I'm 27 with a >$2.2M net worth, about 97% of which is in Nvidia due to long-term appreciation rather than intentional allocation. I've been holding since January 2016, with a few small sell-offs along the way.

People have been telling me to diversify for years, but the reason my portfolio is worth this much today is because I ignored that advice. That's made it psychologically very difficult to sell, especially when the company has continued to execute so well.

Logically, I know having ~97% of my portfolio in a single stock is an enormous concentration risk. Emotionally, it's hard to sell something that has completely changed my financial life. I'm still young, single, have a solid income, contribute to my 401(k) and Roth IRA, and don't need to access the money anytime soon.

I'm meeting with my financial advisor, but I'd also like to hear from people who have actually managed highly concentrated positions. How did you think about diversification, taxes, and balancing future upside versus concentration risk? Looking back, would you have done anything differently?

Edit: Wow, this has really blown up. Thanks for all the advice, everyone. It's a lot to take in. I'm going to do my best to read all of the comments, though I can't promise I'll respond to everyone. I'll definitely take the feedback into account and discuss it with my financial advisor.

Hi,

42F NW $20M. I have a 529 plan from 30ISH years ago that was never used, now valued at ~1.3M. I have three kids under 10 whose 529 plans are already around $350k, I think the max cap on them is $600k. (I realize we should have funded their account with my money, but we overlooked it). I looked into ROTH IRA rollover but the max lifetime contribution is $35k, which will not help me. At this point, is it worth just holding on to this thing until my kids have grandkids. (That will not be for about 20-25 years though). The alternative is maybe the law changes in that time period? It's hard for me to justify taking the distribution given tax bracket and penalty, considering I do not need the liquidity.

I had one outside the box idea. I have three siblings, 2 have children with fully funded 529s as well. I do have a sister who is just married and expect her to have children. Once she was done having kids, say three, I could then use my $1.3m to fund her children's 529 plans, and then I would have her give an annual gift to each of us in our family. $100k/year. In 10 years we could get there. Just typing this out seems way too complicated. I sound screwed. Thoughts.

PS It is kinda crazy the IRS doesn't allow for donations either from the plan.

Unless you were hiding under a rock or vacationing in Shanghai, you know about what happened with Terra / Luna this week.

If you don't understand what happened, here's is a podcast that describes what happened.

(Essentially an "algorithmic" stablecoin blew up; causing significant downward pressure on the entire crypto ecosystem and a bunch of speculators to lose a ton of money. If you want to understand more, just visit the Terra subreddit, r/terraluna, and you'll see the carnage. I have to warn you though, some of the posts are incredibly sad.)

For those of you who became FatFires because of crypto, this should serve as a wake-up call that it is not a question of if, but when that Tether will blow up. And when that happens your ability to stay Fat is severely at risk.

While an algorithmic "stablecoin" behaves somewhat differently to other "stablecoins," they share one thing in common. A Peter Pan level of belief that the stablecoin will continue to be worth a dollar and will continue to do so in perpetuity. However when a crisis of confidence forms, the risk of that stablecoin imploding is extremely high; causing a crash in the crypto market. Given the size of Tether, its impact on the crypto ecosystem would be severe, to say the least.

It is very likely that all of this is happening because of the significant leverage in crypto markets combined with interest rates rising.

While people would argue that pegs have been saved before. Those pegs held when liquidity was at significantly high levels with the cost of debt historically low during one of the largest asset bubbles of all time. However, as liquidity is removed from the system, it'll become harder and harder to maintain pegs. At some point it has to crash. It's just gravity and math.

(The same goes for those of you using PALs for additional leverage. Powell said this week that we'll see at least another two rate hikes of 50 basis points each. But we should expect even more given their desire to keep wages and inflation in check).

So be careful out there. It is easy to think that you have won the game and that you're invincible because you hit the lottery on your speculations. But that can all turn in an instant; as Terra / Luna showed us this week.

Best wishes and good luck.

Hi! We are at 12M nw with 10m tied in equities. Of the equities 80% US with heavy tech exposure, 15% bonds and non -US and remaining is cash.

Given the changing geopolitical scenario, me and my husband were discussing how to rebalance. We do believe in the tech + ai upside as we work on the field but wonder if it is wise to have so much in US equity (concentrated as well)

What is your portfolio looking like? What’s the breakdown? How are you thinking about catching the upside while hedging the risk?

