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- 3 Simple "Roth vs. Traditional" Rules, Research-Backed Decision-Making Principles from a Poker Champion, and More
3 Simple "Roth vs. Traditional" Rules, Research-Backed Decision-Making Principles from a Poker Champion, and More
Money Question: "How do I balance student loans and investing?"
Benjamin Daniel, CFP®
August 02, 2025
Read Time: 4-minutes
Happy Saturday,
Here is this week’s edition of 6-Point Saturday — financial insights to help you make smarter money decisions.
Table of Contents*
*Clickable in the online version.
Point #1 — Two Men Learning to Fish
“This is a story about two men who learn how to fish.
The first fisherman heads straight to the marina to buy the best fishing boat money can buy. He specs out a custom, carbon fiber rod. He spends time reading up on everything there is to know about fishing. A few months later, he finally feels ready to fish.
The next day, he heads out on the lake in his new boat with his fancy rod and wealth of fishing "experience" built up over the last few months. But six hours in, nothing. Not even a nibble. What happened?
Turns out, the second fisherman had already sucked the lake dry.
On day one, the second fisherman grabbed a simple rod, sliced up a hot dog, and went out to the lake. The first day, nothing. Second day, nothing. Third day, nothing. One week. Nothing.
But on the eighth day? His first nibble. And every day after, he honed his technique. He found a baiting technique that worked a bit better. Or a new spot with a few more fish. And after three weeks of iteration, he found the winning combination.
Before long, he was hauling in hundreds of fish every day. To keep up with his daily haul, he hired a small team to help him. And from there, he opened a restaurant with fat margins to sell his fresh fish. And after that, he opened a fishing school to teach others his craft.
He did all of this while the first fisherman sat around gathering gear. Sure, the first fisherman felt productive. He was "learning" after all, right? But there was one difference: feedback.
Every day the second fisherman had an idea of something that might work better. And every day, he went out to validate his assumption. If it worked, his strategy improved. And if it failed, he learned something new.
The moral of this story?
Get to action as quickly as possible. When you find yourself gathering gear, grab a simple rod and start fishing.”
Taking action on the fundamentals today is more effective than implementing advanced techniques tomorrow.
When we convince ourselves we need the best resources or perfect information to get started, we’re blind to the costs of inaction.
This can be an easy trap, especially for competitive individuals (like myself).
For instance, early in my career, I was drawn to earning alpha or outperforming the market index.
I read everything I could on value investing…
When my first focus could’ve been simply earning market returns (fortunately, I corrected my ways within a few months).
In the world of personal finance, this trap is everywhere. Learning about:
Complex life insurance policies, when term insurance is usually fine
Alternative assets, options, etc., when passive indexing works wonders
Optimizing credit card points when there are more pressing issues, like building an emergency fund
Mapping every detail of a “side hustle” before launching when you may learn more by doing
Instead, when you’re just beginning to get your finances in shape:
Don't try to master every money strategy at once. Focus on the few actions that move the needle most for you today.
— Money Wisdom (@MoneyWisdom_)
12:17 AM • Jul 16, 2025
Otherwise, the delayed action typically costs us more than getting started on the fundamentals.
Point #2 — 3 Simple “Roth Vs. Traditional” IRA Rules
One of the most hotly debated topics in personal finance:
Should I contribute to a Traditional IRA or a Roth?
Continuing the theme from Point #1, it can be easy to get hung up on researching all of the factors and trying to make the perfect decision here.
But, again, the cost of inaction can be huge.
Research takes time and makes us susceptible to paralysis by analysis.
Rather, a simple rule might be to “Roth Optimize.”
In other words, when you’re clearly in a low income tax bracket year (gap year, starting a business, etc.), Roth contributions probably makes more sense.
If you’re in the middle income tax brackets, you could consider tax diversifying: half to Traditional & half to Roth. (If you really must get technical, rather than splitting, you might ask: Will my retirement tax bracket likely be lower than it is now? If so, Traditional might give you more bang for your buck.)
If you’re in the high-income tax brackets, Traditional is probably the way to go.
The key: don’t let “perfect” be the enemy of great.
Point #3 — How to Pay Off Student Loans & Invest
“I (22m) am a college new grad. I started my full-time job this week and wanted to ask what percentages I should save and use to pay off my student loans. The base salary is $85,000 with a $5,000 sign-on bonus and a $5,000 retention bonus after one year. I have $ 30,000 in student loans and $ 9,000 in a brokerage account. I live at home, have no expenses, and work remotely. How do you suggest I save my money and pay off debt with no retirement date in mind?
