Earners,

Apologies for the late email today as I am out of town (the Friday send will likely come out late Saturday as well). I am lucky enough to be writing this to you from beautiful Miami, Florida, so this one will be shorter than usual as I have some margaritas to attend to, but I wanted to share this AMAZING subreddit that I think you will absolutely love if you're subscribed to this newsletter.

What The Rich Actually Invest In

There’s a sort of allure around the wealthy and what they invest in. Apparently, there are these ”secret investments” that only the rich have access to.

For the most part, that’s a bunch of bollocks. Sure, there might be some alternative assets that only very wealthy people get access to - but a lot of the time, the returns are a little bit worse if not way worse than ol’ faithful public market investments, like broad market index funds, ETFs, etc. Why’s that? Well, the folks that run these “investments“ charge an obscene amount of money / percentage of assets to where the math doesn’t “math” anymore. People wouldn’t admit it, but the real reason they got sold on investing their money with a given high net worth representative is the perceived “exclusivity“ and “status” they get (which we know is, of course, total nonsense).

These ultra-wealthy managers themselves aren’t rich because they have exclusive investments - they are rich because they charge wealthy people a ton of money to basically do what any monkey-in-a-suit wealth manager could do: put money into a box and make sure it doesn’t go down. Of course, there are exceptions and legitimate ethical money managers that earn their fees. However, I would imagine that the majority of the time, these wealth managers are more salesmen than financial wizards. A lot of rich folks are insanely great at making money and God awful at keeping/growing it.

So yes, you have the cohort of the rich that don’t really know any better and a multi-billion-dollar industry that has stemmed from that. But what about the uber-successful folks that are actually financially savvy?

The Coolest Subreddit On The Internet

Fat FIRE is a place dedicated to the uber-rich to talk about common investing strategies, what they spend their money on, problems they are facing, etc. The F.I.R.E part stands for Financial Independence Retire Early, which is a movement of folks who want to make a huge bag of money and then ride off into the sunset at a young age. I mean, of course, we all want to do that. However, these people are actually putting the big-time work to make it a reality while they have their youth. It’s truly inspirational to read and always fires me up to go through it. It is SO cool to see how these folks are thinking about their wealth and what/how they are planning for the future.

Here is an example below. It’s from a user that had a $120,000,000+ exit (sold his business for that) and is asking about what others in his position invest in:

For people with $100M+ NW, how do you manage your money and life?

Inspired by the $120M exit post, let's take a step back and discuss how people with $100M+ net worth actually manage their money in real life.

I am actually one of the lucky few that reached $100M. ((I had to sign up for a new Reddit account to stay anonymous but can show proof to the mod.) I started with $30M of windfall through a company IPO about a decade ago and am currently at $120M-$130M at the moment depending on how you value my private holdings. I am a rare breed that I don't use big financial advisors. But here is my current NW breakdown.

• Index Funds. (Mix of DFA/Vanguard): $30M

• Concentrated Portfolio (kept some IPO stocks and other speculations including crypto): $45M

• Foundation/DAF: $5M

• Real Estate (incl primary residence, beach house and 4 rentals): $15M

• Private Investments (angel investments + vc funds): $25M - $35M

I don't like big private banks. I tried to let one of the big banks handle my account, they generate tons of trades but returns were poor. I specifically asked them not to get into any private investments because I was going to make them myself. I am glad I did that so I could get the control back easily and I have been doing well on my own. In retrospect, I do feel I spend too much time on investing my money. If I had just put everything into a well-balanced index fund, I probably will end up getting the same results. I am glad that I spent quite a bit of time on early-stage investments though. I think it's a great way to stay close to the tech ecosystem and see a number of entrepreneurs grow their companies into behemoths and become great leaders.

I see the $30M index funds as my safety net that will cover the expenses for the rest of my life. The Real Estate's value is mostly personal use assets while the rentals pay for property taxes and are tax efficient. I do plan to gradually move my concentrated portfolio into my foundation and private investments over the next 20 years. I know how to do early-stage investing and I think it's a great way to invest in human capital and create long-term value.

Overall, I think focusing on the numbers and returns is the wrong approach with this level of net worth. It's more about

1. What are my and my family's needs and wants?

2. What do I want to do with my life?

3. How do I make this wealth useful in the grand scheme of things in the long run?

I think I have pretty good answers for 1) but I am constantly contemplating 2) and 3) still. I believe I will have the answers eventually by experimenting with different things. I will report back if I have more thoughts.

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For folks with $100M NW, how do you manage your money and life?”

If you want to read more about the responses and check out the subreddit in general, check out the link below:

https://www.reddit.com/r/fatFIRE/comments/pxcw4z/for_people_with_100m_nw_how_do_you_manage_your/

But isn’t that WILD?! Now, sure - you can be cynical and say that some of these people are just making this stuff up, but there are certified folks with exorbitant amounts of wealth that have publicly stated they use and love this subreddit. Also, Reddit has a sort of self-cleansing nature to it where the mods/members would snuff out pretty quick if people were completely making it up. Maybe there are a few fibbers here and there. For the most part though, it seems to be an insanely cool place to connect with others that are on the same wavelength as you, learn from the folks that are really doing it at a high level and help expose you to new ideas that will make you rethink what is possible.

I would love for you guys to check it out. Also, reply to this email! I would love to chat with some of you on what you think of something like this. I think it’d be cool if we started a community of some sort to share these sorts of insights… Let me know if you checked out the subreddit and what your thoughts are!

Sorry again for the late email - keep me accountable y’all!

Earn more,

Nate