Investing

Cheat Sheet

Patrick Di Cesare, Financial Educator

 How to use this guide:
this is to help you figure out
what investments are
available to you and what
may suit your situation.
 How to use this guide:
use this to research these
options more
 Disclaimer:
*this is for educational
purposes only and is not
investing advice or financial
advice
Before investing, you have to
understand that the order
you invest in matters.
Why? Personal Finance is a
lot like algebra in high
school.
Mess up the order, the
answer is wrong
 Except with personal
finance, the wrong answer
costs you A LOT of money.
This order of operations
maximizes your returns and
minimizes your taxes
 Step 1: Before investing:
Have an emergency cushion
 Step 1: Before investing:
This should be money in the
bank thats easily accessible
for unexpected expenses
(think your car breaks down, an ER visit, etc)
Having this cushion will prevent you from using a credit
card and digging a deeper hole
 This should be at least
enough to cover your
insurance deductibles.
Only use this for emergencies. No
vacays, no nights out, and
definitely don't invest it.
Step 2: 401k, 403b, 457, TSP
match (if your employer
offers this)
Many employers will match a percentage of your 401k
contributions.
Contribute at least up to this percentage.
This is the closest thing to free money there is, don’t
leave it on the table. You need to be taking
advantage of this (even if you’re in debt)
Step 3: High Interest Debt
Think credit cards, personal loans, title loans, etc.
Credit cards have a 20% interest rate on
average. You're not going to get a better return
on money invested anywhere else.
Step 3: High Interest Debt
Outside of your employer 401k match, all
investing needs to stop until your credit card
and other high interest debt is gone.
High interest is anything over 8%. Student loans
tend to fall within this range, it’s up to you
whether to include them or not.
 Step 4: Increase your
emergency cushion
Enough for at least 3 months of your monthly
expenses
This will protect you from something like losing
you job.
Unforeseen things will happen, this will at least
have you prepared financially.
 Step 4: Increase your
emergency cushion
Keep this money in the bank or high yield
savings account.
An HYSA is something where this money can
earn 4% interest or more (safely)
Ally, Marcus by Goldman Sachs and Sofi all
offer this.
Step 5: Roth IRA (ISA in the
UK, TFSA in Canada)
Account that you contribute up to 6.5k per year
that grows tax free.

This is an account, not an investment. You still

need to pick investments within this account.
Fidelity/Vanguard are good places to have one.
 Step 6: Health Savings
Account (if eligible)
Money you put in is not taxed, money you take
out is not taxed, money contributed can be
grown and invested tax free
This option is not right for everyone, it may not
make sense in lieu of regular health insurance if
you or a family member go to the doctor often
or have a chronic health condition.
This is due to the higher out of pocket costs
Step 7: Max out 401k, 403b,
457 etc
Maxing this out gives you a tax break now
(traditional) or later (Roth)
Which one you do depends on if you think
your income will be higher in retirement
(Roth) or now (traditional).
If you’re not sure, do a 50/50 mix
Limit is 22.5k in 2023
Step 7: Max out 401k, 403b,
457 etc
Maxing this out gives you a tax break now
(traditional) or later (Roth)
Which one you do depends on if you think
your income will be higher in retirement
(Roth) or now (traditional).
If you’re not sure, do a 50/50 mix
Limit is 22.5k in 2023
Step 8: Other investments
Taxable brokerage, Crypto, Real
Estate, Alternative Investments
These do not have caps on them
and you can invest as much as you
want.
Which you do depends on your
preferences
Step 9: Paying extra towards
a mortgage, College
Savings, other low interest
debt/prepaid expenses
This depends on your mortgage interest rate. If it's 3%,
it doesn't make sense to pay this off early vs investing.
If you're paying 7%, it may make sense. At the end of the day, these
are mathematical guidelines. If you get peace of mind from paying off
your mortgage early, go for it.
 A lot of people ask why
college savings is so far
down the list.
Many priortize this and not their own
retirement. Then down the line they don't
have enough to sustain themselves and
become financial burdens to their children.
Which defeats the whole purpose of investing for your kids
 That covers the order of
operations...but what do you
actually invest in????
Index funds and ETF's are the
easiest way to invest.
These are ways to buy
hundred of thousands of
stocks without buying them all
individually.
The other big benefit to this
investing method is you're
paying a fraction of the fees
you would pay someone to
invest for you (30x or more
less in many cases)
 There's thousands of them
Index funds/ETF's, but these
are some of my favorites:
Vanguard
VOO- S&P 500 (top 500 companies in America)
VTI- Total US Stock Market
VXUS- International Stock Market
VT- Total World Stock Market
VUG- Growth Stocks
VGT- Information Technology
VGSH- Short term treasury bonds
VWO- Emerging Markets
VYM- Dividend Fund
VNQ- Real Estate
 Fidelity:
FZROX- Total US Stock Market
FNILX- Large Cap
FZILX- International

