Frequently asked questions
Adapted for US readers from the Swedish RikaTillsammans FAQ. Items marked US review depend on US tax or lending rules and need a check before publishing.
Getting started
How do I get started with investing?
Whatever the amount, the method is the same. Three things come first:
- Build an emergency fund before you invest. No cushion, no investing.
- All investing carries risk. Values go up and down. Respect risk, but do not fear it.
- Never invest money you will need within three years. Markets can fall 30% in 30 days. Short term money belongs in an FDIC insured savings account.
Then automate a monthly contribution into a broad, low cost, global index fund, inside a tax advantaged account where you can: your 401(k) up to the employer match, then a Roth or traditional IRA, then a taxable brokerage account.
How big should my emergency fund be?
There is no single right answer. The classic "three months" rule comes from a 1985 US study on how long unemployment typically lasted. In the US, unemployment benefits are thinner than in much of Europe and health insurance is often tied to the job, so three to six months of expenses is a sensible default. Note: months of expenses, not months of income.
Things that raise the number: owning a house, children, pets, older cars and appliances, a single income household, variable or commission pay. Things that lower it: renting, good disability and health coverage, a high income, two stable earners.
Lump sum or invest monthly?
The math says invest everything at once; it wins about two times out of three, because money that is invested longer has longer to work. The emotions say spread it out; nothing hurts like investing and watching it drop the next week. We suggest the 50/50 rule: invest half today and the rest on a fixed schedule over the coming months. Vanguard has published the underlying research.
Which fund should I choose?
The research points to the same answer again and again: save regularly, automatically and for the long term in a broad, cheap, passive, global stock index fund, provided you do not need the money for five to ten years or more. In the US, total world funds cost well under 0.2% a year, and every major brokerage offers one. Think of it as a bag holding a small slice of the world's several thousand largest companies. Over ten years it gives you the best odds of success.
Robo advisor or index fund?
Honestly, it matters very little. Either way you will be ahead of most investors. A robo advisor is an all in one solution that handles rebalancing and allocation for you; some people love that, others prefer doing it themselves for a lower fee. Choosing between two good index funds, or between two reputable robo advisors, also matters very little. Pick one and get started.
How should I invest $10,000, $100,000 or $1 million?
It depends entirely on where you are going. Like the Cheshire Cat told Alice: if you do not know where you want to go, it does not matter which way you take. Ask yourself:
- When will you need the money? This is the most important factor.
- How would you feel if it fell 30% next month?
- Is your emergency fund in place, and is high interest debt paid off?
- Which tax advantaged accounts have room left?
The method does not change with the amount. The amount only changes how much the details are worth.
Your portfolio
What about adding this to my portfolio?
Dividend stocks, sector funds, gold, a regional fund, crypto. Before discussing the asset, ask:
- What was the decision process that led to "I should add ___"?
- What problem will ___ solve in your portfolio?
- What are your circumstances?
People invest for different reasons: to maximize expected return, to express identity, for the fun of it. All are valid, as long as you know which one you are serving and keep the "fun money" small.
What do you think about fund X?
If a fund is not on our list of preferred funds, there is a reason: it is too expensive, too narrow or actively managed. Start with how we pick funds (cost, breadth, passive), then judge fund X against those three tests.
What should I do with my old funds or stocks?
Every situation is unique, and in a taxable account selling can trigger capital gains tax. Inside a 401(k) or IRA, switching has no tax cost. In general, moving from bad odds to better odds always improves a portfolio: active to passive, single stocks to an index fund, expensive to cheap. For a taxable account with large gains, talk to a fee only advisor first. US review
If it is that simple, why does not everyone invest this way?
Because it takes time and it is not exciting. As one of the world's most successful investors put it: most people do not have the patience to get rich slowly. The catch is the "over time". That is why things that swing wildly every day are so tempting, and why their long term odds are worse.
Is investing safe?
Yes, under the right conditions. The key relationship is between time horizon and the probability of a gain: the longer you hold, the higher the odds. All investing carries risk, and with single stocks you can lose everything; with a global index fund that is very unlikely. Read "Don't fear the risk" next.