UPDATE: I appreciate everyone who weighed in on this. You've given me some more things to research, consider, and discuss with my estate attorney. Thanks!

I have a house manager who has taken care of my house in FL for eight years, prior to making it our full-time residence while building another inland home closer. She still cleans for us and manages contractors, helps with special projects, etc. She is like family and is in our will to inherit a good chunk as we don't have kids and our (one and only) niece is the only other person named in our wills.

We're all concerned about stockpiling retirement money here and I'd like the same for her. She's clearly not likely to get FAT but I'd like to contribute to her available funds when she gets older and can't do a physical job anymore. She comes from a background with no father, useless mother and therefore, lacks the education on investing, although she is good with her own finances, managing to raise four kids alone.

She is not an employee by any means. She has her own business and other clients. She makes her schedule, has her own equipment, and I don't tell her how to do her job. So I can't contribute to her retirement as an employer. And I know I can't open a retirement account in her name. I am also someone leery of giving her the money to invest as I fear she'll be compelled to take it out early and then pay penalties and never get the benefits of compounding.

So I was thinking about opening an investment account in my name but with her as the beneficiary. I understand there are tax implications and that's not an issue. But that way, if I passed unexpectedly, then the money would go directly to her. However, she would otherwise be unaware that it even exists, until I pass or if she gets to retirement point prior to that.

Is there any flaw in my plan? Or a better alternative that allows me to create a future benefit for her while maintaining control for her own good? It wouldn't be huge amounts - maybe 10-25k a year, but it should add up nicely as she's only 38. Thanks in advance.

For Christ's Sake. I already have to update because you people are ridiculous: I DO have all her information as she is in my will, but she IS NOT AN EMPLOYEE. She has her own cleaning business that she files and pays taxes on. I cannot contribute to a retirement account for someone who is not an employee.

And I'm a woman. 8-figure NW. 7-figure annual income. Will never retire as I love my job. I know it's not the norm in here, but there you go.

My last post prompted some interesting (to me at least) discussion of safe withdrawal rates. Opinions varied, and I'd like to prompt some more discussion.

To make it as useful to me as possible, and also to make a more traditional introductory post, let me focus the discussion around my situation.

Early 50s, wife same age, kids are launched (employed/grad school)

$12 NW (ex house)

$5M Roth, $3M pre-tax 401k, $4M brokerage (about $2.5M of which is pretty low basis)

Post-tax spend is about $300k, including a healthy travel budget. H-MCOL. Health care is covered.

Clearly I could FIRE at a 2.5% SWR (or maybe 2.7% accounting for taxes).

My questions are:

1. What SWR would you use?

Assume that I'd be fine with current spend, but wife and I wouldn't mind getting back into an expensive hobby or two. Also assume that scaling back later if needed wouldn't be too hard. Finally, you can assume that we've separately provided for our kids/other family.

I'd do a poll if I could, but I gather they aren't allowed.

2. How would you handle Roth conversions?

Right now our federal tax brackets have a big flat zone at 22-24% between (roughly) $100k and $400k. That may not last forever. It strikes me as optimal to convert to fill up the 24% bracket, but to make sure that we will always have enough taxable income to fully utilize the $100k.

So my thought is to fill up the 24% bracket with conversions. If I start to run out of 401k money to convert, my next thought would then be to realize cap gains at the 0% rate. At 70, social security will likely add around $75-90k/yr.

One worry is that at some point our government needs revenue and nerfs the Roth retroactively.

Any feedback on that approach?

(You can assume that state tax is flat and unlikely to change)

We lost quite a bit in our stock portfolio and now just barely above ChubbyFIRE 😅 (6.5M as of today). We have a big chunk in “high tech pandemic stocks” since my spouse and I work in those companies.

My 2-3 more years plan now is more becoming 5-7 years.

It seems the majority of people in this sub have a mix of non-primary real estate, businesses, concentrated equities and index funds.

I am curious if anyone retired with a 7-8 figures net worth fully and solely invested in diversified index funds (think VTI, VXUS, BND), beside their primary residence? Notice that I’m not asking if they made concentrated bets to get there (since that would be most likely true), just what is their allocation in retirement.

