45yo 18M portfolio, best way to grow?

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svll
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45yo 18M portfolio, best way to grow?

Post by svll » Wed Jul 05, 2017 1:07 pm

Couple both 45 years old. 12M in housing/rentals, 6M in stocks, 280K mortgage, and 450K cash. 60% of stock is individual large cap domestic growth stocks. The rest is in large cap domestic and SP index mutual funds, with more allocation on the index fund.

Income is about 1.2M/year gross from two W2's, dividends and rental income. Expense is equivalent to 350K a year gross. The income will fluctuate, but expect to be within the 800K to 1.4M range. The expense might rise to 450K-550K once the kids go to college for a number of years.

My goal is growth. Active management is OK but hours are somewhat limited. Any suggestions?

aristotelian
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Re: 45yo 18M portfolio, best way to grow?

Post by aristotelian » Wed Jul 05, 2017 1:40 pm

Seems like you are doing just fine. Hard to give advice to someone who has won the game a few times over.

With your income and tax bracket, I would take a look at Vanguard Tax-Managed Balanced (VTMFX) and Lifestrategy Moderate Growth (VSMGX).

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David Jay
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Re: 45yo 18M portfolio, best way to grow?

Post by David Jay » Wed Jul 05, 2017 1:40 pm

Welcome to the forum.

You have, as we say here at Bogleheads, "won the game" as your portfolio can provide for your current living expenses indefinitely (2.5% is commonly considered a "perpetual" withdrawal rate, 18M *.025 = 450,000).

We are going to point you in the direction of broadly-based index funds. Instead of chasing the latest thing, we like to take what the market gives with minimal effort or worry. A classic "lazy portfolio" would hold at minimum a US total stock market fund, an International stock market fund and a US bond fund (we call that the "Three Fund Portfolio"). From there you can look at tilts towards small cap, value, and so on, but it is not necessary.

Here is the wiki on portfolios: https://www.bogleheads.org/wiki/Lazy_portfolios
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

bloom2708
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Re: 45yo 18M portfolio, best way to grow?

Post by bloom2708 » Wed Jul 05, 2017 2:01 pm

Congrats. You won. Likely can't mess it up.

I would sell all real estate except residences. Put it 50/50 in a nice 3 fund portfolio. Add some REIT for excitement. Use tax efficient placement. Re-balance one time per year. Go play 18 holes. Maybe 36.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

ERISA Stone
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Re: 45yo 18M portfolio, best way to grow?

Post by ERISA Stone » Wed Jul 05, 2017 2:06 pm

Do you own the $12M in housing/rental outright, or are there mortgages attached. If so, what's the debt total?

svll
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Re: 45yo 18M portfolio, best way to grow?

Post by svll » Wed Jul 05, 2017 2:47 pm

Thanks Aristotelian and David. My spouse and I started working 20 years ago, paid off the student loans and started saving and building a portfolio. We were lucky to have good paying jobs and made a few investment decisions correctly, among many mistakes in stocks and options.

I agree the portfolio should be able to provide income stream for an indefinite period. But since I am not contemplating retirement, I am looking at ideas to expand and grow it. I am pretty heavy in residential real estate, but the prices are very high now. The stock evaluations are the same and my luck hasn't been especially good.

svll
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Re: 45yo 18M portfolio, best way to grow?

Post by svll » Wed Jul 05, 2017 2:49 pm

Erisa, the real estate has 280K mortgage.

lowndes
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Re: 45yo 18M portfolio, best way to grow?

Post by lowndes » Wed Jul 05, 2017 2:49 pm

svll wrote:Thanks Aristotelian and David. My spouse and I started working 20 years ago, paid off the student loans and started saving and building a portfolio. We were lucky to have good paying jobs and made a few investment decisions correctly, among many mistakes in stocks and options.

I agree the portfolio should be able to provide income stream for an indefinite period. But since I am not contemplating retirement, I am looking at ideas to expand and grow it. I am pretty heavy in residential real estate, but the prices are very high now. The stock evaluations are the same and my luck hasn't been especially good.
If it was me I would determine my asset allocation and invest in a three fund portfolio. On the real estate I'd keep the primary home and any vacation homes you use and sale the others.

