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At what point is DIY not a good idea?
Posted on 12/22/21 at 8:21 pm
Posted on 12/22/21 at 8:21 pm
Let's say hypothetically I'm DIY with a household income around $300k per year. We max out 401k's annually, contribute to the college fund for the kids monthly, and carry about $100k in a cash rainy day fund. Only debts are a mortgage at 3.25%, car payment at 3.5%, and student loans. Not in any huge hurry to pay any of those off given the low rates. Zero CC debt for me or the wife. We use them for the points and pay it off monthly.
Beyond that, everything left over at the end of the month goes in a taxable brokerage account. Invested in ETF/Index funds (QQQ, VWO, VTI), a handful of blue chip stocks in different sectors, and a couple of growth plays. Main growth stock is SLI, and that's my bay boat fund.
Now, I think we're doing okay for our ages (33 & 34). But, again hypothetically, if our income were to go to $1 million a year, I am no longer confident in my ability to manage. I wouldn't have a clue on things like tax avoidance strategies. In that situation, is my strategy okay if I consult with an accountant as needed, or do we just need to turn this operation over to someone who manages money for a living?
Beyond that, everything left over at the end of the month goes in a taxable brokerage account. Invested in ETF/Index funds (QQQ, VWO, VTI), a handful of blue chip stocks in different sectors, and a couple of growth plays. Main growth stock is SLI, and that's my bay boat fund.
Now, I think we're doing okay for our ages (33 & 34). But, again hypothetically, if our income were to go to $1 million a year, I am no longer confident in my ability to manage. I wouldn't have a clue on things like tax avoidance strategies. In that situation, is my strategy okay if I consult with an accountant as needed, or do we just need to turn this operation over to someone who manages money for a living?
11
Posted on 12/22/21 at 8:31 pm to HoldenOversoul
I'm not the situation changes that drastically with the income incease. Without additional avenues created, there aren't that many ways to get money in tax advantaged accounts. I'm not sure how a financial advisor changes that. You could consider whole life etc, but that's the main play I could see a FA adding in this scenario. Someone please correct me if I'm wrong.
Posted on 12/22/21 at 8:58 pm to HoldenOversoul
I don’t think the situation changes materially even with higher income. You are just pulling forward your potential retirement age.
The reality as you max all the typical vehicles is you are left with taxable brokerage as the option.
You may want to beef up some insurance options (short term and long term disability, for example) especially as the incomes rise and you can afford the coverage.
In short, I wouldn’t overthink it. Keep it simple as long as possible.
The reality as you max all the typical vehicles is you are left with taxable brokerage as the option.
You may want to beef up some insurance options (short term and long term disability, for example) especially as the incomes rise and you can afford the coverage.
In short, I wouldn’t overthink it. Keep it simple as long as possible.
Posted on 12/22/21 at 9:04 pm to HoldenOversoul
(no message)
This post was edited on 1/1/22 at 12:12 pm
Posted on 12/22/21 at 9:18 pm to lynxcat
Pushing retirement up is the goal. The new money likely won’t actually get us to $1m per year, but it will be mostly in quarterly distributions as we both happened to reach shareholder in our jobs starting January 1. I believe it will more than double our current annual income most years.
The plan for now is to use the first quarterly distribution to put towards a new home, in addition to what we net on the sale of the current home.
After that, we plan to live solely off our salaries and invest 100% of distributions unless we are replenishing the emergency fund. I’m sure my wife will bend the rules a bit, but I’m pretty happy living on my current salary and don’t want to fall victim to lifestyle creep.
The plan for now is to use the first quarterly distribution to put towards a new home, in addition to what we net on the sale of the current home.
After that, we plan to live solely off our salaries and invest 100% of distributions unless we are replenishing the emergency fund. I’m sure my wife will bend the rules a bit, but I’m pretty happy living on my current salary and don’t want to fall victim to lifestyle creep.
Posted on 12/22/21 at 9:21 pm to HoldenOversoul
Regardless of y'alls professions I would recommend checking out the white coat investor. He has a pretty simple approach on how to allocate your income, and with it I haven't felt any need for a FA.
My wife and I were/are in a very similar scenario. The WCI approach has scaled just fine with our income that in a 3 year period will have gone from basically the two extremes of your hypothetocal range.
As others have suggested, there may be benefit in an accountant at some point if you take on additional income sources.
My wife and I were/are in a very similar scenario. The WCI approach has scaled just fine with our income that in a 3 year period will have gone from basically the two extremes of your hypothetocal range.
As others have suggested, there may be benefit in an accountant at some point if you take on additional income sources.
Posted on 12/22/21 at 9:25 pm to HoldenOversoul
quote:
I’m sure my wife will bend the rules a bit, but I’m pretty happy living on my current salary and don’t want to fall victim to lifestyle creep
This is the hardest part.
On a macro scale it's quite easy not to go hog wild. However, on a micro scale it becomes quite easy to justify lots of little things that start piling up.
Posted on 12/22/21 at 11:04 pm to HoldenOversoul
Everybody has an opinion, and this may be unpopular, but a good FA will help mange the CPA and the attorney.
