What I Learned Managing $500 Million Dollars

I'd rather be rich

I'd rather be richFor a few years, I worked for a high net worth investment planning firm. To be considered a client, you needed to have at least $2 million in investable assets. What does this mean? It means you have to be able invest $2 million with us, in some combination of retirement and non-retirement accounts. Don’t get this confused with net worth, as net worth has nothing to do with investable assets.

Anyways, in total, we had over $500 million under management. I mainly worked on building the plans, so I got to know the intimate details of our clients – things that most other people would never know about these people.

So what did I learn from dealing with the rich? I list the most interesting insights below. Some things may seem obvious to you while others will surprise you. Hopefully, you will learn something and be able to apply it to your financial life.

Priceless Lessons Learned While Working With The Rich

Financial Lessons Learned

Most of our clients were self-made millionaires. Very few inherited their money. The majority were doctors, a good many owned their own business, and a few were executives. In fact, one worked for Kellogg’s, the cereal company. Every holiday season he would bring us boxes of cereal! Another worked at a pretzel factory and we would get pretzels from him. Finally, another worked at Clif Bar and we got a ton of those too. [Read more…]

Forex Trading: The Risks And Rewards

forex trading currency

forex trading currencyAwhile back I wrote a post about my introduction to forex trading. At that time, it involved setting up a play account for my international finance course and to make trades throughout the semester. It was an interesting experience trading forex and I was lucky enough to end up making some money. I say lucky because I had no clue what I was doing. After all, I am mainly a buy and hold investor.

Recently however, I was out with a friend and we got to talking about investing. He too is a passive investor but wants to set up a play account and start forex trading. In his case though, he will be using actual money. He knows that I am well versed in the investment industry and wanted to know what the risks and rewards were to getting involved in forex. I told him I would do some research on it and get back to him. Below are the risks and rewards I found when forex trading. [Read more…]

5 Things To Do When Approaching Retirement

approaching retirement cake

approaching retirement cakeI recently read an article on the Time website about 5 things you need to do when you are within 10 years of retirement. Overall, I thought the article was good, as it covered a lot of the things you should think about as you near retirement. In fact, it included one thing that I think most people often overlook. With that said, all of the items on the to do list should not be ignored until you are approaching retirement. So what are these 5 things? I list them below and then go into more detail as well as action steps you should take to be in the best financial shape possible as you are approaching retirement.

  • See if you’re saving enough
  • Stagger retirement with spouse
  • Don’t quit on stocks
  • Do mortgage math
  • Make friends with co-workers

5 To Do’s When Approaching Retirement

Are You Saving Enough?

When it comes to investing, time is your best friend. For this reason, you shouldn’t wait until you are approaching retirement to see if you are on track with your savings amount. You need to do this throughout your working years. [Read more…]

Finding The Right Online Broker For You

right online broker

right online brokerWe all have different needs in life. This is especially true when it comes to investing. Some of us are index investors, while others are dividend investors. Some are scared to invest and therefore need more hand-holding, while others are able to do things on their own. When I created my online broker comparison chart, I did so to help you find the right online broker for you.

What I didn’t realize is that many of you would still have questions. This is why I am writing this post. While I won’t be able to specifically tell you which online broker you should choose to invest with, I can give you some guidance on which ones to consider and which ones to steer clear from. So, below I highlight a few different investors, and where each of these people should look when trying to figure out which is the right online broker to invest their money with.

The Right Online Broker That Meets Your Needs

For The Newbie

If you are just starting out investing, you have a ton of options. It really comes down to your goals and how you feel about investing. [Read more…]

A Reader Writes: Financial Advice for 20 Somethings

financial advice for 20 somethings

financial advice for 20 somethingsI received the following email recently from a reader who needs some help. I post it as I feel the question is common for many recent grads and I can talk about financial advice for 20 somethings:


I just graduated college and received a job offer from a great company. I’ll be making $40,000 to start. I have no problems budgeting, as I have lived off campus in college since sophomore year. The concerns I have are my retirement plan, health insurance, and saving money for a variety of things (trips, house, friends weddings). Any suggestions?

First off, congratulations on finishing school and landing a job. Your email didn’t go into great detail, so some of the things I will suggest may not apply.

Financial Advice for 20 Somethings: Retirement

First, Your 401k Plan

To begin, find out if your company matches on the 401k plan. They may match anywhere between 3-5%. Whatever the match is, contribute that amount. When it comes to investment selections, look for a fund that invests in the market as a whole. An S&P 500 index fund or a total stock market fund would be ideal. If those are not available, look at a large cap stock fund.

If you are comfortable with a little more risk (and you can be since you won’t need this money for 40 plus years), look at small cap stock fund. This fund will be a little more risky, but since you are just starting out, you can afford to take the risk. Always remember, the sooner you start saving for your retirement, the better.

One note about the above: pay attention to the fund expense ratio of the mutual funds being offered. The higher the fee, the more it costs you. There is no relationship between a higher fee and a better performing fund. In many cases, the opposite is true – lower fee funds tend to perform better since they are trying to match the return of the market.

