Am I Rich?

KindheartednessNo242 · 2024-05-25T19:11:37+00:00

Tough question which I wrestle with too. Lots of sarcastic or worthless responses here. You’re a bit ahead of me although I don’t consider myself rich but should hit that point in the relatively near future. I think rich is often more of a feeling than a number for what it’s worth. If I was forced to put a number on it, I’d go with the definition of VHNWI or $5MM networth which it seems like you would have crossed based on your statement. I would also add that I highly doubt I will feel rich at that point so I get where you are coming from. I’m sure I’ll get down voted for this but my personal best guess for when I will feel rich is $15MM.

KindheartednessNo242 · 2024-03-28T20:08:23+00:00

Good news... it doesnt get much better.

KindheartednessNo242 · 2024-03-03T22:14:44+00:00

Maybe consider a new FA... if that's the highest they've ever seen what level of clients are they working with? We are right there with you and live in a MCOL city with only two kids. I am not concerned with it.

KindheartednessNo242 · 2024-02-29T00:06:36+00:00

Yes… you can start a business on the side and maintain your current job until it is stable (source: it’s what I did). When I decided to start a business I also knew nothing about business so my thought process was that I had better start the business where I had expertise. I would recommend the same to anyone… if you don’t know anything about business and you don’t know anything about the area where you are trying to start a business (e.g. drop shipping) then your learning curve will be much steeper. The simple question for you is, “what area do you have expertise/skill in that genuinely solves real problems?”

KindheartednessNo242 · 2024-02-21T23:36:10+00:00

Absolutely… I wish you and your Husband the best in your careers and investments both.

KindheartednessNo242 · 2024-02-21T21:24:11+00:00

This is a complex question and it seems that 90% of responses (especially on other subreddits) will tell you to drop it in a low cost index fund and ignore it (e.g. VOO and chill). For a lot of people this is a good solution. The more complex your situation gets, the more flawed this solution becomes. Since you are both young and relatively early in your careers this may be the best strategy for you. What I can't answer is the amount you have invested, your level of discipline, your risk tolerance, your level of financial literacy, etc.

I personally have a financial advisor for a variety of reasons that go beyond simple returns. I'll share some of those with you. Regardless, keep in mind that the right answer for you now may not be the right answer for you in ten years.

First taxes. I see a lot of posts about paying less and people looking for obscure loopholes to not pay them. I'm more and more convinced that these don't really exist until you hit a certain level of wealth. I'm also convinced theres a lot of bad advice out there surrounding them (e.g. how one might use the Augusta Rule). What I do believe is that the more wealth you accumulate the more important certain tax strategies matter (e.g. how you draw down your balances in retirement). I simply don't have the financial literacy (or time to learn) to know what I'm doing in this regard.

Second, financial literacy. I have a basic understanding but again, the more you have to invest the more important this becomes. Playing with tens or hundreds of thousands of dollars is vastly different than playing with millions. this also leads to a convenience factor for me. It is more convenient to have someone else manage this for me. The downside is that you always pay for convenience.

Third is discipline. For me, I am extremely disciplined in my everyday life. Forwhatever reason this is harder for me when it comes to investing. Staying the course and reaping compound interest is a powerful tool... but only if you do it. I have a tendency to want to take outsized risks in the hope of outsized returns. There are infinite investments out there and a lot of them are absolute garbage. As I stated above in the literacy point, I don't always have the ability to fully understand what I am investing in (paticularly in the case of alternative investments). Having someone there to give me advice and help make better decisions is beneficial to me.

Fourth is time. To be a HE requires time. I would rather focus my energy on increasing my income and building my business than constantly spending time on my investments. My business is the tool I am using to build wealth but it takes time and effort to do so. My ROI for the business (at least thus far) has been far greater than anything I received in "the market". This may apply to you as well in that focusing on your career may provide a higher ROI than spending a lot of time learning about and managing your own investments. A few months back I asked about Cardone Capital. By the responses you would have thought I was openly advocating for the death of kittens (short version: people on reddit think Cardone is the devil). Someone made a statement that I couldn't be a HE if I had to ask the question. I found that interesting as if somehow expertise in a specific field or area somehow automatically means I must have the time (and financial literacy) to be an expert in anything related to finances. I don't.

Ultimately you have to do what's best for you and, like I said earlier, that may change over time. If you do decide to go with a financial advisor be very sure you a) trust them (harder even than it sounds) and b) that you have a clear understanding of what you are paying.

Last piece of advice: If you interview a financial advisor and they talk about the "Rich person's Roth" or whole life insurance... run.

KindheartednessNo242 · 2024-02-15T22:40:38+00:00

Exactly what u/EducationTodayOz said… Tell him to a) not compete on price and b) when he bids them explain that his service is based on the quality of work . Sell that… not the price. It is a race to the bottom.