For some reason those business segments don’t catch as much shite - no products I guess - but CPAs rarely focus on long term and attorneys rarely focus on simple. My experience anyway…
When you’re talking $1m+ pay someone a fee to just talk to. Just avoid the salesmen.
For some reason those business segments don’t catch as much shite - no products I guess - but CPAs rarely focus on long term and attorneys rarely focus on simple. My experience anyway…
When you’re talking $1m+ pay someone a fee to just talk to. Just avoid the salesmen.
Posted on 12/22/21 at 11:11 pm to HoldenOversoul
Is income stable?
Posted on 12/22/21 at 11:59 pm to GEAUXT
Lifestyle creep is inevitable. It’s about being conscious of it and not overdoing it. There is nothing wrong with a bit of lifestyle creep if someone is earning $700K more than previously. A couple $200 dinners a month isn’t going to matter….avoid the $10,000 dinners.
This post was edited on 12/23/21 at 9:45 am
Posted on 12/23/21 at 5:50 am to HoldenOversoul
Go talk to a few FAs and find out. Let them know you’re interviewing and see where it goes. If you don’t find anything helpful or valuable, you’ll have your answer.
Posted on 12/23/21 at 7:13 am to HoldenOversoul
I don't ever see me not managing my investments. That doesn't mean I don't consult with financial professionals, but I always make the decision and own the result. That approach has always served me well, but I'm educated and apparently make good decisions. 
Posted on 12/23/21 at 8:22 am to HoldenOversoul
Why not put some of your investment with a FA and continue handling another investment account on your own. I do this and it works very well for me.
Posted on 12/23/21 at 8:32 am to CajunTiger78
I understand the concept, but what criteria means it works well? Do you mimic the FA investment choices? Does it give you reassurance that you are doing the right thing with your portion?
I guess my question would be if the FA is worthwhile in that scenario, give him everything..if he provides no value/returns, do it yourself.
I guess my question would be if the FA is worthwhile in that scenario, give him everything..if he provides no value/returns, do it yourself.
Posted on 12/23/21 at 8:34 am to HoldenOversoul
Idk man
I don’t like paying people to do shite
I’m kinda jealous you’re married though. I’d pay a chick to marry me if she could cook good and wasn’t fat
I don’t like paying people to do shite
I’m kinda jealous you’re married though. I’d pay a chick to marry me if she could cook good and wasn’t fat
Posted on 12/23/21 at 9:10 am to Billy Blanks
Our salaries will stay right about where they are, so a combined $300k per year baseline. The additional income is all distributions based on our equity stakes in our respective jobs.
My wife will get a monthly check based on collections for her business that month. It will vary quite a bit. We've heard it can fluctuate as wildly as $10k one month and $150k the next. Mine will be quarterly and should be fairly consistent.
My wife will get a monthly check based on collections for her business that month. It will vary quite a bit. We've heard it can fluctuate as wildly as $10k one month and $150k the next. Mine will be quarterly and should be fairly consistent.
Posted on 12/23/21 at 9:57 am to HoldenOversoul
I don’t think you are going to see a ton of benefit from a FA based on the confidence you are sharing herein.
With that said, I like the slackster advice here with a little nuance. Interview some FAs and find one that you can pay a fixed rate when you need to consult them. Couple hundred bucks an hour for them to pressure check your thinking when are faced with something you need reassurance.
The reality of paying a fee for AUM doesn’t make sense if you are confident in yourself.
Once the FAs realize the income stream potential, I think they’ll be interested in playing the long game eventually thinking you will throw them a bone (whether that is a correct assumption or not).
With that said, I like the slackster advice here with a little nuance. Interview some FAs and find one that you can pay a fixed rate when you need to consult them. Couple hundred bucks an hour for them to pressure check your thinking when are faced with something you need reassurance.
The reality of paying a fee for AUM doesn’t make sense if you are confident in yourself.
Once the FAs realize the income stream potential, I think they’ll be interested in playing the long game eventually thinking you will throw them a bone (whether that is a correct assumption or not).
Posted on 12/23/21 at 10:46 am to lynxcat
I'd find a firm that doesn't manage wealth at all but can answer your questions.
Posted on 12/23/21 at 12:04 pm to HoldenOversoul
I have contacts who use multiple FAs.
I have contacts who use none.
If you are honest with them about your goals and they are honest with you about their strengths, you should get a comfort level whether you could benefit from none of them, 1, or multiple.
It isnt uncommon for people on top of generational wealth to have a play fund and multiple advisors managing the full portfolio.
I have contacts who use none.
If you are honest with them about your goals and they are honest with you about their strengths, you should get a comfort level whether you could benefit from none of them, 1, or multiple.
It isnt uncommon for people on top of generational wealth to have a play fund and multiple advisors managing the full portfolio.
Posted on 12/23/21 at 2:39 pm to meansonny
quote:
It isnt uncommon for people on top of generational wealth to have a play fund and multiple advisors managing the full portfolio.
That also adds complexity that is avoidable.
On a personal level, I have a strong bias towards simplicity. I’ve automated all of my investments across HSA, 401K, and taxable brokerage. The only thing I don’t automate is IRA that is a lump sum in January each year.
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