Lazy Income Streams, Passive (ish) Ways to Earn Money

Okay, guys, I'm gonna let you in on a secret...I am a very lazy person. I like to think of myself as a very efficient woman; I don't like to do anything twice or unnecessarily. I work smarter, not harder. This is why I'm into index fund investing. I like to have my money work for me, but I don't want to spend all my time and energy watching my stocks. Being a lazy person, I wanted to share with you the low-effort ways that I am planning on making money in 2021.

Last year, I made $139k in income. One of the major ways that I earned that money was by freelancing. My 9-to-5 job is a visual designer in the tech industry. Last year, I wasn't employed full time for the first two months of the year, so to make up the difference monetarily, I did a lot of freelancing work. This brought in about $20k. I love doing design, but it is so much work to freelance on top of having a full time job, and that's just really not how I want to spend my time. So I am going to share with you the 10 ways that I am planning on earning income this year.

1. Work A 9-5 Job (not super low effort, but stable!)

My main stream of income will be through my 9-to-5 job and keeping it simple. I work 40 hours a week, and at my current company, I have a good work/life balance. I'm not too concerned about it being too much to handle, but I am earning the majority of my money from my day job. I earn $58/hour.

2. Earn Interest

Everybody should have a high yield savings account where you keep your emergency fund or other savings. I made over $100 in interest alone last year, which may not seem like much, but that was literally just my emergency money sitting in the bank. Even if you're paying off debt, you should still have an emergency fund in case anything comes up, so having your savings in a HYSA will earn you interest without you having to lift a finger. Currently, interest rates are pretty low due to the pandemic. I'm with Ally Bank, and mine is at 0.5%, so it's not as high as it used to be, but it certainly is not nothing. And that will compound on itself and grow, grow, grow!

3. Earn Dividends

The next way I'm earning income is through dividends. I also love this way because it is so passive. All you do is invest! I am not a person who chooses individual high dividend stocks, I simply put my money into an index fund, in my case SWTSX, which is Schwab's total stock market index fund. If you are with Vanguard or Fidelity, they also have a similar total stock market index fund. I get dividends from SWTSX every so often, but in dividends last year I earned over $2,000, and in 2021, I'm on track to earn about $3,000. And I don’t have to do a thing! I reinvest all of those dividends, so my dividends keep earning more dividends.

4. Share Affiliate Links

The most common program is through Amazon's affiliate marketing program. It's so simple, and easy to sign up. It just gives you a little bar at the top of your Amazon page, and when you click into a product you can like get a hyperlink with your co-affiliate marketing code. So when people see that you've recommended a book or recommended a product, you get a small payout from Amazon for getting other people to buy that product.

For me, I try to recommend things that I absolutely love, like the finance books that I used on my own journey. I don't encourage just anything, and I think it's really good for people to be mindful of what they are recommending because it can come off as insincere. I think there's a healthy balance between showering people with affiliate links and recommending products that you truly think others would benefit from. There are also FTC rules regarding affiliate marketing, so make sure  and understand them before you sign up. That being said, if you see any Amazon links on my site, just know that I am getting a little profit, but I stand by my recommendations. 

5. Use Display Ads

I am making money this year through Google Adsense.  This is something that many bloggers and YouTubers use. I am not monetized on YouTube, but I do have it set up on my blog. Google only pays out after you accrue $100, so I have never been paid out, but I think in 2021 I will get my first Google Adsense paycheck. but it is so easy to set up. I set mine up through Squarespace and I just plugged a little ads.txt file into my website (only available on the business plan and above) and then I was set up and ready to earn. It auto places ads and I turned on whatever was recommended and that's it. Again I'm lazy, it was so easy and not hard at all.

This does mean setting up a blog though. My Squarespace costs me $216 a year, so I would just keep that in mind when taking into consideration what you're willing to pay to start your affiliate ads and your display ads versus what it costs to “invest” in yourself. A lot of people use self-hosted Wordpress sites which are much cheaper, but I am lazy so I use Squarespace and I love it.