(these have zero fees)

Why? So they can get you in the door and sell you on their other product...just be
aware of that. Almost every brokerage does this with low fees, but Fidelity decided to
make some of their funds zero fee to set themselves apart.
 Any investing company has
their equivalents of all these
funds:
Schwab
Merrill
iShares
Spyder
*What company you invest with is not nearly as important as choosing investments
and buying in them consistently
Some things to be aware of:
There's hundreds of ETF's and
index funds to choose from.
If you're looking for the best
hands off option, consider a
target date fund
 These are set it and forget it
options that automatically
readjust your investments to
safer options as you get closer
to retirement.
 Examples:
VTHRX- Target date 2030
VFORX- Target Date 2040
VFIFX- Target Date 2050
(these are Vanguard, but every investing
company has their own version)
 Some things to be aware of:
The returns may be lower over
time vs 100% stock index funds,
but the fact that it balances more
towards safer investments (like
bonds) over time means you won't
lose as much in a bad market
either.
Some things to be aware of:
Some brokerages will charge
fees every time you buy
another brokerage's fund
 Some things to be aware of:
Example:
Fidelity charges a $50 fee for buying
Vanguard funds.
They'll do this because Fidelity isn't making money off
you if you buy a Vanguard fund, so they charge a fee
 Some do this, some don't, check with
whatever brokerage you use. But
generally it's best to buy Fidelity funds if
you use Fidelty, Vanguard funds if you
use Vanguard, etc....
 So which one is the best index
fund?
There isn't one. Fidelity Total Market Fund tracks
all the same companies Vanguard's does. The
returns are almost identical...It's far more
important that you pick some funds and
contribute consistently vs obsessing over which
ones are the best.
 Pay attention to expense
ratios...this is a fancy way of
saying the fees they charge.
All the ones listed here have
under .2%.
 Professional mutual funds
like charging 1% or more for
investing in the same things
as these funds
This may not sound like a lot, but over a
40 year period, it can eat into as much as
25% of your returns.
 FAQ's
What's the difference
between an index fund and
ETF?
 FAQ's
Index funds:
-have minimum investments
-usually available within retirement accounts
(can be bought in taxable brokerages as well)
-bought and sold and the end of the day
 FAQ's
ETF's (exchange traded funds)
-no minimum investments
-bought within taxable brokerage accounts
(can be bought in taxable brokerages as well)
-bought and sold and throughout the day like
regular stocks
 FAQ's
What's my best investing
option?
It depends. If you want to set it and never
think about it again (other than contributing)
a target date retirement fund is going to give
you peace of mind.
 FAQ's
What's my best investing
option?
If you're younger and have a higher risk tolerance,
an index fund that tracks the overall stock market
(like VTI or FZROX) or growth fund might be your
best bet. It all depends on you, your situation and
your risk tolerance.
 FAQ's
What kind of returns can I
expect?
Again, it depends. With a target date fund, 6-7% over
many years is about average. With an index fund
tracking the total US stock market, long term average is
10-11%. But...that's an average. It can go up 30% one
year and down 20% another (like in 2022)
 FAQ's
What kind of returns can I
expect?
This is why target date funds are nice. If you're close to
retirement, you probably can't stomach a 20-30% loss.
Target date funds shift to safer investments as you age
to account for this. The trade off is lower long term
returns.
 FAQ's
What kind of returns can I
expect?
If you choose index funds that are all stocks, you need to
remember to shift these to safer investments (like bond
funds) as you age. This is a big part of investing a lot of
people forget.