Ultra HNW on this forum?

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realfan
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Ultra HNW on this forum?

Post by realfan »

I have been frequenting this forum for over a decade. I am a rare poster and I DM folks sometimes when I want to impart some of my experience but not share details on the regular forum. I live an odd life in that my wife and I are friends with folks from all over the economic spectrum. We also have friends who are 15 years younger to ten years older - we are in our mid 50s so you can do the math :)

On the younger end, we have friends (as well as our own adult children) who aren’t worth much and are just starting out. I always preach the Boglehead three fund portfolio to this crowd as a great way to start investing. I also have friends on the older side of the spectrum whom I suspect are worth north of $25M (multiple homes, no mortgages, invested in hedge funds, PE funds, stock market, commercial RE, etc.). I also discuss simplified investing with a couple of folks in this crowd and I swear they think I am a simpleton.

My own net worth is less than these ultraHNW folks but clearly well ahead of anyone just starting out - I’m probably being a bit modest here but we’re fine and looking to retire in five years or so. My question at the end of this long ramble is - are there ultra HNW folks on this board that subscribe to the Boglehead philosophy? I myself (although not an UHNW but a regular old HNW) pursue a modified three fund strategy whereby I overtilt to REITs as I have a lifelong love with RE and the benefits they bring. Thus, I am allocated to US Total Stock Market, US Total Bond Market, Total International Stock Market (ex-US) and REITs.

I know that many here feel that the three (or four) fund portfolio is just fine for UHNW folks and that you can add some PE or hedge funds if so desired but is there a natural breakpoint at which one needs to think beyond a Boglehead portfolio? Asking for a friend :D . Thanks.
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Lee_WSP
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Re: Ultra HNW on this forum?

Post by Lee_WSP »

A managed portfolio which simulates the S&P can have a lower tax and expense drag than VTI. The fees may also partially be offset by slightly better returns.

For UHNW families, tax planning is far more important.
marcopolo
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Re: Ultra HNW on this forum?

Post by marcopolo »

realfan wrote: Tue Jan 04, 2022 8:51 pm I have been frequenting this forum for over a decade. I am a rare poster and I DM folks sometimes when I want to impart some of my experience but not share details on the regular forum. I live an odd life in that my wife and I are friends with folks from all over the economic spectrum. We also have friends who are 15 years younger to ten years older - we are in our mid 50s so you can do the math :)

On the younger end, we have friends (as well as our own adult children) who aren’t worth much and are just starting out. I always preach the Boglehead three fund portfolio to this crowd as a great way to start investing. I also have friends on the older side of the spectrum whom I suspect are worth north of $25M (multiple homes, no mortgages, invested in hedge funds, PE funds, stock market, commercial RE, etc.). I also discuss simplified investing with a couple of folks in this crowd and I swear they think I am a simpleton.

My own net worth is less than these ultraHNW folks but clearly well ahead of anyone just starting out - I’m probably being a bit modest here but we’re fine and looking to retire in five years or so. My question at the end of this long ramble is - are there ultra HNW folks on this board that subscribe to the Boglehead philosophy? I myself (although not an UHNW but a regular old HNW) pursue a modified three fund strategy whereby I overtilt to REITs as I have a lifelong love with RE and the benefits they bring. Thus, I am allocated to US Total Stock Market, US Total Bond Market, Total International Stock Market (ex-US) and REITs.

I know that many here feel that the three (or four) fund portfolio is just fine for UHNW folks and that you can add some PE or hedge funds if so desired but is there a natural breakpoint at which one needs to think beyond a Boglehead portfolio? Asking for a friend :D . Thanks.
Curious why you think that is an odd life?
I suspect it describes a lot of people on this forum, it is pretty close to describing us.

Anyway,
We are not UHNW, but have several friends that are, their investing approach, just like any other demographic, seems to vary widely from diy/low cost/indexing to having "a guy" that takes care of everything, to one friend who is probably in the three comma club (based on family wealth), that has a private office running his portfolio. Not sure one can generalize investing needs in that demographic any more than others
Once in a while you get shown the light, in the strangest of places if you look at it right.
jhawktx
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Re: Ultra HNW on this forum?

Post by jhawktx »

realfan wrote: Tue Jan 04, 2022 8:51 pm I have been frequenting this forum for over a decade. I am a rare poster and I DM folks sometimes when I want to impart some of my experience but not share details on the regular forum. I live an odd life in that my wife and I are friends with folks from all over the economic spectrum. We also have friends who are 15 years younger to ten years older - we are in our mid 50s so you can do the math :)

On the younger end, we have friends (as well as our own adult children) who aren’t worth much and are just starting out. I always preach the Boglehead three fund portfolio to this crowd as a great way to start investing. I also have friends on the older side of the spectrum whom I suspect are worth north of $25M (multiple homes, no mortgages, invested in hedge funds, PE funds, stock market, commercial RE, etc.). I also discuss simplified investing with a couple of folks in this crowd and I swear they think I am a simpleton.

My own net worth is less than these ultraHNW folks but clearly well ahead of anyone just starting out - I’m probably being a bit modest here but we’re fine and looking to retire in five years or so.
This sounds like an episode of "What's My Line"...for those old enough to remember that show. Are we supposed to guess who you are? :happy
stoptothink
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Re: Ultra HNW on this forum?

