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BARCLAYS US EQUITY INSIGHTS -> TOP 5 QUESTIONS WE'RE HEARING... (Full Note)
Barclays US Equity Insights -> OP FIVE QUESTIONS WE'RE HEARING... (Full Note)
Timing of price fluctuation when very large trade orders occur
I Interviewed 20 Leading Wealth Management Firms: Here Are All Their Strategies
Buy, Borrow, Die. Gotta understand how hedgies or ultra HNW play the game. Why they can keep borrowing money, or (shares to sell-short). It's easy to borrow money if you are already rich
I Invested In ABML At 12 Cents, Here's My Next Play - CRBTF (First Publicly Traded DeFi Company)
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I like the strategy, I have an HNW friend who does the same thing with VOO at 1.7x and I personally run 1.2-1.5x on high-beta stocks as an active trader. Question about drawdowns - you got through 2022 by deleveraging to 1.9x preemptively in 2021. What do you do in a 20% correction that you don't anticipate? Accept every IBKR automated liquidation to bring your excess liquidity up to 0?
Thanks for this, its helpful to have your honest views on this and certainly food for thought. It's actually REALLY interesting. So I'm actually from Jersey 🇯🇪 You mentioned it is BVI company HQ in Jersey. Weshop was purchased by a HNW in Jersey from the UK hence mind and management here. It's a BVI company, but many private wealth vehicles (which this was) were historically setup in BVI which is quite common, so not as fishy as it might seem. So not a SPAC, but yes a Special Purpose Vehicle. The financials definitely don't make for good reading and blow ratios like P/E out of the water, but have to be read in the context that this basically a capital hungry VC start up over the past few years whilst trying to IPO. Heavy on marketing (athletes / influencers etc) in the early years for brand awareness and acceptance. I've been watching it for a few years (as I said above I've been USING the app). So I think its unfair to call it an insiders dumping scheme, but I can see why you might say that. The 12 month share maturity time-frame is to stop users making purchases, getting shares, then returning goods / receiving refunds. Which might better explain that aspect. Thanks for looking into it. One thing I dont understand, is who's buying into it? At that price... Surely its the anticipated growth that is priced in there? They are looking to launch in the US, so perhaps that's the thinking?
For full transparency I’m in an advisory like role at Charles Schwab, my opinion on advisors who deliver only ETF portfolios is quite poor. Schwab’s business model allows someone like myself to help self directed investors outside of providing specific buy/sell recs. While my role is to educate clients on general topics I only bring management into question if I see a need like for example a bond ladder, tax loss harvesting, banking products, for HNW individuals we have teams that work with them on their tax strategies and estate planning. So a little salesy but I believe it’s doing so as a fiduciary. For example being in MA someone starting a family and find a need to set up a 529 I typically reroute them to Fidelity for the tax advantages. Only when it’s like 3 years away from college I let them knows Schwab’s 529 won’t provide deductions but if they want to consolidate the accounts at Schwab then open it because they won’t get marginal benefits from taxes since there’s a short runway but still say Fidelity will provide them with deductions. Every advisor will say they do financial planning, but you will find advisors that are either really charismatic or who are very technical. There a few that are nice middle ground and will actually be valued. End of the day my opinion is you only need management once you’re approaching $1MM in investable assets. I might get chewed out for it but that’s my personal opinion.
Advisors arent worth paying for unless youre HNW or UHNW. Its just not complicated. Buy index funds and have an accountant do your taxes. Now mail me a check for 2% of assets under management each year.
Cool post, but a couple of considerations: ELTIFs arent private equity funds - they're mosting investing in infrastructure. ELTIFs arent derivatives. Its a direct investment fund with limited splash of Fund of Fund activity. The size of ELTIFs is small... too small to be a problem. ELTIFs are designed for institutional and HNW investors, not banks. Synthetic CDOs are CDOs of CDS contracts on other CDOs. ELTIFs not able to own CDS, so the comparison is disingenuous. According to you, they also cant even have CDS backing them - which is a good thing (if SHTF, then there is limited risk of contagion).
It's one of the perks you get with their financial management services (arguably one of the biggest ones). Their research and recommendations is one of their biggest offerings in attracting HNW individuals from other firms.
This would be a situation where I would talk to a professional. You can look for a fee only one. In reference to whether you get a step up in basis on death, there is a difference in tax treatment between taxable vs retirement accounts. You can also look into whether there are exchange funds that take crypto related assets. There are also funds like AQR and Quantinno that generate capital losses on paper that can help offset taxes. You need to talk to a professional. Most people on /r/investing are not familiar with HNW issues.
The website you’re describing is an entire industry and a very large one at that. Retail investors can obviously run screens and filters to find investments but HNW and institutional investors are generally not going to find investments through the website you’re describing. The regulatory aspect of the industry would make this very difficult
Well that is incorrect... For commercial reasons, banks don't mind lending you cheap money if your funds are locked with them, and they manage your account, it's part of a package they do that for SW, family office, HNW, hedge funds, pension funds, AM... On the overall they don't consider it a lost because their fees offset in some other place but the loan can be cheaper then what they would get on " risk free" assets ( such as overnight fed...)
"This is just not true." It is absoultely true. Source: I work with HNW individuals. I don't think you realize how many of them have art, firearms, collectibles locked in a safe that no one ever sees. And that Aston Martin DB5 you think is to show off their wealth? It sits in the garage with a car cover on it.
I work at an RIA. Any idiot can work at an RIA, as I’m often reminded on this sub. Most RIAs don’t do what we do because it’s complicated and logistically risky. And most advisors are idiots. Answer your question, super easy. Get licensed and cut your teeth at a firm that specializes in servicing HNW and UHNW.
There are plenty of balanced mutual funds but balanced ETFs really haven't taken hold in a meaningful sense. One of the largest markets for ETFs is the instituational market (both formal institutions and HNW individuals with advisors) and balanced funds are not appealing to most institutional investors so there is limited incentive to create them.
L4 is going to be brokerage dependent... they all worried about uncovered calls and your ability to cover. I know Schwab, Fidelity, and Etrade look at your trading history and won't give you L4 or portfolio (test) immediately unless you're HNW.
