Lesson 10 of 10 · 8 min read
Your plan on one page
Everything from this chapter, in the order you actually do it.
The order
There is an order, and it isn't arbitrary. First know where your money goes, because without that number you don't know what you can spare. Then clear the expensive debt, because it beats any return investing can give you. Then the buffer, because it stops you having to sell at the worst moment.
Then the free money: if your employer matches into a pension scheme, that's immediate return you can't get anywhere else. And only then investing, with money you can do without for ten years. Someone who does step five and skips step two loses money on every contribution.
Four sentences on paper
A plan doesn't need to be long, and longer is usually worse. Four sentences: how much I put in each month, into what, why, and what would have to happen before I change anything. That last one matters most and is always skipped. Without a reason to change agreed in advance, your plan changes with every headline, and that's precisely where return disappears. Write them down and keep them somewhere you'll find them when things get tense.
In practice
"I put in €200 a month, into one global ETF, so that in twenty years I'm not dependent on my pension alone. I only change something if my income changes structurally or I need the money within five years."
Automate what you can
Every decision you have to take again each month is a decision you'll one day fail to take. Set your contribution to go automatically the day after payday. Put your buffer in a separate account at a different bank. Fix your recurring purchase at your broker if it supports that. What's left of manual decisions is exactly what deserves your attention, and the rest happens without you. The best investor is usually the one who has to remember the least.
Once a year is enough
Put a date in your calendar, say in January. Check three things then: does my buffer still match my current fixed costs, has my allocation drifted, and has something in my life changed that makes my plan no longer fit. That's it. The rest of the year you don't look, because looking more often changes your behaviour and not your return. This chapter was about the layer underneath investing, and that layer is exactly where the gains sit that nobody can take from you.
Stocky says
Put that annual appointment in your calendar right now, with these four lessons attached. In a year you won't remember what you meant.
Remember this
- Order: overview, expensive debt, buffer, employer match, then investing.
- Four sentences: how much, into what, why, and when you'd change something.
- Automate everything you'd otherwise have to decide again each month.
- Once a year is enough; looking more often only changes your behaviour.
There is a quiz for this lesson
3 questions that check whether it stuck. They live in the app, because a quiz nobody grades teaches nothing.
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