We do this investment every single year without fail

Ever had your heart race at work because your manager suddenly does something unexpected, and you worry about getting laid off? 😨

That happened to Angie last week when her manager set up a last-minute team sync. If you've been in the corporate world for a while, you know those 15-minute random meetings with no explanation often spell bad news. 🔮🙈

So, the big reveal at the meeting? Her manager announced she was leaving the company. 😮‍💨 But what really got to Angie was the spike of fear from feeling so dependent on this source of income. 😣

It was a stark reminder of why we’re on this Financial Freedom path. Angie loves her job—it’s one of her biggest sources of joy. And she wants to keep it that way, free from stress.

With multiple income streams and a comfortable cash reserve, we should feel secure, but the deep-rooted fear of job loss still lingers—like an uninvited guest. But hey, it’s what keeps us pushing forward. 🌟

Freedom to us means making work optional and choosing to do what brings us joy. 💎

OK, how do we get there? In this letter, we’ll share:

• How we level up the North Star from Letter #1 by optimizing our Index Fund investment.

• And how we set up those investments every year—index funds need no creativity, just good old consistency. 🤌

We’re playing the safe & steady index fund game. 🎲 Here are 2 rules to play by:

Rule#1

Do not, 🙅🏻‍♀️ we repeat, do not invest in a normal brokerage account until you make the most of your tax-advantaged accounts (401(k), IRA, HSA, etc.)

The tax deferral or tax-free growth in these accounts means your investments can compound more effectively over time. Without taxes eating into your returns, your investments can grow faster. 📈

Rule #2

Dollar-cost averaging

is investing a fixed amount of money regularly, no matter what the stock price is.
It helps turn the market's ups and downs 🎢 into a smooth ride, making your investment adventure much more enjoyable over the long haul!

The ultimate game of index fund investment

In case you're not familiar with these accounts, here's a crash course 👨🏻‍🏫

Tax Deferral | Traditional IRAs, 401(k)s, and SEP IRA

Contributions are made with pre-tax dollars, reducing your taxable income now. Think of it as telling Uncle Sam, 'I'll pay you later!' 🫵 Taxes on earnings and growth are deferred until withdrawal.

Example: If your salary is $100k and you contribute $20k to a traditional 401(k), you’re taxed on $80k. But you’ll pay taxes on earnings and growth later.

Tax-Free Growth | Roth IRAs and Roth 401(k)s

Contributions are made with after-tax dollars, but earnings and withdrawals in retirement are tax-free.

Example: If you contribute $20k to a Roth 401(k), you’re taxed on $100k now, but the future you will thank you—no taxes on earnings and growth later. It’s like planting a money tree 🎋 and not having to share the fruit with Uncle Sam!

When Angie learned about those retirement accounts at her first job, she felt like the dumbest person in the room. 🤡 She went into a _semi-_panic attack and contributed as little as she could. 😢💸

Don’t be like Angie! Make BFFs with these concepts and your future self will be sipping margaritas on the beach!🍹🏖️

As Financial Freedom pursuers, we love Roth accounts, but we know not everyone qualifies—including us. Don’t worry, though—there are strategies for everyone! We’ll spill the beans in another letter. 🫘

Here's how we set up our Index Fund investment every year without fail 🥁🥁

For context, Angie is on a W-2 and contributes to her employer’s 401(k). Tyler is self-employed this year, so we're setting up a solo 401k (future newsletter… 🤭*)*.

1. Max out Angie’s traditional 401(k) through bi-weekly auto-contributions.

2. Leverage the Mega Backdoor IRA: Max out the remaining limit for employee and employer contributions, hitting $69,000 in 2024.

3. Bonus Move 🕺: Every year around February when expecting a company bonus payout, Angie puts the maximum allowed percentage of her bonus into her traditional 401(k). This way, she avoids paying the flat 22% tax on most of her bonus.

4. Max out our traditional IRAs

5. Max out our HSA for married couples

6. Invest in normal Brokerage Accounts: After our tax-advantaged accounts are taken care of (Rule #1!), we invest in Vanguard and Fidelity brokerage accounts.

   Following Rule #2, we don’t dump all contributions at once. 🙅🏻‍♀️ We spread them out over the year, setting a bi-weekly reminder ⏰ to invest in our brokerage accounts.

Every year without fail for the past 5 years. Consistency over creativity, right? 🤓

Next letter, 💌 we'll reveal the percentage of index funds in our portfolio. 🤫 But that's not all—index funds are our bread and butter, but we've got some spicy 🌶️ investments coming your way too. Stay tuned! 👀

That's it for today. Hope it's helpful for your journey to Freedom 🙏

Love you to freedom and back, 🫰

Angie & Tyler

We’ve been enjoying lush Costa Rica with Tyler’s parents. 💚

What Freedom Means to Us—quality time with our loved ones, especially on trips! 💎

Things We are Loving Right Now ❤️‍🔥

📚 Book corner

• Angie has devoured this book ⚡️ on the plane to Costa Rica. OMG, it’s a thrilling page-turner packed with twists and turns. 🤯 It’s not dark like a murder mystery—just a series of deceptions that keep you guessing until the end.

🗺️ Travel

• 🧳 For those who always live on the edge of luggage weight limit when traveling, this portable baggage weight is a game changer 🙏 No more awkwardly lifting our luggages onto a scale and squinting at tiny numbers. Now it’s more like a short & sweet dead lift. 🏋️‍♀️