I wrote in an earlier post on Financial Baggage about my commitment to make more active choices with my finances--to intentionally design my financial future rather than letting it happen by default.

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For many years I squirreled away any excess cash I earned in a checking account rather than investing it because I was afraid of making the wrong choice about where to put it. But still, I never felt like I had the time to do the research I wanted to make an informed choice.

Below are the questions I asked myself and highlights from the research I did to figure out how to be smarter with my savings. To skip to the punchline of where I landed on this topic, I prioritized funding an emergency account, accelerating repayment on expensive student loans and setting aside some money for a few upcoming expenses.

Putting idle cash to work — Wealth, Redesigned.

Then I focused on investing. I have read a ton of articles, blogs and books about financial planning and investing since starting this project. Many years of strategy consulting have predisposed me to using frameworks as a way to make sense of complex topics. So below is my attempt to create a simple framework to help prioritize financial objectives. To handle the last two categories on the table above, I needed a point of view on how to invest. I think it was an undergrad financial accounting class I took that scared me off of investing for years.

Our final project was to pick a company, analyze its financials and make a recommendation on whether or not to buy the stock. You could do a lot of research and still get burned in an irrational market. The impact of fees and inflation, compounded over time, is really significant, even though a percentage point seems like something you should be able to just shrug off.

Check the Resources tab for more info on what index funds are. An investment philosophy is only useful if you actually put it to work. That was certainly true for me.

At some point your portfolio will likely be down To address the point about picking the right company, I considered two options to build a diversified portfolio while keeping fees low: Vanguard funds are particularly popular index funds because they are so low cost.

The history of Vanguard is actually pretty interesting. Instead, it redirects net profits to fund shareholders in the form of lower costs. On the other hand, robo advisors are a recent innovation in the investing space. They provide automated, algorithm-based portfolio management advice and many use ETFs as a primary investment vehicle. Many, though not all, have much lower investment minimums than traditional players.

Tax loss harvesting to lower your tax bill is also a benefit they frequently offer. Several companies have emerged since the category was created in , many with help from the huge amount of venture money that is flowing into the sector.

Some of the largest players include Betterment, Wealthfront, Personal Capital, FutureAdvisor, SigFig, Vanguard Personal Advisor Services and Schwab Intelligent Portfolios. Established players like Vanguard and Schwab are getting into the space with their own competitive offer as this category is heating up. In the Resources section of this site, I link to a number of articles that highlight the relative merits of robo advisors and can guide you through picking one if this style of managing your money interests you.

I have accounts set up with several of these players as a way to actively follow this rapidly evolving space in addition to meeting my investment objectives. With some, I have an investment account, with others I just have a free account so I can asses their offer. On the Tools page, I have listed what has stood out for me so far. The bottom line is that a lot of the offers are pretty similar. One big difference is that some charge a bit more but also give you a person to talk to.

In the spirit of taking action, I picked a couple of different players to invest with and just got going. Lastly, I want to comment on the slight sinking feeling I had when I actually transferred money from my bank account to set up investment accounts.

I wish I would have been more proactive about setting up small, automated transfers from my paycheck to an investment account a long time ago. That approach has the two benefits. Putting idle cash to work October 14, How should I prioritize where my available cash gets allocated? You could always build up to that as you fund some of these other high priority areas in parallel.

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Pay down credit cards Credit card loans are crazy expensive. I built a spreadsheet to model out the long-term impact of short term spending which has made me feel much more confident about making larger purchasing decisions.

Fund retirement accounts K, Roth IRA, IRA Retirement accounts have tax benefits which is why I have them positioned ahead of taxable accounts.

How to earn upto 9% interest on your Savings account Balance? | Wealthcom

This can vary greatly. You also want to make sure you have your retirement needs covered because you can get financial aid for college but not for the old folks home.

How should I be investing? I'm focused on building a well diversified portfolio with low fees a. How should I execute this investment approach? I'm using Vanguard funds and robo-advisors An investment philosophy is only useful if you actually put it to work.

This is example content. Double-click here and select a page to feature its content. Sep 25, John Doe Comment.

Jul 13, John Doe Comment. May 11, John Doe Comment. Retirement accounts have tax benefits which is why I have them positioned ahead of taxable accounts.