6. Get Brand sponsorships

I have only had one sponsorship so far, but brand sponsorships is something I'm looking into for 2021, reaching out to brands who I think align closely with my audience and values and are companies that I actually use. Brand sponsorships are something I struggle internally with because sometimes I would never want to recommend a product to a person that it is not a good fit for, especially if it’s a financial product. For example, if Robinhood were to approach me, I would most likely decline because I don't personally use Robinhood. It is something that I can't necessarily stand by based on how it gamifies investing for people who have no idea what they're doing.

On the other hand, if Wealthfront were to approach me, I'm a huge Wealthfront stan. I love and use Wealthfront and trust them with my own money. Brand sponsorships like that I would easily accept without feeling guilty. My only word of advice if you plan on entering sponsorships is to always read the terms and conditions of those contracts. In my experience, I didn't read the fine print, and some ads were posted where I didn't realize they were going to end up. Fight to keep ownership of your content so that the sponsor doesn’t own your content in perpetuity and you don’t sign your rights away. 

7. Sell Digital Products

I set up my Etsy shop last year where I sell motivational art and coloring charts to track your financial goals. I like digital products because it's a one-time setup, and you can easily re-list the same items. It costs about 20¢ or 35¢ to list, but then once you've done that, it takes care of itself. Free programs like Canva or Figma are great for creating the digital products and are super easy to use. Get 40 free listings on Etsy by signing up through my link.

7. Sell Physical Products (merch)

I am launching some physical products this year in my Etsy shop. But, and I cannot emphasize this enough, I do not want to handle all the shipping and fulfillment of the orders. 

I am going to be using services like Teespring and Printful to manage it for me. Printful links to Etsy and Teespring links to YouTube, which means that people can order your designs directly from those sites, but Printful and Teespring will create and ship the products for you. Physical products like merch are really great as long as you are not the one dealing with all the inventory. I've talked to friends who handled their own inventory before, and it can be a nightmare. Even though these types of services take a bigger portion of the profit, in my opinion, it’s worth the convenience. 

9. Resell Your Stuff

I am planning on earning money through reselling, so apps like Poshmark, Facebook Marketplace, Mercari. I made around $1,000 or so dollars last year in reselling with minimal effort. People who actively Posh may go out looking for products to sell, but for me it's just a matter of decluttering my home, taking what I already have and turning it into cash. Sign up with my Poshmark link to get $10 in Posh credit!

Reselling is an easy way to take what you already have and turn it into money. The market is growing and growing, and as people become more conscious about where they shop, a lot of people are going to turn to secondhand shopping. Not only can it save you money, but it also does great for the environment.

10. Get Cash Back

Finally the last way that I am going to earn income is through cash back apps like Fetch, Rakuten, or Coupons.com. Basically you get a cut for shopping, typically because they agree to sell your data to third parties. Not gonna lie, if you're uncomfortable with that, I’m just being honest. It's not free, nothing is free in this world. You using social media and all these other apps...somebody's getting profit off of you somehow. Nothing is truly free in this world! But if you're comfortable with that, you can easily make money back.

If you're already doing your grocery shopping you scan your receipt through the Fetch app or coupons.com app and get money back or if you're already shopping online and you have the Rakuten app widget installed in your browser you can get up to 10% cash back for buying what you were already gonna buy. For me I know the price I pay, but I’m already buying stuff anyway, so I'm willing to get like a couple hundred dollars back for  doing whatever I'm already gonna do, which is buying something.

Start scanning your coupons and get 2,000 points ($2) with my Fetch app link. Shop using Rakuten’s browser extension and get $20 when you sign up for Rakuten with my link. Also use Honey when you shop and get Honey gold (redeemable for gift cards) and coupon suggestions at checkout!

