Getting Started:

I was discussing some of my posts with my brother and it came to my attention that some of the terminology used in my mini thoughts can be confusing to newcomers. So I want to focus on some of the “basics” that the FIRE (financial independence retire early) and Passive Income folks discuss and utilize. I will try to collect a glossary at the end so this post might be longer than normal. As I said to him the best day to start investing was yesterday. The next best day is right now.

Step 1:

First, we have to cover some financial security basics. Follow the Investment Order, which is something that was worked on through many subreddits, forums like Mr. Money Mustache, and now here. Also this is for US Investors specifically.

1. Establish an Small Emergency Fund. ($1000 or 1 Months expenses in a High Yield Savings Account)
2. Contribute to your 401k/TSP up to your employer match. (This is free salary that you aren’t getting paid if you ignore this, do everything in your power to make this number happen.) Example: $50,000 salary 5% for 5% matching = $2,500 a year you lose because you’re not funding to the match.
3. Pay off any debts with interest rates 5% or more above the current 10-year Treasury note yield. (1/22/26 ~4.2% so any debt over 9%) Your passive income from dividends and stocks is not going to save you more than your spending on this debt.
4. Increase your Emergency Fund. (Ideally 3-6 Months of expenses in a High Yield Savings Account)
5. Max Health Savings Account if eligible (HSA). HSA come out of your pay before Federal and State Income Tax, and Social Security and Medicare Tax. If you don’t use it for medical expenses that year, you get to keep it in the HSA account for life where it can be invested into Index funds to grow. You can even withdraw without penalty after age 65 without needing it to be medically related, but you then have to pay income tax. If you use it for medical it’s always tax free.
6. Max traditional IRA (tIRA) or Roth IRA (Roth) based on your income level. Certain income levels you can’t deduct traditional contributions, and certain income levels no longer qualify for Roth. The key here is that you control your IRA. Vanguard, Robinhood, Fidelity, and you can choose lowest fees and available funds.
7. Max 401k. If your fees and funds are somehow better than an IRA or your income is at a point where you can’t deduct a tIRA then swap 4 and 5.
8. Pay off Debts 3% above 10-year Treasury note yield. (1/22/26 ~7%).
9. Invest in a taxable account. This is where this blog tries to focus.

Now since this entire blog is about making more money. I think its important to understand that if you are struggling financially to save and invest then the list above is vital to building a strong baseline for your future. An emergency fund is critical and employer matches are very important.

If you’re on the lower income side and meeting the goals of 3-6 is stopping you from entering the market for a very long time. I can see value in giving yourself a goal like: Put $50 into a brokerage account each month. Chime does a free round up to a Chime savings account from every debit card purchase (you have to turn this on). Spend $5.48 at Starbucks and Chime will send $0.52 to your savings account. Places like Acorns do this, but have a minimum monthly fee of $3.

Step 2:

Make yourself an Investment Policy Statement (IPS). This is like a promise to yourself about how you want to protect and grow your money. Basically you list out your objectives, how risky you want to be and what your asset allocation should be. Mine is a simple email to myself I update it once a year to re-balance my portfolios:

• Bonds 10% – Primarily focused on VBTLX (Vanguard Total Bond Market Index Fund Admiral Shares)
• 30% International – Focusing on VTIAX (Vanguard Total International Stock Index Fund Admiral Shares)
• 60% Total US Market – VTSAX (Vanguard Total Stock Market Index Fund Admiral Shares, also S&P 500 matching funds, because my 401k doesn’t have VTSAX and neither does my HSA)
• I keep my emergency fund at $20,000 cash. I don’t include it in my IPS, some people do. It’s for true emergency job loss scenarios. I currently have $15,000 in Vanguard’s High Yield Savings Account (HYSA) call Vanguard Cash Plus. The other $5,000 sits in its own savings account at my primary bank.

