• Richie Crowley

The Risk Averse Investment Strategy That Is Turning The 99% Into Millionaires

You may not want to hear this, but this is what you’ve got to do.


Withdraw all of your money, go to a department store and ask them for 4 shoeboxes, equally distribute your money into each shoebox, and then hide them in various rooms, cabinets, closets, and drawers around your home.


Now THAT is how you stay liquid.


And earn $0.00 of interest every year.


That is not the solution.


In 2016, I was a 25-year-old living in my parent's basement. The same basement in the same home that I grew up in. Failure to launch.

I had just moved back from Europe and was working in Cambridge, MA at a Tech Start-up in the recruiting space. I wasn’t sure I wanted to put down roots (sign a lease) in Boston so I asked my parents if I could move back home. I hadn’t lived at home since I was 16. They agreed under one condition: The money I was not going to be paying in rent, I had to allocate towards my student loans and invest the rest. That meant $350 towards my loans and $458 into a Roth IRA.

I am so fucking grateful they made me do this.


Understanding Roth IRAs

A Roth IRA is a tax-advantaged, retirement savings account, funded with after-tax dollars, that allows you to withdraw your savings tax-free. Roth IRAs are investment accounts and do have returns. At any time, account owners can withdraw contributions without penalty, so long as it’s a value less than or equal to what they’ve contributed. If you withdraw earnings prior to age 59½ , you are subject to taxes and penalties. Some exemptions do apply such as building or rebuilding a home, after the account holder becomes disabled, or after the death of an account holder.

Roth IRA’s are liquid cash reserve accounts, with annual maximum contributions, recently increased to $6,000 as of 2019 for those under 50 years old. (*Source: Investopedia)

“The biggest advantage of a Roth IRA is that you have a bucket of money that you can always withdraw your contributions from without penalty. Roth IRA’s are a second level cash reserve account.” — Katie MacDonald

Since opening my Roth IRA account in late 2016, I’ve evolved into an educated investor. Educated, not defined through a complete understanding of every available option, but educated in knowing what I want and need.

I want risk-averse solutions, I want liquidity, I want socially responsible investments, and I want low maintenance.

I want this because I need financial security.

One of my biggest anxieties comes from financial insecurity.

So, in an effort to honor my desire for a low maintenance strategy, I educated myself on Dollar Cost Averaging, a staple of my current liquid-based risk-averse investment strategy.

Dollar-Cost Averaging is the strategy of spreading out your stock or fund purchases by buying at regular intervals and in roughly equal amounts. When done properly, it can have significant benefits for your portfolio. To leverage DCA, all you do is at equal intervals take your fixed dollar amount and purchase as many shares as you can. Dollar-Cost Averaging is systematic savings for those without large sums, i.e. most of us in the 99%.

“When you dollar-cost average, you invest equal dollar amounts in the market at regular intervals of time. The idea is to get the best deal on a desired investment by controlling for market fluctuations. Rather than trying to time the market, you buy in at a range of different price points.” Matthew Frankel

Dollar-cost averaging also eliminates the need to “time the market” and was appropriate for me because it got me into the appropriate portfolio, and encouraged me to stay on track with my long-term financial goals. Think of it as automating your investing.

I began to use it.

I selected my fixed dollar amount and scheduled interval deposits into my Roth IRA and then let it sit. Low maintenance indeed.

A year later I decided to check in on it.

It was January 2018, I was preparing to leave that Cambridge based job and I wanted to “run some numbers” to make sure I could afford to bet on myself professionally. Year one was a success. Since inception in late 2016, I had an overall 5.53% return in my Roth and almost $650 more dollars in the account than what I had deposited.

I was ready for 2018.

Again, I set my fixed dollar amount, scheduled my intervals and let it run.

But, when I checked back in early 2019, things had changed.

Not only was my Roth IRA reporting a -5.52% loss for 2018, but since inception, this account had a -.89% loss. I had less money in my account than the value I had deposited into it. I was upset.

I questioned everything.

Not only was I the 27-year-old real-life Matthew McConaughey, but I was moving backward. My investment accounts were Benjamin Buttoning.

