Saver’s credit qualifications

To qualify for the Saver’s credit, you must be

• 18 years or older
• Cannot be claimed as a dependent on another person’s return
• Not a student
• Meet the Saver’s credit income requirements
• Save for retirement in a qualified retirement account such as an IRA, 401(k), 403(b), or a 457 plan
• Contribute enough dollars to retirement to get full credit
• Meet the Saver’s credit contribution deadline

Qualifying retirement accounts

Contribution to 401(k), traditional or Roth IRA, 403(b), 457 plans, SARSEP, or SIMPLE plan or the federal government’s Thrift Savings Plan qualify for Saver’s credit.

Retirement contributions of up to $2,000 for individuals and $4,000 for couples qualify for full Saver’s credit. Note that if you take distributions from your retirement account, your Saver’s credit will be reduced.

Income requirements

Here are the income requirements to qualify for Saver’s credit in 2022

• Individuals – up to $34,000
• Married couples – $68,000
• Head of households – $51,000

Saver’s Credit Amounts

Depending on your adjusted gross income, you may be eligible for a 50%, 20% or 10% credit of the amount you contribute to a retirement account.

Contribution deadline

Saver’s credit is a credit, not a tax deduction

Dependents and full-time are not eligible

People under the age of 18 or who are claimed as dependent on someone’s tax return do not qualify for Saver’s credit. If you are a full-time student who is enrolled in college for five months or more, you can’t get Saver’s credit.

Who is the Saver’s Credit for

Saver’s credit is targeted at lower to  middle income families to give them an incentive to save for retirement. Single filers who make more than $34,000 and married filers who make more than $68,000 do not qualify for the credit.

Examples

Your deposit with OnJuno is protected by FDIC insurance on amounts up to $250,000. Evolve Bank and Trust, which provides banking services for OnJuno has been around for almost 100 years.

OnJuno Review

Signing up for an account with OnJuno

• Go to OnJuno.com and put in your email address
• Create a password
• Verify your email (remember to check your spam folder if you don’t see an email from OnJuno.
• Provide basic information such as your full name, social security number, date of birth, and contact information. You will also need to provide your cell phone number (to get your verification code).
• Electronically sign required documents

Sign up bonus

OnJuno is currently offering $50 bonus if you set up your first direct deposit. You will also get a metal card.

OnJuno Membership Tiers

OnJuno has two membership tiers – Basic and Metal. While both are free, there are some differences between them. Metal membership requires a direct deposit of at least $500 per month. There are no minimum balance requirements.

There are no fees associated with the account. The company uses AllPoint and MoneyPass for ATM withdrawals. You will have access to more than 85,000 ATMs worldwide. B The Basic plan includes one free out-of-network ATM transaction whereas the Metal membership gives you three out-of-network ATM transactions.

Cashback

OnJuno offers 5% cashback at select merchants including

• Amazon
• Walmart
• BestBuy
• Netflix
• Doordash
• Starbucks
• Target
• Disney
• Spotify
• Airbnb
• Uber

OnJuno Basic offers cashback on purchases up to $500 per year (that’s a max of $25 per year). OnJuno Metal membership offers cashback on up to $3,000 per year (that’s a max of $150 per year).

High Interest Checking Account

OnJuno offers a 1.2% interest rate on its checking account. For the Basic account, the interest is limited to the first $5,000 in deposit and $0.25% thereafter. If you have a Metal membership, you will get 1.2% interest on the first $50,000. Balances above $100,000 do not earn any interest.

Get your paycheck in Crypto

How donor-advised funds work

• Donor selects a sponsor and makes contributions in cash, stock, or other assets.
• Donor gets a tax deduction
• The contributions are invested according to the donor’s preferences. The money grows tax-free.
• Donor recommends to the sponsor the charities he or she would like to donate. The sponsor then writes a check to the charity.

Donor controls how money is invested and distributed

A donor-advised fund is owned by the sponsoring charity, but as a donor, you have control over how the money is invested and distributed.

Irrevocable contributions

Any contribution you make to a donor-advised fund is irrevocable. This means that the funds cannot be returned to the donor and can only be used to make contributions to qualifying charities.

Tax deduction

When you contribute assets to a donor-advised fund, you can claim an itemized tax deduction for federal and state taxes. Your tax deduction will depend on the type of asset and how long you have held your assets. Tax deductions are limited to 30% of adjusted gross income (AGI) for con-cash assets held more than one year or 60% of AGI for contributions of cash. Donations exceeding these limits can be carried up to five years.