Thesaints
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Re: 45yo 18M portfolio, best way to grow?

Post by Thesaints » Wed Jul 05, 2017 2:52 pm

How would your RE holdings have performed in 2009 ? You might be too highly concentrated in that sector vs. no exposure at all to foreign markets.

aristotelian
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Re: 45yo 18M portfolio, best way to grow?

Post by aristotelian » Wed Jul 05, 2017 2:59 pm

svll wrote:Thanks Aristotelian and David. My spouse and I started working 20 years ago, paid off the student loans and started saving and building a portfolio. We were lucky to have good paying jobs and made a few investment decisions correctly, among many mistakes in stocks and options.

I agree the portfolio should be able to provide income stream for an indefinite period. But since I am not contemplating retirement, I am looking at ideas to expand and grow it. I am pretty heavy in residential real estate, but the prices are very high now. The stock evaluations are the same and my luck hasn't been especially good.
Growth is good, but personally I would be thinking about protecting myself from risk. You are very concentrated in real estate and while a 2008 type of event would not destroy you it would certainly give back a lot of your gains. Do you not have any bonds at all?

I would also start thinking about taxes. At your level, taxes could make more of a difference than your investment decisions.

A move from real estate into muni bonds (or Tax Managed Balanced Index, which contains muni bonds) would diversify your portfolio and decrease your taxable income, killing two birds with one stone.

staythecourse
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Re: 45yo 18M portfolio, best way to grow?

Post by staythecourse » Wed Jul 05, 2017 3:15 pm

My bigger worry would not be growth, but decreasing risk. You have A LOT of money in rentals. Have you thought about selling and just investing in broad markets. At this point your BEST way to grow is not to lose any of it through lawsuits. The risk of that happening is significantly higher holding real estate then equities.

Other then that it seems you should be giving us pointers on how to grow their wealth. :D

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

WhiteMaxima
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Re: 45yo 18M portfolio, best way to grow?

Post by WhiteMaxima » Wed Jul 05, 2017 3:18 pm

Buying W Buffet a dinner. He will tell you how to turn 18 M into 30 B.

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Watty
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Re: 45yo 18M portfolio, best way to grow?

Post by Watty » Wed Jul 05, 2017 3:37 pm

svll wrote:My goal is growth. Active management is OK but hours are somewhat limited. Any suggestions?
The problem with active management is that study after study has shown that overall it does not beat the index funds over the long term. Just with random chance you would expect a few to have some great number but the odds of you picking those mutual funds or financial advisers in advance is slim.

Even if you believe there are a few financial advisers that can pick superior stocks then you have to be skeptical that they would actually work for you even though you have a high net worth. In addition to working for themselves there are people, institutions, pension plans, and mutual funds that they could work for and manage a hundred times(or more) money than you have and get higher compensation.

That isn't to say that a carefully selected low cost fee only financial advisor might not be a good idea for you, it is just that they will be more focused on your tax situation and estate planning than picking high growth stocks.

With your house it sounds like more than two thirds of your net worth is in real estate, just for diversification you should consider putting more of future money into other asset classes.

You need to have a plan on how you will handle the real estate when you are 80+ years old and might not be able to keep on top of it yourself. Even with property management companies you will need to keep an eye on them and occasionally find a new property management company. That could be hard to if you are in a nursing home.

You should also have a plan for how your real estate will be handled by whoever inherits it some day. If that is your kids then they may not have the skills it takes to handle that much real estate.

I would assume that you already have professional estate planning, if not then get it.

I would caution about trying to be too aggressive. There are lots of highly paid athletes, performers, and lottery winners with a lot more money than you but they can make bad investments and quickly be in financial trouble.

Tamalak
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Re: 45yo 18M portfolio, best way to grow?

Post by Tamalak » Wed Jul 05, 2017 3:42 pm

Sheesh. Sell your rentals and stick your life savings in VT. The dividends alone will fund a lavish lifestyle even if the stock market gets cut in half.