How do I invest ethically and sustainably?
Most large global index funds already screen out some companies. If you want more, many US providers offer ESG versions of total market and total world funds at low cost, and several robo advisors offer socially responsible portfolios.
Home and mortgage
Fixed rate or adjustable rate mortgage? US review
This answer is different in the US than in Sweden. Swedish mortgages are mostly variable, and there the advice is to stay variable. In the US, the 30 year fixed mortgage is the norm and gives you something rare: if rates rise you are protected, and if rates fall you can usually refinance. An ARM can make sense if you are confident you will sell or refinance before the rate resets. Compare the total cost, not just the starting rate.
Pay down the mortgage or invest?
Generally: do not prepay beyond what you need to unless you have specific reasons. Compare the "return" on an extra $100 of principal (your mortgage rate, after any tax deduction) with the expected long term stock market return. If your mortgage rate is well below that, investing usually wins on the math. If your rate is high, or a paid off home gives you real peace of mind, prepaying is a perfectly good choice. Max the 401(k) match first either way.
How do we help our children buy their first home? US review
We planned to help with part of the down payment, not all of it, to leave them the pride of "I did this myself". A large sum can hurt as easily as help, which is why saving with children matters as much as saving for them. US specifics to check: the annual gift tax exclusion, lender rules on documented gift letters, and whether a 529 plan or Roth IRA is a better vehicle for earlier goals.
Income and career
What is a reasonable raise to ask for?
This may be the most important and most underrated money advice there is. Income drives what you can save, your retirement, and your safety net. It is also the factor most correlated with wealth. Stop thinking in percentages and think in value: not "what is a normal raise?" but "what value do I create and what is that worth?" For the right person, an extra $1,000 a month is small change to most employers.
How do people reach a very high salary?
The common paths: specialized expertise, the right industry (tech, finance, consulting, medicine, enterprise software sales), changing jobs every two to four years, and negotiating actively. A recurring warning: do not fixate on the number. Very high pay often comes with hours and pressure that cost something too.
Should I buy into the company I work for?
Most people strongly advise against buying a small minority stake. You would concentrate both income and capital in one place; if the company fails, you lose the job and the investment together. A minority owner has little real influence and may find the shares hard to sell. If you do it, insist on a shareholder agreement with exit clauses, a sensible valuation and a credible plan. The same logic applies to holding too much employer stock in a 401(k).
Keep money in my company or take it out and invest privately? US review
The Swedish answer (take it out early, because the end result is the same and you avoid the risk) depends on Swedish tax rules and does not carry over. In the US the answer depends on entity type (LLC, S corp, C corp), retirement plan options such as a Solo 401(k) or SEP IRA, and state tax. Rewrite with a US CPA before publishing.
Goals and the good life
How do I save for kids, retirement or financial independence?
The principles are the same; only the time horizon changes. A ten year goal is a ten year goal whether it is for your children, your retirement or financial freedom. The US adds account choices: 529 plans for education, the 401(k) and IRA for retirement, a custodial account or a Roth IRA for a working teenager.
What do you think about FIRE?
Having the freedom to work as much or as little as you want, with whom you want, is great. Financial independence has long been our goal; early retirement never was. A good question to ask yourself: is FIRE a way to move toward something, or do I just want to get away from something? Many of the wealthiest people in our community never stopped working. Work often gives meaning, belonging and structure.
Can money really buy happiness?
Yes, the research is clear. But like any skill, it takes practice. Buy experiences rather than things, pay in advance, do it together with others, treat it as a reward rather than a habit, and buy less insurance against small losses.
About us
Are you independent?
You decide, but we usually say no. We have strong opinions about what works and we put our own money behind them. We are not a newsroom and not a testing lab. Think of us as a friend who is a little further along the road. We do not sell financial advice and we do not sell our own financial products.
Where can I get professional help?
When we started investing, we often wondered who we could trust. Many advisors, especially at banks, play a different game than individual savers. Good help does exist, and it is often worth every dollar. In the US, look for a fee only fiduciary advisor, who is legally required to act in your interest and is not paid by commission.