Donate appreciated assets

You can donate appreciated stocks or other assets and get a tax deduction for the market value of the donation.  This is more tax efficient than selling your assets, paying capital gains taxes, and donating cash to a charity.

Let’s take a look at an example. You have $50,000 in appreciated stocks that you would like to contribute to charity. Your cost basis for the stocks is $10,000. Let’s assume that you are in the 35% tax bracket and the capital gains tax rate is 15%.

Option 1: Contribute cash- You sell the stocks for $50,000. You pay 15% taxes on the gain of $40,000 (Tax = $40,000 *0.15 = $6000). Your tax saving is $11,500  (35% of $50,000 minus capital gains tax of $6000)

Option 2:  Contribute appreciated securities – You donate $500,000 in appreciated securities. Tax saving is 35% of $17,500.

No minimum contribution

DAFs have no minimum contribution, but the sponsors can set their account minimums. Account minimums can be as low as $5,000.

Understand the cost

When you invested in a DAF, you will pay administrative fees and investment expenses. Take a close look at the fees before you invest because combined fees can add up to almost 1% of the assets per year in some cases. In addition, some DAF offer advisory services through a financial advisor for a cost. The financial advisor will help you choose investments to meet your long-term goals.

Legacy Planning

By making a bequest in your will, you can make the sponsor of the donor-advised fund a beneficiary of your retirement plan or life insurance policy. This will reduce real estate tax for your heirs and allow you to support multiple charities with one bequest.

Estate planning

Assets contributed to a donor-advised fund are considered part of a person’s estate since the assets belong to the sponsor. This allows you to reduce your real estate taxes. DAFs are a great way to direct where your money is invested and to what charitable organization your money goes.

Bottom Line

Donor-Advised Fund is a great way to give money to charitable organizations. You can contribute cash, appreciated stock or other assets and get significant tax benefits. DAFs allow you retain control of how your money is invested and to what charitable organization your money goes.

M1 Finance Review

Customizable portfolios

You can set your target allocation of stocks or ETFs on your M1 app. Whenever you invest, M1 Finance will buy stocks or ETFs to meet your target allocation. If you don’t like to build your own portfolio, you can copy one of the model portfolios.

Low minimums

You don’t need thousands of dollars to get started with M1 Finance. Minimum investment  is $100 for taxable accounts and $500 for retirement accounts.

No commissions

There are no commissions for trading stocks and ETFs.

No management fees

Most robo-advisors charge annual management fees. But M1 finance has zero management fees. Any money saved in management fees allows you to grow your money faster.

Fractional shares

M1 allows you to invest fixed dollar amounts, which means you can buy fractional shares in stocks and ETFs.

Dynamic rebalancing

M! Finance will keep your portfolio at its targeting allocation automatically by buying or selling shares as necessary. M1 does not charge anything for automatic rebalancing.

For funds that are already invested, you must ask the app to rebalance. M1 Finance is not as effective in this regard as other robo-advisors. But the app does make it easy to see your portfolio allocation against your target allocation.

M1 offers portability

If you choose to move to another brokerage, you can move your portfolio from M1 to the new brokerage. Most robo-advisors don’t offer this feature. They hold your money in their proprietary funds and when you move your money to another brokerage, you have to sell your funds creating a huge tax  mess.

Investing for retirement

M1 is a good place to invest your retirement funds. It  offers traditional IRAs, Roth, and SEP IRAs.

M1 Plus

M1 Plus gives you extra awards and features. It is free for the first year and costs $125 thereafter.

2% loans

M1 plus members can borrow money at 2% interest. The maximum loan amount is 35% of your portfolio. The only requirement is that you should have more than $5,000 or more invested in a taxable account. There are no credit checks or any paperwork that you need to complete.

1% APY checking account and 1% cashback on debit cards

You can earn 1% interest on your checking account and 1% on your spending on the debit card. The checking account has no monthly fee and no minimum balance. The debit card offers ATM fee reimbursement for up to four transactions a month.

Automated transfers

You can set up automated “If, then” transfers across M1 products

Custodial account for children

M1 offers two daily trade windows (morning and afternoon, the standard is one trading window) if you have $25,000 in your portfolio

Write checks online

You can send physical checks online without touching your pen

Cons

• Investing with M1 finance is automated. You don’t have access to financial advisors or investment advice.
• M1 Finance does not offer tax loss harvesting. So you lose the ability to reduce your taxes by offsetting your capital gains with losses.

