SITREP: If you’re smart, you’ll use these 3 financial planning tools
This is it boys. The only programs you need to make your financial independence dream come true. I have used dozens of planning tools and investing platforms throughout the years, devoting hundreds of hours to research and it all boils down to these three companies. Why these three companies? Because they cover the basics of ALL PERSONAL FINANCE! To create financial wealth (so that you can live off of your investments and never have to work again for money) you need these three companies.
- M1 Finance: An investment platform where you can set up individual retirement accounts (IRAs), a brokerage account (regular non-tax advantaged investment account), high yield savings account (for your emergency fund and immediate expenses), and custodial accounts (investment accounts for your kids).
- Monarch Money: An all-in-one money management platform that allows you to sync all of your accounts from every institution to include bank accounts, credit cards, loans (home and auto), etc. so that you can easily see and track your net worth (assets – liabilities = net worth) and budget.
- ProjectionLab: This is the ultimate DIY financial planning software that allows you to create a personalized financial plan (incorporating multiple scenarios) from now until your projected death.
With that said, let’s get into more details…
#1. M1 Finance (M1 Finance): This is the only platform you will need for all of your investments! Clicking on the link above, you will download the M1 Finance app and create an account. Once you have created an account you will prompted to link your bank account to M1. This will allow you to move money into your various M1 accounts (IRA, brokerage, HYSA, etc.). You typically must start an account with a minimum of $100.
The first account M1 Finance creates for you is a brokerage account. This is a non-tax advantaged account that allows you to buy and sell stocks and ETFs freely. However, your ultimate goal is to be a long-term investor. M1 Finance is set up for long term investing as it only provides two trading windows (or times in which stocks are purchase and sold). This is to discourage day trading and keep the focus on long term buy and hold investing. M1 Finance will then prompt you to create a “pie.” M1 Finance pies are designed to show you what you are investing in. To create a pie, you will choose certain stocks (e.g. Amazon, Meta, Tesla, Nvidia, etc.) or ETFs (VOO, QQQ, VTI, etc.) and then assign a percentage to those stocks and ETFs. These percentages will determine how much of your money that you invest will go in each stock or ETF. For example, you could create a pie that holds 50% VOO, 20% Google (Alphabet), 10% Amazon, 10% Apple, 5% Nvidia, and 5% Disney. These percentages must add up to 100%. In this example, $100 invested into this pie would have $50 going to VOO, $20 going to Google, $10 going to Amazon, $10 going to Apple, $5 going to Nvidia, and $5 going to Disney. Keep in mind that you will later use this brokerage account as a bridge account to get you from early retirement to 59 ½ years of age before you can start withdrawing from your retirement accounts, but more on that in another article.
However, you do not need to fund the brokerage account immediately if you do not want to (nor should you if you have not completed some of the other financial steps such as establishing an emergency fund, paying off debt, or saving for retirement). The next account that you should create is a Roth IRA. You will do the same thing in creating a pie. If you have read any of my other posts, I always recommend investing into Vanguard’s S&P 500 index ETF (ticker symbol VOO). It is entirely possible to have a pie that only has one fund stock or fund in it. If you have a Roth IRA at another company, you can always roll that over into your M1 Roth IRA. This will simplify and make it easier to manage. M1 does not charge any fees! In fact, often times they have promotions to give you free money for completing rollovers, based on the amount of money you have in the account.
After you have opened the Roth IRA, you should then open a HYSA. As of the time of this article, an M1 Finance HYSA yields 4% a year. That is guaranteed free money, paid out each month, just for having it in the account! This is where your emergency should be. Also, any money that you plan to use in the short term (less than 5 years away) for major purchases (such as a down payment on a house or car) should be in a HYSA.
As a final thought, if you have an old 401k, 403b, or other type of retirement account from a previous employer, you can always roll those over into M1 Finance (in a like type account) to consolidate and simplify. Additionally, M1 Finance IRAs most likely offer more investment options than your other 401k and with no fees.
In the end, M1 is very simple to use, has no fees for investing and is a great app to get you to retirement. (M1 Finance)
#2. Monarch Money (Monarch Money): To figure out how to get to your destination (in this case your destination is retirement), you need to know where you are. And knowing where you are financially, is knowing your net worth. Your net worth is everything you own (bank accounts, retirement accounts, stocks, house, car, etc.) minus everything you owe (mortgage, student loans, car payments, etc.). Monarch Money allows you to do this all in one place. Once you create an account, you will sync all of your financial data to the platform. This includes all of you bank accounts, investment accounts, loans, and any other debt and assets (cars, houses, etc.) you might have. Monarch Money will then generate your net worth number, and track all of your investments and debt pay off on one platform, making it extremely simple to see where you are so that you can plan on how to get to your ultimate financial destination. Monarch Money is great for budgeting as well a staying on top of subscription services that you have, so you can review them to see if they are still needed. You can also link your spouses accounts and share information so that you can build joint wealth together (aww, how sweet and romantic). (Monarch Money)
#3. ProjectionLab (ProjectionLab): Now that you have established your investment accounts and know your net worth, it’s time to plan for your retirement a stress test that plan to see if it will work. There is no better place to do that than ProjectionLab. ProjectionLab allows you to input your current salary and income from all streams, input your current net worth (including all investments and assets you own), input your current debts, and allows you to plan for future debts such as purchasing a new home, car, or paying for a kid’s college. This includes factoring in things like future incomes (pensions, social security, inheritance, retirement withdraws, etc.) as well. ProjectionLab will then run your financial plan through a Monte Carlo simulation using almost 200 random scenarios from the history of the stock market to see under what conditions your plan will survive. Survival in this case is defined as not running out of money. Seeing this play out will give you much more certainty that your plan will work, or at a minimum, you can see where you need to make adjustments to your plan (work longer, save more, don’t buy as expensive of a house, etc.). I say all these bad things, but sometimes you find that you may have saved too much. You can also use ProjectionLab to determine if you should spend more money or give it away before you die. The peace of mind ProjectionLab can give you by ensuring your financial plan for the rest of your life is solid, just simply can’t be beat. I can’t recommend this enough. (ProjectionLab)
That’s All, Folks
Once you sign up for and incorporate these three companies into your financial plan, you will have all the proper accounts in place to grow your retirement (Roth IRA), bridge you from early retirement to retirement age (brokerage account), and prepare for life’s unexpected incidents (emergency fund) (M1 Finance). You will know your net worth and be able to see all of your and your spouse’s accounts, assets, and liabilities in one place (Monarch Money). And you will have the ability to plan for how you will spend your money for the rest of your life, giving you peace of mind that plan will actually work (ProjectionLab).