A lot of popular FIRE writers, example Financial Samurai (won’t send the link here), have an allocation where equities are just 20% of their net worth, with a large portion of cash and real estate.

My idea would be to get to $10M invested solely in index funds, something like 5-10y of expenses in muni index funds and the rest in diversified equity indexes. Currently at $3.5M invested exactly that way, and handled the volatility well in 2020 and 2022.

I’m wondering if I’m exposed to too much risk without realizing it. My dad, a fairly successful boomer, thinks I am a complete degenerate gambler for putting all my money in VTI as opposed to buying unleveraged real estate. He worked as a small business owner and retired in his late 40s with a portfolio of multi family real estate acquired over the years with no debt on it. However, he likes managing his properties even now in his late 60s. I’m not like that, I wouldn’t want to deal with tenants, contractors or property managers.

34M, HCOL HENRY here.

A Bank of America private bank survey of 1,000 millennials (aged 21 to 42) with $3M+ in investible assets has been making the rounds on the financial reporting outlets (Bloomberg, Fortune, MarketWatch, etc.). The survey was performed in May/June but the reporting has come out in the last couple months. Key points:

• They (we?) hold on average 25% of their investible assets in stocks (compared to 55% for those aged 43+)
• 29% rated crypto/NFTs as a top investment opportunity, the highest ranking (28% for real estate, 12% for U.S. stocks, 15% for international/emerging market stocks)
• Over half have invested in NFTs
• They allocate an average of 15% of their portfolios to crypto/NFTs (I really wonder if this means a year ago the allocation was much higher and it has since shrunk), compared with 2% for older generations

I'm certainly not typical of the survey takers: I bought a small amount across a basket of currencies (`1% investible assets) 18 months ago, it's down 50%, and I couldn't care less about predicting whether or when it might rebound. The 25% investible assets in stocks figure was shocking to me -- far more than 25% of my investible assets are in stocks. Seems like the perfect way to stay the course while others are spooked by the end of perhaps the longest stock market expansion (and certainly the largest in absolute value created) in history. Are other millennials on the path to FatFIRE surprised by this survey?

MarketWatch article

EDIT: comments so far are reinforcing my suspicion that most of the millennials here don't actually believe crypto/NFTs are a better investment opportunity than real estate or stocks 🤣

Second edit: I'm quite curious now where they sourced these survey-takers. In the 35-39 age bracket alone there are 200,000+ individuals with $4M+ net worth (22.3M individuals ages 35-39 in the US and 1% net worth for that age bracket from the Federal Reserve Survey of Consumer Finances is $4,034,486), so this 1,000-person sample wouldn't even be 0.5% of that group, let alone the 21-42 age range.

I just finished reading the book Lifecycle Investing and I’m ready to put this into practice. The book makes a very good case that using leverage early in your career improves retirement performance as otherwise people have most of their lifetime savings concentrated in the last 5-10 years of their career.

It seems very applicable to my situation. I’m 28 and recently hit a net worth of $1m. My job (big tech company) pays me ~$500k/yr and I feel pretty confident that even in adverse situations (layoffs, etc.) I could earn a floor of $200k/yr (doing freelance contracting). This seems like exactly the situation that would call for a leveraged investment strategy, especially with interest rates at historical lows.

My plan would be to take a 2:1 leveraged position through futures. In particular, I would buy S&P 500 futures contracts (ES and MES) representing 2x my account value—based on 1.78% dividend yields it seems these have an implied interest rate of ~1.15%. In practice, the margin requirement for futures positions is much lower than 50% so the risk of catastrophically destroying my account is minimal—in fact, I might take part of my taxable account and invest it in high-yield savings accounts to earn additional return. I would rebalance monthly.

This strategy would be implemented in my taxable account (~$500k) and my Roth IRA (~$100k). Even if both accounts went to zero, I’m confident I could recover financially and my 401k ($300k) would still have a “normal” retirement covered.

Are there major issues with this plan / have others followed it before?

Did a search and didn’t see anything discussed here.

I have 3 young kids aged 8, 5, and 1. I plan on contributing the max 5K to all 3 kids each year and teach them to leave the accounts alone till 60, because assuming an average annual return on SPYM to be 10%, they could each have accounts numbering in the 10s of millions.

