Hey there! Welcome to the Independent Money newsletter 👋 We’ll be exploring the latest financial news and discussing how it affects entrepreneurs like you. Plus, we'll share some awesome wealth creation insights from successful entrepreneurs that you won't find anywhere else.

Let’s dive in! 🏊‍♂️

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In this week’s newsletter, we’ll discuss:

• Market Watch: Fed increases rates, Q2’s business investment boom, and why this might be a good signal for B2B businesses.

• Expert Q&A w/ Ankur Nagpal: How much should you invest back into your business versus a traditional solo 401k?

• Financial Tips and Tricks: Brian Feroldi’s 7 money rules to incorporate into your life

• What’s Happening at Carry: New product updates and upcoming events

Market Watch ⏱️ 

Throwback to 2001 Interest Rates

In an earlier Independent Money issue, we mentioned that you can expect more rate hikes in the future…

It turns out that the future is now, as the Fed increased the target rate by another quarter of a percentage point from 5.25% to 5.5% this past week. This new interest rate of 5.5% is the highest since 2001, though policymakers suggest there might be another rate hike in September.

For business owners, this means it will be much more expensive for you to take out loans, and you might be better off padding your emergency fund rather than expanding new projects.

 …Yet Many Businesses Didn't Get The Memo

Despite the dreary news of more rate hikes, new encouraging data released this past week shows that the U.S. economy is surprisingly resilient, as GDP increased at a 2.4% annualized rate in the second quarter of 2023.

However, the most surprising aspect of this report is that Quarter 2 showed a business investment boom, with corporate spending on buildings, equipment, software, and other B2B goods surging by nearly an entire percentage point.

So if you're selling B2B products or services, this is good news that demand may increase, though it's still important to be wary of a potential economic downturn.

Expert Money Q&A w/ Ankur Nagpal 💸

How much should you invest back into your business versus a traditional solo 401k?

There isn't really a one-size-fits-all answer to this question, but it's generally a good idea to prioritize growing your business, especially if you're younger in your career.

When you begin a business, you probably aren't making a lot of money, so trying to reinvest in the business, save for retirement, and create an emergency fund can be stressful. 

You'll have more time to invest for retirement later in your career, so in the early years, focus on growing the biggest, coolest, best business you can. There's a limit to how much you can make through traditional investing, whereas you can grow your income exponentially by acquiring new skills and building a successful business.

In addition, you get to spend pre-tax dollars when you invest in your business. So whenever you make a purchase using business money, you're essentially getting a 30-40% discount.

That said, you should still make at least small monthly retirement investment contributions for two reasons:

1. Time is your friend. Thanks to compound interest, even small contributions can add up to significant sums of money over 20-30 years.

2. It ensures you have the right investment system set up now. If you get the right retirement accounts set up and have an automated system in place now, it's easy to simply increase your investment contributions once your business is more stable.

Financial Tips and Tricks 💰️ 

Brian Feroldi is an investor and the author of the Long Term Mindset newsletter, which discusses long term strategies for building wealth.

Here are his seven money rules, which you may decide to incorporate into your own life:

• Rule #1 – The Tracking Rule: If you track what you spend each month, you'll know exactly where your money goes (and probably be surprised by how much you spend). What gets measured gets managed.

• Rule #2 – The Employer Match Rule: Unfortunately, this doesn't apply to solopreneurs, but other options exist to maximize your contributions, like the Mega Backdoor Roth Solo 401k.

• Rule #3 – The Automation Rule: Always automate whatever financial transactions you can, like credit card payments, mortgage/rent payments, and investment contributions.

• Rule #4 – The Three Day Rule: Before making a $500 plus purchase decision, wait three days. You'll learn whether or not it's truly valuable to you.

• Rule #5 – The 2X Rule: Always invest the same amount you spend on splurges.

• Rule #6 – The 50% Rule: Always invest 50% of any bonus, windfall, or raise to build wealth.

• Rule #7 – The Networth Rule: Similar to rule number one, you'll improve your net worth if you calculate it annually.

What did you think? Are there any you plan to incorporate into your life? 

What’s Happening at Carry?

Here’s what you can expect in the coming weeks

See the full list of events here. ⏰

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If you want more resources on building wealth as an solopreneur/entrepreneur, check these out:

• The Solo 401k handbook 

• What is a Solo 401k?

• How to Open a Solo 401k

• Common Solo 401k FAQs

• Solo 401k Contribution Calculator 

* Investment advisory services are provided by Ocho Investment Advisors LLC ("Ocho Advisors"), an SEC registered investment adviser. In-app brokerage and custody services are provided by DriveWealth LLC, member FINRA/SIPC. IRA plans are provided by DriveWealth, LLC and opened via the Ocho application. Ocho Investment Advisors LLC's internet-based advisory services are designed to assist clients in achieving customer defined financial goals. They are not intended to provide comprehensive tax advice nor provide financial planning with respect to every aspect of your financial situation and do not incorporate specific investments that you may hold elsewhere. Investing in securities involves risk and there is always the potential of losing money. Asset allocation and diversification do not guarantee a profit or protect against a loss, and past performance is no guarantee of future results. For more details, see our Form CRS, Form ADV Part 2 and other disclosures.