Then do anything, anything you please. Your limitation is time, not money, so maximize time.

lostdog
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Re: 45yo 18M portfolio, best way to grow?

Post by lostdog » Wed Jul 05, 2017 3:50 pm

A three fund portfolio of Total Stock Market Index, intermediate term Muni bond and International stock index OR Vanguard Total World Index and an Intermediate Term Bond.

Unless you really like working I would suggest semi-retiring. You've won the game. You can set your asset allocation and use one of the portfolio above and go have a fun hobby the rest of your life.
Financial Independence is the best revenge. | "Our life is frittered away by detail. Simplify, simplify." -Thoreau

letsgobobby
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Re: 45yo 18M portfolio, best way to grow?

Post by letsgobobby » Wed Jul 05, 2017 4:37 pm

svll wrote:Couple both 45 years old. 12M in housing/rentals, 6M in stocks, 280K mortgage, and 450K cash. 60% of stock is individual large cap domestic growth stocks. The rest is in large cap domestic and SP index mutual funds, with more allocation on the index fund.

Income is about 1.2M/year gross from two W2's, dividends and rental income. Expense is equivalent to 350K a year gross. The income will fluctuate, but expect to be within the 800K to 1.4M range. The expense might rise to 450K-550K once the kids go to college for a number of years.

My goal is growth. Active management is OK but hours are somewhat limited. Any suggestions?
Like the others, I wonder why growth is your goal. You have a very low marginal utility of wealth - that is, another $10 million won't change your lifestyle or sustainability in any meaningful way. In conrast, halving your wealth from $18 million to $9 million might, as you'd be bumping up against a 4% withdrawal rate, which may not be sustainable for 40+ years.

I can't provide any recommendations for growth, seeing that you've probably got that equation figured out.

For safety, I'd suggest selling $3M in stocks and placing it in a muni bond fund; and I'd consider selling some of the real estate especially if it is highly concentrated.

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Re: 45yo 18M portfolio, best way to grow?

Post by Grt2bOutdoors » Wed Jul 05, 2017 4:45 pm

Easy to see why growth is goal, dynasty planning.

Advice, look into 1031 exchanges when seeking real estate diversification, defer paying taxes and/or use real estate equity to lever up conservatively to make improvements and or further investments in real estate but diversify geographically. Also, realize that although you invested correctly (luck factor), you may not always be so lucky. Road is littered with real estate investors whose luck ran out......
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Goal33
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Re: 45yo 18M portfolio, best way to grow?

Post by Goal33 » Wed Jul 05, 2017 4:58 pm

Not sure why everybody is assuming he did a great job investing. Seems to me his income is super high and that is what fueled this nice portfolio. He may have been better off in VTI all along.
A man with one watch always knows what time it is; a man with two watches is never sure.

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FIREchief
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Re: 45yo 18M portfolio, best way to grow?

Post by FIREchief » Wed Jul 05, 2017 5:23 pm

Why are you still working??
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

sawhorse
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Re: 45yo 18M portfolio, best way to grow?

Post by sawhorse » Wed Jul 05, 2017 5:55 pm

Why do you have $350k in expenses?

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arcticpineapplecorp.
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Re: 45yo 18M portfolio, best way to grow?

Post by arcticpineapplecorp. » Wed Jul 05, 2017 6:42 pm

Watty wrote:
svll wrote:My goal is growth. Active management is OK but hours are somewhat limited. Any suggestions?
The problem with active management is that study after study has shown that overall it does not beat the index funds over the long term. Just with random chance you would expect a few to have some great number but the odds of you picking those mutual funds or financial advisers in advance is slim.

Even if you believe there are a few financial advisers that can pick superior stocks then you have to be skeptical that they would actually work for you even though you have a high net worth. In addition to working for themselves there are people, institutions, pension plans, and mutual funds that they could work for and manage a hundred times(or more) money than you have and get higher compensation.

That isn't to say that a carefully selected low cost fee only financial advisor might not be a good idea for you, it is just that they will be more focused on your tax situation and estate planning than picking high growth stocks.