Bottom Line

M1 Finance offers a great way to integrate your investing and checking accounts into a single account. If you are a self-directed investor, it’s a great way to build a customized portfolio without all the tedious work of buying and selling shares and maintaining a target allocation. M1 Finance also allows you to borrow money cheaply against your portfolio. Signing up for M1 Plus gives you additional rewards. It’s free for the first year and $125 per year after that.

Realty Mogul Review

The company was founded in 2012 by Jilliene Helman and Justin Hughes to help investors get access to real estate investment opportunities that were previously only available to institutional investors.

Realty Mogul gives investors opportunities to invest in commercial real estate such as apartment buildings, office buildings, self-storage facilities, office, and medical buildings. The platform offers investment opportunities for both accredited and non accredited investors.

Private Placements

Accredited investors can invest in private placements. An accredited investor is someone who

• earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, or
• has a net worth over $1 million, either alone or together with a spouse excluding the value of the person’s primary residence

Accredited investors can invest in private placements, which are single properties such as apartment buildings or a portfolio of properties. The minimum investment amount varies by deal (typically $25,000 to $50,000). Investment horizon is 3 to 7 years.

Private placements are not liquid and your money will be locked in for the investment period. These are unregistered security offerings that are exempt from registration with the SEC.

REITs

Non accredited investors can invest in public non-traded Real Estate Investment Trusts (REITs).

RealtyMogul Income REIT – This REIT invests in commercial real estate. It’s a public nontraded REIT. It focuses on generating income and pays out monthly dividends.

RealtyMogul Apartment Growth REIT – This public nontraded REIT invests in multifamily apartment buildings. Dividends are typically lower than the RealtyMogul Income REIT fund as this fund focuses on capital appreciation and not income.

Account minimums and Fees

Account minimum – $5,000
Management fees – 1 to 1.25%

Pros and Cons

Pros

• Excellent online platform – all docs are available online and can be executed electronically
• Good choice of investments
• Investment opportunities are vetted before they are offered to investment

Cons

• Some investments are illiquid
• Private placements are only available to accredited investors

Self-directed IRA and 1031 exchanges

You can invest in Realty Modul through a self-directed IRA. If you are rolling over funds from selling another investment, Realty Mogul allows 1031 exchanges, which allow you to postpone capital gains taxes.

Bottom Line

Realty Mogul offers accredited and non-accredited investors opportunities to invest in commercial real estate. Though some investments have high minimum and lock-up periods, the platform offers plenty of investment opportunities to choose from based on your preferences.

I am a cheapskate – the blogs I read are free. I don’t want to spend hundreds of dollars to get investment advice or ideas.

Note: Some of blogs discussed below have both premium and free articles. I only read the free articles.

Focused Investing Blogs

Adam Hartung’s blog
Theme – Emerging trends, innovation, business strategy

Hypergrowth
Theme – Technology, SaaS, high growth businesses

Stratechery
Theme – Technology, platforms

Public comps
Theme – Comps for SaaS companies

Brian Feroldi – Longterm Mindset
Theme – Long term investing

Richard Chu’s substack
Theme – Technology, SaaS investing

Clouded judgement
Theme – Cloud software companies

Investment Talk
Theme – Market commentary

IO fund blog
Theme – Technology focused blog

Software Stack Investing
Theme – Analysis of software companies

Dividend Growth Investor
Theme – Dividend investing with a long-term focus

Saber Capital Management blog
Theme – Broad investing ideas

General investing blogs

These blogs don’t discuss individual stocks. They are focused on general investing ideas and avoiding pitfalls.

Morgan Housel’s blog at Collaborative Fund
Theme – Great stories on investing and personal finance

Of Dollars and Data
Theme – Investing insights supported by data

Microcap club (Ian Cassel)
Theme – Investing ideas from Ian Cassel, a proven investor

Novel Investor
Theme – Investing ideas and compilation of interesting articles around the web

But in some cases, you may have to choose your own HSA administrator. To choose the right HSA provider, you must consider several factors.

Choosing the right HSA administrator

Choosing the HSA provider can be daunting. Not all major financial institutions offer the HSA. Then, you have to navigate through a number of fees they charge – minimum balance fees, inactivity fees, and investment fees HSA is one of those things where it is  worth it to shop around for the best deal.