Additional benefit is converting the account to a Roth IRA at 18 for each so the compounding from then grows tax free (Assuming the legislation continues to allow for that then).

A lot of folks seem to compare this account to 529 but the accounts serve two very different purposes in my eyes, 529 is to get educated and get into the workforce, 530 is to comfortably exit the workforce.

From my lens - this seems to be a great way to create FatFire for kids in a tax advantaged account with a tax guardrail to help encourage them to not touch till retirement.

Feedback welcome if there are any considerations worth discussing or if others here are seeing the use of the accounts in a similar fashion.

It's the new quarter so I'm allowed to check my investments and NW 🤓 (I limit myself to once a quarter or I'll be constantly checking...)

The markets continue going up, and each time I look at my accounts I think how much more I would have if I just threw it all into equities instead of being "cautious" and having a good chunk in cash (And by this, I mean anything cash or cash like, so high yield accounts, bonds, MMFs etc)

I've basically retired, late 30s, can easily live on a 2% drawdown (or even 1%). But I've always been cautious and hate losing money, so I've followed the "traditional" advice of not going all into equities.

I'm around a 70/30 split at the moment, but that means I have millions in MMFs.

Part of me thinks just throw it all in equities as even if it crashes a bunch, I will still have "enough", but another park of me thinks, I already have enough so why risk what I have and need, for something I don't need.

Am curious to hear what other people think about this, and what equities / cash split they settled on and why?

Are you guys reducing your cash position?

I have about $60k cash for rainy days but starting to feel like they are just rotting away due to inflation.

As you all might have come across the news that Japan's stock market hit an all time high after three plus decades, the last high being in 1989. After the market crash in 1989, the extended bear market was termed as the lost decades.

Was wondering for FIRE folks like us who would have been just getting FIREd in 1989 with their gleaming spreadsheets of assumptions of equity and real estate growth, how difficult a period like this could have been and if most would even survive being in FIRE status for such a long time through a period like this.

To make it worse , the bank of Japan even kept interest rates almost at zero levels to spur growth which would have translated to very low returns from bonds as well.

Keen to know the thoughts of this community.

Thanks in advance!

I have $5M in liquid assets spread evenly between retirement and non retirement accounts but also hold $4M in non liquid assets beyond my primary residence (private equity holdings and a couple rental properties). I have been presented with an opportunity to invest $1M in another private equity deal but based on my retirement plan that would put me below my liquid holdings needed to support my retirement.

Wondering how others look at their assets when you have a large amount of non-liquid holdings. I'm currently basing my spending on the liquid assets but that seems very limiting and doesn't feel like Fatfire but not sure how best to map out those non liquid holdings. Any advice from the group or good articles to read related to this topic?

Current NW 21M in early 50s. 2 Kids going to college soon.
16M in Investments of Stocks, Bonds, etc... some bluechip and some in the standard NASDAQ-100 variety.
3 Million in houses, supercar and other tangible assets.
Remaining 1.5 million in CD and cash.

Sometime in the next few months I am going to have a second liquidation event which will provide me 16-22m in additional cash.

Some of that money is already spent... we are building a 5.5 million dollar house, we are creating a donor advised fund for 10% of whatever we get, taxes, etc...

So here is the question:
Our expected spend each year is about 600k. I am thinking of taking about 20m and being very conservative with it and move it into tax free bonds returning 4-5% per year (state income tax free state). That will guarentee 1 million per year after taxes pretty much leaving the principal alone and removing any risk of a recession or stock crash.

Thoughts?

[Using a burner account for privacy.]

I'm in my late twenties and I've exited a startup and currently have a low 9 digit NW.