This will keep you grounded and aiming for your goals. This year with the Passive Income Project, I have set myself a limit of 10% of my current portfolio + savings. If this project see’s growth that exceeds that 10% I will immediately move funds to the above allocations to rebalance myself. My IPS is my old age protection plan and pension all in one. It can change with your needs over time, but you don’t change it every month because Tesla or Google spiked in value. I’m going to move on to the glossary chart now because this is getting longer than expected. It might warrant a part two.

If your looking for tools to start your journey, check out The Toolbox. Chime offers a High Yield Savings Account (3.75% APY) after first $200+ Direct Deposit, they call it Chime+ but it’s free. The referral link gives us both $100. Robinhood is also a great place to start an IRA. It’s the only place I know of that does an IRA match (3%, which is $225 if you contribute to the 2026 cap of $7500), but it requires Robinhood Gold $50 a year which would require $1667 in contributions for the match to “pay off” Gold. I’ll make a post talking about all the perks for Gold.

~~Miniwing~~

Recommended Reading:

Oh and I almost forgot three really excellent books on the mindset of wealth building:¹ The Richest Man In Babylon, The Millionaire Next Door, Rich Dad Poor Dad.

1. As an Amazon Associate I earn from qualifying purchases ↩︎

Glossary of Key Terms

Term	Definition
4% Rule	A rule of thumb stating you can safely withdraw 4% of your total portfolio each year in retirement without running out of money.
401k	A retirement savings plan offered by an employer in the US.
Asset Allocation	How you divide your money among different types of investments (e.g., 80% stocks, 20% bonds).
Bull vs. Bear Market	A Bull market is when prices are rising; a Bear market is when prices drop 20% or more from recent highs.
Compound Interest	Earning interest on your interest, causing your wealth to grow exponentially over time.
DCA (Dollar Cost Averaging)	Investing the same amount of money at regular intervals regardless of whether the market is up or down.
Dividend	A small slice of a company’s profit paid out to shareholders as a “thank you” for owning the stock.
ETF (Exchange-Traded Fund)	A “basket” of hundreds of stocks you can buy all at once to stay diversified.
Expense Ratio	The annual fee you pay to own a fund (like an ETF). Ideally, you want this as low as possible (e.g., 0.03%).
Fat FIRE	Retiring with a high standard of living ($100k+/year expenses) with no sacrifices on travel or luxury.
FIRE	Financial Independence Retire Early (The idea that once you reach FI, work is optional).
FIRE Number	The total amount of money you need to retire. Usually calculated as 25x your annual expenses.
FU Money	Savings that give you the freedom to walk away from a toxic job or situation without fear.
HSA (Health Savings Account)	A tax-advantaged account for high-deductible health plans. No tax now, no tax later on medical expenses.
IPS (Investment Policy Statement)	Your “Investing Constitution” that defines your goals and asset allocation to prevent emotional decisions.
Lean FIRE	Retiring on a very minimalist budget (typically <$40k/year expenses) focused on extreme frugality.
MMM	Mr. Money Mustache, one of the most well-known FIRE bloggers in the world.
NAV (Net Asset Value)	The “per-share value” of a fund, calculated by dividing the total value of assets by the number of shares.
Passive Income	Money earned with little ongoing effort, such as Dividends, Interest, or Rental Income.
ROB (Return on Basis)	Tracking how much of your original “seed” money you have pulled back out of an investment.
ROC (Return of Capital)	A payment from an investment that is technically just a portion of your original money being returned.
Roth IRA	A post-tax Individual Retirement Account. You pay tax now, but withdrawals in retirement are tax-free.
SWR (Safe Withdrawal Rate)	The percentage of your portfolio you can spend annually (4% is standard; 3.5% is conservative).
tIRA (Traditional IRA)	A pre-tax Individual Retirement Account. No tax now, but you pay income tax at withdrawal.
TSP	The Thrift Savings Plan, which is the government version of a 401k.
VTSAX / VTI	Total Stock Market funds often cited by the FIRE community to own a piece of every public US company.