Here are the things you should look for when choosing an HSA account.

Maintenance fees

Many HSAs charge monthly fees. Some charge monthly fees if you don’t maintain a minimum account balance. The HSA administrators included in this list don’t have maintenance fees.

Investing options

HSAs are secret IRAs. You can invest your HSA funds in mutual funds or stocks. A self-directed brokerage account is best because it gives you many options to invest with fewer fees, compared to a managed account, which may have fees.

Debit cards

It’s convenient to have an HSA debit card that you can swipe for medical expenses, rather than go online and complete a form to get reimbursed for qualified medical expenses.

Best HSA Accounts

Lively HSA and Fidelity are our two top choices for HSA accounts. The reasons are simple. Both don’t have monthly fees and offer options to invest through a self-directed brokerage account. While Fidelity is a financial behemoth offering everything from brokerage accounts, mutual funds, and IRAs, Lively only offers HSA accounts. Lively was founded in 2016, so it’s a relatively new player on the scene.

Lively offers self-directed brokerage through TD Ameritrade whereas Fidelity offers it through its brokerage arm. If you already have other accounts with Fidelity, it may be worthwhile to open an HSA account with Fidelity as well.

Other HSA administrators on the list may work for you if you maintain higher monthly balances.

Advantages of HSA

Contributions to HSAs are pre-tax. Withdrawals are also tax-free if you use the money for qualified medical expenses.

HSAs are secret IRAs. At age 65, you can withdraw money from HSAs just like an IRA. There are no penalties but you must pay tax on your withdrawals if you use them for non-qualified expenses.

HSAs are portable. You can take the funds from one employer to another, or even transfer them to your individual account.

There is no age limitation but to contribute to an HSA account, you must have an HDHP plan

Not happy with your employer’s HSA account – Choose your own

Sometimes employers choose HSA administrators that have fees and complicated policies. In those cases, you can choose to have your HSA account. Note that employers typically only direct payroll deductions to their sponsored HSAs. It’s up to you to set up contributions if you pick your own HSA administrator.

Bottom Line

HSA accounts are tax-efficient vehicles to save money for medical expenses if you have an HDHP plan. You can invest your HSA funds in mutual funds or stocks. When choosing HSA administrators, keep an eye on monthly fees and the investment options offered by the administrator. Lively and Fidelity are our top picks for HSA accounts, though others on the list might work for you if you maintain a high monthly balance.

The episodes are crash courses on the topics and explain complex topics in an easy-to-understand way. Each podcast is about 25 to 35 minutes.

NPR’s Planet Money Summer School Podcasts

Who is the podcast for?

Teens and people getting started with investing will benefit the most from these podcasts. If you have been investing for 20 years, the podcasts may be a good refresher but you will be easily bored because they cover only the fundamentals.

Planet Money Summer School Season 2: Investing (2021 season)

• Planet Money Summer School 1: The Stock Market
• Planet Money Summer School 2: Index Funds & The Bet
• Planet Money Summer School 3: Smooth Spending & The 401K
• Planet Money Summer School 4: Bonds & Becky With The Good Yield
• Planet Money Summer School 5: Bubbles, Bikes, & Biases

Planet Money Summer School Season 1: Microeconomics (2020 season)

• SUMMER SCHOOL 1: Choices & Dating
• SUMMER SCHOOL 2: Markets & Pickles
• SUMMER SCHOOL 3: Profit & Cocaine
• SUMMER SCHOOL 4: Scarcity & Pistachios
• SUMMER SCHOOL 5: Trade & Santa
• SUMMER SCHOOL 6: Taxes & Donald Duck
• SUMMER SCHOOL 7: Advertising & Race
• SUMMER SCHOOL 8: Risk & Disaster

Where can you listen?

You can listen to these podcasts directly on the NPR Planet Money Summer School website. You can also listen to it on Sticher, Apple Podcasts, Overcast, and many other apps. Many of these apps allow you to listen at 1.25 to 2 times the speed saving you time.

Bottom Line

NPR’s Planet Money Summer School podcasts are a great way for teens and new investors to learn about investing and economics. You can get through most episodes in about 20 minutes if you listen at 1.25 to 1.5 times the speed.

A regular 401(k) is offered by an employer to allow an employee to save for his or her retirement. In many cases, the employer may also match a portion of the employee’s contribution. With a solo 401(k), you are both the employer and the employee.

