So I came across $3 million a few years ago
I don't know that much investment. I had a normal $30K per year job in the service industry and an extra $5K in the bank when someone told me about crypto back in 2012. I risked the $5K bought into it, sold it in 2018, and was left with about 3 to 4 million dollars (after paying federal and local taxes). I made a saving account and put money into it. I did not quit my job. A few months later someone from the bank called me and asked for a meeting. In the meeting, they convinced me to invest that money with the bank trust subsidiary company (in 60% stocks 40% bond). They will charge me 1%/. I left about 1 million in the bank and gave them the rest.
It's been 2 and a half years. The market (and my money with them) was up and down in 2018 and again in 2020 (2019 was good). My balance with them is still higher than where it started.
I still work and am happy with my job. I don't need any money as I still have plenty in my bank account
I do wonder if I did the right thing (they have 1% fees). Should I have gone with someone else like Edward Jones? Or someone else? Should I have invested on my own (even though I don't have experience with it) and save 1% in fees?. Should I have bought a business like a gas station or something?
Any thoughts or answers to my questions?
I think 1% is a lot. You can buy an etf that tracks the sp 500, and not have to pay 1%. Again, do your research and figure out if you're getting ripped off or not.
Yes, And these traditional bank investments rarely outperform the market. Putting that across multiple ETF's in bonds and stocks would be more beneficial. But having bond exposure at this time does not have the best risk reward ratio. Atleast in stocks you'll able to ride the money printer goes Brrrrrr rally.
Congrats on your financial success. IMO, this site has all you need to know: https://jlcollinsnh.com/2011/06/08/how-i-failed-my-daughter-and-a-simpl…
"if you deposit $3mm into an account at a firm like Charles Schwab ...."
Are there no fees with Charles Schwab? Then how do they make money? The money I gave this bank subsidiary is diversified. It's in all kind of various markets and taxable and no taxable bonds (example, NON-ENERGY MINERALS, ENERGY MINERALS, INDUSTRIAL SERVICES, TECHNOLOGY SERVICES, ELECTRONIC TECHNOLOGY, etc etc DIVERSIFIED TAX EXEMPT MUTUAL FUNDS, DIVERSIFIED TAXABLE MUTUAL FUNDS, etc)
It's managed by someone who has worked as a portfolio manager for 30 years and was a professor at a university for business/investment.
The account is under my name, even though managed by them. When I was signing up, they also said I can change my mind anytime. They will write me a check. Or even transfer the entire account to some other company if I want.
Plus I get all the private banking benefits with an assigned private banker. I am not sure if I have much use for that though.
I also have some crypto left as I didn't sell everything (less than a million though). I might get a chance to sell again if it goes over 5 million -- as it happened in early 2018
https://www.google.com/amp/s/qz.com/1719659/charles-schwabs-zero-fee-co…
It’s essentially $0 commission at Schwab for transactions, and holding an account there would certainly cost far less than 1%. I believe it’s like 0.01% if anything. They make their money in numerous ways, including interest charged on margin trades, and selling their order flow, to name 2 ways.
Sounds like you’re well-diversified. That’s great news. However, if you understand a little bit about finance you can do the exact same thing without ever having to pay someone to do it for you. Judging by the amount of money you have, I’m confident in saying that you can easily learn to do this yourself.
https://www.google.com/amp/s/www.etftrends.com/passive-etfs-continue-to…
I could post tons of studies from boring textbooks, but this article sums the lesson up well: actively managed funds are not worth your money. In a period of 10 years, something like 99.5% of active investors fail to outperform the market, and their insane fees (1% is just the tip of the iceberg) negate any possible reasoning to invest in something like that. For those who do outperform the market over 40 years, it’s not much of an outperformance, and the outrageous fees negate those gains again. The same is true for mutual funds, hedge funds, etc. This is because markets are semi-strong form efficient, meaning that they reflect 100% of publicly available information. If a firm were to outperform the market and post 30% gains, they’re either making extremely risky trades and the returns aren’t risk-adjusted (so they could very well lose 30% next year) or they have inside information that they trade off of (illegally). Even the most well-known investors like Bill Ackman make mistakes sometimes (look up his Herbalife short, for example). Not even kidding, Warren Buffett’s advice to everyone is to invest in a low-load ETF that tracks the S&P500. Here’s another article, to beat a dead horse: https://www.google.com/amp/s/www.fool.com/amp/investing/2020/06/07/this…
Basically, keep your money where it’s at and you’ll generate market returns or slightly underperform compared to the market, but with the manager you have you’ll be losing around $4.5mm in fees (40 years at a 1% fee assuming you insert $3mm in that account). That means that if you literally just park your money in an S&P500 ETF you’ll pay around $400k over 40 years and have $20.5mm when you retire, or you can stay where you’re at and pay $4.5mm to retire with $15mm in your account with the manager you’re working with.
Hi OP, I'm in a very similar boat. However, I came across bitcoin when it was under $1. Being a stupid high school kid at the time, I was gambling online. And, the online platform required me to have Bitcoin in order to gamble. After Bitcoin went to $5k each, I sold all of my Bitcoin and netted around $8MM. This is what I did with my $8MM after tax.
$1MM for my parents / family members, $1MM to various charity, $1MM blown on random stuff over the course of 4 years. ~$4.5MM saved. $2.5MM in cash and $2MM invested. ($1.5MM in real estate and $500k in stocks (including IRA / 401k / 529 and etc.) I made $140k as a first year IB analyst in 2019 and will be making $170k in 2020. I'm planning to invest $1.5MM into real estate after election. Then, $500k into stock if market crash. Personally, I think this is the opportunity of a life time and you should hold cash until the economy is more sable.
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