Post by stoptothink »

marcopolo wrote: Tue Jan 04, 2022 9:12 pm
realfan wrote: Tue Jan 04, 2022 8:51 pm I have been frequenting this forum for over a decade. I am a rare poster and I DM folks sometimes when I want to impart some of my experience but not share details on the regular forum. I live an odd life in that my wife and I are friends with folks from all over the economic spectrum. We also have friends who are 15 years younger to ten years older - we are in our mid 50s so you can do the math :)

On the younger end, we have friends (as well as our own adult children) who aren’t worth much and are just starting out. I always preach the Boglehead three fund portfolio to this crowd as a great way to start investing. I also have friends on the older side of the spectrum whom I suspect are worth north of $25M (multiple homes, no mortgages, invested in hedge funds, PE funds, stock market, commercial RE, etc.). I also discuss simplified investing with a couple of folks in this crowd and I swear they think I am a simpleton.
Curious why you think that is an odd life?
I suspect it describes a lot of people on this forum, it is pretty close to describing us.
Really odd post, pretty much describes us too (well, we're quite a bit younger).
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Sandtrap
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Re: Ultra HNW on this forum?

Post by Sandtrap »

realfan wrote: Tue Jan 04, 2022 8:51 pm I have been frequenting this forum for over a decade. I am a rare poster and I DM folks sometimes when I want to impart some of my experience but not share details on the regular forum. I live an odd life in that my wife and I are friends with folks from all over the economic spectrum. We also have friends who are 15 years younger to ten years older - we are in our mid 50s so you can do the math :)

On the younger end, we have friends (as well as our own adult children) who aren’t worth much and are just starting out. I always preach the Boglehead three fund portfolio to this crowd as a great way to start investing. I also have friends on the older side of the spectrum whom I suspect are worth north of $25M (multiple homes, no mortgages, invested in hedge funds, PE funds, stock market, commercial RE, etc.). I also discuss simplified investing with a couple of folks in this crowd and I swear they think I am a simpleton.

My own net worth is less than these ultraHNW folks but clearly well ahead of anyone just starting out - I’m probably being a bit modest here but we’re fine and looking to retire in five years or so. My question at the end of this long ramble is - are there ultra HNW folks on this board that subscribe to the Boglehead philosophy? I myself (although not an UHNW but a regular old HNW) pursue a modified three fund strategy whereby I overtilt to REITs as I have a lifelong love with RE and the benefits they bring. Thus, I am allocated to US Total Stock Market, US Total Bond Market, Total International Stock Market (ex-US) and REITs.

I know that many here feel that the three (or four) fund portfolio is just fine for UHNW folks and that you can add some PE or hedge funds if so desired but is there a natural breakpoint at which one needs to think beyond a Boglehead portfolio? Asking for a friend :D . Thanks.
Notes:
1. Not sure what UHNW is? Can you clarify with a number or range?

2. Each person is different. For example:
a) Person with Net Worth 30 million. Substantial institutional pension from a career as an employee. Etc.
b) Person with Net Worth 30 million. Multiple business owner, entrepreneur, employer.
c) Person either of the above living in an UHCOL area. No children.
d) Person either of the above, LCOL area, children, estate considerations, etc.

3. There is no "break point", what works for one doesn't work for another.

Any of the above is might have something beyond a "boglehead" 3-4 fund index portfolio, but different between each of them, that best suits their needs as far as diversification of assets, income, etc.

Actionably: post for a "portfolio review" with specifics in forum format.

j :D
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RubyTuesday
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Re: Ultra HNW on this forum?

Post by RubyTuesday »

There have been several threads over the years soliciting surveys of bogleheads’ net worth. Of course self-reported… who knows accuracy…

There are reportedly many bogleheads with NW over $10M, which is the figure I see batted around for UHNW definition.
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Normchad
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Re: Ultra HNW on this forum?

Post by Normchad »

Your life doesn’t seem unusual to me.

I’m not UHHW, but I’m sure I could be. The reason I’m not is that all of my money comes from wage income. So the pike grows steadily over time, and as it gets to big, I become more conservative. So I sort of intentionally won’t take the risks needed to get there.

Most of the UHNW people I see sort of have a “Big Bang” moment that gets them their. Either they sell a business or held a bunch of RSUs that blew up. That sort of thing.

Anyhow, yeah, from here I could absolutely hit 8 figures using BH principles if I just keep working long enough and up the equity allocation. I’m just not interested in either of those things, mostly because I have “enough”.
an_asker
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Re: Ultra HNW on this forum?

Post by an_asker »

I've a few buddies whose net worth I have no clue about. I do know that some of them live in VHCOL areas and earn about ten times our household income, which in itself is in the top 10%.

In social media groups, some of these folks have expressed their opinion that to get to the Boglehead UHNW category (they don't know Bogleheads, but I am saying this based on the numbers that were being bandied), they need to either be investing in individual stocks or they need to do so plus perform option trading. In other words, just a normal 'stay the course' portfolio won't put them in the $25 million plus range.

Does this pass the sniff test? In other words, if you are someone on this thread with a $25 million plus net worth, have you gotten there by basic three fund portfolio (or similar) investing? Or did you hit it out of the park with a Tesla or a Bitcoin or an Apple or some such and/or did you do option trading or some other super technical thing to make it big? Or was it based on inheritance or marriage?
LFKB
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Re: Ultra HNW on this forum?

