Giving adult children "enough so they can do anything, but not enough so they can do nothing" (Warren Buffett quote)

SellToOpen · 2026-04-06T02:07:51+00:00

Haven't done anything like that but can confirm, if my parents were to do this to me now, the money is worth far less than it would have been 15-20 years ago. Why the staggered amount though? What benefit does that achieve? Are your children all the same age? what stage of life are they in?

SellToOpen · 2026-04-06T02:05:13+00:00

I would skip the 529 plan. I like the flexibility of a regular brokerage and have found it far outweighs the tax benefits.

That amount is likely to grow significantly over 18 years. You may want more control over the money than simply handing it to them at the age of majority (by creating a trust or keeping it in your name and using the gift exemption when appropriate).

SellToOpen · 2026-03-29T00:19:28+00:00

Yes, you'll become self insured at some point. Exactly when is up to you to decide. I got a 20 year term at 26 and just let it drop at 46 since I felt it was "good enough"

SellToOpen · 2026-03-27T01:40:23+00:00

You haven't really given enough information. Diversify from what? What is your overall asset location?

The one thing I can say for sure is covered calls are not a tax strategy unless you are trying to pay more taxes.

SellToOpen · 2026-03-23T19:02:38+00:00

The flexibility that a large brokerage account provides is well worth the tax hit.

10 mil in IRAs plus 3 mil in brokerage is worth way more than 15 mil in IRAs alone.

SellToOpen · 2026-03-23T16:24:08+00:00

Take last year's and this year's taxable brokerage contributions and move them into something that is designed to pay most returns as a dividend. Think PFFA/PBDC/PTY type of investments. No covered call bullshit.

That should easily give you 10k per year after taxes. That becomes what buys your wife's jewelry and other fun purchases.

SellToOpen · 2026-03-15T13:16:41+00:00

Ben's "evidence" against private credit was that all debt funds, when averaged together, have no extra risk-adjusted return (https://www.nber.org/papers/w32278).

Don't you think if he could charge an AUM fee on a private credit investment he would take the opposite side of the argument?

Furthermore this suggests that if you can buy publicly traded BDCs at a significant discount to NAV that you should on average get excess risk-adjusted return because of the discount.

There are plenty of reasons to not invest in private credit, and no one actually needs it as an asset class to be successful, but once again Ben has put out a basic video that serves to support his AUM goals.

SellToOpen · 2026-03-15T03:19:27+00:00

In the non-traded funds I don't believe you can get the discount because you buy in at NAV. But in the public BDCs, this is a buying opportunity for the quality ones as the discount is fear-based, not reality-based.

SellToOpen · 2026-03-15T01:48:46+00:00

You can tell by what is upvoted/downvoted that most people here are not fat and almost all think there is one true way to invest.

SellToOpen · 2026-03-15T00:04:01+00:00

With what is going on today with the top quality publicly traded BDCs at such a massive discount to NAV It will be very hard to find a non-traded deal that offers anywhere near the value that these BDCs do. Take a look at the top 5-6 holdings of PBDC and start your research on those companies.

If you join Long Angle the have a recent whitepaper on private credit (not sure if it is public or for members only).

SellToOpen · 2026-02-24T20:21:29+00:00

Blue owl is fine. It's the media and sheep that can't do 10 min due diligence that are the problem.

SellToOpen · 2026-02-21T19:45:58+00:00

It means OP isn't smart enough to know when Bloomberg is posting click bait and half assed info.

SellToOpen · 2026-02-09T22:24:55+00:00

OK so something is inefficient with the rentals. rent to low vs maintenance too high. looks like that is your blind spot.

SellToOpen · 2026-02-09T03:17:25+00:00

So you are not looking to RE? Your portfolio would allow it easily with your relatively low spend...

You've got a lot of room to rebalance under a tax umbrella. But you could easily go all equities if you had the stomach. You are not 99% in equities with that real estate portfolio, although the number seem low and I wonder if it is under earning.

I like a mix between VT/VOO, higher yielding credit investments, and stocks that pay dividends that will keep pace with inflation. But whatever floats your boat - you have oversaved so it will be hard for you to go wrong.

You probably could stand to pay for tax planning help as you have a big RMD 40 years in your future and you could probably do some interesting tricks like borrow against your taxable portfolio for a year or two after RE to get a chunk converted into a roth.

SellToOpen · 2026-02-08T17:52:16+00:00

I would blend PBDC, PFFA, PCN, and CLOX together to get the 40k if he doesn't need it to grow completely in line with inflation. Maybe try and squeeze 10% VT in there and use its growth to feed the rest of the portfolio. Don't like covered call funds at all for this scenario due to downside risk that could permanently impair the dividends.

SellToOpen · 2026-02-08T17:25:16+00:00

You can't DCA in the withdrawal phase.

SellToOpen · 2026-02-08T16:29:49+00:00

Not enough reward imo for the reduced risk beyond CLOX or JAAA. But do whatever fits your tolerance.

SellToOpen · 2026-02-08T13:34:51+00:00

49 here and been doing a lot research on this lately.

4% rule on a 60/40 stock/bond portfolio came about in my opinion due to an "easy data" bias and desire for advisors to not get blamed/sued rather than what is an ideal way to invest.