Man, I was planning to become a HNW individual today. Hopefully tomorrow
Man, I was planning to become a HNW individual today. Hopefully tomorrow
This isn't anything new; if you have a pension, you are invested fairly heavily in private markets. Unless they are dropping the accredited investor standard, your average person isn't going to be able to invest directly into private markets with their 401k. This more than likely is the target so HNW can invest more into PE than your average joe. The only concern is that Private Markets have been pushing hard to get retail access, as the pipeline of institutional capital is drying up, since most are overallocated to the asset class.
Almost certainly not true. I can’t see why anyone HNW/UNHNW would use this over the better options they already have.
Honestly, you have to have an IQ of like 75 and the confidence of Mark Wahlberg. I cruise in a lot of HNW circles all the day traders literally eat crayons. That's why they are so good, when the average person hears NVIDIA is a market cap of 4 trillion we take gains and reallocate capital, these tards double down on super otm calls. What you don't see is the volitility in their lives one day their net worth is 20 million the next 2 million because they blew it on some emotionally charged trade. The reality is unless you are functionally retarded it is hard to outperform the major averages. If you have an iq abve 80 and any self-doubt your only success trading options will be long-dated atm calls on the spy and qqq. You don't have to listen to me, just pm me after you blow your account.
HNW here and I don’t have or use a financial advisor. Basic ETFs will get you in the region of 10% a year instead of 10% in 4 years
Appreciate this - super helpful. One thought though: Isn’t comparing Robinhood to Schwab or Morgan Stanley kind of like comparing WhatsApp to AT&T in 2005? RH isn’t trying to win HNW clients yet - they’re winning attention, daily engagement, and behavior. If the average customer makes more trades, refers more friends, and learns faster (especially with AI now helping), wouldn’t that change the value per user over time - maybe in ways legacy metrics don’t capture?
\- Far lower than healthy average account value. 25.8 Million "funded" accounts. $180B assets under custody and a market cap of $83B. That puts the average account value at less than $7,000. Nobody is fighting to take RH's customers, and that market cap represents a much higher multiplier than the rest of the sector. (As points of comparison: Schwab's average account value is over $200k (47.6 million accounts, $9.91T under custody, market cap of $166B). Interactive brokers is over 150k (3.62MM accounts, $573.5B assets, market cap of $98B)) ETrade was about $70k per account when it was sold to MS at a firesale price of $13B. TD Ameritrade was around $108k per account when sold to Schwab for $26B. Neither of those companies were "healthy", but both were putting up better numbers than Robinhood is today. \- In the financial industry, Vlad is not seen as a serious leader running a serious business. This may not be fair, but it's the perception. \- RH's customers are not sophisticated investors (see also: $7k average account value), and very few of them have been involved in a bear market. When the current market turns or corrects, they are going to get hit a lot harder than most other brokers' customers, and will be much more likely to close their accounts. \- RH does have a substantial GenZ and Millennial presence, but not among the folks who are most likely to become HNW or UHNW in the next 15-20 years (the young folks of means have their money elsewhere). The long-term value of these customers is questionable. RH will make more profit by encouraging more active trading, but there's no path to the (ultra-profitable) wealth management or trust management businesses. With that said, HOOD does trade more like a tech stock or meme stock than as a financial services company (and $120 is not out of the question, but probably not sustainable), but compared to the rest of its industry, it is already overvalued. I'm not buying, but I'm not shorting either. (Disclosure: I have no position in HOOD, though I do in MS and SCHW.)
#TLDR --- **Ticker:** TSAT **Direction:** Up **Prognosis:** Shares to $84 USD **Source:** My personal trainer's HNW client (who was also early on PLTR) **Catalyst:** Canadian government is backing them ($650M grant, PM is buddies with CEO). Debt negotiation is the main overhang; once that's settled by Dec 2025, uncertainty is gone and it's expected to rocket.
Archer's aircraft serve what purpose? The vehicle's range is not far enough to be useful other than for tour groups/entertainment. They can't operate in the segment of modern helicopters either. The cost of parking one of these at any FBO will destroy any operational profits from it being there. A HNW individual who wants a toy isn't going to buy something that can only fly a very short distance either. The only people who may want one of these (personally or commercially) is a person who owns multiple jets, gliders, etc and just wants to say he has one. You are talking 50 people on the planet. Any FBO that "partners" with Archer is just doing so as it costs them nothing. Archer would be a paying client of the FBO. So this PR is meaningless.
I highly recommend the OP talks with a tax professional before gifting or selling that particular stock. We do not know the OP’s tax situation. Gifting tax rules are different from cost basis carrying over. I deal with HNW clients so I deal with these types of situations on a regular basis.
##Tried to buy 3x leveraged NVDA on a HNW friends account I help manage. When I tried to buy it's like, no, no you can't do that moron. I see why rich people stay rich now.
i would love to see a statistic on the 'majority' of holders financial situation. i am of the strong belief that >75% of ACTUAL BTC holders are HNW individuals. owning 1/10th of a coin on Robinhood is not a bitcoin. im not here to say it wont drop, to be clear. i am still not entirely sure it isnt a long con...lol.
We're definitely in for short term volatility, but I don't expect it to last. Every dip fills out put side option chains with long retail positions... We can't expect market makers to just give the game away. Non-HNW retail must always lose on the whole for the market to grow. That's why underwriters cut off RH when hedge funds got market makers trapped short during the GME debacle. They needed time to source long shares to meet retail demand, and it served to throw some cold water on that demand. But mostly it ensured that the house didn't lose against retail on a large scale. If you really want to know where price is going you need to watch gamma exposure (aka the gex). That will tell you imminent max pain points re: gamma (the thing that moves delta) by showing you where market makers are meeting volume. Remember that 80-90% open interest must close otm. Extrapolate from there and you get something like an expected move +/- that tends to be pretty accurate.
Vast majority of trade volume comes from institutional - not retail - traders. And even within retail, it’s really only HNW people making any impact. The collective power of millions of retail investors coordinating on Reddit was able to…move a handful of small-cap meme stock.
Because you think like 99,9% of the people, and probably don't know any HNW individual. This isn't about money : it's about passion (it's the company he founded, his child) and having a purpose. Pro sports players don't want ton Being rich and not having any purpose isn't a good thing in the long run, trust me ;)
If the USA market collapses, most of the worlds markets will too. That said, probably you'll want to lean on either the EU (a risky bet that they too, won't fall to the far right?) and then Asia. I think countries like Singapore and Vietnam, and China would be the most cushioned since they have a combined large enough market and production to self sustain. Singapore more as a hideout for the HNW coming from China will leech off the wealth effect from there.