Post by LFKB »

I don’t know what you consider UHNW but I’m a tad below where you expect some of your friends are. I started as BH and still add to my index funds, but I’ve invested in a number of individual stocks and have beat the market handily every year. I also just made a large ($5M) investment into a private equity fund recently, but it was a situation where I know all the principals and was able to get into the fund after they had made three investments, two of which look to be home runs, and had the benefit of a year of hindsight while getting in at the original cost basis.
GP813
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Re: Ultra HNW on this forum?

Post by GP813 »

According to Investopedia: Ultra-high-net-worth individuals (UHNWIs) are defined as people with investable assets of at least $30 million.
bling
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Re: Ultra HNW on this forum?

Post by bling »

GP813 wrote: Wed Jan 05, 2022 9:49 pm According to Investopedia: Ultra-high-net-worth individuals (UHNWIs) are defined as people with investable assets of at least $30 million.
even that seems low to me. we're talking ULTRA high net worth! it should be $100M.

but for these people, it's all about tax planning and preservation of wealth. it's more important to stay in the 3 comma club than it is to get market returns.
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zaboomafoozarg
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Re: Ultra HNW on this forum?

Post by zaboomafoozarg »

I remember when Maynard Speer was here, with his $30M net worth and interesting posts. Kinda miss having him around.
ClassII
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Re: Ultra HNW on this forum?

Post by ClassII »

I have a friend who’s family is in the 3 comma club. I’ve never had the courage to ask how it all works for them but I would love to. And of course I fantasize about winning the Powerball (cough, $630M this week, cough) some day and wonder if suddenly being at that level would require any changes to handle that wealth. Does VTSAX and chill really scale?
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Lee_WSP
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Re: Ultra HNW on this forum?

Post by Lee_WSP »

The Fed keeps statistics on this. Just name the percentile and you can pull up the estimated familial wealth to be in that percentile.
sc9182
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Re: Ultra HNW on this forum?

Post by sc9182 »

ClassII wrote: Wed Jan 05, 2022 10:12 pm I have a friend who’s family is in the 3 comma club. I’ve never had the courage to ask how it all works for them but I would love to. And of course I fantasize about winning the Powerball (cough, $630M this week, cough) some day and wonder if suddenly being at that level would require any changes to handle that wealth. Does VTSAX and chill really scale?
Heh - it takes money to make money (or lose money -- like today).
You have to earn money (big moneys infact) before you can contemplate joining 8 digit club and/or 3 comma club.
Or there is that Power-ball (of sorts) always .. being lucky (ie., super super lucky) beats being good or VTSAX buy and HODL ..
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snackdog
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Re: Ultra HNW on this forum?

Post by snackdog »

High net worth seems like 8 figures and UHNW 9 or 10 figures. The three fund approach scales to all of them but the rewards for portfolio managers do also so they tend to get suckered into active management.
ClassII
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Re: Ultra HNW on this forum?

Post by ClassII »

sc9182 wrote: Wed Jan 05, 2022 10:19 pm
ClassII wrote: Wed Jan 05, 2022 10:12 pm I have a friend who’s family is in the 3 comma club. I’ve never had the courage to ask how it all works for them but I would love to. And of course I fantasize about winning the Powerball (cough, $630M this week, cough) some day and wonder if suddenly being at that level would require any changes to handle that wealth. Does VTSAX and chill really scale?
Heh - it takes money to make money (or lose money -- like today).
You have to earn money (big moneys infact) before you can contemplate joining 8 digit club and/or 3 comma club.
Or there is that Power-ball (of sorts) always .. being lucky (ie., super super lucky) beats being good or VTSAX buy and HODL ..

Well of course. Besides the fun of the lotto fantasy im more just curious how UHNW individuals manage their money. Obviously it costs more and the real high end folks have entire staff to work on it. More just a curiosity than anything I ever really expect to have in my life. Plus I like to think there’s always something to learn from how those in different economic groups handle their money.

For instance: do they get the same AUM at JP Morgan as is mere mortals? Or is it like BofA Premium Rewards where they make all that complimentary for the high rollers?
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HanSolo
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Re: Ultra HNW on this forum?

Post by HanSolo »

realfan wrote: Tue Jan 04, 2022 8:51 pm I know that many here feel that the three (or four) fund portfolio is just fine for UHNW folks and that you can add some PE or hedge funds if so desired but is there a natural breakpoint at which one needs to think beyond a Boglehead portfolio?
Needs...? I'd say no. But if they feel like it, then I don't see why not.

Warren Buffet bet a million dollars that a portfolio consisting of hedge funds couldn't beat the S&P over a 10-year period. Buffett won the bet.

So I don't think anyone needs to go beyond the standard Boglehead-type portfolio, but they can if they want to. For example, in my IRA, I have some non-Boglehead-type stuff going on (actively-managed funds, tilts, gold funds, valuation-based adjustments, etc.). I don't think there's necessarily a "right" or "wrong" about it. Some people gamble in Las Vegas. I don't, but who am I to say they're "wrong"? It's their money.

Try telling them to put everything in a Target Retirement fund and call it a day. That might be a fun conversation.
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sailaway
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Re: Ultra HNW on this forum?

Post by sailaway »

Some of our UHNW friends have tried to lecture us about having a guy or investing in real estate or setting up a trust. But they are not interested in having a conversation on money matters. This likely has as much to do with the age difference as net worth. The one friend that is closer to my age wants to talk more about philanthropy and spending the money than investing it. As a matter of fact, the only investments mentioned have been looking for companies to invest in in her home country.

