Unit 2 · Level 2 · Money that must never go in
Rent money is not risk capital
Look at your account on payday. Most of what sits there is not yours to risk. Rent or mortgage, food, transport, insurance, the minimum on any debt: that money already has a claim on it, even though the bill has not arrived yet. What is left after every commitment, and after your emergency fund is intact, is the only part that can carry risk.
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What you get asked
Put the claims on a monthly salary in the order they get settled
Risk capital is the residue, not the starting point. If the last step is funded by skipping the first, that is not investing. That is borrowing from next month.
Which of these counts as genuinely spare money?
Spare money is what survives every commitment you already have. Money sitting in the account early is not spare. It is early.
Money that keeps a roof and a fridge working is ___ money, and it never belongs in a volatile asset.
Committed money has a name on it already. Calling it spare because it happens to be in the account today is how people end up selling at the worst possible moment.
You earn €2,400 a month. Fixed costs take €1,700, debt minimums take €250, and you add €150 to your emergency fund. How much is genuinely spare?
€300. That is the number that can carry risk, not the €2,400 that lands on payday. Sizing starts from the residue, never from the salary.
Why is investing your rent money dangerous even in a market that rises over time?
You do not get to choose the day you need it. If the price is down that week, you sell at that price anyway, and the landlord is unmoved by your entry point. 🐜
The rest of this unit
Some money has a date attached, and a market cannot be told about the date.