The shoebox strategy wasn’t sounding all that bad.

The truth is that markets fluctuate. They rush, they dip, they rebound.

I needed to reeducate myself. Having financial insecurities and opting into the idea of possibly having less money tomorrow than today sucked.

I continued to evaluate more options.

That’s when I created a strategy that I call: Triple Interest Investing.


In Triple Interest Investing, you have a starting balance that earns interest (1) in one account, and that interest is then deposited into a second account with a higher rate of return. Once the funds are in the second account they will continue to earn interest (2) that is then reinvested into that same second account, to earn more interest (3).

The third step of Triple Interest Investing leverages what is known as compounding interest. Compound interest is the addition of interest to the principal sum of a deposit.

To begin with Triple Interest Investing you’ll need a High-Yield Savings Account.

A High-Yield Savings Account is a bank account that offers you a higher interest rate for deposits than a traditional savings account. They are FDIC insured and completely liquid.

As of February 2020, Bankrate and NerdWallet reported that the best available High-Yield Savings Accounts offered rates between 1.95% — 1.60% APY. Most of these accounts also payout monthly so you will earn slightly more in interest due to compounding interest.

Quick Math Example: Starting Balance = $10,000, High-Yield Savings Account Annual Percent Yield =1.85%. With this starting balance and this rate, you’ll actually finish a 12 month calendar year with a 1.87% APY. So, without having touched your money, you’ll earn $186.58 compared to the pennies you would have earned in interest with your traditional savings account. Think Bank of America’s .03% APY.

If you continue to use this one move strategy, Single Interest Investing, you’ll remain liquid and completely risk-averse and over time pad your bank account. But, as you increase that base balance, new temptations will come: Stock Market, CD’s, etc.

That’s what happened to me and how I developed the TII strategy.

“Triple Interest Investing is a low maintenance, risk-averse, liquid-based investment strategy for the 99% that can make you a millionaire.”

Triple Interest Investing: The Strategy

  1. Open a High Yield Savings Account with monthly payouts. Aim for 1.85% APY or above.

  2. Deposit a sum you are comfortable with into your High-Yield Savings Account to be your starting balance.

  3. Open a Roth IRA

  4. Schedule a monthly auto-payment from your High-Yield Savings Account to your Roth IRA equal to the value of your monthly interest earnings from your High-Yield Savings Account, for the day after your interest earnings are deposited into your High-Yield Savings Account. (See Example Below: $10,000; 1.85% APY)

High Yield Savings Account ScheduleCongratulations!

You are now Triple Interest Investing.

You will now earn 1.85% from your starting balance, and then automatically invest that into your Roth IRA which will return a conservative estimate of 5–7% and then those earnings will be reinvested into your Roth IRA further increasing the balance.

With this strategy, using figures from the example, you’ll have nearly $200 more by the end of year 1.

Now, here’s where this strategy can really advance your investments.

Depending on your savings, what you should be doing is aiming to max out your annual contribution to your Roth IRA.

The first reason to do this is that your contributions stay liquid in your Roth IRA, and you’re able to withdraw them at any time without penalty. The second is that when using Triple Interest Investing, you’ll be contributing the maximum amount into your Roth IRA at a discount.

Here’s how it works.

  1. Open a High Yield Savings Account with monthly payouts. Aim for 1.85% APY or above.

  2. Deposit a sum of $6,000 or more into your High-Yield Savings Account to be your starting balance.

  3. Open a ROTH IRA

  4. Schedule a monthly auto-payment from your High-Yield Savings Account into your Roth IRA equal to $500, for the day after your interest earnings are deposited into your High-Yield Savings Account.

In the example above, after 12 months of Triple Interest Investing, the account owner will have maxed out their $6,000 annual Roth IRA contribution, but will still have $60.81 in their High-Yield Savings account.

A 1.01% discount.

Why?

Well, interest.

When using Triple Interest Investing to max out your annual contributions to your Roth IRA, you are allowing yourself to contribute as a discount. Here’s what this looks like with large sums of money. On the contrary, if you were just contributing the max to your Roth IRA without the use of a High-Yield Savings Account, then you would not be investing any interest and debiting yourself the full $6000 annually, rather giving yourself a discount using Triple Interest Investing.