Nice job decoding those acronyms with an LLM. If you *actually* listened to that podcast (which I doubt you did given your degenerate trading behavior) you'd know the motivation to outsource, money management, investing, DCA, all are entirely driven by psychology, and decisions to manage HNW always have a psychological aspect. It's the same with the withdrawal phase and reallocation. It's also entirely the reason you tried to make a guru-minded post here You insinuating 6-figures could be misconstrued as flexing proves you know FA about HNW, period. Don't try and shift the goal posts, buddy Nobody said mindset is a prerequisite to net worth, you're confusing correlation correlation with causation. That's the amateur tell, along with all the other bullshit in your original post Also if you've never weighed up the option to buy and sell at the end of a lease versus the alternatives, you probably haven't been on this planet long enough to be giving anyone any advice. Thinking you could use that against me was moronic, compared to you who's a pennystock shilling scumbag Better luck next time xx byee
Reply: Right—The Compound, Josh Brown, asset delegation at the HNW threshold. I’ve heard the episode. The irony is, that segment wasn’t about mindset—it was about operational scale. Wealth management outsourcing ≠ detachment. It’s logistics, not psychology. And just to clarify again, I never claimed six figures was a flex. You brought that framing in, then argued against it like it was mine. If you think mindset requires net worth, you’re confusing exposure with composure. That’s the amateur tell.
It's even worse than that for him. His wealth is actually tied to loans tied to his stock value. It's how all of the HNW Millionaires and Billionaires do it. Look up Buy, Borrow, Die if you're unfamiliar with the concept. But for anyone who isn't. You have 1 billion Dollars in Assets. But you need to fund a 300 million dollar lifestyle. You can either sell 30% of your portfolio (and give up 30% control of your company via the loss of the stock voting power) OR you can take out a portfolio margin loan at 5% or whatever for 300m backed by the stock as collateral. The upside is that if the stock grows by 10% and you only need to pay 5% then it's actually profitable to take the loans. The problem comes when your stock drops 50% and you get margin called because the bank gets worried that you won't be able to pay back the 300m you owe. So you start with 1 billion. Take a 300m loan. The stock price drops 50% and the bank margin calls you because your leverage ratio is too high. So now you only have 500m in assets (1b -50%) and the bank takes 300m of that leaving you with $200m left as net worth. That's the danger he's facing
But… Most of the income at that level is through dividends and CEO bonuses come from financial results and are always tied to equity value of the company. Whatever relief from a tax break will be offset by weaker performance in results and equity value. I don’t think there is wide sentiment in the HNW category that there is a win if the economy goes to shit. There are opportunists and vultures but they are minority. The narrative that they want everyone to default on mortgages so Blackrock can buy them up and rent them back also makes no sense. They want to loan us money. We need to have equity for that to be a real and sustainable opportunity. Banks love mortgages and credit cards and every other way they can lend us money. The more equity we have the more they can lend us and with the least risk. There are more wealthy people would like to see their equity going up by millions or 100’s of millions, receive hefty dividends and, if they work, get paid huge bonuses in cash and stock than there are that want to scoop up deals in a bad economy.
We have a HNW but we don't trade options. We do like currency forex and sports.
High net worth individuals and retail being the largest buyers of the dip, as hedge funds and insiders are the leading sellers makes me feel like this ain’t the short term bottom. HNW individuals can be just as degenerate as retail
Eyyyyy brotha. Not an OG but we’re in the same exact boat. DCA doesn’t work with FIRE and I didn’t earn it with some HNW skillset I can just go back to work with.
I’m FIRE, so there’s no significant income coming in to DCA with and my time horizon has been fixed to four years ago, I have the luxury of going back to work but unlike a lot of FIRE people I made money as a retail investor so don’t really have a HNW career to go back to if my portfolio craters, and it would suck so badly to FIRE, make the right moves, and still end up bartending or working middle management. I’m 50-30 with 20% cash, rolled from 80/20 in November to 60/30/10 in January. Yes, I’m rebalancing in response to Donald Trump. I suspected chaos but IMO after seeing there is zero pushback from Democrats or other Republicans on a tariff war against our allies, I am forced to consider that he himself is a severe Black Swan Event.
Public market equities are just a single asset class within the moving parts of a well- structured HNW asset portfolio. That swing said— diversification of risk is an environmental thing. Perhaps long-biased Strategy isn’t always best for a sharpe ratio? Hmmmmm.
Professionals mostly don't even try to pick stocks. HNW money managers typically create portfolios based on certain benchmarks set by various banking analysts, so 70/30 stocks bonds, or 80/20 "balanced growth" and invest to match those benchmark returns. The goal is very rarely to 'beat' the market.
Check out catastrophe bonds. Make sure you do your research about what they are before investing in them. With that being said, the dividend yield is MUCH higher than what you would get from HYSA. Some cat bond ETFs are PDI and HNW
After tax muni yields are better than treasuries if you are in the highest tax bracket, FYI. I am in a similar boat, but I still plan on being long equities for most of my liquid portfolio. If you own enough real estate then I think you are sufficiently protected against inflation overall, but it's hard to see that when you live in your house. My recommendation is to keep a meaningful portion in higher risk assets and put the rest in muni / treasuries . If you want to protect against inflation then you can invest in shorter term bonds. I personally would never rely on HYSA for passive income. Curiously, have you looked into private equity at all? That is where the real returns are if you're HNW.
I’m a portfolio manager for a HNW team. So I’m biased to the investment side of things. Financial advisors / wealth advisors do well if they a. Invest well (enough) and b. Provide timely and accurate financial planning information. I’ve never had a client leave over performance, but the biggest “gains” most of my clients get is on tax avoidance. My team doesn’t make big bets tactically, we would typically out perform or underperform by 50bps in a given year. But we do so in a risk / volatility managed way, looking for best risk adjusted returns. Clients care mostly about the narrative. They are forward looking, when I do my annual reviews to the board of a pension or endowment in the end of January they care way less about 2024 performance and much more about what 2025 will look like. So, if you could get $100mm in a book of business, charge 50-75bps on the assets, you could build a nice little life for yourself. But clients want to see you trade, and they want to hear why you traded what you did. It’s all about the narrative. Make the world make sense to them, be their voice of reason, and you’ll do well. Getting core exposures for the benefits of diversification at a low cost is absolutely a core bedrock of what we do. It’s more like 13-15 funds though, not 2.