Criterial for solo 401(k)s

To participate in the solo 401(k), you must be self-employed and have no direct employees other than your spouse. There are no age or income limitations.

The IRS defines self-employed as:

Someone who carries on a trade or business as a sole proprietor or independent contractor,
A member of a partnership that carries on a trade or business, or
Someone who is otherwise in business for themselves, including part-time business.

Contribution limits

For 2022, the annual combined contribution limit for both employer and employee to a  solo 401(k) is $61,000. If you are older than 50, you can contribute an additional $6,500 in catch-up contributions.

• Employee contribution limit is $20,500 (+$6,500 if you are older than 50). Note that the total contribution limit for all your traditional 401(k)s is $20,500. Let’s say you contribute $7,000 to a traditional 401(k) at your full time job, then you can only contribute $13,500 to a solo 401(k).
• Employer contribution limit is $40,500 (for all employers)
• Contributions cannot exceed $100% of your compensation

Solo 401(k) contribution deadlines

• Employee contributions – Last day of the calendar year (December 31)
• Employer contributions – tax deadline for the previous year (Apr 15th or later, if extensions are filed)

Solo Roth 401(k)

Just like a solo 401(k), you can set up a solo Roth 401(k)if you prefer to make after-tax contributions.

Be prepared for additional paperwork

Solo 401(k)s have more paperwork compared to an IRA. If your solo 401(k) balance exceeds $250,000 at the end of the year, you need to file IRS Form 5500-EZ.

Higher costs than IRAs

The cost to maintain a solo 401(k) is higher than that of IRAs due to higher compliance requirements.

Where can you open a solo 401(k)?

Discount brokerages usually don’t offer solo 401(k)s but the big players such as Fidelity, Vanguard, and Schwab do. Read the fine print – understand the fees, minimum balances, and inactivity fees before you sign up.

Rolling over solo 401(k)s

You can rollover your solo 401(k) into IRA, just like you would roller over your traditional 401(k) into an IRA.

When I first read the title of the book and Galloway’s bio, my first question was, “How is a business school professor and an entrepreneur qualified to write a book on happiness?”.  After reading the book,  I believe that Galloway brings a unique perspective to the topic of happiness based on his experiences that are very different from what you find in most self-help books written by psychologists. The book is divided into small, easy-to-read chapters. The author shares interesting real-life anecdotes that keep the reader entertained.

The Algebra of Happiness – Book Notes And Summary

Introduction

Scott Galloway teaches brand strategy courses at NYU’s Stern College of Business. In the last three-hour lecture of his class called “The Algebra of Happiness”, he talked about love, success, and the definition of a life well-lived.  In May 2018, he posted an abridged version of his course on YouTube and it received millions of views in the first couple of weeks. That’s when Galloway decided to write a book on the topic.

Galloway attended UCLA but he wasn’t a very good student. He graduated in five years with poor grades. But he was able to get a job in investment banking at Morgan Stanley, partly motivated by his roommate who wanted to be an investment banker.  After a few years, he attended Berkeley’s Haas School of Business and got an MBA. While at Berkley, he got interested in brand strategy and founded a strategy firm.  He also incubated several e-commerce firms and hit a home run when one of his firms, Red Envelope, went public in 2002.

Here are few key insights everyone should understand about life and success.

• From your mid-twenties to your mid-forties – work and stress take a toll. But life gets better from your fifties as your children grow up and you start recognizing that your time on the planet is limited.
• When you are young, “balance” is not what you need. The slope of trajectory for your career is set in the first five years after graduation.
• A good indicator of success is how much time you spend sweating every day. Put in the work in your younger years.
• Choose your spouse carefully. Find a real partner to share your struggles and successes – someone who will soften the rough edges, someone who’s a good teammate, and someone whose goals and approaches to life are in sync with yours.
• Where you live matters a lot. Your zip code can be your destiny. When you are young, get credentialed and move to a city. It gets difficult to move when you are older.
• Money brings you happiness up to a point. But once you reach a certain level of economic security, the correlation between money and happiness flattens. Find out what you like – whether it’s cooking, wiring, playing the guitar, or mountain biking. Hobbies add a texture to your personality.
• Compound interest is the most powerful force in the universe. Put money away and invest early and often. Compound interest works not only for money but also for relationships. But a little effort every day into your relationship to make them flourish.
• Economic security is not your salary. Stay invested in the stock market because you are not smart enough to jump in and out of the market. Being rich means your passive income is greater than your monthly expenses.
• Research shows that drinking too much is a good predictor of unhappiness.
• People overestimate the amount of happiness that things will bring them but underestimate the long-term positive effect of experiences. Drive a Hyundai but take your wife to a nice place for dinner.
• Spend time with your parents when they are old. You will cherish that time for the rest of your life.
• Everyone experiences failure and tragedy. The key to success is the ability to mourn and move on.
• Your successes and failures are not entirely your fault. Be less hard on yourself. One of the keys to a healthy relationship is forgiveness. You or your spouse will screw up. Learn to forgive and not hold grudges.