With your house it sounds like more than two thirds of your net worth is in real estate, just for diversification you should consider putting more of future money into other asset classes.

You need to have a plan on how you will handle the real estate when you are 80+ years old and might not be able to keep on top of it yourself. Even with property management companies you will need to keep an eye on them and occasionally find a new property management company. That could be hard to if you are in a nursing home.

You should also have a plan for how your real estate will be handled by whoever inherits it some day. If that is your kids then they may not have the skills it takes to handle that much real estate.

I would assume that you already have professional estate planning, if not then get it.

I would caution about trying to be too aggressive. There are lots of highly paid athletes, performers, and lottery winners with a lot more money than you but they can make bad investments and quickly be in financial trouble.
very well said. OP re-read this again. Then read this short paper by William Sharpe (you know, of the Sharpe Ratio, which he never wanted it called by the way). It's called "The Arithmetic of Active Management". Once you read it, you should give up any notions that active management will do better than indexing over the long run.

https://web.stanford.edu/~wfsharpe/art/ ... active.htm

Congratulations and welcome to the forum.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

svll
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Re: 45yo 18M portfolio, best way to grow?

Post by svll » Wed Jul 05, 2017 7:25 pm

Grt2bOutdoors wrote:Easy to see why growth is goal, dynasty planning.

Advice, look into 1031 exchanges when seeking real estate diversification, defer paying taxes and/or use real estate equity to lever up conservatively to make improvements and or further investments in real estate but diversify geographically. Also, realize that although you invested correctly (luck factor), you may not always be so lucky. Road is littered with real estate investors whose luck ran out......
1031 exchange is something I am looking at. But the real estate is expensive that I want to be careful with leverage.

By active management I mean it is OK to involve some work, such as real estate, restaurant partners, etc.

Hindsight is 20/20, but back in 2011 to 2014 the investment strategy was very clear. It is less so now just because the valuations. I am totally OK with cash and just wait. But open to any thoughts.

RAchip
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Re: 45yo 18M portfolio, best way to grow?

Post by RAchip » Wed Jul 05, 2017 7:33 pm

If you want to maximize "growth" then you probably need to sell some of the real estate. Its not the boglehead way, but what about putting $5mm or more into the FANG type stocks? Isnt that what you do if you want growth?

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Re: 45yo 18M portfolio, best way to grow?

Post by chicagoan23 » Wed Jul 05, 2017 7:50 pm

If growth is your goal I would sell all the individual stocks and large-cap index funds and move the money into broadly diversified small caps. You can afford to take on a huge amount of risk considering you presumably have two high incomes and are unlikely to lose two high-paying jobs. You also do not seem to be overly concerned about safety. Small cap stocks are likely to grow the most over the long term. If you lose 60% on them who cares, you still have multi-millions and they will eventually recover. And of course sell all the real estate, because those assets are far less likely to grow at anywhere near the rate of equities over the long-term. You don't need the income and are not concerned about safety.

If you do have some concern about losing money, where you want growth but don't want to take on too much risk, I would recommend a 70/30 portfolio with at least 30% of the equities allocated to International funds. Your risk adjusted return would probably be higher than the all-small-caps strategy, but your total return is likely to be lower than all small-caps.

And if dynastic wealth is the goal I would hire an estate planner and start putting all new money into an irrevocable trust, and closely watch the legislation on estate tax reform. If you live another 50 years and your portfolio doubles every 10 years or so, you'll be at $500 million by the time you die. I'd try to shelter as much of that as possible.

And maybe put aside enough to pay off that mortgage, just in case......

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Re: 45yo 18M portfolio, best way to grow?

Post by Blueskies123 » Wed Jul 05, 2017 7:55 pm

Why are you on Bogleheads, with your kind of portfolio you should have your money with the big shots. You need to be thinking about inter-generational tax planning strategies.
I am not saying you need to paying big fees to fancy pants Morgan Stanley Investment Bankers but you can afford to pay someone to set up a low cost portfolio for you.
FIRE July 2015 The US government spends nearly the ENTIRETY of its tax revenue on Social Security, Medicare, and Interest on the Debt.