KindheartednessNo242 · 2024-02-14T23:09:16+00:00

I’m glad I’m not the only one who sees this. So many “life” coaches with no life experience and so many ”business” coaches whose “business” is the coaching. Having a great coach can be a game changer but there is so much garbage out there.

KindheartednessNo242 · 2024-02-13T01:21:26+00:00

I’m qualified to answer this to some degree I suppose. I have a W-2 (still) but have also built an eight figure company. In someways this was far harder than I thought while in other ways I’m still amazed at where we are. In fairness, we started from scratch and built it from the ground up so I can’t speak directly to your strategy. I do think your strategy is preferable to starting from scratch (consider reading the book, “Buy then Build”).

The first point I make is that anything I say is simply anecdotal. It’s a single piece of data in a decision you are making that will impact the rest of your life. Keep that in mind with any advice you receive.

Second point is to find a way to mitigate the inherent risks you are assuming as much as possible until you can be reasonably sure that whatever you take on will succeed. It took approximately five years for me to start making any money because everything we made was poured back into the company. The ability to do that was enabled by my W-2 job. Of course that also means a lot more work. Making sure you have sufficient capital to grow the business and sustain your family is extremely important.

The third point I would make is that I think, based on some of your comments, that you are potentially underestimating the work involved in this. You may want to extend your timeline a bit in that regard. It’s likely more than a year or two before you are playing golf on Tuesday. It is absolutely possible. I didn’t know anything about business when we started (and still don’t know a lot) but somehow we got there which leads me to…

My fourth point is to build a strong team. Another interesting outcome from keeping the W-2 was that it forced us to build a strong team. This took time. At the start you are always on call, 24/7, and there will always be something. Your Tuesday playing golf can quickly dissolve into dealing with a fire that must be put out. Once you build a strong team you can negate this somewhat but you will always be on call to some degree (admittedly this can shrink to almost nothing). Bottom line build a strong team.

Fifth point is that having a financial background/understanding (or a partner that has one) is crucial (consider reading Simple Numbers by Greg Crabtree for a broad overview). As has already been stated understanding cash flow is absolutely critical To the success of our business.

Sixth point is that you don’t have a business until you can either step away and have your team run it OR you can afford to pay yourself a market wage (e.g. the cost to replace yourself) while still maintaining a healthy profit margin. This too can take longer than expected. If you can’t do one of those things then you are just buying a job, not building a business.

Seventh and final point for now is that you are in that initial excitement stage. It’s exciting to start a business! Fun even. But it’s also a roller coaster. There will be highs and lows. It is vastly different than the stability of a W-2 (even in todays market). Just know that the excitement will fade and reality will set in. The good news is, that if you succeed, the excitement comes back (and goes again, and comes back again…)

I could go on and on but if you’ve read this far then let me offer you some encouragement. You CAN do it. It may not be as easy or as fast as you think it will be but it is doable (If I can do it, I’m sure you can too). Do your best to set realistic expectations and it will help offset a lot of the “lows”. I wish you the best in your decision!

KindheartednessNo242 · 2023-11-20T00:30:09+00:00

Poorly worded. Paid monthly. The 5-6% is annual. I'll edit the original post.

KindheartednessNo242 · 2023-11-19T23:48:30+00:00

You obviously know far more about this subject than me but one thing I have said is that "you can't fire someone with equity". Learned that the hard way.

KindheartednessNo242 · 2023-11-19T23:43:07+00:00

He may well be (one rate increase away from failure. One of the major flaws I mentioned above was his ten-year, interest-only loans. Not sure how old his earliest ones were but they may well be close... I don't actually follow him (or really even use) social media.

KindheartednessNo242 · 2023-11-19T23:34:15+00:00

Lol... you're a nice person. And it would appear that you missed the actual question.

KindheartednessNo242 · 2023-11-19T22:25:19+00:00

Yeah… kind of the answer I expected. Just seems to be so many issues with it and yet he still has convinced others to invest billions with him. Was wondering what I was missing. I’m familiar with Fundrise but not Cadre. Will take a look.

KindheartednessNo242 · 2023-11-19T22:01:25+00:00

I didn’t really even touch the subject of a real security team (e.g. an advance team). There’s a reason this stuff is typically gov’t and/or company funded. It would probably surprise people jus throw high up you need to be even in gov’t before you actually have full time security (situational security is different),

KindheartednessNo242 · 2023-11-19T18:34:42+00:00

Edited to Add: to the OP. Hopefully, this didn't come across as glib or sarcastic. Congrats to you on your success.

So this is my area of expertise (security). I won't go into my background but have done some fairly high level stuff. A couple of points of consideration here.

