Investment Snowflaking
Posted by
on January 25, 2008
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Debt snowflaking is a successful technique to get out of debt. In addition to the fixed amount that you have planned each month, you apply all the extra money you find to paydown your debt faster. It’s an extension of the snowball method and snowball calculator.
Investment Snowflaking
I didn’t want the investing crowd to be left out in the cold, so I’ve turned the approach around to apply it to building investments, which is the cornerstone of our dollar plan. I’m going to try to add each extra dollar that comes into our house to our investments! These investment snowflakes will help build our investments quicker just as the debt snowflakes help paydown debts quicker.
Get Rich Slowly recently highlighted five of Jaimie’s golden rules for snowflaking. Let’s apply the same rules to investment snowflaking:
Building Net Worth
It’s likely that many of the strategies used by people working on paying down debt and people building their investments would cross over in principle. After all, the goal in both scenarios is growing your net worth overall.
Action Plan
I enjoy saving and investing even more when I can apply a fun strategy to it. This seems like a great one because I’ll be able to invest even more than I planned for the year. It will also help since we finished 2007 just short of our planned goal. Now, off to start snowflaking!
Photography by: ViaMoi
Hey Madison… you beat me too it. Left a comment somewhere about that and was eying it up for a post- on my site a “My Two Cents” post. But you did a great job of applying the snowflake principles to the asset side of the equation.
Very worthy of a Stumble:)
@Ciaran: Great minds think alike… looking forward to your article!
I have to get me some of this. For some reason, I fund my IRA all at once instead of piecemeal.
Madison, glad to see others will be saving/investing their refund. And, happy to see your post on using snowflaking for investments. This is one the best ways to get into the habit of saving and investing money. I am amazed at how often people are daunted by being able to save money- it’s often because they don’t think about it in terms of small, consistent, do-able steps. And, when it is money that you did not expect to have, hard to make excuses!
Excellent post! Thanks for sharing it. I plan to include your article in my weekly carnival review this Friday.
Best Wishes,
D4L
Here’s a snowflake success story for ya: I have been practicing “investment snowflaking” since January 1st. Of course, I never called it that! Great name! I gave up all coffee and snacks and made $50 to invest in my sharebuilder account at ING. I had another $150 from the sharebuilder promos and opening a chase freedom charge card I bought $200 of NLY. The market is down 300 points right now, but NLY is up 0.86.
I’m patting myself on the back on this one! Needless to say, it doesn’t always work out this way!.
Lisa
How neat! This is exactly what I’ve been doing lately. At paycheck time I put a specific amount into savings (“pay self first”), but then at the end of the month ANYTHING that’s left in the checking account, no matter how dinky, gets shipped off to Vanguard, too. On January 31 it was $103.
Dunno how long it’ll take to get rich as Croesus at this rate…but on January 31 I was $103 closer than on January 30. 🙂