Grt2bOutdoors
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Re: 45yo 18M portfolio, best way to grow?

Post by Grt2bOutdoors » Wed Jul 05, 2017 7:58 pm

svll wrote:
Grt2bOutdoors wrote:Easy to see why growth is goal, dynasty planning.

Advice, look into 1031 exchanges when seeking real estate diversification, defer paying taxes and/or use real estate equity to lever up conservatively to make improvements and or further investments in real estate but diversify geographically. Also, realize that although you invested correctly (luck factor), you may not always be so lucky. Road is littered with real estate investors whose luck ran out......
1031 exchange is something I am looking at. But the real estate is expensive that I want to be careful with leverage.

By active management I mean it is OK to involve some work, such as real estate, restaurant partners, etc.

Hindsight is 20/20, but back in 2011 to 2014 the investment strategy was very clear. It is less so now just because the valuations. I am totally OK with cash and just wait. But open to any thoughts.
Want to lose your shirt? Invest in a restaurant. No, do not go anywhere near them, they are money pits. Plenty of stories from well known individuals who lost their shirts in the restaurant business - what do you know about the restaurant business? unless you know it well, stay away.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

aristotelian
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Re: 45yo 18M portfolio, best way to grow?

Post by aristotelian » Wed Jul 05, 2017 8:07 pm

Blueskies123 wrote:Why are you on Bogleheads, with your kind of portfolio you should have your money with the big shots. You need to be thinking about inter-generational tax planning strategies.
I am not saying you need to paying big fees to fancy pants Morgan Stanley Investment Bankers but you can afford to pay someone to set up a low cost portfolio for you.
I think its great that he is looking for bogleheads advice. The advice here about predatory financial advisors applies just as much if not more so to high net worth people. OP is pretty clearly focused on his real estate business and does not know much about stocks and bonds. He better educate himself because he has a lot to lose.

Separate from the growth vs risk discussion, I would also ask OP to consider what he hopes to achieve. If the poster above is correct that a growth strategy could result in $500m, that money could do a lot of good. Please consider a donor advised fundnor even setting up your own foundation so the money isn't lost to taxes when you die.

CppCoder
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Re: 45yo 18M portfolio, best way to grow?

Post by CppCoder » Wed Jul 05, 2017 8:10 pm

Grt2bOutdoors wrote: Want to lose your shirt? Invest in a restaurant. No, do not go anywhere near them, they are money pits. Plenty of stories from well known individuals who lost their shirts in the restaurant business - what do you know about the restaurant business? unless you know it well, stay away.
Tilman Fertitta (https://en.wikipedia.org/wiki/Tilman_Fertitta) begs to differ :). Besides, OP said he wanted growth. He didn't specify positive growth :twisted:.

Grt2bOutdoors
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Re: 45yo 18M portfolio, best way to grow?

Post by Grt2bOutdoors » Wed Jul 05, 2017 9:07 pm

CppCoder wrote:
Grt2bOutdoors wrote: Want to lose your shirt? Invest in a restaurant. No, do not go anywhere near them, they are money pits. Plenty of stories from well known individuals who lost their shirts in the restaurant business - what do you know about the restaurant business? unless you know it well, stay away.
Tilman Fertitta (https://en.wikipedia.org/wiki/Tilman_Fertitta) begs to differ :). Besides, OP said he wanted growth. He didn't specify positive growth :twisted:.
Seeing that the man grew up in his father's restaurant business, I would say that he knew the restaurant business "well". The OP on the other hand is/would be a passive investor with the funds, but the operational knowledge is with whom?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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unclescrooge
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Re: 45yo 18M portfolio, best way to grow?

Post by unclescrooge » Thu Jul 06, 2017 12:44 am

svll wrote:Couple both 45 years old. 12M in housing/rentals, 6M in stocks, 280K mortgage, and 450K cash. 60% of stock is individual large cap domestic growth stocks. The rest is in large cap domestic and SP index mutual funds, with more allocation on the index fund.