We are not UHNW, but we do sometimes discuss diversifying into real estate. If we could find a place with an ADU between our parents, we would rent out the main house and have the ADU for ourselves for visits. We just spent two months visiting and the hopping back and forth and filling the gaps with hotels was exhausting.
moneyflowin
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Re: Ultra HNW on this forum?

Post by moneyflowin »

If UHNW is defined as "above $30MM", then I doubt any subscribe to and follow the BH way. It's far is too conservative to generate that much wealth. Getting to that level would require one to lever up repeatedly (eg, real estate) or to concentrate in a small number of home runs whether stock or private investments, or plow all your money into your small business and let it grow (which is a form of risky concentration).

Working a 9-5 job and stashing it into your 401k and brokerage accounts at 60/40, with only passive ETFs and no leverage, while paying off your 3% mortgage, won't gonna get you to $30MM.
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Re: Ultra HNW on this forum?

Post by FoolMeOnce »

moneyflowin wrote: Wed Jan 05, 2022 10:55 pm If UHNW is defined as "above $30MM", then I doubt any subscribe to and follow the BH way. It's far is too conservative to generate that much wealth. Getting to that level would require one to lever up repeatedly (eg, real estate) or to concentrate in a small number of home runs whether stock or private investments, or plow all your money into your small business and let it grow (which is a form of risky concentration).

Working a 9-5 job and stashing it into your 401k and brokerage accounts at 60/40, with only passive ETFs and no leverage, while paying off your 3% mortgage, won't gonna get you to $30MM.
Depends how much that 9-5 job pays. Save $250k/yr for 30 years at 8% growth will get you there. But if you're doing it that way, most people would retire before reaching that point.
toast0
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Re: Ultra HNW on this forum?

Post by toast0 »

an_asker wrote: Tue Jan 04, 2022 9:37 pm I've a few buddies whose net worth I have no clue about. I do know that some of them live in VHCOL areas and earn about ten times our household income, which in itself is in the top 10%.

In social media groups, some of these folks have expressed their opinion that to get to the Boglehead UHNW category (they don't know Bogleheads, but I am saying this based on the numbers that were being bandied), they need to either be investing in individual stocks or they need to do so plus perform option trading. In other words, just a normal 'stay the course' portfolio won't put them in the $25 million plus range.

Does this pass the sniff test? In other words, if you are someone on this thread with a $25 million plus net worth, have you gotten there by basic three fund portfolio (or similar) investing? Or did you hit it out of the park with a Tesla or a Bitcoin or an Apple or some such and/or did you do option trading or some other super technical thing to make it big? Or was it based on inheritance or marriage?
A three fund portfolio isn't going to turn a small amount of money into a big amount of money unless your time horizon is very long; so UNHW assets are likely coming from other sources, such as employment income or a windfall or an employment related windfall or even some sort of speculation. But once you've realized the assets, you can manage them with a three fund (or similar) and slowly grow that big amount of money.
realfan wrote: Tue Jan 04, 2022 8:51 pmI know that many here feel that the three (or four) fund portfolio is just fine for UHNW folks and that you can add some PE or hedge funds if so desired but is there a natural breakpoint at which one needs to think beyond a Boglehead portfolio? Asking for a friend :D . Thanks.
I think there's a natural point when a target date fund becomes unwise because of tax inefficiency; calculating that specific point is an exercise for the reader, but UHNW is probably way past that. Otherwise, you might want to consider doing something else when your holdings make up a significant portion of the fund, or when your possible trading makes up a significant portion of the daily average volume. VTI is currently about $300B in assets and average volume is 3.6 M shares ($800M of trading), so if you take 1% to be significant, that's $3B in VTI or $8M in possible daily trades. Some of the vanguard mutual funds have daily buy/sell limits, so if your possible sales are close to that, maybe do something different.
shess
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Re: Ultra HNW on this forum?

Post by shess »

moneyflowin wrote: Wed Jan 05, 2022 10:55 pm If UHNW is defined as "above $30MM", then I doubt any subscribe to and follow the BH way. It's far is too conservative to generate that much wealth. Getting to that level would require one to lever up repeatedly (eg, real estate) or to concentrate in a small number of home runs whether stock or private investments, or plow all your money into your small business and let it grow (which is a form of risky concentration).
I'm not in that range, but that's in part because I decided to retire early because there didn't seem to be much financial point to continuing to work. I didn't use a 3-fund portfolio to get to that point, but I am using it to keep me there. If I had $30MM, I'd keep on using the same approach.
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VictorStarr
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Re: Ultra HNW on this forum?

Post by VictorStarr »

I know a number of people that have substantial net worth in the SF Bay area. Usually they are either founders with successful exit(s) or early employees of big tech companies. Many of them continue to work, drive Subarus/Teslas and send children to public schools. They usually use a help of CFP and tax specialist. Many continue to invest into low cost ETFs. High percentage of them became angel investors into early stage startups. Many become involved into philanthropy.
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Re: Ultra HNW on this forum?

Post by tryingtogetahead »

moneyflowin wrote: Wed Jan 05, 2022 10:55 pm If UHNW is defined as "above $30MM", then I doubt any subscribe to and follow the BH way. It's far is too conservative to generate that much wealth. Getting to that level would require one to lever up repeatedly (eg, real estate) or to concentrate in a small number of home runs whether stock or private investments, or plow all your money into your small business and let it grow (which is a form of risky concentration).