Those are the 10 ways I am planning on earning income in 2021. These are the easiest ways to get started and span the gamut of really zero effort to like a 5 level of difficulty at most. I'm not saying start painting and sell your paintings because then that will require you actually doing stuff. 

Establish yourself as a brand—I think we're all walking brands these days. It's important to start doing stuff and I don't think you necessarily need to invest a ton of money. I paid $200 for my blog but like there are other options like Wix and Blogspot that are free.

The most important part of any of this and a life tip in general is being consistent. Just start doing it and then understand that the way you're going to see actual returns on this investment is through being consistent whether it's straight up investing in your stocks and seeing those dividend payouts or whether it's starting to sell digital products putting out display ads on your blog. All of it takes consistency! 

I hope you guys like this video. If you want to see more like it, be sure to hit the like button and subscribe to my channel and let's all retire early together!

---

Disclosure: Some links are affiliate links, meaning, at no additional cost to you, I may earn some compensation. All opinions are 100% my own! I truly appreciate you and your support. :)

FI/RE Diaries: A 32 year old teacher living in as small town in the Midwest and FIRE-ing in 23 years with $1M

Occupation: Elementary School Teacher

Industry: Public Education

Location: Midwest

Age: 32

Salary: $45k

FI/RE Number: $1M

Years Until FI/RE: 23 years

Current financial situation: Married, Single Income

Ethnicity: Caucasian

How did you first hear about FI/RE?

Instagram Debt Free Community #DFC

Why do you want to reach Financial Independence/Retire Early?

I don’t enjoy my job and would like to enjoy my time more.

What does FI/RE mean to you?

FI/RE would allow me to focus on the aspects of my life I enjoy, rather than simply having to work to earn an income.

What types of big expenses does your FI number include?

Mortgage payoff. My husband is currently in grad school, but we both received full rides to undergrad. The only consumer debt we have is my husband’s medical school. Cars were payed in cash!

How much do you spend per month? Save per month?

Spend $2,000 and save about $500

What is your % savings rate?

About 20% after taxes

Are you doing anything to achieve FI/RE faster? If yes, what?

Side gigs - DoorDash, Instagram, and VIPKid

Any advice you'd give to someone who has a similar FI/RE lifestyle as you, especially if it seemed hard or unattainable?

Start somewhere. Even when it feels like what you can do currently doesn’t matter, it all adds up.

---

Disclosure: Some links are affiliate links, meaning, at no additional cost to you, I may earn some compensation. All opinions are 100% my own! I truly appreciate you and your support. :)

How Much Money I Made in 2020

I finally took a look at all of my numbers and it turns out that I made a grand total of drumroll please...$139,047.

That is insane!

I was so inspired by Investing with Kim, I wanted to share with you how I earned that money and how it broke down into my income, my expenses, and my savings.

Before we get into all the money details, if you enjoy learning more about my journey to financial independence and early retirement at 35, be sure to subscribe to my channel so we can talk more money, honey!

To preface this all, I wanted to share with you that this has been such a journey to actually make $100K.  It did not come out of the blue. I have been working for 8 years now! If you want an actual timeline and history of my salary, feel free to check out my timeline salary video.

I share my actual numbers in the hopes that we can be more transparent and break down that taboo and stigma of talking about money. I want to show you this is attainable if you work at it. It doesn't come easy but you too can earn this kind of money as a designer. 

Income

To start we have my income. The majority of that money came from my paycheck and this is my nine to five job. I work a 40-hour week in tech as a visual designer. I actually started in March of 2020 so this paycheck is reflecting that amount. If my contract extends throughout the year in 2021, I should be on track to make closer to $120,000. That is with $58/hour pay and that is actually a mid-low end rate. I might try and negotiate that, we'll see. 

To make up for the difference of not working 40 hours in January and February this year, I freelanced. So that $19,560 I made design freelancing. To be honest I got burned out freelancing this year. I think the combination of doing a visual design job during the day and then having to do visual design at night was not fun. I'm not taking on any freelance design work in 2021, but for 2020 that definitely helped cover the difference in the months of January and February where I was not working fulltime. 