>It's a speculative asset that's had 15 years to demonstrate a use case beyond that and there's still nothing. Simply not true. As we speak, the financial industry is being revolutionized by crypto. As one example, take a look at what Hedera is doing. abrdn, the largest asset manager in the U.K., is tokenizing their funds here. https://hedera.com/blog/asset-tokenization-studio >When taking into account both institutional and High Net Worth (HNW) individuals, 77% stated that they have already invested in, plan to invest in, or want to learn more about tokenized assets, citing lower transaction costs, enhanced liquidity, improved performance, and increased transparency enabled by blockchain and distributed ledger technologies as key considerations; stakeholders at all levels are rapidly realizing the untapped potential of on-chain assets.
My broker (I know this sub hates brokers but this one outperforms the market, I'm up 40% YTD) told me to borrow against my house and put it in the stock market about 5 years ago, but I'm not comfortable with that amount of risk, so I didn't do it. I'd be significantly richer now if I had, but if things had gone south, I'd be significantly poorer and also making mortgage/HELOC payments when I don't have to. I'm a property manager professionally so I also would be wary of using it to buy a small rental property, because the risk isn't spread out enough - one bad tenant can eat up a year's worth of profits on a single unit and then, again, you're stuck making mortgage/HELOC payments when you don't have to. There are a lot of traps you can fall into as someone who doesn't know what they're doing (I don't mean that to be insulting, it's just starting from square 1). That said, lots of people have built a business by funding their first rental out of their home equity - just be ready to have a business; rental income isn't passive at all, especially if you don't want to pay 8-10% of your gross for a good manager. I'd recommend following r/landlord if you're serious about this. If I were comfortable risking the roof over my head (which ultimately I'm not even though I know this is the game HNW people play all the time), I'd probably go stock market, but that's mostly because I landlord all day long and don't wanna do it in my personal time as well. Either way don't do it if you can't afford the loan payments in the event of a bear market or loss of rental income.
Seriously. Marrying a similarly minded person who you enjoy being around? It sounds corny, but that's worth more than any number in some account. Money can only make you so happy. I'll see these articles and blogs about some random HNW individual (whether from family money, or business, or celebrities or athletes) and some of them seem like they are truly miserable and lonely underneath all the money.
2 things. The comment I was responding to was talking about alternative advisory billing besides an AUM fee, which is a tiny tiny minority of advisory billing, so yeah it is. If you go to Creative or Mercer, or ask for supplemental advisory services from Schwab and you have $750K retirement account, they are almost certainly going to charge you 1%. If you go to a local state registered advisor they often will charge 1.25%. If you look at an average mass affluent to low HNW retirement account with an active RIA managing it (what OP's parents have), 1% is very slightly below average. The range of service you get for that 1% varies greatly. Some firms will throw in tax filing, a financial plan, quarterly coaching, and estate planning services for that. Others charge 1.25% on a portfolio and just do asset management. I get you don't like the billing so an advisor isn't for you, but that is the state of the industry.
Totally missing my point. But that’s ok I’ll go back to managing my HNW portfolio
I work in the HNW space. A lot of our clients have this issue. We generally propose to divest the asset over 4-5 years to a manageable percentage of the portfolio (usually less than 10%). The asset manager should also be tax loss harvesting along the way. Funding assets to sell at a loss to off set gains. Good luck. I’m shorting NVDA so I hate you a little. 😆
The only real difference is a HNW person has to be careful how they move money because they have enough to crash a market. Otherwise, you'll find as much as a variety of investing strategies as the middle class. For example: George Soros is famous for his hedge funds, but Susie Orman (net worth $75M) is mainly bonds and treasuries. Obama (NW $70M) does index funds and bonds. Dave Ramsey (NW unknown, but likely comparable) Goes 1/2 realestate and 1/2 equities (mutual funds). Jeff Bezos has 3/4 of his net worth in Amazon, which he built.
What's the cutoff for HNW and UHNW?
HNW opens up a lot of opportunities to invest in venture capital projects with a small portion of your net worth. High risk, high reward stuff (20-300x).
Most DIY investors that are in regular white collar jobs that save money in a taxable brokerage do not efficiently do any tax loss harvesting… Instead of buying an index fund, HNW can directly index and then very efficiently do tax loss harvesting while maintaining a balanced index fund of their own making, with every share’s tax basis considered for tax loss harvesting along the way.
The average HNW cares much more about not losing money on their investments than they do about gaining outsized returns. Most of them are hoping the hedge funds will prevent them from serious losses in a market crash. Otherwise, they will use a lot more things like tax free bonds and they will probably diversify into more asset classes to get more diversification than VT would allow.
HNW folks can take a few more risks than others. They do not need the same percentage of cash as others do.
Short answer it doesn't. Reddit keeps churning out these myths like Family Offices. They think every uhnw person has a family office. Reality, you really need 500mill to justify it. All a FO is is a person you employ to buy investments, so even 50mil doesn't justify a $200-300k salary, or provide sufficient work to fill even a day a week. Also many HNW are good money managers, and have been investing for years, so they enjoy making their own portfolio which is not a time consuming task. The FO folk and advisors will chime in - they kove making everything complex to offset correlated risk, in their view, ie debentures etc, but most wealthy people under 50 don't see their exorbitant cost as justifiable when that money can go to charity or whatever. Most half financially educated people know that managers never outperform the market over 20 years, so they just use ETFs, throw in a few shopping centres, maybe a bit of PE or angel investing if they want to go to parties and get more involved. Some create their own sample ETF. Having an FO in the US is for social status for many sub 100mill. Oh, many also just hand their cash to a big investment firm and don't worry about it ever again - this is quite common actually, way more common to an FO.
High-net worth (HNW) investors often invest in a wider variety of assets beyond stocks and bonds (e.g., private equity, private credit, real estate, special situations, etc.). This additional diversification can provide both better absolute returns and risk-adjusted returns. The challenge for non-HNW investors is that these “alternative” asset classes have historically been inaccessible to the more typical investor — both because they often had significant wealth qualification requirements (e.g., required you to be a Qualified Purchaser with >$5M in investable assets) and imposed very high minimum investment amounts. Fortunately this is now changing with the rise of closed-end fund structures like interval and tender offer funds, which often have much lower minimums and many times have no qualification requirements.