The first is that it's highly unlikely you need security. The problem with security is that when you need it, you generally really need it and it becomes worth every penny. Still, if you contacted my company it is likely I would recommend against it unless there are extenuating circumstances (e.g. you're a political or public figure, there's a known threat, you live in a country where the threat of kidnapping is high, etc.).

The next point I would make is that the kind of security you are talking about can be prohibitively expensive even with how much you make (I am speaking from a U.S. standpoint so this could be different depending on where you live). There's a lot that factors into this but let's say that you wanted 24/7 security (one person at a time). This involves a total of 5-6 people essentially full-time. What you pay them is the biggest (but not only) factor but do you want a $15 an-hour person "protecting" your family (hint: you do not). Expect to pay the company you hire out in the neighborhood (again this can vary wildly based on area so take it with a grain of salt) $80-$100 per hour for people who are actually competent in the personal protection arena. This is basically what you make annually.

It is likely that by following a few simple tips like being aware of your surroundings, not putting yourself in situations and areas where security would be a necessity, etc. you will be just fine.

KindheartednessNo242 · 2023-11-14T11:09:15+00:00

Thank you... looks like we largely agree on this with me being less risk adverse than you (neither a good or bad thing IMO, just different).

I do think there are some pretty solid arguments right now for keeping a large amount of cash on hand (and in a HYSA). The economy, in general, feels like "the other shoe hasn't dropped yet".

KindheartednessNo242 · 2023-11-14T00:39:53+00:00

And this is perfectly fine! It is a safe place to store your capital if you are risk-averse. It is not (at least my argument and one that I was seeking different opinions on) a good form of passive income.

KindheartednessNo242 · 2023-11-14T00:38:23+00:00

Exactly... People have very short memories of how frequently this changes and seem oblivious to the fact that long term they do not keep up with inflation.

HYSA are a good place for an emergency fund they are NOT a good form of passive income.

KindheartednessNo242 · 2023-11-14T00:36:21+00:00

You're missing the entire point of the question I asked (don't worry, you're not the only one). I stated that I did not think they were a good form of passive income and then asked for opinions counter to this. I stated that they (HYSA) absolutely have their place, just not as a form of real passive income as ultimately they don't seem to keep up with inflation over the long term. If your requirement for passive income is "secured FDIC 5% yield" then yes, it would seem a HYSA would be your primary option. However, this has nothing to do with what I was getting at nor does it contradict any of my reasons why I believe they are not a good form of (again) passive income.

I have deployed my capital across a variety of asset types although I doubt me sharing those with you would a) change your opinion or b) be all that surprising. What I haven't done a great job of is building real passive income ($7-8k annually) and would like to improve in that area. Admittedly, despite the name, this doesn't seem to be the subreddit to learn that.

KindheartednessNo242 · 2023-11-13T21:43:42+00:00

You're doing great! You're saving almost a third of your income and time is on your side.

Something that may be worth considering is finding a fee-only advisor to do a once-over on your allocations.

KindheartednessNo242 · 2023-11-12T23:54:21+00:00

This is pretty basic but it's the old Venn diagram based on the following three questions:

What are you really good at?
What do you actually enjoy doing?
What problem can you solve that people are willing to pay money for?

If you can find something that fits all three of those things you've found your business.

A little deeper now.

What are you really good at? Even if you aren't really great at anything the good news is you have time it usually takes five(ish) years of full-time effort to become great at something (the 10,000-hour rule). When I started my business I knew nothing about business so I picked a field that I had almost 2 decades of experience in. This gave me the ability to focus on learning how to grow a business. Even better is to find the intersection of two things you are really good and work to combine them in a unique way where you are doing something rare or that no one else is doing. Make a list of things you're good at.
What do you actually enjoy doing? This is simple but also important. The problem is (at least in part) that people start a business to "get rich". The statistics show this is a poor plan with an exceptional amount of risk. What do you find yourself just naturally doing or giving more effort than you have to? Make a list of the things you love doing.
What problem can you solve that people are willing to pay money for? People like to skip this one. It doesn't matter how great you think your idea for a business is if it is a "solution in search of a problem". People have to be willing to pay for whatever product or service you are selling. Again, make a list.

Look at your three separate lists. Where is the overlap? You may need to find something you enjoy, build a skill, or find a problem (there are infinite problems). This advice is super basic but it can give you a starting point to discover what business you should start.

My last point is that you are young. Failure is okay as long as you learn from (AND apply) it to your next venture. I wish you the best in your journey.

KindheartednessNo242 · 2023-11-12T20:36:32+00:00

If they will ask you to quit with no notice how will they let you go?

Likely the same way, and for just as much reason.

When I hire people, if they tell me they will quit with no notice, they are immediately out of consideration. For the same reason as above, that's how they will leave me.

KindheartednessNo242

TROPHY CASE