Working a 9-5 job and stashing it into your 401k and brokerage accounts at 60/40, with only passive ETFs and no leverage, while paying off your 3% mortgage, won't gonna get you to $30MM.
I think the two major caveats here are how much your 9-5 pays and your investment horizon.
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Re: Ultra HNW on this forum?

Post by 2tall4economy »

Slow and steady generally isn’t going to get you to uhnw. It’s usually huge liquidity events or extremely highly paid people who love what they are doing and live large (celebs and ceos).

Slow and steady people tend to get to the “what’s the point” stage and exit their income stream before they cross the threshold.
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Marseille07
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Re: Ultra HNW on this forum?

Post by Marseille07 »

shess wrote: Thu Jan 06, 2022 12:03 am Having a larger portfolio might give you access to investments you otherwise wouldn't have had access to, but it doesn't cause things you previously had access to to suddenly fall apart. If you are in the habit of fishing and drinking beers to while away your weekends cheaply, winning the lottery doesn't mean you need to immediately switch to cocaine and hookers. You can just keep fishing and drinking beers.
You can, but lots of people do:
a) leave workforce
b) change their AA to something conservative because they "won the game" and want to stay in the win column

Both of the above would prevent them from joining the UHNW club even if they had a shot had they continued working & investing aggressively.
BJJ_GUY
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Re: Ultra HNW on this forum?

Post by BJJ_GUY »

A person with a $25mm investment portfolio doesn't really have anywhere near enough capital to be invested in hedge funds, PE funds, and real estate funds - especially when you consider a majority of their assets are likely in traditional marketable assets. In the absence of additional information, I'd say anyone without substantially more wealth than $25mm is being sold product from an investment bank's private wealth group, or something similar. So they are paying fees to advisors, and then paying additional fees and expenses to invest in that organization's proprietary access fund which invests in hedge funds/PE/RE etc.). I'm not the typical BH on this forum who will say there is no utility for active management, and private investment funds, but I do firmly believe you are really going to struggle to overcome a structure as outlined above.

Theoretically a UHNW person could make a limited number of investments in these private vehicles, but they'd need to know the landscape (i.e., identify top tier, or at least not below median funds) as step one. Step 2 would be gaining access to invest in those private funds, most of which are closed to new investors, or at least capacity constrained and unlikely to accept such small investment amounts.

There are a handful of independent multi-family office groups and similar that commingle client assets together, and invest it without excessive downside from hidden expenses, conflicts of interest, access to top talent etc., so that would be the one way to compare and contrast the various options.

Of course the above is all investment related. At $25mm the money is probably better used toward professional tax, planning, and legal efforts. I'm no expert though, so just my two cents.
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Re: Ultra HNW on this forum?

Post by AlohaJoe »

BJJ_GUY wrote: Thu Jan 06, 2022 3:10 am A person with a $25mm investment portfolio doesn't really have anywhere near enough capital to be invested in hedge funds, PE funds, and real estate funds
I know several people under $25mm who are invested in hedge funds and PE. But it usually requires connections and investing via some kind of roll-up arrangement. For instance, they recently invested in Tiger Global's latest round. That had a $1M minimum investment for individuals and $5M for institutions. Maybe one of my friends put that much in on his own but I'm pretty sure none of the rest did. But they are involved with a group who represent 13 people/families -- basically the level below dedicated family office. And that group got involved with a much bigger family office (for a family that in the $2-3 billion net worth range) in a few deals. Now sometimes the smaller group gets invited in as a "friend" of the big group on bigger deals.

So the people I know invest in the shared-family-group which then gets rolled up into the friendly "real" family office which then invests in Tiger Global's latest round.
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Re: Ultra HNW on this forum?

Post by shess »

Marseille07 wrote: Thu Jan 06, 2022 1:26 am
shess wrote: Thu Jan 06, 2022 12:03 am Having a larger portfolio might give you access to investments you otherwise wouldn't have had access to, but it doesn't cause things you previously had access to to suddenly fall apart. If you are in the habit of fishing and drinking beers to while away your weekends cheaply, winning the lottery doesn't mean you need to immediately switch to cocaine and hookers. You can just keep fishing and drinking beers.
You can, but lots of people do:
a) leave workforce
b) change their AA to something conservative because they "won the game" and want to stay in the win column

Both of the above would prevent them from joining the UHNW club even if they had a shot had they continued working & investing aggressively.
Smells like success to me!
EddyB
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Re: Ultra HNW on this forum?

Post by EddyB »

LFKB wrote: Tue Jan 04, 2022 9:42 pm I don’t know what you consider UHNW but I’m a tad below where you expect some of your friends are. I started as BH and still add to my index funds, but I’ve invested in a number of individual stocks and have beat the market handily every year. I also just made a large ($5M) investment into a private equity fund recently, but it was a situation where I know all the principals and was able to get into the fund after they had made three investments, two of which look to be home runs, and had the benefit of a year of hindsight while getting in at the original cost basis.
The “give away” factor is another good reminder of why most people shouldn’t invest in PE funds.
FinancialSnowboarder
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Re: Ultra HNW on this forum?