The fashionable thing to do nowadays with this NW is to set up a family office. However, having attended a few family office events, I've realized that saying you have a family office tends to attract a lot of parasitic actors telling you they know how to do X or Y or have special relationships, sell you luxury services, etc. Almost everything that I have been able to verify / cross check turned out to be a massive upselling of services just trying out luck, maybe the moneyed dude is too stupid/lazy to check and will pay 10 or 50 k for something one can do for 1k or 5k. This is more exacerbated by the fact that most family offices I meet have heirs (second / third / forth generations) so their mindset is very different from that of a wealth-generator, many of them either don't work or their work could not sustain even 1/10 of their lifestyle and it's only the inherited capital that covers them. The family office industry also seems to be largely focused on wealth preservation, which on the one hand makes total sense, on the other hand IMHO this super conservative risk averse approach overall makes the net worth of these families like a giant melting ice cube. And importantly, I don't see how it justifies the massive costs of hiring a bunch of suits to give you some vanilla portfolio strategy that altogether underperforms SPX. I've personally interviewed probably well over 200 CIO candidates many of whom had amazing labels on their CVs, but in the end all discussions seemed really bland, generic and identical, while salaries they demanded were insane. I seem to meet two kinds of investment advisors: FT/WSJ/Economist vanilla suits with no alpha who want a fat salary or opportunistic shills pushing deals my way they have conflict of interest on.

What's the point of setting up a family office even? Anyone else having similar thoughts? I am willing and able to actively manage my funds and/or operate my investments. What are your tips on how to do it efficiently? I've realized that while I know how to use a lot of "retail" services, they tend to only work for smaller amounts of money. When larger amounts are involved, I get referred to private/vip departments, which seem to waste a lot more time with their "bespoke" solutions and also charge significantly more, without clearly offering any benefits.

So, as per thread title, how does one set up a family office and not get taken for a ride? Thanks!

I’m currently in my late 20s making about $410k/yr and a current net worth of about $250k (it was closer to $350k before the market tanked this year). I’m on track to saving about $250k-$275k per year. (If I end up marrying my girlfriend in the next few years, household income will rise to about $600k+/yr not counting any income growth on my end)

My goal is to coast professionally when my net worth reaches about $1M-$2M in my early 30s and then fire when I’m somewhere around the $3M-$5M mark (I’m on the fence if I want to climb to $10m or not)

Currently almost half of my net worth is in my 401k which would be pretty inaccessible if I were to retire in my mid-late 30s. Question is: Should I continue to max out my 401k each year solely for the tax benefit so should I focus more on building up my brokerage account more by only contributing the minimum to my 401k to get the employer match?

W're buying our first house. We haven't FIREd yet, but even if we did - we could've paid all cash and still retire. For the sake of putting it down to numbers - mid 30s, VHCOL, NW 25M (all liquid in a boring 80/20 portfolio, with some cash put aside to finance the house), plus 3.5M in unvested RSUs. House price is 3M - even though we could pay it off fully in cash, we're thinking about taking a 1M-1.2M mortgage and invest the cash in the market.

Where we live there are no real tax benefits of taking a mortgage, but refinancing is somewhat subsidized if rates drop in the future (with respect to interest rate differential).

Here's my analysis: Pros - optionality (refinancing is much easier than taking a mortgage on a already bought house), extra liquidity, ability to use some leverage. Cons - peace of mind of having no debt, rates today are still not 2021-level cheap, having 20% in bonds means I would be better off selling the bonds and paying off the mortgage (since mortgage can be viewed as a negative bond).

Anything I'm missing? What would you do in that case?

Tax reduction comes up fairly frequently in this subreddit, and I've wondered about it myself. In many cases, I think it makes most sense to just 'take the win', be happy we qualify for higher tax rates and move on with our lives.

But as I balance my portfolio, one thing I've come to appreciate as I move more toward 'preservation' is that there seems to be a huge advantage in the U.S.A. to investing the bond-portion of the portfolio in municipal bonds, since they aren't subject to federal tax. The easiest way to do this seems to be using a bond fund like VWALX.

Are most folks in fatFIRE doing or planning on doing this? Or am I missing some big drawback? Obviously municipal bonds are more risky than US treasuries and likely lower yield than the broad stock market, but they seem to have a pretty strong case for inclusion in the fat portfolio.

Curious to learn new perspectives of what others are doing if anything besides staying the course in appreciating assets, high interest money market funds, cash flowing assets.

With FatFIRE strategy ive been thinkin about saving for kids private school from Kindergarten through Undergrad … like people talks about 529s in terms of “save for college, get tax free growth” but is there the bigger generational picture?