My income should stay about the same for 2021 but all $120,000 will come from my 9 to 5 paycheck hopefully...at least that's the plan. I say I'm never gonna take on another freelance client and then sometimes stuff pops up. It's really hard to say no to money when you're still trying to be financially independent... I'm gonna be honest.

$3,603 came from resale. That includes things like Poshmark, Facebook Marketplace, Offerup places like that, where I was selling my clothes or furniture second hand. It takes a lot of effort to resell things—coordinate pickup times, go to the post office, etc. I haven't really been putting a lot of effort into my resale businesses, but I will say it has been easiest during the pandemic to coordinate like Facebook Marketplace pickups because people can drop by and obviously most of the time we're home. So I think 2021 will still be a really great year to keep reselling all the stuff you don't use or need and make a quick buck.

Dividends this year I made $2,895 worth of dividends. That is crazy to know that my money has made me money in my sleep. I didn't do anything! All I did was invest. Most of my stocks are in a total u.s stock market fund (SWTSX) and the dividend payouts, especially in December, are through the roof. In 2021 my Schwab account is projecting that I'm gonna make closer to $3,000 in dividends. That's an additional $200, but will probably be a little more than that because I'm going to be continuing to invest in SWTSX throughout the year. 

In rewards I made $2,732.  Rewards I think of as credit card cash back. I have the Citi double cash back card that gives me 2% cash back on regular spending as well as Ebates (now Rakuten) I get cash back for shopping. Stuff like that is in my rewards category. You can see all these little two to 3 thousand dollar things I'm doing adds up to like $10,000. Every little bit counts! 

Then I have about $2,000 in gifts received. I'm very fortunate in that a lot of my aunts, uncles, and family members give me financial gifts. I think it's pretty common in the asian culture that instead of presents you'll get actual monetary gifts, which I think is really great and useful because you can put that towards things you actually care about and actually want. Sometimes physical gifts are not things you necessarily want and it ends up as clutter in your room, so I'm really grateful that my family has the ability to give me that. Because of this, I am able to buy the gift that I want, which is time eventually. 

This year I put in the income category “government.” We had two stimulus checks so that money went in there, plus my tax refund, so $2166 in total. I don't really know if it's considered income...would you consider it income? Anyway, I'm considering it as income. So again this is the two stimulus checks that I received. I didn't get the full amount because I was in the phase out period. If they do come again for 2021 I will probably not get any stimulus checks due to my income level this year, which is totally fine. And then also this includes my tax refund, which in 2021 I will owe taxes for the $19,560 in freelance work that I have not paid any taxes on yet. I will definitely owe! 

So in 2020, I started taking my Millennial Money Honey business more seriously this year. I opened an Etsy shop and was open to doing brand partnership opportunities. I haven't really earned a lot from Millennial Money Honey. I'm hoping to earn more in 2021, but in 2020 I earned $340.

In interest, which is why everybody should open a high yield savings account (HYSA) if you don't already have one, I earned $173 off of my HYSA. I use Ally! If you are still banking with Wells Fargo, Bank of America, etc., you've got to go open a high yield savings account. If there's one takeaway from this video, you need to go open a high yield savings account to keep your emergency fund and savings in. It’s not a ton a ton of interest you’ll make in the grand scheme of things, but it's definitely not nothing. 

So as you can see in my income breakout chart, 75% of my income is mostly from my paycheck and the other 25% is all the other little stuff. Again, every little bit counts it really all adds up to be a whopping almost $140,000.

Expenses

On to my expenses! So expenses I actually did not spend that much this year. Minus taxes, I spent close to $14,000, which is relatively nothing because I decided to move back in with my parents this year. It made a ton of sense for me and obviously gets me closer to financial independence quicker. So because of that my expenses were relatively low this year. 

