Building Your Financial BarBell: Personal Finance Lessons & a Portfolio Review
I’ve long stressed health but also wealth. Money matters. Money matters because freedom is expensive. There is a term called FIRE, which stands for Financially Independent Retire Early. I prefer FIWOOT which can be attributed to Michael Karnjanaprakorn. Financial Independence but Work On Own Terms.
Keep your job if you like it. Or quit and take a few years off. Or take a half year sabbatical. Or start your own business, which is easier than ever with all the AI tools out there. The point is to live the life you want or as the Sartorial Shooter calls it “your own custom made reality.”
Money is a valuable tool to take care of loved ones and help others. It’s a tool to support causes that matter to you. It’s not just about material things although I certainly do enjoy them. It’s also about having resources to have good and fun experiences.
So note: this is not investing advice & please do your own due diligence but I want to share with folks what I’m doing right now. Some hard earned financial lessons.
Reiterating some basics:
–Spend less than you earn and really watch the hedonistic treadmill. DO NOT keep up with the Jones as they say. Manage your cost structure tightly.
–Saving is important but put more focus on increasing your income
–Having multiple sources of income is a must
–Have at least 12 months of expenses in cash or liquid equivalents
–Optimize for getting equity in great businesses, as many as possible
So assuming you do these things it already puts you ahead of 95% of the populace. Now the fun part (at least to me). Investing and managing any money and building wealth.
I should note before we start that my investing timeline tends to be long. Most preseed and seed stage startups take 10–15 years before any exit. Same with the Venture capital funds. And my public stocks and crypto I usually invest on a long term horizon. Ie. never less than 5 years. I’m not wired well to do stock trading.
I’m a firm believer in the barbell. As I have written before, my biggest mistake was not understanding illiquid versus liquid assets. Up until 2020 I was overweight on Illiquid stuff: real estate & VC funds/startup equity. Now I think about the barbell of illiquid and liquid assets and how these need to be counterbalanced. It’s almost a 4 part dumbbell like a 2 X 2 grid. Liquid assets versus Illiquid assets. Risky but high potential versus less risky & safer.
So the components. On the illiquid but less risky side: I have real estate, usually some income generating stuff.
On the illiquid but super risky: I have LP checks in emerging vc funds, lots of equity stakes in various tech startups. Probably still VERY overweight here if I am honest.
On the Liquid but risky: Crypto, yes ETH & BTC should be in everyone’s portfolio (will say 3–5% at least of your portfolio). I also have a bundle of tech stocks like Microstrategy which is basically a play BTC as they are so levered up in their treasury. I also own way too many public tech stocks like NVDA, TSMC, MSFT, SMH etc.
On the liquid but less risky: I’m a fan of dividend generating stocks like PBR.A, XOM, CCJ, MOS, CF, BTU, MP, URNM as well as other commodity, natural resources and energy public companies. I also have the general Vanguard ETFs which track the stock market at large.
The whole point is to think of these in the form of a balanced portfolio. Not quite Harry Browne’s Permanent Portfolio which is a portfolio split between 25% Stocks, 25% bonds, 25% cash, 25% gold but it’s my version of it. Everyone needs to figure out their own allocation.
It’s also a reflection of the life I am enjoying. I work as much as I want and whenever I want. I get to do lots of reading and studying up on startups, sales/marketing/operating, geopolitical & technology trends.
All of this informs my investing with the market telling me if I am right or wrong.
I’ll do this for the rest of my life as I think it keeps your mind sharp. And it’s some of the most fun and financially rewarding things one can do. The sooner you start this process the better off you will be.