This is accessible for HNW but not for everyone else: https://www.reddit.com/r/BuyBorrowDieExplained/comments/1f26rsf/buy_borrow_die_explained/
There's a difference between HNW and UHNW ("ultra"). I'm the former, and not particularly interested in becoming the latter, and this has allowed me to take **MORE** risks with small parts of my portfolio. (This may be what passes for "fun" at my age.) If you're worth $100K, you really don't want to gamble $20K on some investment you heard about on the internet. At 10 times that amount, you could pretty easily absorb a $20K loss from a $1Mn portfolio. This is how I lost 99% of my investment in Smile Direct 😁. "Oh, well..."
It sounds like you have a fortunate family from a financial standpoint that have all made good long lasting financial relationships and have had success with working with financial advisors to manage their money while they have spent time in the business or work earning enough to have extra to invest. That is a powerful combination they have accomplished. It appears you parents and grandparents have consolidated on a set of accomplished advisors. I would move your money to that set of advisors so it will be together with their future gifts. Frankly as much as you like your financial advisor and how helpful he has been to you, you are not a drop in the bucket in his gross income, so he is losing little financially by you moving away. I suspect you are a likeable guy and he is doing it as much as a friend as anything so will be sad to go, but will wish you Godspeed and success as you leave. I spent most of my career in a major broker dealer working in a regional capacity and helping our top teams manage their UHNW clients and their families. It is a fortunate thing to be exposed to the level of help you will get from a large accomplished team of HNW advisors. Enjoy the relationship as it builds.
> All private insurers flood insurance is underwrit by FEMA. This is not true and is a common misconception. Many companies offer inland flood coverage for lower risk areas, and some also offer further high risk flood policies, though those are mostly HNW carriers.
I agree, but that doesn't really answer the question. I suppose the issue is that HNW and UHNW people probably have access to fixed rate securities loans.
This has been reposted a lot, and every time I try to get clear answers on whether this is done a lot or whether it works, and if so why isn't it done a lot, etc etc. I'm 95% sure that it doesn't work nearly as easily or well as described here. For one thing, the step up in cost basis happens only as the assets are transferred to heirs. The debts owed to the banks must be settled first, which requires liquidating, which is a taxable event, so settling the debt will incurr all the taxes. In addition, the other reason it doesn't work is because it is basically margin trading, but long term. So they're taking on substantially more risk of being margin called if the markets drop, and they're pitting the borrow interest rates against taxes from market gains. If the markets stagnate, they'll lose the gamble. If the interest rates are high, this won't work. HNW families are generally much older and can be notoriously risk averse so margin trading risks are not very appealing most of the time. As near as i can tell, this idea would have worked for a brief time when markets were recovering well and also interest rates were rock bottom in 2019/early 2020. Overall, I don't think it is very widespread, I don't think it is very effective, and if it were, the government could narrow or close the loopholes on them at any time (step up & estate tax).
True. I was an MM in commodities for many years. Whenever the HNW/UHNW line rang, we would all scream 'free money on line one'
Most of the HNW clients I work with have retirement accounts. I think the only exception might be the real estate people who might not have earned income regardless.
Great outline thank you. I thought I hit a goldmine when I went into the weeds on Portfolio123 as a lot of what you posted above is stock in there. More coding than I would like but it was close. If I could find someone who is a wizard on Portfolio123 that would be a huge boost - but then again I would not know if that person was sharing it or not. And that is exactly the plan. Get the data that shows it works in up, down and sideways markets and then post to WSB to get some support for further testing. What gives me chills is that I don't think the indicators I've picked are 100% unique to the trade - its the part of setting the lag on on technical into a group of technicals that could apply universally to a lot of other trades. I have lot of people DMing me for private help, but like I said I want to release this all at once and never charge a dime to anyone. Another part that would be cool would be to open up an RIA that doesn't allow anyone who is HNW or UHNW.
Google the guardrails approach. This is a more recent study by financial wonks and is the method I plan to employ in my future retirement. In short, if there is a 10% movement in your portfolio, you drop your spending. I know some people don't want to reduce retirement spending but I personally think flexibility leads to resilience. Also I recomend reading a lot of Kitces stuff, he is a thought leader for HNW clients and is now advising the advisors more and more. [https://www.kitces.com/blog/implementing-retirement-income-guardrails-to-facilitate-the-right-spending-raises-and-spending-cuts/](https://www.kitces.com/blog/implementing-retirement-income-guardrails-to-facilitate-the-right-spending-raises-and-spending-cuts/)
IMHO you probably shouldn't be seeking advice about this on Reddit because....most of the people here are YouTube educated and only follow viral trends for investing advice. If you're trying to build a real business, you'll need to venture out in to the real world and go to conferences, etc. FWIW my journey has been similar to yours, and I'm current an RIA doing separately managed accounts, which is what you mentioned you are considering. I actually find a lot of satisfaction in doing so because the returns are more personalized to the investor and you can show them a personal rate of return, etc. Sure, you're not going to get the satisfaction of trading a $100M fund, but you're helping individual people. I also find more satisfaction in helping the "average person" get a better return on their investments, rather than just helping the "rich get richer" -- which is what hedge funds are for because only HNW individuals can invest in those. Not saying I wouldn't consider building my own fund someday, but it's a different class of people I'd be dealing with, so for now it doesn't sound enticing. My returns, while similar to yours, average out to about 30-40% annual when averaged over several years over many accounts. Yes, my broker was reporting returns >150% for 2023 for many of our accounts, but I discount their reporting because much of that "return" was just recovery from 2022. This is why I like to take a bigger time perspective. I think you'll find that nearly all of your clients who invest will come from your personal network. Advertising simply doesn't work very well in this industry -- unless you're going after tiny/impressionable investors like the RobinHood model, or Wealthfront, etc. You need to expand your personal network and build meaningful relationships with people who could invest with you after you earn their trust. THAT is the barrier, in my opinion, is earning the trust of a potential client, especially if you're expecting them to give you 100's of thousands of their money to manage. So get out to conferences, join golf clubs, intermingle with the people you're seeking to help, and build relationships with them. That's my two cents. However, it's "only two cents" -- I would neither consider myself an expert in this regard nor have solved this for myself. Just sharing my limited experience.