I was adding everything up and I could not for the life of me figure out where $20,000 of my money had gone. I kept thinking and looking. I knew I didn't spend $40,000 this year. I had only documented $14,000 in spending, so I couldn't figure out where my money had gone. And then I realized, “Oh my God, it went to Uncle Sam!!!!” I realized I had paid $26,000 in taxes that I was not accounting for in my flow. I put it under expenses because it is like a price you pay for working,  a fee of earning money of sorts. It is what it is. 65% of my expenses are taxes right now.

House was $4,450 in rent payments. I was still paying for housing from January through May, so that's kind of where my housing expenses were. Still relatively low, but definitely not nothing.

Gifts that I gave were $1,775. This includes donations to local food banks, the World Health Organization, and towards causes supporting the Black Lives Matter movement.

Work expense of $1,684 includes stuff for my freelance design business. I pay for a subscription service to help me manage all of my clients and stuff called Hello Bonsai App. It sets up payment invoicing, contracts, you name it. It makes you look so much more professional if you're a freelance designer. Highly recommend it! Work also includes like a desk things like that that like really I needed as a freelance digital designer.

Food expenses were $1,510. I categorize food under eating out. I have a separate category for groceries.

Travel this year was really low at $1,429.  I did rent out a cabin for my 29th birthday so that is included in travel. I also did a camping trip with friends. We were outdoors and could be socially distant! 

Since I was freelancing in January and February and my insurance didn't kick in until April, I was paying for health insurance for like 4 months. So $878 falls under that Health category. 

Shopping I actually spent a lot more money than I thought I was going to spend this year. I was actually planning on doing a no spend year, which I share a how I've done that in this video, but this year I actually spent around $700. I bought a pair of hiking shoes and little things that kind of added up.  At $705, I'm still really proud of that number, but yeah definitely I saw that number I was like oh didn't know what I spent it all on exactly. I guess it’s only $700 for the year, so I'm gonna give myself a pass.

Car includes gas, maintenance, etc., $622. That has definitely dropped down a lot because we have been working from home, no need to drive everywhere.

Utilities were $511. Again, I only paid those from January to May.

Groceries were $4125. I try to buy groceries for my family periodically since I’m not paying any rent living at home.

Entertainment was $242. I'm not really exactly sure what I counted as entertainment...I have no idea. I need to go look at that.

Drinks were $117. Guess I was going hard in January and February and living it up!

Then transportation was $82 and that's Ubers and parking and stuff. I'm so curious as to what I spent in the past. This is like the first year I've done a full year of tracking my expenses so I really don't know how much I've spent on Uber's in the past but this year has definitely been the least in like the last 5 years. My friends and I used to go out multiple places a night and multiple nights a weekend back in the day.

In total I spent $41,128 and if you take out taxes, I spent $14,606—definitely a huge difference. I think you have to factor taxes as an expense because it shows you the full picture of where your money's going. 

Savings & Investments

So this is my savings and investments for 2020. My brokerage account alone has grown so much like at the beginning of this year with something like $30,000 at the beginning. Now I'm above the six figure range between my contributions and then the stock appreciation. I contributed $58,213 to my brokerage.

I was able to max out my 401k for the first time this year! That was really exciting. So I contributed the full $19,500 as a single young woman.

For checking and savings, I didn't really end up keeping that much cash or adding any cash to my emergency funds because I am living at home with my parents this year. I felt like it was okay to drop my cash reserve a little bit lower this year. So for checking and savings yeah I only put like $14,000 into those accounts to cash flow all of my expenses. So since I spent $14,000, I only kept what I needed to spend and then invested the rest.

My IRA, which I kind of had some complications with and my tax guy is sorting out now, but I contributed $6,000 to a traditional IRA this year. I re-characterized it to my Roth IRA and there were some pro rata complications. I definitely recommend consulting a tax professional because as much as I tried to like read blogs and do it myself, I still messed up. Having a CPA help me with my taxes and help me file in 2021 for 2020 gives me such peace of mind even if I have to pay like $1,000 for it. Honestly, my sanity is worth it!