Income is about 1.2M/year gross from two W2's, dividends and rental income. Expense is equivalent to 350K a year gross. The income will fluctuate, but expect to be within the 800K to 1.4M range. The expense might rise to 450K-550K once the kids go to college for a number of years.

My goal is growth. Active management is OK but hours are somewhat limited. Any suggestions?
If you're looking for growth, then create a stock-heavy portfolio with a tilt towards small caps and foreign markets.

Now that your question has been addressed, would you mind sharing how you built up a 12 M portfolio in real estate over 20 years?

It's a truly remarkable feat, and many here would love to hear your story.

dbr
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Re: 45yo 18M portfolio, best way to grow?

Post by dbr » Thu Jul 06, 2017 9:30 am

unclescrooge wrote:
svll wrote:Couple both 45 years old. 12M in housing/rentals, 6M in stocks, 280K mortgage, and 450K cash. 60% of stock is individual large cap domestic growth stocks. The rest is in large cap domestic and SP index mutual funds, with more allocation on the index fund.

Income is about 1.2M/year gross from two W2's, dividends and rental income. Expense is equivalent to 350K a year gross. The income will fluctuate, but expect to be within the 800K to 1.4M range. The expense might rise to 450K-550K once the kids go to college for a number of years.

My goal is growth. Active management is OK but hours are somewhat limited. Any suggestions?
If you're looking for growth, then create a stock-heavy portfolio with a tilt towards small caps and foreign markets.

Now that your question has been addressed, would you mind sharing how you built up a 12 M portfolio in real estate over 20 years?

It's a truly remarkable feat, and many here would love to hear your story.
That begs the question that the real answer is just keep on doing what you were doing. That is unless the source of the money was an inheritance or some absolutely improbably event of blind luck.

txranger
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Re: 45yo 18M portfolio, best way to grow?

Post by txranger » Thu Jul 06, 2017 9:55 am

Dude as others pointed out here, u ve won the game. Not sure why u r looking here or looking for growth. Most folks here r desperately trying to get to perpetually sustaining status of living off their investments, and getting out of the rat race. Since u already got to the former, I suggest u look at the latter.

Michread
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Re: 45yo 18M portfolio, best way to grow?

Post by Michread » Thu Jul 06, 2017 10:07 am

WOW! Please share with us how you got there. We would like to learn from YOU. :shock:

caffeperfavore
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Re: 45yo 18M portfolio, best way to grow?

Post by caffeperfavore » Thu Jul 06, 2017 10:19 am

txranger wrote:Dude as others pointed out here, u ve won the game. Not sure why u r looking here or looking for growth. Most folks here r desperately trying to get to perpetually sustaining status of living off their investments, and getting out of the rat race. Since u already got to the former, I suggest u look at the latter.
Not to hijack the thread...but, I would love to know why you wouldn't do the latter. I'm not being judgmental, just genuinely curious. I hope to check out with a mere fraction of that net worth, living very well at that. I'm curious as to what motivates someone to keep pushing forward when, as others have said, you've already won the game several times over.

qwertyjazz
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Re: 45yo 18M portfolio, best way to grow?

Post by qwertyjazz » Thu Jul 06, 2017 10:26 am

The problem is you need more definition than growth. Boglehead methodology is about relatively conservative growth 5-7 percent compounded over decades is impressive though. Add in your rate of saving and you would have some very impressive numbers. If you want more growth, then you need to concentrate your investments in a field. That is more risk. It is even more risk given how predatory people can be when they hear money. Pick a field spend 5-7 years learning about it and gamble if you want much larger growth.
So 2 questions
What is the money for?
What do you consider a lot? (A win)
G.E. Box "All models are wrong, but some are useful."

Beach
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Re: 45yo 18M portfolio, best way to grow?

Post by Beach » Thu Jul 06, 2017 10:33 am

The real estate market is bubbling again. 2/3 of your portfolio is real estate. Prices are getting very high again....sell while you can and mitigate your risk. You could have $30K a month in interest with $12M earning just 3%. How much more are you making in rent plus the headaches that are involved?

goblue100
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Re: 45yo 18M portfolio, best way to grow?

