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Why You Need An Opportunity Fund
Some of the most fun you'll ever have with money.
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Hey there my friend, happy almost 4th of July!
No sponsor for this email but instead here is a quick update on my June investments. The summer has everyone busy, but don’t forget about those finances!
What did you buy this week?
My buys:
$VOO S&P 500
$VYM High Div Yield
$VUG Vanguard Growth
$BND Total Bond Market
$VXUS Total International
$VNQ Vanguard Real Estate— Cade Invests (@cadeinvests)
8:02 PM • Jun 28, 2024
Quote
“I’ve found that luck is quite predictable. If you want more luck, take more chances. Be more active. Show up more often.” - Brian Tracy
Why You Need An Opportunity Fund
Having an emergency fund is level one of personal finance.
But let’s be honest. Emergency funds = boring.
Level 2 is having an opportunity fund.
Opportunity funds = exciting.
Hot take incoming, having an opportunity fund can have a bigger impact on your life than an emergency fund.
You’ll see why 👇️
What Is an “opportunity fund?”
Ever wish you had some extra cash laying around to spend and not feel bad about. That’s basically the job of an opportunity fund.
Lets cover a few examples of when it would come in handy.
That rental house you always wanted came up for sale. You need to get an offer on it ASAP because it’s not going to be on the market long. Opportunity fund.
Your 70 year old neighbor offers you a killer deal on his used truck before he goes to “trade it in at the dealer next week.” Opportunity fund.
For the first time in history your college baseball team plays in the National Championship. You buy tickets and plan a 15 hour road trip with your boys two days before. Opportunity fund. (yes, we just did this two weeks ago.)
You get the point. An opportunity fund is for those higher than usual spending events that don’t qualify as an emergency, but still offer great “value.”
How Much Should It Be?
We all know the emergency fund recommendation of having ~6 months of living expenses saved up and locked away for a rainy day.
In my opinion, there is no specific number you should have ready to go for an opportunity fund but here is a suggested range that I have found works for me:
High Side: Three months living expenses.
Low Side: One months living expenses.
Somewhere in here is what I have found to be the sweet spot. For smaller things that come up you won’t need all of it, but for bigger opportunities that involve investments you’ll be ready to rock.
Should You Invest It?
So now you have a little extra cash set aside, what should you do with it?
While I DO NOT like investing an emergency fund, I’m okay if one wants to “conservatively” invest their opportunity fund (no yolo’ing it into meme stocks).
Why? Simply put because if needed you can say no to an opportunity if your investments are down. Emergencies often don’t give you the choice on if you should spend money.
If you don’t want to invest it, here is are three ways to earn 4%+ on uninvested cash.
Conclusion
Once you nail the basic blueprint for your finances, consider tossing a little extra cash into an opportunity fund.
When done the right way, this will be some of the most fun you have ever had with money.
Opportunity is knocking - Cade.
Don’t miss the next email 👇️
Chump Change Picks
The $20M+ Agriculture Newsletter - My First Million put out a pod with Kevin Van Trump that might be their best episode of the year in my opinion. Kevin’s blue collar tone is a fun listen, and his story of going from corn trader to newsletter operator is great.
How Backdoor Roth Works - Over the income limit and can’t contribute to a normal Roth IRA.? Here is a short and to-the-point video by The Money Cruncher on how to do a Backdoor Roth contribution correctly.
75 Chipotle Bowls Later - Yes, a Wells Fargo analyst did us all a favor by ordering 75 burritos bowls to measure portion size. Here is the chart summarizing this ground breaking data.
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Nothing in this email is intended to serve as financial advice. Do your own research. Thanks for reading, if you have any questions, comments, suggestions, etc. about the email don’t hesitate to send me a reply.