Live Like A Billionaire – From The Inside

A question I raised on Brad’s podcast, who’s your reference set?
Who am I trying to impress?

Last week, I wrote about my introduction to the well-adjusted rich.


Roll forward, I’m on the “special projects” team.

I have a look around.

  • World-class skier
  • World-class ultramarathoner
  • World-class mountaineer
  • Younger version of, said, WC Mountaineer
  • Biz partner: former D1 athlete

Every person a mix of kind and competitive.

A limited number of close relationships, the collective sum being who the boss wanted to become.

This insight does not require assets.

It requires:

  • enough space in your life to think strategically (control your schedule)
  • the knowledge of where you want to go (choose wisely)
  • access to the people you want to become (last week)

What wasn’t there.

I saw: spouse, kids, PA, pilot and the rest of the team.

No Posse.

The world has an incentive to tell us what we want to hear, if you’re rich then even more so.

Close relationships, who share truth.


How was the team used?

Short trips, shared experiences, having fun together.

Doing fun things with world class people.


Assets are no barrier to this life.

Go get it.

Sunday Summary 17 April 2022

The Body You Want

Fit Kids & Parenting

Wealth

High Performance Habits

Strength & Conditioning

Live Like A Billionaire – Student to Teacher

Unexpected mid-week power day.
It’s hard to put a value on the ability to “drop everything”.

What does the title of this piece bring to mind?

  • Jet?
  • Multiple properties?
  • Luxury yacht charters?
  • Seven-figure burn rate?
  • Handing out favors to friends and strangers?
  • Being hailed and feted?

One of the best parts of my coaching journey was getting to know “the well adjusted rich.”

I’m going to spend a few Thursdays running through the lessons I learned from watching people who have a different set of limits.


The Best Teachers You Can Find

My journey started ten years before I got the job.

First, I was a student…

Meeting Joe Friel: Joe is the founder of triathlon coaching in the United States. I had the chance to spend a weekend with him in the Spring of 2000.

By the way, this is how you might get a mentor interested in you…

  • I went to him
  • I showed him how he’d helped me
  • I listened to his advice
  • I went away and did it

Something he said stuck with me, “I’d never met someone who understood my teaching as well as you.” I didn’t just study his philosophy, I tried to embody it.

Joe started me as a coach, helped me win races and wrote a book with me.

Great deal for both of us.

The strategy worked once, so I repeated…

John Hellemans, Scott Molina, Dave Scott, Mark Allen => I was able to learn from the best.

I shared what I learned, for free, widely.


Eventually, I was a teacher…

A decade later, I turn up in Oceanside, on a road bike, in March, and crush most everyone over 40 in a 70.3 race.

Two guys, I’d never heard of, reach out for a call and I accept. I didn’t know they were friends and checking me out, separately.

I get hired and have the chance to look under the hood of the well-adjusted rich.

Turns out my client was a successful finance-guy, who stayed in the game.

His life was, and remains, the best-case scenario of a life I decided not to lead.

Becoming world-class, publicly, creates unexpected opportunities.


Let’s call this Chapter One.

If you’ve been watching me on Twitter – you can see I’m following a similar playbook in 2022.

Not towards any specific goal => simply to connect, be engaged and create unexpected opportunities.

Sunday Summary 10 April 2022

Productivity

Family Wealth

High Performance Habits

Sports Science

The Choices That Define Your Financial Life

  • Act as if personal finance is a game where you only get ten tickets to play.
  • Invest as if you are holding a checkbook with only a dozen checks inside.
  • Speak as if you’re holding a six-shooter, is it worth one of your bullets to make the point that’s on your mind.

I’ve been hearing versions of the above my entire life. It’s been great advice and encouraged me to:

  • Slow down
  • Resist the urge to interrupt compounding
  • Keep it simple
  • Focus on the big decisions
  • Treat small movements like noise

So, we started your kids with the allowance game.

Then, we moved onto discussing the family’s allocation of capital towards education.

With that, we considered the impact, across generations, of borrowing.

What next?

Teach your kids their financial lives will be about no more than a dozen choices.

Here are mine:

  • Study finance (class of 1990)
  • Save 50% of my take home (1990-2007)
  • Partners investment scheme (late 90s, all in then, equivalent of 1 yr spending now)
  • Work to build a startup (2000)
  • Sell into the frenzy (2005-2007)
  • Move into a low-cost Vanguard portfolio (2008 onwards)
  • Boulder real estate (2010 & 2012))
  • Downsize (2012-2013)
  • Borrow long at 3.25% (2013)
  • Debt free (2007 & 2020)
  • Have kids with a kind woman from a humble background (on going)

Every other choice turned out to be noise. What to do?

