund.

      My point on putting money into the market on a downturn is to illustrate that at some point or another we always have excess money, and if the market is going up I prefer to put the excess cash into my debt that I owe (mortgage etc.)…however, if there is a steep downturn in my current stock holdings then I throw the money in there.

      • I personally know people who invested in Pfizer, GE and BP when these companies where considered to be the pinnacle of being reliable. And I owned Lloyds when Gordon Brown personally messed up this very reliable and conservative bank. Ouch! So much for being reliable! Raising dividends over a long period is indeed a good indicator of the mindset of a company, but slightly less so of its future prospects.
        Don’t get me wrong though, I do not think that there is anything wrong with the companies you mention. I own JnJ since 2009 as part of the study fund for our kids. And I wished I bought ADP 4 years ago when I considered buying it, but did not. ADP is now too expensive for my liking.
        I would still be interested in a comparison of your way of investing (ie after a 5% drop) against real dollar averaging. Would be an interesting exercise from which one could learn a bit.

  3. Dollar cost averaging is a good way to go. Thats the way I used to invest money each month. But a while ago I read a book by Edleson about Value Averaging. It’s similar to dollar cost averaging but you actually change your portfolio allocation depending on the markets. It feels like a bit of market timing because you’ll buy when stocks are lower than your target value and you’ll sell stocks when they’re above your target value. You should grab the book from your local library and see if it would work for you (mind you we use an index investing strategy so its easy to rebalance at a low cost, doing it with individual stocks would be more costly)

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