In total, I saved $97,919—the majority of that going into my brokerage. Again I maxed out my 401k and IRA first and then whatever was left over I sent straight into my brokerage account.

So that's what I did with my $139,000 income this year! I'm so excited to share more numbers with you in 2021. If you enjoyed this video and want to see more, be sure to hit the like button, subscribe to my channel or to the podcast, and let's talk more money, honey!

---

Disclosure: Some links are affiliate links, meaning, at no additional cost to you, I may earn some compensation. All opinions are 100% my own! I truly appreciate you and your support. :)

FI/RE Diaries: A 25 year old mechanical engineer living in the Bay Area and FIRE-ing in 15 years with $2M

Occupation: Mechanical Engineer

Industry: Medical Devices

Location: Bay Area, CA

Age: 25

Salary: $90k

FI/RE Number: $2M

Years Until FI/RE: 15 years

Current financial situation: SINK

Ethnicity: Asian/Pacific Islander

How did you first hear about FI/RE?

My sister started learning about the concept of FI/RE and got me hooked on the idea. I had just started working full-time and didn’t really know what I was doing with my money. I’m naturally pretty conservative with my spending, but I had everything in a normal savings account and none of it invested. I’ve still got lots to learn, but I’m definitely making smarter choices!

Why do you want to reach Financial Independence/Retire Early?

I like the idea of having financial stability. It makes me feel secure knowing that if anything were to happen to my career, I'd have the money I need to survive without it.

What does FI/RE mean to you?

I'm mostly focused on the FI part. To be honest, I don't see it changing my life completely, but it will give me peace of mind in my financial status. I'll be able to work on my own terms and not feel obligated to stay in situations I don't want to be in because I need the money. I'm also looking forward to taking time off to travel when and where I want without feeling guilty about the expenses!

What types of big expenses does your FI number include?

Traveling! I’ve got a long list of places to explore and I don’t want to feel limited by money.

How much do you spend per month? Save per month?

I spend $1000 - $1500 and save about $2500

What is your % savings rate?

About 70% after taxes

Are you doing anything to achieve FI/RE faster? If yes, what?

Working on those side hustles and being intentional about my spending.

Any advice you'd give to someone who has a similar FI/RE lifestyle as you, especially if it seemed hard or unattainable?

Consistency is key. You may not see your money grow immediately, but looking back over a couple of years or even months, it's encouraging to see all the progress you've made. And while you're focused on saving for retirement, don't forget to set aside some $$ to treat yo self today.

---

Disclosure: Some links are affiliate links, meaning, at no additional cost to you, I may earn some compensation. All opinions are 100% my own! I truly appreciate you and your support. :)

Index Funds Explained! The Easiest Way to Start Investing

Investing can be really intimidating. There's so many complicated terms—options trading, market limit, day limit—things that make investing seem really hard and honestly, exclusionary for most people. I know I felt that way when I first started investing. I had no idea where to start. I was so confused about what to do. I'm here today to talk to you all about how I actually started investing and talk about the easiest way for anybody to start their investing journey.

Welcome back to Millennial Money Honey where we talk about all things financial independence, I share my journey to retire early, and give you all the money saving hacks. If you like this content be sure to like this video, subscribe to my channel or to the podcast, and let's talk money honey. 

I started investing about three years ago and prior to that my dad had set up a custodial brokerage account when I was born. When I gained access to it, his advice to me was just choose stocks that sound good and invest in companies you actually use. For me that was so ambiguous. What if I chose the wrong company?

I was too scared to actually pull the trigger and start investing because I didn't know what to do. Because of that, I basically did nothing for the first few years that I actually gained control of this custodial brokerage account. I love my dad so much. I am so thankful that he even opened this custodial brokerage, but it wasn't enough to actually get me to start my own investing journey. 