At the end of the day, the fees you pay for a large cap stock fund should be at or below 0.50% and for a small cap stock fund, at or below 0.75%. To understand more about how fees effect your returns, I highly encourage you to read this post. [Read more…]

5 Investment Tips From Warren Buffett

warren buffett investment tips

warren buffett investment tipsWarren Buffett, CEO of Berkshire Hathaway, investing legend, and billionaire, released a letter to his shareholders in 2014 that contained some terrific investment advice. Whether you’re a novice investor or a pro, the Sage of Omaha has advice that applies to you. Below are 5 great investment tips from the man himself.

Warren Buffett’s Best Investment Tips

1. Recognize Your Limitations

One of the toughest lessons a leader has to learn is when to ask for support. If no support is available, leaders should stick with what they know will succeed. Buffett has the same advice for investors that he offers to future business leaders: Recognize your limitations.

“You don’t need to be an expert in order to achieve satisfactory investment returns,” Buffett told his shareholders. “But if you aren’t, you must recognize your limitations and follow a course certain to work reasonably well.” [Read more…]

Worst Financial Advice Ever

worst advice

worst adviceLook anywhere online and you will find financial advice. This is good and bad. Having easy access to all of this knowledge allows for you to easily learn and take the steps needed to become financially successful. But this also allows people who have no business writing about finances to give advice. It also means that companies that are trying to scam you out of your hard earned money can give advice that makes their product/service look good. Below I’ve come up with 12 pieces of the worst financial advice ever. Follow them with caution!

12 Pieces of The Worst Financial Advice Ever

Co-sign A Loan

I’m sure there is one (maybe two) reasons why you would want to co-sign a loan. But for the overwhelming amount of times, it makes zero sense to co-sign a loan. When you co-sign a loan you are saying that you are willing to take over the loan payments if the other person stops paying.

Let’s think about this for a minute. Are you OK with paying for someone else’s car? Are you OK with paying for someone else’s education? If you answered yes to these, email me as you have just become my BFF.

No matter how much you love or care about the other person, you should not co-sign a loan. It will end badly. Alright, 99% of the time, it will end badly.

What To Do Instead: Support them. If they need a co-signer, either they are trying to take out a loan for more than they can handle or they have bad credit – meaning they aren’t great with handling their money in the first place. If they are trying to take out too much of a loan, help them to find a lower cost option. Instead of a new car, look at good used cars. Maybe help them to find ways to save more money or earn more money so they can take out a smaller loan and therefore won’t need the person to co-sign. [Read more…]

Different Ways To Get Exposure In Gold

investing in gold

investing in goldPerhaps it’s no exaggeration to say that gold is the ultimate hedge investment against the dollar. The precious yellow metal’s value doesn’t move along with other securities so investors turn to it whenever markets go bad.

There are many ways for an investor to invest in gold, and there’s no single best type of investment. The effectiveness of a gold investment will always depend on how a person plans on using it. (This is why I love personal finance so much. There is not one solution for everyone. You have to assess your situation, needs and goals, and then go from there.)

Direct Ownership of The Bullion

The main reason why investors buy physical gold is to preserve wealth. They don’t buy it to keep it for the short term and then sell it immediately when gold prices go up a little bit. Investors don’t also buy the physical metal to speculate on price movements. Owning physical gold means having real money that cannot be controlled by any government-based fiat money.

Physical ownership has several drawbacks. First, investors shouldn’t expect to make quick profits from it since it has a wide spread between bid and ask prices. Second, shipping, storing, and importing it has associated fees and rules depending on each country. [Read more…]

Investing With A Small Amount of Money

investing with a small amount of money

investing with a small amount of moneyA common complaint I hear a lot of from would be investors is how to start investing with a small amount of money. Most people don’t have a few grand laying around to put into the market and so they just sit on the sideline instead. If this describes your situation, I have great news for you – this post is going to show you just how easy it is to start investing with a little money. You don’t need thousands to get started down the path of financial freedom. In fact, in one case, you can start out with just $10 bucks!

How To Invest With A Small Amount of Money

Years ago, if you didn’t a few grand laying around collecting dust, your investment options were slim to none. But thanks to technology and some government regulation, you can get started investing with a few dollars. Below are 4 of my favorite ways.

Invest In Your 401k Plan

Many of us that work are covered by a 401k plan at work. This is the easiest way to get started investing in the stock market. In fact, it is the only way you can start doing so with less than $10. How? You decide how much of a percentage of your salary you save in your 401k plan. If you make $20,000 and save just 1%, then you are saving $3.85 per paycheck if you get paid weekly.

Now, don’t make the mistake of thinking that $3.85 won’t turn into anything big, because it will – if you stick with it. Read my compound interest post for proof. Ideally though, you should be investing an amount in your 401k plan that allows you to take advantage of your company match. For a lot of readers, this is probably around 3-5% of your salary.

If you want to get started investing, this is the easiest first step you can take.

Look Into Mutual Funds

If you aren’t covered by a 401k plan at work, or you want to invest somewhere else, you can look into mutual funds. While many mutual funds have large account minimums, there are handfuls that have much lower minimums so that first time investors can invest with a small amount of money. Case and point is Homestead Value Fund (HOVLX). It invests in medium to large sized companies that the manager feels are undervalued. The fund has done well over the long term and only charges 0.64% in expenses. To open an account you need $500. Subsequent purchases cost $100. [Read more…]