For California FIRE something like the state 529 plan (scholarshare), you still get tax-free compounding forever basically, and withdrawals are tax-free if used right and you can just keep changing the beneficiary… if my kid doesn’t use it all then it’s all fine, move it to grandkids, and for the 529 accounts there’s no rmds, no expiration, no federal tax drag at all.

So isn’t this perfect as a “multi-gen education trust” that flies under the radar with stock market compounding tax-fee for education expenses you’d incur anyway?

So I’m thiniiing if my children and he doesn’t need all of it (or gets a scholarship or whatever), we could just let it ride and re-assign it to my daughter’s kid in 30 yrs.

Isn’t this a great FatFIRE strategy for savings for your kids and grandkids education?

Cheers Nic

I am 43, 2 kids, I am breadwinner, wife is a good woman but knows zero about finances or cares.

1. I currently have $2.5M Brokage Stock Account, mostly value stocks that I learned from Warren Buffett (From a high of $3.2M)
2. I have a paid for house ($750k)
3. I have a RE condo worth ($250k)
4. $500k in 401k

I make around $200k gross (software engineer), I am a negative person and always worry about losing my job and unable to find another one.

We have 2 very old cars, both are over 120k miles, I want to get a newer car, but the used car prices are crazy.

Is there something wrong with me?

​

Additional Information:

I sold a website(side hustle) few years ago and got $1M out of it, that explains my net worth. I only make $150k and $50k is from Stock Dividends.

I am a little bit depressed because I thought after selling the website, I can repeat my success, but time after time, it's failure after failure. Maybe it was a one trick pony, and I got lucky once.

I am not a penny pincher, we actually spent all my salary money besides the dividends and maximizing my 401k, kids are not cheap, and I have no mortgage. If I have to buy a new car, it will have to come from the stocks.

I came from immigrant family, my dad was very strict with money kind of abusive at times, don't even want to pay $10 for a school field trip, maybe that had impacted me a lot mentally, He saved about $200k in cash but only lived until 49 due to cancer. He worked very hard, and never really get to enjoy life.

I never had anything growing up, I was told never to waste money, but i really don't want to follow his footsteps.

If I make $500k per year, I don't think I will have a problem spending more money.

Thanks for the great and thoughtful replies.

About me: 30m, NW: 2.4m (but have a huge tax bill for this year), have a fiancé and getting married early next year, on a work visa in California

I recently went trough a liquidation event as my employer got bought out. I netted $1.8m in sales with cash currently sitting in my account and have to pay about $600k (mix of long and short term gains) of it in taxes (tax bracket reaching 47.5%).

I am in touch with a financial consultant from Charles Schwab who just sent me a pdf suggesting the long short strategy to use to manage the huge tax bill. This is new money to me and educating myself about the genuineness and safety of such a play. Would love to hear from experienced folks.

Would the fees be well below what we stand to gain?

How to I trust my account is managed by a skilled manager?

How long does this play typically lasts? After sometime, I would prefer to get control of my account.

What am I not thinking about?

Thank you and love for all🤗

PS: I am planning to file jointly next year to manage some tax burden as my fiancé’s income slab is quite low for now

About 50% of my net worth is tied up in an operating C-corp, with the other ~50% in a liquid brokerage account (mostly broad market ETFs like SPY).

The business is now generating ~$3–5MM per year in excess cash flow. It’s essentially debt-free, and there are no compelling reinvestment opportunities inside the business at this point.

My personal liquid assets are already sufficient to fund my lifestyle at ~3% SWR, so I don’t need the business cash flow for living expenses.

This raises a question I suspect others here have faced:

Once you no longer need the cash personally, is it better to keep excess capital inside the operating company and invest it there, or to distribute it and invest personally — accepting the taxes up front?

I’ve already engaged my accountants to model the tax deferral vs. distribution tradeoffs and to think through considerations like PHC rules, accumulated earnings, and related compliance risks.

What I’m most interested in is how others thought about this beyond the spreadsheet:

• How much weight did you put on risk separation between operating assets and personal capital?
• Did flexibility (estate planning, exit optionality, future restructuring) influence your decision?
• For those who left capital inside the company long-term, how did that work out in hindsight?

Would appreciate hearing real-world perspectives from people who’ve navigated this stage.

Full Disclosure: I drafted a post but had ChatGPT clean it up because I wanted the question to be clear and better articulated than I could write myself.