Focus on actions, not outcome.

What does that really mean?

Do what moves you forward and have faith. Sport, marriage, money, all things… daily action is the fundamental force moving you towards “better.”

Education matters => I was given a chance in Private Equity because I had high marks in a useful field. Between my high school graduation (1986) and my youngest’s (2031) the nature of “useful” will have changed. However, the need for skilled people to “do” will endure.

The most useful part of my degree wasn’t finance! It was financial accounting, programming and mathematics => I learned fundamental knowledge in college. I learned my profession on-the-job. You learn the valuable part by doing work, for the best people you can find.

This keeps popping up over and over again (professors, partners, coaches, mentors, twitter follows). At 53, I’m learning from people less than half my age! Do work to learn.

Avoid Ruin => studying, then working in, financial accounting helps you learn when a situation doesn’t feel right. Embezzlement is an old game and it’s useful to learn the patterns. Financial fraud happens, and will continue to happen. Take steps to reduce your family’s exposure to ruin.

With the accounting, I learned the most with 9 credits spread across three courses. Financial Accounting 1, 2 and 3. Small investment, huge return. Do it when you’re young. Being forced to rely on others to do your financial math is a disadvantage that will cost you.


Let’s pull it together for you…

Starting your working life (in a useful field, with your financial accounting courses done)…

You are at least a decade away from making the shift to lifestyle sustainable, so you focus on:

  1. Learning by doing with the best people who will hire you
  2. Savingget that first $100K banked, you will be grateful when you’re older
  3. Waiting for the fat pitch – once in a lifetime investment opportunities happen once a decade
  4. Turning yourself into the sort of person you’d like to marry, the friend you’d like to have, the parent you aspire to be => meaningful connection is true wealth

Your mind will try to trick you into thinking it’s the investment choices that matter.

It is not.

It is the four habits I outlined above, and avoiding substance abuse.

When One Dollar Costs You Ten

My kids won’t fully appreciate my choices until after I’m gone.

My #1 financial goal for my kids is debt-free education in a field that enables them to get paid.

With the very best of intentions, the US Government has completely screwed up both (a) the cost of college education and (b) the financial lives of the students they were seeking to help.


Debt isn’t free.

Every market juiced with easy money gets screwed up.


Explanation below – my life mirrors the blue line – graduate early, debt free, start saving

I googled up average debt at graduation and average graduation age.

$40,000 and 23 yo.

So let’s make three simple scenarios:

  1. Debt free early graduation (21 yo) => McGill 1990 finance grad
  2. Debt free at 25 yo
  3. Debt free at 30 yo

Let’s run it forward assuming:

  • Investment return of 5%, prior year close
  • $20,000 per annum savings

The late-start saver

  • who saves at the same annual rate
  • who earns the same return

ends up ~$1 million behind at 60 yo.

This is not the whole story, not even close!

In my demographic, families can burn ~$250,000 of capital to help a kid “get started” => 529 accounts and parental support. Even more if you roll private from Kindergarten.

What’s the 30-year cost of this choice?

$250,000 * (1.05)^30 = $1,080,000

Million bucks gone, you never see it.

  1. You burned the capital
  2. The kid figures life out by 30, and spends most of their 20s pissed at you (for tapering their support) 😉

$2 million opportunity cost, spread between two generations.

You assume it was what you were supposed to do and are grateful you finally got them off the payroll.


A possible alternative…

Our default position is in-state education and I’ll buy whatever’s left of your 529, at $2 on the dollar, once you save $100,000 of your own money.

What do we want to have happen?

  1. conserve family capital
  2. use debt sparingly
  3. build a habit of saving

Everyone pays their own way.

Sunday Summary 27 March 2022

Getting a much clearer idea about the topics that engage y’all.

Thank you for the likes, RTs and replies.

Athletic Performance

High-Performance Strategies

Wealth Topics

The #1 Mistake Financial Professionals Make

…is not leaving


Living!

Let’s start with the best money advice I’ve seen in 2022:

Don’t build a plan that requires your death to succeed.

Yes.


Rather, create a life that supports how you want to live.

How are we going to do that?

Get some money off the table.

How much?

5x “last year’s cost of living”

This is Core Capital – it is a function of your spending as well as your savings.

Once you have Core Capital, protect it.

