3 Ideas: 401K Mind Hack, Be Quitty, and Too Good to Go


written by oz chen

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Welcome to the Rich List, a weekly newsletter of 3 ideas to increase your wealth, well-being and wisdom.

Idea 1: Ode to the 401K

While my crypto and individual stocks have taken a walloping, my 401K has performed much better (albeit slightly bruised).

Amidst the bloody 2022 market downtown, I’ve come to appreciate the behavioral power of 401Ks:
Retirement accounts diversify against riskier things you can do with your money.

There are a few behavioral gems baked into 401K investing:

  • Automatic diversification: most companies use a 401K provider like Fidelity, which will let you pick from a handful of funds. This default prevents you from picking individual stocks.
  • Automatic investment: set up money to be taken out of each paycheck. This automates the behavior of consistent investment. Out of sight, out of mind.
  • Mental separation: 401K funds feel separate from everyday finances and discourages meddling with. It’s a healthy separation; “this money is for future me.” You are less likely to log into your 401K account than Robinhood.
  • Less trading: the lack of options within 401Ks means less desire to trade and incentivizes sticking with an investment for the long term, which is where most returns come from.

The combination of boringness, default options and few choices makes the 401K as insurance, a hedge, against the part of me that wants to put money in higher-risk investments.

The takeaway? If you have a 401K, prioritize maxing it out before you put your hard-earned money at risk.

Note: Why 401Ks specifically? IRAs are the same animal, but different breed. You can trade in your IRAs, and depending on the custodian there are many investments to choose from. Though you’ll still benefit from the mental separation of IRAs as a retirement account.

Idea 2: Be as Quitty As You Are Gritty

Quitting is a vital skill.

That’s what I learned from Annie Duke’s newest book, Quit: The Power of Knowing When to Walk Away.

Duke flips the script on the cultural worship of never giving up. We laud people for grit and sticking it through…but we never celebrate people for quitting on time.

Like this story of a Siobhan O’Keeffe, who ran the 2019 London Marathon on a broken leg:

Her fibula bone snapped — at mile eight. But she continued running and finished the race, obviously against medical advice…Let’s all admit that we are also like, “Oh, she’s so tough.” We admire that. It’s the persisters who get all the credit, and the quitters are just cowards.

It’s obviously bad to run on a broken leg. The injury represents the opportunity cost of never running another marathon again. But this type of faulty decision making abounds, whether it is staying in a toxic relationship or a bad job for too long.

Annie Duke walks through colorful case studies – paired with behavioral science – about the art of quitting.

There are so many lessons, but here are 3 that stuck with me:

  1. Be open to new opportunities beyond your current job, domain, or lifestyle. Make time to explore; there may be options that you may have never considered.
  2. Avoid “goal myopia“: this is following through on a goal no matter how bad it gets. The marathoner with a broken foot doesn’t consider that she gained +8 miles of running; she thinks she lost the entire 26.2 miles by not finishing. Progress over perfection.
  3. Be as quitty as you are gritty: Quitting is not incompatible with grit. It takes courage to quit. You want to quit the wrong things so that you can bring your grit to work on the right things.

This resonates with another life observation: I subdue the urge to say I’m sorry when someone tells me they got a divorce or lost a job.

First, I don’t know if they’re actually happy or sad about it.
Second, quitting one situation can make room for a much better situation.
Ultimately, it’s better to not project my values.

Idea 3: Too Good To Go

A friend recommended the Too Good to Go app, which helps consumers connect with businesses with extra food that would otherwise be thrown away.

Here’s how it works:

  • Search for your neighborhood (more options in dense/big cities)
  • Browse offerings from local restaurants
  • Pay a cut rate price (e.g. $4.99) for a variety box from the restaurant
  • Pick up (no delivery)

My friend lives in San Francisco and has gotten deals like 4 bobas for $4, or even boxes of dimsum. I checked around in Long Beach (smaller city) and I only see offerings from donut shops & bakeries.

I love this business model. It’s win-win-win: customers get to try foods for low cost, restaurants maximize their inventory, and the environment benefits from less food waste.

I just wish more businesses were on this platform. So give them a download whydoncha?

Check it out: Too Good to Go app.

Just for fun

This is a confronting flow chart. It speaks to the arbitrary nature of identity (“I’m a liberal!”) and instead focuses on what we’re all incentivized to do, given our life situations.

Aligns with my beliefs outlined in action over identity.

liked this article? tell your mom, tell your kids


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