I finally saved enough money after working long enough. Plus I did a no-spend year. I decided I needed to learn what to do to invest. So I did what any average millennial does, I Googled it. From my research I decided that I wanted to invest in index funds. 

What is an index fund?

Even that term in itself sounds kind of complicated. If you think of an individual stock as a single flower, think of an index fund as a bouquet of flowers. Instead of owning one individual stock you would own the entire stock market made up of a bunch of individual stocks. An index fund is so much easier because you're not choosing individual stocks. You're buying, for example, a total U.S. stock market fund like VTSAX, SWTSX, or FSKAX. All of those are total U.S. stock market funds. They are all great, they are just through different brokerages, which leads me to my next point.

What is a brokerage?

A brokerage is just a place or a financial institution in which you can purchase, buy/sell, trade stocks. My favorite three that I always recommend are Vanguard, which was founded by the founder of index funds, the guy who literally came up with the idea and made it a thing, John Bogle, Fidelity and Charles Schwab. Now they all have great index funds that they run and manage and they are all good brokerages. I personally use Charles Schwab and I love and recommend them. 

The reason you would want to invest in an index fund over an individual stock is just because an individual stock can go up and down and is really subject to how well the company is doing. Versus an index fund, since it's made up of a ton of individual stocks, if something falls off of the index if it goes down to zero the stock goes away and is replaced. It is a self-cleansing, self-replenishing fund. That's why it's a little bit more safe to hold that. (As with anything financial related though do your own research. I cannot give investing advice. You need to consult a CFA or CFP.) 

Level 1: Robo-advisors

After doing my research and deciding I wanted to invest in index funds, I knew it wasn't worth it for me to pay an actual person to manage my investments. This is where a robo advisor came into play. I use the robo advisor Wealthfront and I 100% recommend a robo advisor for anybody who is just getting started. If it's a matter of doing nothing and waiting until you learn more, or starting with a robo advisor, robo advisors are great. 

What you do with a robo advisor is you take a quiz and basically you tell them your age, when you're planning on retiring, and your risk tolerance, which is just how nervous do you get if the stock market suddenly takes a plunge. Would you pull out all of your investments or would you stay the course? A robo advisor would advise you based on that and buy the funds based on what you've told them. It would be a mix of U.S. stocks, international stocks, bonds, and a couple of other indexes. All of your investments would be well-balanced.

Not only do they invest everything for you based on that, they rebalance if things get out of whack. If you have too much U.S. stocks they'll sell it and rebalance it and keep a healthy portfolio. 

I love Wealthfront specifically because they have awesome financial planning features. You can input when and where you want to buy a house, how many kids you want, if you plan on paying for the college, if you plan on taking time off to travel, and if you want to retire early you can tell them that too. It will tell you based on that information you give it what you need to be saving for all of your financial goals. 

Here is my to sign up for Wealthfront and you will get $5,000 managed for free and I will too if you use my link! I can't recommend them enough for anybody who is too scared to start investing. A robo advisor is how I got started.

Level 2: Target Date Funds

The next level up from robo advisors is target date funds. Target date funds are index funds, which also have a bunch of index funds inside of them—stocks and bonds, etc. You pick a target date index fund based on the year you turn 65 generally. I am in the target date 2055 index fund. They go in increments of five years usually, so pick the year closest to when you would turn 65. 

You can get a target date fund through any different brokerage—Schwab, Fidelity or vanguard. They all have target date funds and what I like about target dates funds is they automatically rebalance and move away from stocks closer to bonds the older you get. It automatically rebalances everything for you as you reach your retirement date. 

Not only that, they tend to be extremely low cost. What you want to look at is the expense ratio on your index funds. For target date funds they usually cost around 0.05% to 0.08% to manage it. What's nice about that is you just pick one fund, dump your money in and never think about it again. 