Post by FinancialSnowboarder »

AlohaJoe wrote: Thu Jan 06, 2022 3:26 am
BJJ_GUY wrote: Thu Jan 06, 2022 3:10 am A person with a $25mm investment portfolio doesn't really have anywhere near enough capital to be invested in hedge funds, PE funds, and real estate funds
I know several people under $25mm who are invested in hedge funds and PE. But it usually requires connections and investing via some kind of roll-up arrangement. For instance, they recently invested in Tiger Global's latest round. That had a $1M minimum investment for individuals and $5M for institutions. Maybe one of my friends put that much in on his own but I'm pretty sure none of the rest did. But they are involved with a group who represent 13 people/families -- basically the level below dedicated family office. And that group got involved with a much bigger family office (for a family that in the $2-3 billion net worth range) in a few deals. Now sometimes the smaller group gets invited in as a "friend" of the big group on bigger deals.

So the people I know invest in the shared-family-group which then gets rolled up into the friendly "real" family office which then invests in Tiger Global's latest round.
I agree with AlohaJoe. I know dozens of people under $25M who are invested in hedge funds, PE, and Real Estate funds. Many funds only require you to be an accredited investor ($1M net worth), with some requiring you to be a Qualified Purchaser ($5M net worth). Some funds have a limited number of spots for friends & family, so net worth is not relevant in that case.

There are also SPVs that aggregate investors to hit the minimum investment to invest into a fund. For example, an SPV can have 50 investors to meet a $5M minimum investment.
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Re: Ultra HNW on this forum?

Post by jharkin »

marcopolo wrote: Tue Jan 04, 2022 9:12 pm
realfan wrote: Tue Jan 04, 2022 8:51 pm I have been frequenting this forum for over a decade. I am a rare poster and I DM folks sometimes when I want to impart some of my experience but not share details on the regular forum. I live an odd life in that my wife and I are friends with folks from all over the economic spectrum. We also have friends who are 15 years younger to ten years older - we are in our mid 50s so you can do the math :)

On the younger end, we have friends (as well as our own adult children) who aren’t worth much and are just starting out. I always preach the Boglehead three fund portfolio to this crowd as a great way to start investing. I also have friends on the older side of the spectrum whom I suspect are worth north of $25M (multiple homes, no mortgages, invested in hedge funds, PE funds, stock market, commercial RE, etc.). I also discuss simplified investing with a couple of folks in this crowd and I swear they think I am a simpleton.

My own net worth is less than these ultraHNW folks but clearly well ahead of anyone just starting out - I’m probably being a bit modest here but we’re fine and looking to retire in five years or so. My question at the end of this long ramble is - are there ultra HNW folks on this board that subscribe to the Boglehead philosophy? I myself (although not an UHNW but a regular old HNW) pursue a modified three fund strategy whereby I overtilt to REITs as I have a lifelong love with RE and the benefits they bring. Thus, I am allocated to US Total Stock Market, US Total Bond Market, Total International Stock Market (ex-US) and REITs.

I know that many here feel that the three (or four) fund portfolio is just fine for UHNW folks and that you can add some PE or hedge funds if so desired but is there a natural breakpoint at which one needs to think beyond a Boglehead portfolio? Asking for a friend :D . Thanks.
Curious why you think that is an odd life?
I suspect it describes a lot of people on this forum, it is pretty close to describing us.

+1. Probably describes us as well. I have friends that span the universe from PhDs working at tech startups and a quantitative analyst at a major fund management company (who makes a 7 figure salary and almost certainly has 8 figure NW - but he lives in a smaller house than me) to blue collar folks. Family is similarly a range, but I think most siblings, cousins and both sets of elderly parents all live paycheck to paycheck.... bad life circumstances compounded with a lack of financial education.

I learned long ago not to give ANY of them financial advice. It always backfires.
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Re: Ultra HNW on this forum?

Post by Nysoz »

To get to UHNW, you either have to start with a lot of money by inheriting it, make and save a lot of it, or take more risks.

If you save $240k a year for 30 years at 8% returns, you get $27M which still isn't the google definition of UHNW.

If you save $120k a year for 30 years at 15% returns, you get $52M.

If you save $60k a year for 30 years at 20% returns, you get $71M.

A person with a normal job with normal market returns won't get there. You have to take risks by using leverage, looking for higher risk returns, or start a business. Each of these are of course higher risk but get higher potential returns to get to the higher NW levels.

If you allow money to compound longer for 40-50 years then it starts to become possible.
Leesbro63
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Re: Ultra HNW on this forum?

Post by Leesbro63 »

FinancialSnowboarder wrote: Thu Jan 06, 2022 3:58 am I know dozens of people under $25M who are invested in hedge funds, PE, and Real Estate funds. Many funds only require you to be an accredited investor ($1M net worth), with some requiring you to be a Qualified Purchaser ($5M net worth). Some funds have a limited number of spots for friends & family, so net worth is not relevant in that case.

There are also SPVs that aggregate investors to hit the minimum investment to invest into a fund. For example, an SPV can have 50 investors to meet a $5M minimum investment.
This reminds me of something I read on the Retire Early forum about some advisors attempting to attract different "affinity" groups. Some of said groups consist of people who bond over issues that cannot be discussed here. But this is similar..."ooohhh...you're now wealthy enough to invest with my (or my company)...aren't you lucky?" Even some UHNW folks aren't smart enough to understand the pitch.
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Re: Ultra HNW on this forum?

Post by Leesbro63 »

an_asker wrote: Tue Jan 04, 2022 9:37 pm I've a few buddies whose net worth I have no clue about.
Over the holidays, I was invited to a party hosted by an early 60's (age) couple in my condo. He had some sort of tech business that he sold. They have a double unit...the nicest unit in the building. I always assumed they were UHNW and smart about money. Until he made a comment about taking Social Security at 62 "because I'll have to live to <some age that he figured> if I wait". I then commented that some people wait until age 70 because they view SS as longevity insurance, and if they don't make it they won't care, because they'll be dead. His wife looked at him and he got this blank look. The conversation then drifted to something else and I didn't press the issue.