What are you saying? Are you asking why HNW people buy houses and rent them out to tenants, or why do HNW people rent where they live rather than buying houses? If it’s the first, taxes. If it’s the second, flexibility.
Keeping deposits is a liability. Dodd Frank regs require held capital ratios corresponding to deposits etc. so dropping the deposit amounts and focusing on HNW people who use services that generate fees is a better biz model.
You should only buy individual stocks if you have the time and ability to watch them like a hawk. The top S&P companies you listed are all from similar industries and highly correlated, so too concentrated if that’s your only investment. Some HNW people do direct indexing, where they (their asset managers) buy individual stocks in the index instead of ETF or mutual fund. Direct indexing gives you better control over taxes, but not higher returns.
The they can’t falsify the prospectus given to HNW investors lol
Assuming you’re younger than 40, if you have a stock portfolio worth 1M at this point in your life, good chance you’ll be in the top 1% by the time you retire. So yeah ur down the ladder from the ultra HNW individuals, but way up from 99 of people ur age likely.
Holy shit. And to imagine people pay you for this advice. That statement right there just proves you have zero experience doing any estate planning and tax mitigation for HNW individuals. Go back to peddling whatever shitty mutual funds you have at Edward Jones.
Tell that to the HNW & UHNW clients I work with 🤣. You’re the typical DIY’er who thinks because they’re mediocre in their field they can be proficient in others. Sadly not everyone is in tune with reality
Your statement is contradictory, you want to invest in a fund that is hedged aka focuses on reducing downside exposure involving trading it for an ideally lesser amount of upside exposure passively or actively, but want the highest annual percentage return? The whole point of hedge fund is to focus on risk, not just the highest return. I would recommend ETFs, SMAs, and/or mutual funds and for the private markets, you can look into the many private REITs that an advisor may offer if ur a HNW by their standard.
Financial advisors are not the worst if they are Fiduciary. Those are the people who are required to work with you in terms of your best interests, not just sell you products. Get one with a flat fee, not a % of assets, if you look for one. As a more serious response as someone who works in Private Equity, and was a bit flippant at first because I get a lot of very bad takes (but you seem genuine so I'll be genuine), $5m is what I would put as the lower bar to invest in a fund, and PE is a high-risk diversifier, not necessarily a way to make a ton of money quickly. If you fall into HNW or the bottom of VHNW, so between $5m and $10m in assets, I would avoid it personally. The risks and lack of liquidity make it, at least in my opinion, not well-suited for investment. Many funds are going to have a $5m minimum investment, you wont be able to withdraw your money for years, and they are risky. Now what you could do is take $100k and register for one of the sites like EquityZen or hiive that sell private equity chunks and play around there. That could get you some of the fix you're looking for. I really like your idea of taking some classes on finance, especially if you now have enough money that you can comfortably live on it, it seems like you do have the correct attitude towards wealth. If I were you, I would take classes, find a fiduciary financial advisor, and just do some research. If you do look at PE funds, find some in your area (PE is a relationship more than traditional advising!) and sit down with a couple and chat. A lot wont be raising right now, but could be raising in the future. You do want someone you'll have a handshake relationship with and they actually can be very good resources. I also can answer most questions you might have about PE, but there really arent many definitive books written about it, it is more of an in-person thing. I got my start at a M7 business school and all our PE classes didn't have textbooks, but the teachers had been in-industry for decades.
Common peasants like us certainly wouldn't get 4x leverage, it would most likely be some kind of Lombard-credit offered by banks to HNW individuals
This was insightful, thank you! What are some of the more successful tax avoidance strategies that HNW/UHNW people use?
You don’t do Lombard loans in HNW? They’re very popular in private banking.
Man, it's so wild seeing people on reddit sit there and make up scenarios that don't exist at all in the real world. I work with UNHW specifically in the asset management, pension construction, and planning space. Nobody's doing that. And yet constantly I get on Reddit and people are just so confident that they are lol. A few problems: 1) asset backed loans aren't term constrained or fixed. They're variable. 2) Over the course of a decade any investment account will have sufficient turnover and loss creation to fund that liquidity need without taxes being a major concern 3) your borrowing needs to be a relatively small enough portion of your net liquid investment value to not create margin call issues. Asset backed loans are increasingly scrutinized by regulators and are being subject to basically the same constraints as margin 4) You can't just skip out on paying off debt lol. Portfolio borrowing is great for a short term need, not funding retirement expenses over time. 5) It doesn't actually save much money. Any sufficiently large enough portfolio to pull this sort of dumb idea off (ignoring the prior constraints) also has enough dividends and turnover to fulfill most ongoing cashflow requirements. This is just one of those things that someone with no experience in HNW came up with, told others that had no experience that was how "wealthy people" did things, and it just got propagated online among individuals who didn't know any better.
The answer is an order of magnitude less than everyone on the internet seems to think they do. Sincerely, a guy who’s worked in HNW for over a decade.
So many finance YouTubers say that the rich 'use this trick to avoid paying tax', but I still don't get it. They all say the same thing. HNW people take out a loan on their assets (stocks, properties, etc...), and they use those loans as if it was an income, for their day to day expenses. YouTubers all say that you don't pay tax on loans as you would for capital gains or employment income, which I guess is true. But what I really don't understand is that this loan needs to be repaid, so the rich guy needs to sell something (and thus pay capital gains tax) or get some sort of income (personal income tax) to pay back the loan. So this tactic does NOT avoid tax. What am I missing? Are they just refinancing the loan over and over somehow with newer loans?
With all due respect , story doesn’t add up. There is a reason he didn’t try to get more wallet share or try to save your business. Wealth managers aren’t for everyone but a sweet spot of passive and active tax managed investments should be a part of every HNW individuals portfolio.
I generally come at it from an account structure perspective. It’s essentially a trade off: (traditional brokerage) on access to all your money now and into the future that can compound indefinitely after 59 1/2 (40 more years) vs (401k) free money of matching you receive now plus your contributions which you are required to spend, RMDs, after 59 1/2. In more detail: Is Lifetime 401k Matching (360k est) - your free money and reduced taxes now, that incentivizes you to divert 15% or more of your lifetime income into a vehicle that has: 0 to limited access to your money for 30+ years, 0 to limited buying power, must be spent in retirement (RMDs), must pay tax on distributions, can’t pass down the equities, misses compounding after 59 ½ (40+ more years), worth it? vs A Traditional Brokerage account, where you forgo the tax benefit now and lifetime free money and otherwise invest the 15% of or more of your income into an in unrestricted account which allows for: full access to your money over a lifetime, full buying power (similar to HELOC) - up to 50% or more of your portfolio is marginable, no requirement to be spent, no requirement to sell, no requirement to pay taxes, unless you choose to sell, can easily pass on the equities, takes advantage of incredible compounding that happens over the next 40+ years I also know HNW borrow against their assets to fund their lifestyle which can be attractive.