Post by goblue100 » Thu Jul 06, 2017 11:02 am

The phrase "to gain what they didn't need, they risked what they couldn't lose" is running through my head. I believe that belongs to William Bernstein.
I also remember reading an article from Larry Swedroe recounting the tale of a older couple that had something like 13 million which the husband turned into something like 3 million during the upset of 2008. Just food for thought for OP.
Some people are immune to good advice. - Saul Goodman

svll
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Re: 45yo 18M portfolio, best way to grow?

Post by svll » Thu Jul 06, 2017 11:33 am

Some pearls I picked up --
1. Estate planning. Heard quite a bit about it. But is it too early at 45? The law keeps changing too.
2. Risk mitigation. I use a lot of insurance on each property, and umbrella.
3. Change into stocks. Tried that before.

My past strategy was simple. Study an area well, buy the quality you like at the right time, stay for the long term. Most of the gain is from the rise of tide, and any lesser quality will wear out the investor.

CppCoder
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Re: 45yo 18M portfolio, best way to grow?

Post by CppCoder » Thu Jul 06, 2017 11:34 am

Grt2bOutdoors wrote:
CppCoder wrote:
Grt2bOutdoors wrote: Want to lose your shirt? Invest in a restaurant. No, do not go anywhere near them, they are money pits. Plenty of stories from well known individuals who lost their shirts in the restaurant business - what do you know about the restaurant business? unless you know it well, stay away.
Tilman Fertitta (https://en.wikipedia.org/wiki/Tilman_Fertitta) begs to differ :). Besides, OP said he wanted growth. He didn't specify positive growth :twisted:.
Seeing that the man grew up in his father's restaurant business, I would say that he knew the restaurant business "well". The OP on the other hand is/would be a passive investor with the funds, but the operational knowledge is with whom?
Of course. I was just being cheeky. The original post seems a little like a humble brag, so I thought the replies deserved some irreverence.

CppCoder
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Re: 45yo 18M portfolio, best way to grow?

Post by CppCoder » Thu Jul 06, 2017 11:37 am

Michread wrote:WOW! Please share with us how you got there. We would like to learn from YOU. :shock:
See, this is how to grow your funds. You need to write a book titled, "How I went from student loans to millions in real estate in no time flat." Very important: Make sure you don't infringe any patents or copyrights of Robert Kiyosaki.

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Watty
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Re: 45yo 18M portfolio, best way to grow?

Post by Watty » Thu Jul 06, 2017 12:42 pm

svll wrote:Some pearls I picked up --
1. Estate planning. Heard quite a bit about it. But is it too early at 45? The law keeps changing too.

No. You could get hit by the proverbial Mack truck tomorrow and if you wait until you are 65 to start doing it then you may be invested in ways that don't work well with estate planning. The laws do keep changing so you will also need to update your plans every few years.


2. Risk mitigation. I use a lot of insurance on each property, and umbrella.

The big risk is that your local real estate values or rent could drop a lot. This is especially true if you property is all located in the same city.

3. Change into stocks. Tried that before.

The stock markets are near a high so if you used several stock index funds and stuck with them then you would likely be doing pretty good right now.

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Re: 45yo 18M portfolio, best way to grow?

Post by LFKB » Thu Jul 06, 2017 12:52 pm

Can you provide more background on how you got to where you are today? What were your incomes along the way and what were some of the good and bad investments you made? How much of the $18M came from income vs investment gains vs inheritance?

Of the $12M in real estate today, how many properties is that and what is the breakdown of primary residence vs vacation vs rentals? Where are they located?

As someone who is younger than you but with high incomes, I am curious to learn more about how you got where you are and the context will also be helpful in determining your best path forward.

Thanks

sawhorse
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Re: 45yo 18M portfolio, best way to grow?

Post by sawhorse » Thu Jul 06, 2017 2:17 pm

Have you looked into offshore accounts to lower your taxes and protect your assets from lawsuits?

