Read Now. Invest Later.

Day 20. RNIL = happier household

A happy financial life is built around consumption and savings.

How do you save? What account do you plug money into for a rainy day or retirement?

I have a preference because I like simplicity.

If I were restricted to only one financial account, it would be a brokerage account with a cash management feature. I could direct deposit my check, pay the bills, and allocate my savings to any publicly traded investment as I see fit. I wrote about this in the spring.

The fact is that solving financial questions and more general financial planning requires investment choices aligned with need and taste for risk. A brokerage account is a must to invest. Knowing investment basics is the next step. Read now. Invest later. Educational pro tip at no charge.

Today, we begin with a lower-risk investment, a Treasury Inflation Protected Security (TIPS), that offers a way to have a portion of savings change as inflation changes. In the language of finance, a TIPS hedges inflation risk. A TIPS is a bond that produces periodic income for a finite period of time. Cash flows are updated for actual changes in inflation. Pretty cool.

Course notes follow.

Let me know your questions.