I still don't know what that was all about. I'm sure they are financially OK, but I'm less convinced that they are UHNW, as we would define it. So unless you actually know via some publication, you never know what someone has.
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Re: Ultra HNW on this forum?

Post by nisiprius »

The first thing that popped up in a Google search for "UNHW" was $30 million...

Certainly, people with high net worth have more freedom to do any darn thing with their money that they like, including take risks that wouldn't be prudent for the less wealthy, lock up big chunks of their wealth in illiquid investments, and so on.

Probably the relevant number is not absolute dollars, but the ratio between investment portfolio, and the standard of living (and thus expenses) that the investor chooses to live at. We often fling about the "4% rule," so a mental model of a Boglehead retirement saver could be portfolio = around 25X spending. I imagine that someone with a $100 million portfolio and $4 million/year in "expenses", someone with $10 million and spending $400,000/year, and someone with $1 million spending $40,000 a year feel similar degrees of financial stress and worry.

I wonder what the ratio was between once-legendary fund manager Bill Miller's net worth, and the annual operating costs of his superyacht, RV Utopia, and its crew of seventeen. I'll bet he worried about it. He didn't keep it after his fund blew up.

People with high net worth have the option to become genuine participants in enterprises and I suspect that most people who get to $30 million got there by being active participants. At some point being able to vote your shares of stock isn't just a symbolic act. Let's leave them out of the discussion. That's not just a different kind of investing, it's a different kind of life. We're not talking about people whose careers are their enterprises, we're thinking about people who get to UNHW in some other way.

Certainly, at that level, tax considerations dominate investing to a much higher degree than for the "mass affluent."

Certainly, at 250X spending instead of 25X spending, there's a real question of what to do with it all. Philanthropy. Sheer miserliness, Scrooge McDuck enjoying the feel of the money in the money bin. Extravagant conspicuous consumption like buying NFTs. Creating a family fortune rather than a personal fortune.

But say you just have $30 million and you just want to invest it for the same purpose as lower net-worth--you want it to support spending of 3-4%, a million a year or so. The record of university endowment funds (Ivy League Endowments Fail to Beat a Simple US 60/40 Portfolio--Again) suggests that no, even institutions with hundreds of million to invest do not have access to investments that are just plain better than a portfolio of a few index funds.

Of course such arguments go on endlessly, but the reason they go on endlessly is because the uber-investments don't do enough better to prove anything--not once you get through the smokescreen of valuing illiquid investments, or comparing selected hedge funds to average mutual funds, etc. Of course, in his famous bet with Warren Buffett, Ted Seides had to say he could beat the S&P 500 using a portfolio of hedge funds. What else could he say? "I'm taking a bet I'm sure to lose?" Only after it was over and he lost did he start making excuses about why it hadn't been a fair bet.
Last edited by nisiprius on Thu Jan 06, 2022 8:10 am, edited 3 times in total.
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Leesbro63
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Re: Ultra HNW on this forum?

Post by Leesbro63 »

nisiprius wrote: Thu Jan 06, 2022 7:59 am Certainly, at that level, tax considerations dominate investing to a much higher degree than for the "mass affluent."
Buying and holding the Boglehead 3 Fund Portfolio seems about as tax efficient as it gets, even at $30M+.
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Re: Ultra HNW on this forum?

Post by Sandtrap »

Given: IHNW = 10-20-30 mil plus .

Only my experiences: I have never heard or met or known anyone that was “self made” (no windfall) and of UHNW that did it only as an employee. All were business owners or very highly paid professionals who also had businesses.

*however, that was long long ago. Now, there are such high salaries in tech, athletics, etc. A game changer.

**Of course there are always exceptions and everyone has different experiences and data.

But my primary life exposure has mostly included generational or new business people either through extended family, friends, golf leagues and clubs or country clubs or work and business relationships.
Though they had market based portfolios, it was not the only vehicle and not the primary generator of wealth.

There are an infinite number of financial strategies and structures where a low cost market based portfolio has a strong role, and it neither be exclusive nor excluded.

The biggest broadest and deepest point of view is a good one.
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Last edited by Sandtrap on Thu Jan 06, 2022 8:58 am, edited 3 times in total.
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capilano
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Re: Ultra HNW on this forum?

Post by capilano »

I lucked into UHNW. Graduated in college in 2004, had a good 2008-2009 and came out of that with 4-5mm. This grew to around 12mm by 2018-2019 by just being regularly invested and doing security selection. At the end of 2019, I was forced out of the market by dumb luck, and I reinvested everything in March-July 2020 (again, security selection), and am now 21-26mm. I turned full boglehead in fall 2021 as I'm just confused by the market. I still work at my job, no plans to retire until I'm in my late 60s or 70s.
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Re: Ultra HNW on this forum?

Post by NS_Bane »

"Ultra high net worth individual" is a marketing term used by the wealth management services industry. The idea is to (i) identify a segment of people to whom you can provide services, (ii) segregate them from other individuals based on assets so you can better tailor the services you provide them and (iii) flatter them with the designation "ultra high net worth."

