Net Worth/PA Allocation/Tips
Hi all--I had posted this in a different thread but wanted to use it to see if others would share info on their net worth, strategies, saving/investing/PA allocation tips:
High level life/job situation/age?
Total net worth?
Rough portfolio allocations
Best advice you've received or figured out about saving/investing?
My info: 40 year old, S&T, 6.3mm net worth.
2 kids, married, wife works but in a more normal corporate job. I've mainly been in banking/s&t roles except for a brief stint in risk after getting whacked during GFC. As I mentioned, at age 30 I had little saved up (401k, small cash savings, equity in a condo) of 400k or so. I don't really think this was from doing anything wrong, not like I was spending like an idiot etc. I had spent money on a wedding which took away 100k (worth it) but otherwise just normal travel etc.
In my 30s, comp ranged between 400k to 1.2mm, probably closer to the latter the last handful of years.
My investments have been pretty cookie cutter, and net worth split something like this: 65pct equities, 10pct bonds, 15pct home equity, 10pct private investments. I've tried to use as many tax advantaged stock things as possible (401k, 529, NQDC to the extent I can stomach company credit risk).
I live in a tier 2 city and have all along. Think this has helped a ton with cost of living and also lifestyle creep, despite not being as sexy. We take pretty lavish vacations, have both kids in private school now, but otherwise live middle of the road for what I think we could. For example, we don't drive fancy cars, have a middle of the road house in a nice area, etc.
My advice to those closer to starting out--it really is a long game! The year to year bonus noise doesn't matter a ton if the trend is good. Have a group of high quality friends to bounce life and personal finance ideas off of. Try to keep reminding yourself keeping up with others spending/lifestyle is stupid--for a lot of us I think the goal is financial freedom and if you're careful, you will be the (first) one laughing.
By my calculations, 6mm isn't enough to do anything too crazy. If/when I get into the 10-15mm zone, I think we would be able to downshift and/or do some other cool stuff (vaca home, downshift careers, etc). Happy to answer questions in further detail and also curious if anyone out there is at a similar point of their career to compare notes with.
Take I have: Do not invest in real estate properties where you can't see the property everyday if needed. My family and I made this mistake with a real estate investment and got abysmal (yet positive) returns on it.
I'm very frugal and live way below my net worth means (only ~10% of my net worth is liquid, evenly split in real estate / public markets for the rest). Somewhat similar net worth to what you had in my early 30s.
Congrats on hitting $6.3M at 40 though, that's awesome! Took my parents until retirement to hit a similar net worth number.
Good perspective. Personally I think about it as single investment and asset class diversification. Multifam can definitely be hit or miss. But as another example to your point, I invested about 17pct of my net worth in 2 private investments I had massive conviction in. First off in hindsight, this was way too much concentration in 2 trades for me. Secondly, they performed terribly and I realized that no matter how sure you are (especially illiquid investments) always think about the possibility of getting wiped out.
Question - Do you ever feel burnout/career distain after all those years? I just got my first internship, but I’m worried that if I stick around in banking for 25 years I’m going to have a big bank account but hate my life/career. Maybe I need to find a different desk, or it could be that banking just isn’t for me? Appreciate any advice, don’t post on here often.
Definitely have to deal with burnout/mental exhaustion. I'm on the trading side and I've gone through enough market blowups now that it does weigh on me. As you accumulate more money and "need" the job less, the stress goes down and at least I have stopped holding on/caring as much, although I'm still pretty interested overall in the markets. Having some early retired friends now, I've come to realize that you need something to occupy your time. For now, since I'm not at a financial point where I can just downshift and stop working, I'm trying to mentally frame work partly as a hobby versus just a pure stressful grind in my mind. I work with some close friends, that has also made it much more bearable, and I doubt I would've stuck it out this long without them. I don't think I could have lasted with banking vs trading hours FWIW.
You have roughly 5mm in equities and bonds and can't retire? That should be returning ~8% yearly, right, or roughly 400k a year. How large are your expenses that you can't retire with 400k a year + any social security that you and / or your wife could get?
I think you'd be hardpressed to find anyone who thinks 8pct real return on a diversified stock heavy portfolio is the right assumption. I'd think more like 4pct real return is conventional assumption. Expenses run about 500k gross right now. Nanny alone adds about 100k gross, and private school for 2 kids adds another 100k gross. The rest is on like I said comfortable but not crazy excessive spending. Our biggest other splurge is probably a 70-100k/yr gross travel budget which if you believe it or not, is probably somewhat average for more senior people in our industry with families. Bottom line--I think my gross spending will probably get closer to 400k/yr after we can function without a nanny, and to 300k/yr once private school is done. But no matter how you cut it, retirement off 5mm is not in the cards for us for a bit. Also I'm 40. Social security is useless to me and may never even happen.
I assume you're in the NYC metro area, why not do public schools? Assuming your net worth, I assume you're in a great school district. Is it placement into college? Genuinely curious how you decided on that as I know a few families worth $10M+ and there seems to be an even split - half of them send their kids to private school / half send to public school.
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