Success

Stay thirsty

Talent is important and will help you enter a crowded VIP room. But talent alone Is not enough. You need hunger to succeed. Where hunger comes can help you understand the difference between success and fulfillment.  Find something you are good at. The rewards and recognitions that come from being very good at something will make you passionate about it.

Embrace adulthood

Every commencement speaker will ask you to follow your passion and never give up. Instead, find something you like, put hours of practice into it, and be great at it. Nobody starts their career being passionate about tax law. But great tax lawyers are passionate about peers who like them and can create economic security for their families.

Careers are like asset classes. If a sector becomes overinvested with human capital, returns on those efforts are suppressed. Don’t be attracted to cool things. Most rich people make their money in boring businesses – think insurance, pesticides, or iron/ore smelting.

The adult in the room

Everyone loves to talk about how rewarding it is to raise kids. But people rarely talk about how rewarding it is to take care of their parents. A good time to start is when you graduate. Tell your parents, “I got this”. Become a source of solutions to your parents versus stress.

Getting the easy stuff right, and Email

Have good manners. Show up early. Follow up. It’s not hard, is it? Galloway had plenty of difficulties responding to people on time and following up. His email to a student who showed up at his class an hour late and was kicked out became an embarrassment for himself and NYU.

Believe you deserve it

70% of Americans suffer from some kind of imposter syndrome. But realize that most successful people reach beyond their grasp. Believe that you deserve it. Share your achievements with the people you love and care about.

Find your charm

Galloway loves talking to people – the bigger the crowd the better.  He is an introvert one-on-one but an extrovert when talking to a group. He uses his classes to hone his speaking skills. Find something you like and work on it.

You are (probably) not Mark Zuckerberg

Entrepreneurship sounds exciting. You work 80 hours a week and then need to write a check to keep the company afloat. It’s not easy to raise money from other people. Business failures are hard to hide and embarrassing to explain. Entrepreneurship is also a sales job. Are you comfortable calling people, again and again, especially people who don’t want to hear from you? Even Google has to hire thousands of people to sell Google to the masses.

Being successful in a big firm is hard. You have to play nice with others, suffer injustice, and deal with office politics. But on a risk-adjusted basis, it’s still better than entrepreneurship.

When to take cover

Here are the signs to look for that the market or a company is about to end up on the wrong side of cyclicality.

•  Lofty valuation metrics (eg. P/E ratios)
• Countries and firms start building huge buildings
• CEOs’ egos are out of hand –  they go on a buying spree (buying companies at lofty valuations), get featured profiles on magazines
• Mediocre kids with 2 years of tech experience make six figures
• Bidding wars for real estate
• When times are good, people look for youth. When times are bad, people look to gray hair for leadership

What to do if you think you might be in a bubble

Whether a company is successful depends on when it is created. Companies created as the economy is coming out of recession are likely to be successful. Companies started in boom times struggle because people, services, and real estate are expensive. 

If you are doing well, realize that you are probably caught up in a boom. Being humble and living within your means will prepare you financially and psychologically for the next economic cycle. 

Measure what matters

Wealthy people claim to not think about their money much. But the truth is they are obsessed with money. They spend 80-hour weeks for decades to make their money. 

Benchmarks, metrics, and milestones range from meaningless to profound.  Reviewing the metrics in your life is a very useful exercise. How often you meet your parents? How many followers do you have on social media (if that matters to you in a meaningful way)? Your number of followers gives you feedback about your work.

Know the ends vs the means

We need to understand that professional success is the means. It’s not the end. The end is the economic security of your family and having meaningful relationships with your friends and family. 

