Space Is The Place

After a month of cold temperatures, things are starting to warm up here in Durham NC. The first snow crocuses have bloomed and the daffodils are starting to peak out of the ground. I love this time of year because I can see all of last year's gardening work pay off as things come back to life. If you're looking for me Saturday morning, I'll be outside pruning & prepping garden beds.

Today we finish up the series on how I invest my own money, set a spending mindfulness challenge for February, and learn about all the people who have been to space.

Enjoy your weekend. Thanks!

February Challenge - 28-Day Spending Fast

Tomorrow marks the start of February,?our shortest month at just 28 days (except some years, but let's not spoil a good thing).?Which makes it an excellent time to try a 28-day spending fast!?

While an eating fast helps cleanse for your body and make you more aware of eating decisions, a spending fast does the same thing when it comes?to?spending and shopping. No judgement, no right or wrong,?just an opportunity to be very deliberate about spending and reestablish baselines for what feels normal.

Here's how it works: for the next 28 days, put a pause on all the nice-to-have (but not need-to-have)?stuff you might normally buy. Obviously you still have to pay your bills and buy groceries, and it's fine to keep those streaming subscriptions rolling. I also?think it's totally acceptable to go out to nice meals. But any?non-essential*?purchases that require a choice get put on hold for the next four weeks.

You can still browse online or add things to your Amazon cart.?You can go to your favorite stores and make long lists of all the nice things you will buy next month.?But instead of hitting the checkout, just let it wait for a few weeks. Give your brain time to adjust and acclimate.?

If you still want all those things in March, go for it! But I wouldn't be surprised if some of those potential purchases feel a lot less exciting & important?after a few weeks of waiting.

(Want to super charge your 28-day spending fast? Pair it with?this four-week financial detox email course.)

*Of course, it's up to you to decide what is essential or not. The point of the exercise is to reestablish baselines for spending norms, not to split hairs over wants versus needs.

Space Is The Place -?Everyone Who Has Ever Been to Space, Charted

This fun collection from Scientific American presents a series of infographics on, as the title implies, everyone who has ever been to space.

Related: astronaut Scott Kelly (listed under 1999 in the last series of charts) wrote a book about his year in space called?Endurance, which I really enjoyed. However, the record for longest period in space by a human was set by Russian cosmonaut Valeri Polyakov, who spent 437 days on the Mir space station during a single mission in the mid-1990s. Holy smokes!?

Money –?How I Invest My Own Money: My Investment Strategy

All right, it's time to wrap up?this series on how I think about & manage my investments. Today share the investment strategy I use for my own money.?(Missed any of the previous articles? Start with?Why I Invest,?How I Think About Risk & Time,?When I Buy Investments, and?When I Sell Investments.)

I invest my money using a strategy called "Core and Satellite", though truthfully?I didn't know it had a name when I started using it. It evolved over time, so I think it makes sense to present it that way.

I started working quite young, and it's pretty easy to save money (even at sub-minimum wage)?when your ambitions are buying packs of baseball cards for $1 or comic books for $1.50. So saving money is a deeply rooted habit that has served me well, especially as I was getting started in Chicago in my early 20s?and making very little money.

But I knew absolutely zero about investing until my early 30s, when another sound engineer named Matt Littlejohn?laid this on me: "if you're not investing, you're throwing your money away." It was the first time that I had heard?anyone explain that money in a savings account loses value over time because of inflation.

(Now, I've said this before and I'll say it again:?cash is king for short-term needs. You need to have enough cash to manage emergencies and unexpected opportunities in an FDIC-insured savings account?before you start investing money. So, that disclaimer aside, let's continue the story.)

The next day I googled "how to start investing" and decided to use the simplest strategy I could find:?open an IRA and invest in a target-date fund. A target date fund adjusts over time, starting out very aggressive (i.e., stock heavy) and becoming more conservative (i.e., bond heavy) as the target date approaches. It's a great set-and-forget option.

Since then, I decided that target date funds are actually a little more conservative than I would like and now I put around 90% of my retirement money in low-cost stock index funds and around 10% in low-cost bond index funds. I have a high risk tolerance and a 90/10 mix works for me, but that's more aggressive than is comfortable for a lot of people.

FYI –?I don't worry about adjusting the allocation each year (like a target-date fund does) because my motivation is growth, rather than preservation, and stocks are better at growing over long periods of time than are bonds.?

This is the Core part of the strategy:?a simple, conventional approach that is designed to work well over the long-term. Think of the core as set and forget, rinse and repeat, etc. It doesn't require much ongoing thought or maintenance, which is how I like it.?This is where the bulk of the money goes.

After a few years, though, I got to thinking that I ought to at least understand how to buy individual stocks. Even though I liked my low-cost index funds, even though I know that it's mostly impossible to outperform the market in any given year, I thought I would become a better investor by learning how to buy stocks.?

But I didn't want to change anything in my retirement accounts, so I opened a taxable brokerage account for this purpose. Then?I signed up for a well-known stock picking service to help me understand what to do?and got started.?

(FYI - I'm considering starting my own "follow along" investing newsletter. It's still taking shape, but you can?click here to get on the waiting list?to learn more.)

One of the deals I made with myself when I started buying individual stocks was that I would hold each investment as long as possible, ideally forever. (You can read more about how I think about selling in?last week's newsletter.) So, even though I wasn't buying low-cost index funds in this account, most of my principles were still the same: buy stuff that I believe in, that I think will succeed over the long-term, and own it for a long time.

This is the Satellite:?a smaller portion that is carved out for high conviction – but also higher risk – ideas. While the core represents the normal, conventional thing, the satellite represents higher potential reward in the long-term?with higher risk in the short-term.

Here are some insights I would like to share about this Core & Satellite?strategy:

• It has worked very well for me. My retirement accounts (core) chug away with little to no interruption from me. My non-retirement account (satellite) has seen both amazing successes and complete failures, but – because I hold most investments for a very long time – the successes far outweigh the failures.
• Most people only need the core. Really, I mean it. If you are generally risk-averse or don't really enjoy paying attention to the stock market, then you don't need to go any further than a mix of low-cost index funds that matches your goals & timeline.
• The satellite is risky. It is not for everyone, and probably not for most people. Again, I have a very high risk tolerance and can stomach watching investments go up & down dramatically, because I believe that it will benefit me over years & decades. But most people get freaked out by that much volatility, so please don't feel like you need this part of the strategy to be a good investor.

Ok, that wraps up this series on how I invest my own money.?I hope you've enjoyed it! I'm going to compile all five parts into a blog post on my website, which I'll share in a future newsletter in case?you want to?share it with others. And, should you wish to learn more about a potential follow-along investment newsletter,?click here.?Thanks!

Quote -?"Be careful not to compromise what you want most for what you want now." – Zig Ziglar

Thanks!

Timothy Iseler, CFP?

Founder & Lead Advisor

Iseler Financial, LLC

Registered Investment Advisor | Durham NC

iselerfinancial.com?| (919) 666-7604