Fiscal Dominance has taken over. You can't put the genie back in the bottle now that debt:gdp is over 100% The only way is up. High rates == money markets pay high yield, HNW individuals and cash rich banks get paid billions by the FED for holding cash. Low rates == cash exits money markets and finds assets. Houses, stocks, crypto up. Both are stimulatory. There is no down. The spice will flow.
Some yes, of course. Others no, or at least they’re indifferent. Advisors should provide value that is commensurate with the 1-2% fees charged. Often, advisors put no effort into low value, non-HNW clients, and throw them in bank proprietary funds that charge quintuple the fees of standard ETF equivalents, on top of the advisors fees. They don’t bother to provide planning and saving advice that helps their clients. I’ve worked in the industry and seen a full spectrum of FAs and some are absolutely amazing, some are pieces of garbage. It depends on the employer/FI too. It’s unfair that good advisors are painted with the same brush as the lazy/greedy ones, but this sentiment is becoming more widespread.
- Fed is reactionary; not a proactive force (besides Volker in the 80’s); Alan Greenspan; pumped mkts during 90’s-2000’s with low interest rates; didn’t give a shit about fraud (anecdote); low interest rates caused a bubble in assets such as housing; bubble burst in 2008 - Bernake: first use of QE and lowered interest rates during 2008 crisis. no qualms with him - JPow: reactionary to mkt forces; too much QE during pandemic (bought corporate bonds and junk bonds (unprecedented) on top of fiscal stimulus (tax cuts, PPP, EIDL, and direct payments to consumers); co’s used funds for stock buybacks (speculative) instead of investing in capex or hiring; also pumped asset prices; succumbs to political pressure and mkt pressure (speculative); so many tech layoffs; HNW occupation that has trickle down effects to consumer demand (research effect) - GDP is anemic this quarter, employment should also be down despite govt rosy #’s (full time 👎 vs. part time👍, more than one job 👍 and govt employees 👍), inflation still high CPI (research reasons why; insurance (car medical housing), housing prices, rent) - new round of community bank failures (Republic First, next NYCB?) - rising credit card debt and late payments; the reason for high PCE? ppl are still buying things despite inflation, but with credit (spec); usually the first consumer dominoe in a downturn; research car payment defaults - multihousing default rate is up; CRE too (speculative) - gold is up; - sfr loans last pillar in consumer defaults, but payments steady for the time being - yield inversion in bonds!!!! how many days inverted??? (research other periods of yield inversions and days until business cycle downturn). best indicator for downturns - mkt is being pumped by AI hype; look at TSLA despite missing top and bottom line estimates, but Enron said “AI” in earnings call and stock mooned - Inflation was supposed to be “transitory”; word used not to spook the mkts by JPow; MKTS COME FIRST ALWAYS; 401ks (research the emergence of 401k industry vs pensions; lobby); - AI jargon has yet to bring anything fruitful economically besides image generation, text bots, and search. where’s the next leap that would lead to economic growth in the near term? are tech promises/hype/spec/FOMO propping up the mkts? (spec) - low volume on stock exchanges? (research). !banbet SPY $300 5m
They almost always hold a bunch of short term Tbills or cash in a MM. Both are essentially cash, earning whatever the rate is (5%+ rn) and allows them to have cash in a down turn. Very few HNW investors who are successful long term in building real wealth are just completely piled in to equities 100% of the time.
And if they were event-driven investors, they'd be less rich lol. There's a reason none of the most successful investors of all time invested that way. I am an investment professional and I use that fear as a buying opportunity. The people who react to the events and panic sell almost always come to regret it in the long run. I'd prefer to be on the other side. Most smart investors who are HNW but not professionals like me will just be well-placed to do nothing and stay the course when there's an event such as a war or something. If they were properly prepared before with an advisor, that's what their advisor will most likely tell them to do. Advisors turns into quasi-psychologists when the market is behaving erratically.
This is not accurate. Most HNW investors are not holding significant cash reserves. If they are, they're not very smart investors and they don't have an advisor, so they would not be the kinds of people to scoop up cheap stocks in a downturn. I'm not saying it would be bad to do this, it would be smart... I'm just saying that I work with HNW investors professionally and most of them are too smart to hold onto a bunch of cash in the bank earning them nothing.
Hi, I'm a CFA charterholder and investment professional that works with high net worth and institutional clients (like as in billions of dollars invested with my company). Fundamentals of Finance is my YouTube channel I started with a friend to help people learn how to invest. This is a great question you've asked here. So, obviously with any large group of people they're not all exactly the same. But, the vast majority of HNW (high net worth) people have advisors and the vast majority of their advisors would tell them to do nothing. Smart investors invest based on their objectives, and do not let the market dictate what they will do. They don't follow others into hot trends and they don't panic sell. Before there's a downturn they should be positioned in such a way that they will not lose more than they can stomach if a downturn comes. Then when one does, they can afford to wait it out (and will have the peace of mind to do so). You don't have to be HNW to do this. It has nothing to do with how much money you have and everything to do with your mindset and how well you've set up your account before the downturn comes. I can help you with the thought process on how to put this in place if you're curious to learn more.
Normally a top portfolio advisor manages HNW or UHNW clients and as such they want lower beta since they already have enough money. The thing that jumps out at me, is not that they don't beat the S&P as that is expected, but that they lost over 40% in a 20% down year. For that reason alone I would fire them.