Learn from rejection

Galloway encountered many failures and rejections in his life. But he feels that enduring those rejections (from universities, peers, investors, etc.) has been hugely rewarding. For many people, the fear of rejection is a bigger obstacle than talent or the market. Take a risk every day and get comfortable by stretching beyond your comfort.

If you are not an employee, employ yourself

Entrepreneurs are glorified by the media. In reality,  90% of entrepreneurs start companies because they don’t have the skills necessary to be an employee. 

Most employees are happy to commute when traffic is high, go to irrelevant meetings for decent pay. Bu working for yourself means you are in charge. Everything you do is for you, not for the company. 

At small companies, the guy who runs the place can be a jerk. A few “A Players” work their asses off, but you can get by with hundreds or thousands of well-mannered B+ players in big companies.

When you are an employee, you don’t know what your managers have planned for you. They are the ones who determine your economic well-being.  Galloway was insecure economically and that pushed him to entrepreneurship. It was not his vision.

Be a role model

Galloway had two men who shaped his life when he was 13 – his mother’s boyfriend Randy and Cy Cordner, a stockbroker at Dean Witter.  Randy gave Galloway $200 to invest in the market and Cy educated him on the markets. These two men made Galloway visible and worthy of their time. Galloway is grateful that these two men took a passional interest in the well-being of a child that wasn’t theirs.

Love

The Ends

Love and relationships are the ends and everything else is just the means. Love is love received, love reciprocated, and love given unconditionally. The most important decision in your life is who you have kids with. Find someone who is kind, competent, and who you enjoy being with. 

When it comes to love, everyone likes to punch above their weight class. That’s fine but don’t fall into the trap of believing that someone is better because they are not interested in you.

1+1>2

Marriage is beneficial economically. Two people combined make better decisions than single people.  Married couples in their 50s have 3x more assets than single people. 

Try to be a better partner in a marriage.

Don’t keep score – We like to inflate our contribution to the relationship and minimize our partner’s. Don’t track who does what – that just wastes energy.  Be generous and do as much as possible for your partner and often. When your partner messes up, forgive. Forgiveness is a key attribute to happy relationships.

Don’t let your wife be cold or hungry

Don’t skip lunch. Don’t leave your house without energy bars. Make sure your wife is comfortable whether it’s in the car or a restaurant. 

Express affection and desire as often as possible

Affection, touch, and sex solidify your relationship. Being with the right partner creates meaning for the human species.  Express affection and make your wife feel secure in the relationship.

Keep your kids close

Build meaningful relationships with your kids. Small investments made several times a week pay off dividends. When your kids get older, they will remember that their parents chose them over anything else. When you get old, your children will comfort you, so you can sleep in peace, just like you did for them when they were young.

I love you

From his own failed first marriage and from watching his friends, Galloway learned a lot about love. Love is a willingness to take the life you have built for yourself and tear it up for the other person (this came from his therapist).  Most of us suspend our lives until the kids come around. Very quickly, the answer to most questions is, “whatever is best for the kids”. Still, kids are great and make you a better person in every way.

Montezuma’s revenge

Instinctively, you will do anything for your kids. Even the things you hate become just inconveniences in the presence of people you love. You are saying – my life is yours and I love you.

Valentine’s day

Tell people you love them. Galloway tells the story of his Crossfit instructor who gets a call from his grandfather. The grandfather, Galloway interprets, said ” I love you” to his grandson at least six times in a short conversation while the grandson was at work. The takeaway here is – invest time with your kids so that you can interrupt your kid’s kid at work and tell them how much you love them.

Take affection back

Touch is fundamental to human communication, bonding, and health. Yet, we live in society whether men are asked to refrain from touching each other. Italian men kiss each other on the lips. Kiss your kids. Over time, you kids will stop what they are doing and develop a respect for the moment. They will know that everything else can wait.

Divorce

Galloway’s immigrant parents were living the  American dream. Two people with eight grade education worked hard and flourished in the American economy. Then they got divorced and Galloway got to see his dad only on weekends. But he has fond memories of the time they spent as a family and lived near a beach.

Attach to people

Affection strengthens bonds, provides access to resources, and communicates your potential as a parent. Galloway credits his success to two things – being born in America and having a mom who was passionate about his well-being. His mom was divorced and was making $15,000 per year but she made him feel connected.  She gave him confidence that he had value and that he was capable and deserving of things.

What makes a home

The American dream is homeownership. That’s the case even though homes are not any better than other investments once you account for maintenance. A good proxy for your life isn’t your first home but your last. Towards the end of your life, you are not adding much value. The people who look after you are very generous or are reciprocating your love and support.

