A Breakdown of How We Invest

Our method of investing is what I would call a hybrid approach amongst many people who have influenced our financial philosophy. I believe in staying 100% debt free (aside from a mortgage we are paying extra on to eliminate) so any credit card spending is purely to rack up some reward points for traveling and is paid off immediately. I make an effort to pay down our mortgage by a steady amount each month (roughly an extra $500 toward principal) which I consider a zero-risk investment that returns 4.25% (our current mortgage rate). I believe that index funds are a great way to invest but I’m not 100% sold on them being the only way for the home gamer to invest. I invest about 50% of our portfolio into index funds by using Wealthfront. As we contribute to our IRA’s and our taxable accounts with Vanguard we match them dollar for dollar with Wealthfront to keep our portfolio diversified. The funds that go into the Vanguard accounts go into investments hand-picked by me. I have a fairly conservative approach heavily influenced by Warren Buffett and Dave Ramsey.. not that I’d compare myself to either of them obviously. The investments handled by me are a mix of value large-mid cap single stock picks, and actively managed funds that have shown a long track record of out-performing the S&P 500.
To break it down more simply.
1. We make a unique budget for each month.
2. We stick strictly to that budget regardless of how much income we have that month.
3. The money left-over that month is applied in order of importance to our current financial goals.

Our standard monthly breakdown of investment priorities is..
1) $100 weekly to our Wealthfront IRA (I prefer the dollar cost averaging approach on this account because of the nature of indexing)
2) $10 per weekday to an M1 Finance account investing only in Berkshire Hathaway B stock (there’s no single investor I admire more than Buffett, and I can’t pass on the opportunity to invest in his venture)
3) $400 in additional principal to our mortgage payment (I consider this is a 0-risk 4.25% return investment)
4) $55 is applied each Monday, Wednesday, and Friday to an Ally Bank online savings account that is used as a sort of “slush” fund to be used for larger discretionary purchases and traveling (after becoming debt free I found this important to allow myself to spend some money guilt free)
5) Left-over money is applied to our Vanguard Roth IRA until the limit is reached
6) Additional funds are applied evenly to our Vanguard and Wealthfront taxable accounts

Once the money is assigned to the accounts in order of priority, we select investments from mutual funds with a history of beating the S&P 500, and individual value stocks

If you have a thought on our investment strategy or would like to share any thoughts and feedback, please leave a comment!

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