There is no hard and fast cut off. $30 million is a much better number than $100 million simply because there are much fewer potential customers out there who have $100m. A wealth manager would rather call his 70 year old client with $33 million in the bank a "ultra high net worth individual," flatter him and get his fees, rather than save that term for someone in the three comma club who will never give him business.

As for UHNW individuals on Bogleheads, my guess is that there are comparatively few. A lot of Bogleheads adopted the philosophy after having been burned and realizing they are not smarter than the market, whereas a lot of UHNW individuals either inherited wealth or were extraordinarily lucky. Many lucky people mistakenly attribute their success to their supposed superior intellect or instincts, and they are not likely to adopt an investing philosophy based on the principle that you are not going to outsmart the market.
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Re: Ultra HNW on this forum?

Post by Strayshot »

Lee_WSP wrote: Tue Jan 04, 2022 8:56 pm For UHNW families, tax planning is far more important.
This. I would also add estate, and insurance planning.

If you have the money to take big risks for big payoffs, you tend to get dragged into active management, VC, hedge funds, and other “boutique” opportunities. That is why there is an accredited investor requirement for many (but not all).

Actors and professional athletes have lots of complexity, multiple streams of income, different compensation mechanisms with thick contractual legalese, etc. How to invest the money once it is “in their pocket” can be as Bogleheads straightforward as possible, but getting it there and paying legitimate but minimized taxes is a huge nightmare. Just an example.
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Re: Ultra HNW on this forum?

Post by Leesbro63 »

NS_Bane wrote: Thu Jan 06, 2022 8:33 am
As for UHNW individuals on Bogleheads, my guess is that there are comparatively few.
I'll bet there are more than you'd think. I seem to recall a poll on here, back when polls on here were a thing, and there were quite a few with $10-$15M...and if they are still around that more than doubled if they remained invested. Maybe someone can find that poll.
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Re: Ultra HNW on this forum?

Post by bling »

Leesbro63 wrote: Thu Jan 06, 2022 8:48 am
NS_Bane wrote: Thu Jan 06, 2022 8:33 am
As for UHNW individuals on Bogleheads, my guess is that there are comparatively few.
I'll bet there are more than you'd think. I seem to recall a poll on here, back when polls on here were a thing, and there were quite a few with $10-$15M...and if they are still around that more than doubled if they remained invested. Maybe someone can find that poll.
agreed. you don't even need that high an income to reach $10m if you've saving your entire working career. over the past decade, BH has been flooded with people from tech as well. these people have benefitted from very good compensation, as well as being "forced" into owning shares of their companies which happened to outperform the S&P500 by a significant margin. a couple both working in tech are well poised to reach $30m just following basic BH guidance.
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Re: Ultra HNW on this forum?

Post by goodenyou »

Leesbro63 wrote: Thu Jan 06, 2022 8:48 am
NS_Bane wrote: Thu Jan 06, 2022 8:33 am
As for UHNW individuals on Bogleheads, my guess is that there are comparatively few.
I'll bet there are more than you'd think. I seem to recall a poll on here, back when polls on here were a thing, and there were quite a few with $10-$15M...and if they are still around that more than doubled if they remained invested. Maybe someone can find that poll.
viewtopic.php?f=2&t=69175&p=1250158&hil ... h#p1250158

Just a few over $10M back then. In my 11 years here, there have been a few members revealing a NW over $30M. Most people in that space are busy running their companies and have highly paid professional handlers.
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Leesbro63
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Re: Ultra HNW on this forum?

Post by Leesbro63 »

goodenyou wrote: Thu Jan 06, 2022 9:20 am
Leesbro63 wrote: Thu Jan 06, 2022 8:48 am
NS_Bane wrote: Thu Jan 06, 2022 8:33 am
As for UHNW individuals on Bogleheads, my guess is that there are comparatively few.
I'll bet there are more than you'd think. I seem to recall a poll on here, back when polls on here were a thing, and there were quite a few with $10-$15M...and if they are still around that more than doubled if they remained invested. Maybe someone can find that poll.
viewtopic.php?f=2&t=69175&p=1250158&hil ... h#p1250158

Just a few over $10M back then. In my 11 years here, there have been a few members revealing a NW over $30M. Most people in that space are busy running their companies and have highly paid professional handlers.
Thank you for finding and posting that.
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Re: Ultra HNW on this forum?

Post by mikejuss »

It's my understanding that an all-index portfolio scales just fine--whether your net worth is $1 million or $100 million. But perhaps others disagree...
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Re: Ultra HNW on this forum?

Post by mikejuss »

capilano wrote: Thu Jan 06, 2022 8:21 am At the end of 2019, I was forced out of the market by dumb luck, and I reinvested everything in March-July 2020 (again, security selection), and am now 21-26mm.
Good for you. Question: what forced you out of the market at the end of 2019?
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Re: Ultra HNW on this forum?

Post by capilano »

mikejuss wrote: Thu Jan 06, 2022 10:06 am
capilano wrote: Thu Jan 06, 2022 8:21 am At the end of 2019, I was forced out of the market by dumb luck, and I reinvested everything in March-July 2020 (again, security selection), and am now 21-26mm.
Good for you. Question: what forced you out of the market at the end of 2019?
You wouldn't believe this. In Sep19 i went all-in into a short fund. The other investors all pulled a couple months later though, so the fund closed and I got the money out, most by Jan/Feb 20. So dumb luck maybe, although I still wonder what if i had been mega short in Feb-Mar20.
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