How to deal with the end of a life

Where you die and who is around you at the end is a signal of your success or failure in life. Take care of caregivers because they support your parents while you are not there or help you with things you can’t do. 

There is no manual on how to deal with the end of life. Make time to care for your parents but don’t put your career on hold. Economic security is important and people live longer than their prognosis. 

Relive their life. Look at pictures and share stories. Leave nothing unsaid. If they are sick, they may say mean things. It’s not them, it’s the illness speaking.

Love a kid who isn’t your own

50% of marriages end in divorce. Then there’s death and disease. That leaves a lot of kids in single-parent households where the odds are worse for the kids. Become passionate about the well-being of a child who isn’t yours. It will make you more human. 

Appreciate how fortunate you are

Galloway lost many friends to AIDS, which was termed a “gay disease” in the 1980s. Society decided that they weren’t victims. Ronald Reagan never mentioned the word, “AIDS”, in his eight years in office. Few of his friends caught a break when science made treatments possible.

Find your own heaven

When you are with your family, loved and in peace, you are in heaven. In life, we all want more – more money, more praise, more relevance, and a cooler experience. The only time you feel satisfied ever is when you are with your family.

Love the ones you are with

We don’t spend enough time thinking about the mother of all important decisions that will set the tone for the rest of our lives – picking the right mate. The right partners that share the joy with you. Students spend a lot of time choosing their career but not enough time thinking about their future partner. The dopamine rush you get when you are excited to see someone you love keeps you young. When you are with people you love – family, friends, and colleagues, you are blessed with happiness.

Kids: It’s all about them

We segment our kids into favorites. As awful as it sounds and makes you a terrible parent, know that your favorite child changes back and forth.  Kids keep score and you will work hard to satisfy their needs.

There are very few absolutes. Getting to a place economically, emotionally, and spiritually where you love someone completely without expecting anything in return is absolute. Your life is finite. Focus on loving, forgiving, and pursuing. 

Health

Be strong

Work out regularly (most CEOs do as well). Demonstrate your physical and mental strength at work. Stay calm in the face of stress. Stay calm and don’t sweat over your next presentation or project.

Cry – it’s good for you

In our society, men don’t cry. It’s considered a weakness. But crying relieves stress brought on by the onslaught of emotions that are difficult to process. As you get older, you will realize the finite time you have. You want to freeze time and have the moments when you feel something.  Crying in the company of others or thinking about loves ones is healthy and brings joy.

Trade closeness for harmony

Galloway doesn’t have a close relationship with his dad and sister but it’s harmonious. They like taking a trip every few years and having a great time.  Taking care of parents can be taxing but it’s rewarding. Find meaning in taking your parents around in a wheelchair.

Get lost in the moment

The fastest-growing demographic is the centenarians. The secret to a long life is good genes, a healthy lifestyle, and loving others.  But then there are “x-factors” – a friend who dies too young. 

Try to stay in the moment. It takes a lot of effort. It’s true that delayed gratification can build a better future for you and your family. But staying in the moment can help you enjoy your life than working your ass off with a promise of some reward in the future.

Don’t be an assh*ole

Be nice. Even billionaires, contrary to what is shown on TV, are generous and well-behaved. Being grateful is consistently correlated with greater happiness. Gratitude helps people feel more positive emotions, relish life’s experiences, improve their health, deal with adversity and build strong relationships.

Praise and admire others. Complementing others is not a zero-sum game. Acknowledging others’ accomplishments and attributes take nothing away from you. If anything, they help you in the long run.

Sustenance > Addictive substances

Food, sex, and kids. We are wired to be addicted to the things fundamental to the survival of the species. Offer your kids not a dopamine hit (eg. video game) but sustenance. Be there, be predictable. 

Who is this book for?

The Algebra of Happiness has nuggets of wisdom for readers of all ages but young people in their early twenties are likely to benefit the most from the advice. This book also makes a great high school or college graduation gift.

Other Resources

Listen to Scott Galloway’s interview on Bloomberg here. In the wide-ranging interview, Galloway discusses Uber, Lyft, and WeWork in addition to his book.

Here is a highly-rated 10-minute video of Galloway discussing his principles. I guarantee you that it will be worth your time. Also, check out Galloway’s Youtube channel for his latest views on technology and business.