Think of this strategy as paying yourself every month, using your High-Yield Savings Account as a buffer account that allows you to max out your Roth IRA at a discount. So, as it is, you can use Triple Interest Investing 1 of 2 ways.

  1. Invest only the interest from your High-Yield Savings Account into your Roth IRA using Dollar-Cost Averaging.

  2. Max out your annual Roth IRA contribution with $500 monthly Dollar-Cost Averaging deposits, discounting yourself by using the interest earned from your High-Yield Savings Account.


To avoid any confirmation bias in the creation of this strategy, I shared it with Katie MacDonald of MacDonald Wealth Management and asked her to calculate a conservative estimate of the value of a Roth IRA if a person:

  • Opened the account at age 25

  • Contributed the annual max ($6,000 in 2020)

  • Held the account without withdrawals for 40 years

Estimate Value at age 65: $985,315.00

Dollars shy of $1 Million.

And this is with a conservative 6% rate of return, and without accounting for expected increases in maximum annual contribution allowances.

Now, before you loosen your collar, roll up your sleeves, and educate me on alternative investment strategies learned on Wall Street, know that I am fully aware of the many strategies individual investors can use. I trust you know your shit, and I would love to learn from you. But, this isn’t for you. This is for me, and anyone else with financial insecurity anxiety in the 99%.

Triple Interest Investing is a low maintenance, risk-averse, liquid-based investment strategy for the 99% that can make you a millionaire.

“Once people began to understand that Roth IRA account holders could withdraw what they put in without penalties, they started using Roth’s to save for the future, for their children’s education, for cross country moves. It has changed lives.” — Katie MacDonald


As I edited this, still soaking in a bath of gratitude for my parent's agreement, I thought of some other seldom mentioned strategies I’ve used to save money.


  • Live At Home: If the average rent in the top 100 American cities for a 2 BR apartment is $889 and you spend just one year at home, you’ll save $10,668 in addition to the additional temptation costs when living on your own. Imagine at 23 you could start Triple Interest Investing, what a head start that would be.

  • Consider Sobriety: You may be scratching your head here, but trust me on this. When I went sober in 2018, I tracked back 1 year of alcohol-related spending. This included drinks, food after 10 pm on weekends, and ride-sharing Friday — Sunday. My life was revolving around alcohol. The amount was shocking: nearly $400 a month in alcohol-related spending. Imagine that, just by removing alcohol I could have been Triple Interest Investing 80% of the max contribution of a Roth IRA and become the Sober Millionaire.

  • Opt For Public Transit: This past week I stayed with a friend in Mid-City Los Angeles and took the bus to Venice and back each day. Each trip was $1.75, $3.50 roundtrip. If I used a rideshare app it would have been $23+ each way. A daily saving of $42.5, more than enough to invest. Also consider car expenses: Monthly payments, insurance, gas, and more. I understand public transit is not an option for some Americans, but for some it is, and we chose not to use it. Try it for a week, record the money saved and see for yourself if this makes sense.

  • Subscription Evaluation: In late 2019 I shared that I spend $32.43 a month to run all my businesses and social subscriptions. Do you know what you spend?


In 2016, in that same basement, I cried for the first time in 8 years in front of my mother. I confided in her that I didn’t think that I would ever have what she and Dad did. Not in romance, but in a home, a family, a steady life.

Earlier that day, it was a Wednesday, I was asked by the COO of my work to consider resigning. Remember that Tech job in Cambridge I just started? Yup, 2 weeks into my employment they asked me to leave.

I was on the verge of losing my first job, and a $40,000 salary.

I ended up convincing them to demote me to a summer intern and stayed with the company for almost 2 years. It was during this experience, and in the years since, that I recognized how much value I had assigned to income.

Money can deliver freedom, relieve financial anxiety, and minimum wages need to be liveable, but beyond that what is wealth if we just hoard it?

I’ve learned to focus not on how much I earn, but on what I save. Inherent in what we save is a confrontation of what we spend, and we can’t continue to distract ourselves into thinking that the solution is always in additional income.

Richie. Human.


💰


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