There is a broadly used actual definition for this. HNW = 1M+ UHNW (ultra high net worth) = 30m+ Pretty common to exclude your main home from this calculation too (seeing as you need somewhere to live and this generally won't be used for funding your lifestyle). In terms of when is it worth hiring one - well that depends. Different people have different levels of complexities. Then, overlay things like your own knowledge and ability to do it yourself, your actual interest in doing it yourself, or the time you have to dedicate to it. Most wealthy people have fairly complex situations and are missing at least 1 of these 3 things (and quite often all 3), which is when it's worth hiring a professional. If you're looking for numbers, these will be very rough but I would say: <250k not worth it, do it yourself. Approaching or around 500k it might be worth it for some. Others will still be very comfortable doing it themselves. 1m+ definitely worth considering. Some people might still go DIY, but proportionately a lot more people will benefit from professional advice. Multiple millions and the vast majority of people will be taking some form of professional advice.
I bought at $8. Doubled down at $11. Tripled down at $19, and have been and will be continuing to do a final quadruple down over the next two weeks. Estimated EPS is currently 0.03 which is a joke. I feel like they are paying analysts to lowball honestly. The credit card is being looked over even with this DD. There were hundreds of thousands of waitlist signups on day 1, and they are currently undergoing a $5.5MM marketing campaign via the Solid Gold Card program - in the form of the 5000 $1.1k literal gold cards they are giving out for people who get 10 referrals to sign up for Gold. This is a guaranteed 50,000 new Gold subscribers in a short period of time, and they've timed it perfectly so that some of these will appear in the Q1 earnings, and the bulk of them will appear in the Q2 earnings. This is not even mentioning the fact that myself and MANY others are currently going around HUNTING PEOPLE DOWN to sign up for Robinhood and try out Gold, all to get that stupid fucking solid gold card. I've seen people paying $60 for each sign up they get. I myself have been RUNNING ADS and paying my friends $25-$50 each and just need like 3 more at this point. I have also come across lots of others doing the exact same thing, meaning that in reality Robinhood is going to easily drive more signups that overflow past the 5000 card referral program. It's free marketing for them, and their CLV that they've built up over the years will pay it off in the long run easily. The only risk factor is if there's a major black swan event, i.e. if the market crashes. It's not secret that a lot of their value is propped up by small retail traders. But their customer base is expanding to HNW individuals as they become more trusted. It's no longer uncommon to see people with million dollar+ accounts, when that used to seem absurd. Aside from that, growth in Q1 has been extremely high across the board. The team knows this and they are definitely playing into it which is what we want. Yes, it's up over 100% since it was trading on fucking cash value at $8. But it's still HUGELY discounted from their IPO price, and you're starting to see people like Jason Calacanis shilling their bags on Twitter saying they are not going to be selling for a long time - mainly because it's so apparent that Robinhood is winning over the next generation of traders AND pulling in existing traders from other brokers more rapidly than ever. Also THEY ARE GAAP PROFITABLE FOR NOW!! People STILL think they are somehow bleeding tons of cash and are about to go bankrupt. Positions: 38k shares, $66k in calls but will be increasing by \~$175k over the next few weeks bar any major world-ending events. I won't be selling my initial until around $40, and my optimistic bull case puts us ending near $70 EOY.
The other guy doesn’t know what he’s talking about. 1. You have to be registered with the SEC, there are tax, legal, and compliance matters to deal with so the cost wouldn’t be reasonable to operate unless it was closer to millions. 2. Most people (hedge funds) gather AUM by (i) knowing HNW individuals through work exp or introductions (ii) pitch to other fund of fund managers (iii) pitching to other funds such as family offices etc 3. Your returns mean nothing if you don’t have a history of replicating it under different market conditions. To be frank, risk management is one of the largest part of a professionals job. Understanding how much money you’re putting at risk, managing the volatility, and managing investor expectations. Likely it’s not possible for you to manage someone’s money on your own. If you really think you’re that good there are hedge funds always hiring and a lot of them only care about returns. (job security is ass if bad)
Don't come to Reddit for this. To break away from your optimal (it sounds fairly optimal) portfolio and be sure that you're making the correct decision will take a ton of work if you have no background in building portfolios. You should be seeking out financial advisors. If I was in your position I would definitely not start trading options to achieve the goal. Any learning needs to be firewalled from your investment accounts, and it takes a ton of work to get to a professional level in option trading (and with a 3M account you need to be operating on a processional level). The current approach I like best for HNW, and the direction I'd go if I was in your position with your experience level would be to build a modern, diversified all-weather portfolio that with futures overlays. This has been very hot since 2020 and is becoming far more accessible to people in your wealth range, when before it was more in the realm of family offices. So your allocation may look like 90/40 instead of 90/10, and it would be using tax efficient ETF structures that use futures for leverage, so you're only paying a few basis points over the risk free rate to fund it. Usually you also consider alternative investments when building out this sort of portfolio, like adding CTA return streams in particular. Volatility trading is also a popular add-in, but that takes some knowledge to really understand what you own. Resolve asset management podcast is a good example of the sorts of thinking and players you'll encounter in the space from the more client end of things. Jason Buck of Mutiny Fund and Corey Hoffstein with Newfound Research also have some good entry level content about these ideas (including good podcasts). Hoffstein's Flirting With Models is a good place to look if you want to try and get a level higher than the more salesman level talk that you'll encounter (not that there's anything wrong with that, it's necessary because the theory is pretty esoteric for the average investor who only knows the 50 year old [and extremely outdated] 60/40). I also like Show Me Your Portfolio with Excess Returns. With these resources I'm giving you, try and focus on best content they have, like what does the portfolio of AQR's CIO look like, or how does a hedge fund manager run his personal portfolio. Oh, you'll also see quant investing themes in modern portfolios as well, and aside from CTA/alternative assets it's not uncommon to see bringing in some quant-esque risk premia as well, like factor investing stuff.
BTC easily. Blackrock's IBIT is the fastest ETF to 10bn of all time. The institutional bid is here, sovereign states are adding it to balance sheets that will be revealed some time this year, and the vertical aim is becoming the base layer monetary asset of the world. Either it remains a 1-10T asset class forever - or it accelerates - at which point there is no dollar value you should be selling it for. Can't get much more asymmetric than that. Judging by the amount of hate in normie circles still (ie reddit) - despite it being 10% of ATH - should tells you all you need to know with how early we are. Despite the largest asset managers in the world, sovereign wealth funds, HNW individuals, et al. buying it hand over fist there is only 21 million in existence. The smart money has realized the value of a scarce asset backed by energy. Only question is how long until the average person does. My guess is it will take a first world government reveling they are keeping BTC on their balance sheet.
And if you are a HNW individual I can only assume that you inherited the money!