Robo advisors on the other hand, not only do you have to pay the expense ratio on funds, but usually you pay a very, very small advisory fee. This shouldn't be any more than two 0.25%, which is well below what you would pay an actual person, which is anywhere from 1% to I've even heard of people paying 3% for their financial advisors. Basically what you do not want to do is pay fees because fees are lost money for you. Be sure and check expense ratios on funds!

I would, for example, look up SWYJX. That is the target date fund I invest in. I can see the expense ratio on it is 0.08%. Target date funds are great once you feel comfortable choosing your own brokerage and learning the interface of the brokerage itself. 

What I like about robo advisors is their interfaces are so beautifully designed and so easy to use. Generally for Schwab, Fidelity, and Vanguard, their interfaces are a little more clunky and not user friendly. It is a bit more intimidating to use, which is why I put it at level 2. 

Level 3: DIY Index Fund Rebalancing (Boglehead 3-fund portfolio)

Level 3, once you've figured out which discount brokerage you like using, is to pick index funds and rebalance them yourself. One of the most common methods of doing index fund investing is called the Boglehead 3-fund portfolio. This idea is founded by John Bogle, again the founder of Vanguard and index funds. Basically what you do is pick a percentage of indexes—so you will have a total U.S. stock market index fund, a total international stock index fund, and a total bond market index fund. You choose an allocation that you feel comfortable with. 

Obviously stocks are more risky, but if you are younger you're going to have the time to be more risky. You'll be a little bit heavier in stocks and as you move closer to retirement you want to move the stocks closer to a bond fund.

I currently have my allocation at 80% U.S. stocks, 15% international stocks and 5% bonds. That's what I feel comfortable with. I'm definitely a more aggressive investor and I feel comfortable with those amounts given my current age and the length of time I am going to keep these funds in the market. 

Some people rebalance their portfolio quarterly or half yearly. Rebalancing is when you would sell some assets to put it in the right percentage balance. So if you're too heavy in bonds you would sell some to buy stocks, thus putting it in balance. Since I'm still actively buying funds on a very regular basis because I still have income and am not retired yet, I like to put in money as soon as I get it. 

When a paycheck hits I invest right away and I use my rebalancing calculator spreadsheet to decide where to allocate that money. It updates with numbers directly pulled from google finance so it's somewhat, but not exactly real time. It tells me if I have $1,000 to invest, where should I put that money to keep it in the right balance. This means since I rebalance my portfolio by paycheck I don't need to rebalance quarterly or even half yearly. 

Since I'm with Schwab my three fund portfolio is made up of three indexes: SWTSX,  Schwab's total U.S. stock market index fund, SWAGX, Schwab's total bond market index fund, and SWISX, Schwab's total international stock market fund. 

I started at level one with a robo advisor and progressed to a target date fund and only as of last year I am now DIY rebalancing my index fund portfolio myself. It took a couple of years to level up to that place. If you're scared to start, I highly recommend considering just going for it. You learn from your mistakes and you can always keep leveling up as you learn and grow.

The most important thing is time in the market because the longer you're in the market, the longer your money has to compound and grow and work for you. This way you can take advantage of retiring early or becoming work optional and achieving financial independence. Don't sleep on it! 

All three of these methods, robo advisor, target date funds, and the Boglehead 3-fund portfolio, are great options. Just pick one and don't wait. Let me know in the comments below what level you're on and what your ultimate goal is for leveling up your index fund investing game. 

If you're a novice investor, don't let investing intimidate you! I am here to help you and guide you as much as possible. (Again do your own research though because I don’t  want to be sued by the SEC.) I hope this helped you! Be sure to give it a thumbs up, subscribe to my channel or podcast, and tune in next week where we'll talk more money, honey!

---

Disclosure: Some links are affiliate links, meaning, at no additional cost to you, I may earn some compensation. All opinions are 100% my own! I truly appreciate you and your support. :)