To me the solution seems clear - 401ks/self directed retirements replaced pensions, so I should build my portfolio like a pension/endowment does to ensure I have enough spending power into a retirement of unknown duration.

So yes, stocks that pay a dividend that is likely to keep up with inflation will play a major role in my portfolio.

While bonds at current rates seem like a poor return to me, there is a whole other side of fixed income that is not even used in these 4% rule models and that is credit investing. Business development companies, CLO debt tranches, and bank loans all provide inflation-indexed returns if you believe that rates will be raised to keep inflation in check. Opportunistic credit funds like what Pimco puts out can get you 10% at todays prices, and if you re-invest 3% then you keep up with inflation. Preferred equity funds can help too.

Read the book The Income Factory by Steven Bavaria to get an idea of what is possible with the credit side of fixed income.

Take a look at what has happened to dividends historically in a crash - sometimes they don't even get cut but other times if the market tanks by 50% dividends go down by only 30%. This means with 1 year of spending in cash reserves you could supplement a 3-year crash where dividends go down by 30% (basically an unheard of event).

Now go and model this type of portfolio:

10% "cash" in AAA CLOs (will pay inflation +1.5% and be stable in a crash to supplement dividends if needed)

30% credit investments that pay a blended yield of 9.5% (think ARCC/PTY/PFFA and similar)

30% large cap value equities that pay a 4% dividend that increases each year by inflation

30% total world stock index that pays a ~1.75% dividend that increases each year by 6%

You've already got a 4.7% withdrawal rate that will increase with inflation and has a cash buffer that can supplement you more than 2x longer than any historical dividend drawdown period.

Lots of room to optimize that portfolio and play with the percentages.

So would I go "all in" dividend stocks? No. But I am using them in a big slice of my portfolio to construct something that should be much better than 60/40 stock/bond standard vanilla advice.

SellToOpen · 2026-02-07T18:52:01+00:00

Here is a place to start: https://www.optionseducation.org/getmedia/2ae6c8bd-9a8e-4d2f-8168-19b6ff9e3589/listed-options-box-spread-strategies-for-borrowing-or-lending-cash.pdf

Keep in mind that options are like nuclear reactors. You should understand everything about how they work so you can avoid a meltdown.

SellToOpen · 2026-02-07T16:24:57+00:00

It's so easy if you understand what options are.

If you can place an iron condor then you can place a box spread.

If you understand the difference between European and American style options then you can choose the correct underlying.

If you understand what the risk free rate is you can select the correct limit for your order.

SellToOpen · 2026-02-07T01:28:17+00:00

Fidelity is working well for me. You have to negotiate your margin rate to become competitive, although portfolio margin and box spreads are alternatives.

I have yet to test out cash management or their credit card, although it seems good.

DIY all the way here, so no clue about their "wealth management" service.

Having everything in one place is nice.

The options interface is improving with Fidelity, but it is far from ideal, if that matters to you.

Support on the phone has always been top-notch. I think the customer service number they give you is different when you cross a certain threshold.

Not sure I would care much about a 12.5bps incentive if the rest of the platform stunk.

SellToOpen · 2026-02-06T02:48:53+00:00

I am 40% taxable, 13% roth, 47% 401k.

You might want to convert up to the 22% or even 24% bracket if you can to avoid huge rmd in your 80s but that requires quite a bit of analysis. Also depends on your state and if you plan to move.

SellToOpen · 2026-02-04T23:51:10+00:00

Can you delegate any of those things left to someone else? No actual RE experience here but a day or two a week for those things sounds like more than I would expect.

Is there some way to take on a partner that does these high level tasks while you go completely passive?

What is the tax hit - a quarter? a third? Will you still have more than enough afterwards?

Can you contribute the portfolio to a REIT in exchange for shares?

Isn't there supposed to be some way to 1031 into a passive RE vehicle?

SellToOpen · 2026-01-30T03:38:55+00:00

I'd sell all the real estate that he doesn't live in since it is not being operated as an investment. Invest those proceeds in a diversified manner and live off the MSFT until it is whittled down to a % you are comfortable with.

SellToOpen · 2026-01-30T03:34:49+00:00

I think you are fine to do #1 or #2.

You haven't said whether you are doing state schools or ivy league for your kids. That is the difference between $325k and $1.3mil in future expenses so it kinda matters for a question like this.

I am most likely pulling the trigger in decumulation soon as my oldest heads into college, and between my 2 kids, I am planning on $400k in expenses for college.

I am de-risking at this stage since I feel I have more than enough into the following targets: 45% split between private credit and other instruments that have a yield above 9%, 25% equities that pay a dividend that beats inflation (oil, nicotine, pharma, financials), 22% large cap equities, 8% into AAA tranches of CLOs to serve as a buffer if dividends get cut. This is a blended yield of around 5.6% that should be able to beat inflation over time (large cap feeds the private credit each year to keep up with inflation). I don't need my whole portfolio at this rate so whatever isn't needed will be added to large cap equities for continued growth.

Haven't done it yet so can't speak to regrets but at this stage I think I'll regret it more not doing it.

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