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HomerJ
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Re: 45yo 18M portfolio, best way to grow?

Post by HomerJ » Thu Jul 06, 2017 2:45 pm

Michread wrote:WOW! Please share with us how you got there. We would like to learn from YOU. :shock:
Heh, paraphrasing Steve Martin on how to become a millionaire.

First, get a job that pays a million dollars a year.
Income is about 1.2M/year gross

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Re: 45yo 18M portfolio, best way to grow?

Post by Grt2bOutdoors » Thu Jul 06, 2017 6:06 pm

HomerJ wrote:
Michread wrote:WOW! Please share with us how you got there. We would like to learn from YOU. :shock:
Heh, paraphrasing Steve Martin on how to become a millionaire.

First, get a job that pays a million dollars a year.
Income is about 1.2M/year gross
First, start out with $20 million. Second, lose $2 million. Third, listen to your wife and go on Bogleheads.org to ask their advice. Fourth, fire your personal banker when you realize the real knowledge resides on the great world wide web!!!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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FIREchief
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Re: 45yo 18M portfolio, best way to grow?

Post by FIREchief » Thu Jul 06, 2017 6:15 pm

HomerJ wrote:
Michread wrote:WOW! Please share with us how you got there. We would like to learn from YOU. :shock:
Heh, paraphrasing Steve Martin on how to become a millionaire.

First, get a job that pays a million dollars a year.
Income is about 1.2M/year gross
Hey, hey, hey....... Comedy is NOT pretty. 8-)
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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FIREchief
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Re: 45yo 18M portfolio, best way to grow?

Post by FIREchief » Thu Jul 06, 2017 6:16 pm

svll wrote:
Grt2bOutdoors wrote:Easy to see why growth is goal, dynasty planning.

Advice, look into 1031 exchanges when seeking real estate diversification, defer paying taxes and/or use real estate equity to lever up conservatively to make improvements and or further investments in real estate but diversify geographically. Also, realize that although you invested correctly (luck factor), you may not always be so lucky. Road is littered with real estate investors whose luck ran out......
1031 exchange is something I am looking at. But the real estate is expensive that I want to be careful with leverage.

By active management I mean it is OK to involve some work, such as real estate, restaurant partners, etc.

Hindsight is 20/20, but back in 2011 to 2014 the investment strategy was very clear. It is less so now just because the valuations. I am totally OK with cash and just wait. But open to any thoughts.
I've heard that the surest way to retire with a small fortune is to start with a large fortune and open your own business.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

chicagoan23
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Re: 45yo 18M portfolio, best way to grow?

Post by chicagoan23 » Thu Jul 06, 2017 6:58 pm

svll wrote:Some pearls I picked up --
1. Estate planning. Heard quite a bit about it. But is it too early at 45? The law keeps changing too.
You already have more money than you will ever realistically spend. A meager 2% interest/dividends/rental income on your current assets will produce enough to keep up your hefty spending rate of $350k per year, and even if you sold everything today and put it all in cash earning zero interest, you'd still not run out of money over the next 50 years. Plus you still have two high incomes. There is literally no reason for you to hold new assets from future savings and investments in your own name. Nothing good can come from that, with the likely result being confiscatory estate taxes when you die. My "Rule of 72" calculation noted earlier puts you at centimillionaire status in 25 years or so, and that's not taking into account new contributions. I'd argue that you might already be late for truly effective estate/gift tax maximization and bullet-proof asset protection planning, but it's never too late.
svll wrote: My past strategy was simple. Study an area well, buy the quality you like at the right time, stay for the long term. Most of the gain is from the rise of tide, and any lesser quality will wear out the investor.
There are an awful lot of extremely smart people who study an area well and think they are buying quality at the right time, but only a handful who have had the results you have had. If this is your strategy, I'd say you are probably on a hot streak and I'd look to start indexing, with an appropriate asset allocation for your long-term risk tolerance. Don't kid yourself that your goal is merely "growth"; your goal is really hitting risk-adjusted return targets.

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