The return on Core Capital doesn’t matter. Keeping it does!

It’s the most valuable money you will ever have, there are rapidly diminishing returns beyond this point.

Core capital doesn’t free you from the ability to stop working.

That’s OK.

You don’t want to stop, ever.

That’s another mistake the financial services industry makes => selling you a dream that you won’t enjoy.

You want the freedom to choose, to take chances with your time, to stay in the game.

You want this freedom to choose as soon as possible. Not late in life.

INVERT: You want the freedom to choose “not to.”

Not to deal with:

  • other people’s BS
  • fast money schemes
  • worry
  • golden handcuffs
  • creeps & crooks

Two weeks ago, in asking five questions, I gave you a nudge to start thinking about life.

  • Learning & Peers
  • Travel & Exploration
  • Values

That article introduced the concept of Lifestyle Sustainable => a low-cost base of operations where, ideally, you can live for free. The idea is to remove cost-of-housing from your financial concerns.

That’s the core financial asset for your portfolio. It cost me US$110,000 in 2000.

This is a great place to park your Core Capital.

Removing housing from your list of concerns gives you more than a financial return.


Alongside your key financial asset, I hope you have a loving, lifelong partner. This person is the most important decision, financial or otherwise, you’ll be making.

The highest return investments I made in my 30s & 40s, were not financial in nature. With a low-cost base of operations, & marketable skills, I was in a good place.

Many high-earners fail to see the value of what I just pointed out.

  • Low-cost base of operations
  • Marketable skills

Beyond that, most everything is lifestyle enhancement and ego.

Thankfully, I had a major setback in my early-30s (divorce) which gave me pause.

In 2000, I saw my future in front of me… lifestyle enhancement and ego… and I made a change.

A big one.

I became a world-class athlete. With (athletic) success came the realization that something was lacking.

So much success, still lacking!

  • If you’re good at making money…
  • If you’re good at playing the game of “career”…
  • If you are nearing the top of your field…

…then you’ll be tempted to keep doing what you are good at.

I’d encourage you to establish that low-cost base of operations, then try something really challenging…

The highest return investments I made were improving my suitability for marriage and learning how to parent. Most of my learning happened after I was married and my kids were born.

It is never too late to invest in the human capital of your family.

If you get these investments right then you might not notice the benefits. Honestly, a big driver in my life has been a fear of getting divorced again (not-divorced, winning)

Fear that drives positive action is useful.

I’ve been paid by less drama, and less problems (we don’t see all our wins).

I’ve also de-risked some of the challenges my future self will face (companionship, engagement, dementia). Study (the problems of) who you are likely to become.

You’ll notice my portfolio advice (still) doesn’t talk about asset allocation.

This is deliberate!

Asset selection is not the differentiating factor for a life well lived.

  • Marketable skills
  • Low-cost base of operations
  • Fixed-rate mortgage, if you like
  • Target date fund for your future self

Then focus on living your life and creating the friends/family with whom you’d like to share it.

Sunday Summary 20 March 2022

Mood Management

Athletic Performance

The Body You Want

True Wealth

World War Three Portfolios

One of my favorite things is skiing with my wife.
I’ve made a decision to keep living.
Reality is going to catch up with me at some point, I know.

When stressed, you are going to be tempted to shuffle your asset allocation.

Churning your portfolio isn’t the answer.


Geography, Citizenship & Right of Abode

I’m parked in the middle of the American Empire => by choice.

I naturalized to the US and don’t need anyone’s permission to stay here.

Being born Canadian, I have the option to live in Canada. It’s a valuable option to a wonderful country (with a different political system).

I also have the right of abode in New Zealand (a third political system). I like to think of it as a smaller Canada, on the other side of the world.

My Kiwi visa doesn’t expire. Unfortunately, I can’t pass the visa to my kids. However, each of my kids has a Canadian Citizenship certificate.

Three political systems, two hemispheres, all English speaking.

Hemispheres, continents, countries and political systems.

The location to start from scratch.


Monetary Environments

Who regulates the custodian for your financial assets?

Unsure what I mean?

Who has the ability to lock your money inside a political regime?

Where can you send money, with a single instruction, that’s outside of your home regulatory environment?

The capital to start from scratch.


Income Streams

  • Do you have an alternative source of income?
  • How long might it take to develop one?
  • Are your skills marketable internationally?
  • Might you be able to develop a set of marketable skills?

The skill set to start from scratch.


Look at the above on an individual, generational and family-wide basis.

The unimaginable happens once a decade.