This individual is starting off from a strong position. The ability to have minimal expenses by living at home & working remotely can be a great opportunity.
Let’s assume he still uses at least 20% of take-home for having fun.
That leaves 80% (!) for investing and saving.
First, he could prioritize a starter emergency fund. This should generally be a few thousand dollars. He could use half of the sign-on bonus to enjoy and the other half to get this started.
Next, he could contribute enough to any employer retirement plan to get any match. This “free” money is part of your compensation.
Now it’s time to look at the student loan interest rates. Last week, we saw an individual with a low student loan interest rate (2.75%). This week, the Reddit user went on to say his highest loan is 6.5% and the rest under 4.5%.
So, the case isn’t quite as obvious as last week. This decision partly depends on his risk tolerance and comfortability with “debt.”
He might want to get more aggressive with the 6.5% loan. Let’s assume he prioritizes that next.
After paying off the 6.5% loan, he can build out a full emergency fund, or 6 months of fixed living expenses. Naturally, he “doesn’t have any expenses” living at home at the moment. But I’d still shoot for, say, half of what normal monthly fixed expenses would be if he was living on his own.
Now, it’s the student loans vs. investing decision. He’ll only have the sub-4.5% loans at this point. Assuming the ability to earn 8 to 10% market returns, it makes more sense to make normal payments on the student loans and invest the rest.
This would be an excellent plan to make the most of a great opportunity of working remotely and living at home.
Point #4 — 4 Decision Making Principles
Daniel Pink summarizes key decision-making principles from Annie Duke’s national bestseller Thinking In Bets:
“Want to make better decisions?
Then stop judging your choices by their outcomes.
That’s the big idea behind Thinking in Bets by Annie Duke—a champion poker player and cognitive psychologist.
Here’s what she teaches: 🧠🎲
Most people confuse outcomes with decisions.
If the result is good → they assume the decision was good.
If the result is bad → they assume it was a mistake.
But that’s faulty logic.
It’s called “resulting.”
Why is this dangerous?
Because it rewards bad decisions that got lucky…
And punishes good decisions that hit bad luck.
Over time, it trains you to think emotionally—not rationally.
Annie’s fix: Think like a poker player.
That means:
✅ Treat beliefs as bets
✅ Estimate probabilities
✅ Own what you can’t control
✅ Separate luck from skill
You’re never playing with perfect information—act accordingly.
Here’s a better question than “Was I right?”
👉 Did I make the best decision with the info I had at the time?
That’s the only metric that leads to consistent, long-term success.
Decisions aren’t about certainty.
They’re about likelihood.
You’re placing bets—on people, plans, and outcomes.
So get better at reading the odds.”
Point #5 — Quotes of the Week
Continuing the “action gets rewarded” theme, which of these is your favorite?
"…most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure."
If you want to give yourself a solid kick forward in your future, ask yourself:
"What will it cost me if I don't act?"
People postpone endlessly because they don't think about or connect fully with the costs of inaction.
There are costs. Act.
— Dr. Julie Gurner (@drgurner)
9:29 PM • Jul 7, 2025
"The world is a malleable place. If you know what you want, and you go for it with maximum energy and passion, the world will often reconfigure itself around you much more quickly and easily than you would think.”
Point #6 — My Question of the Week
What’s one way your finances have benefited from you taking action, previously? What’s one small step you can take this week that will benefit you going forward?
Reply to let me know! I read every response.
Thanks for reading — I hope you found a helpful idea or two.
I’ll see you next Saturday with more.
Have a great weekend,
Benjamin Daniel, CFP®
Founder, Money Wisdom
P.S. Want to take control of your money (and stop stressing)? Here are 2 ways I can help:
Financial Health Check: Get your biggest money questions answered, understand where you stand financially, and get a personalized action plan from a CFP® professional. Book a free Intro Call here (or purchase today) to see if you’re a good fit.
Financial Coaching: If you’d like some accountability in getting your finances into shape, engage in financial coaching. Build the habits & systems to help you start building wealth, pay off debt, and feel confident about achieving your goals. Reply to this email and say “Coaching” to join the waitlist.
Disclaimer:
This material is not investment or tax advice. No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading this material can be accepted by the publisher.
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