Fight For The Deferred Compensation You Deserve

Deferred compensation

Make sure they pay you

Money doesn’t feel very special most of the time because we work hard for our money. When we get our paycheck or the proceeds from a successful investment, of course we deserve the money. It’s when we win the lottery or find a dollar on the street when we start experiencing that giddy feeling money sometimes brings.

I got a nice surprise in the mail from my old employer the other week. It’s shocking to think it’s been over three years since I last worked a stable job. The mail simply notified me that another tranche of employer stock was going to hit my brokerage account. Sweet! I haven’t thought about receiving deferred compensation in a while now given I’ve been so busy writing, consulting, finding new tenants, and managing my never ending bathroom construction.

Finance industry bonuses are generally broken out into cash, stock, and private investments, depending on your seniority. The more senior you are, the less cash you get. I was a Director (one up from VP) at my old shop, so my bonus was heavily weighted towards deferred compensation that was spread over three to seven years! That’s how firms make it expensive for employees to ever leave.

If you quit your job, you will lose your deferred compensation in finance much like how you’d lose your remaining unvested stock grants if you work at a startup. But if you have a dialogue with your manager, you just might be able to keep what’s yours.

Remember, everything is negotiable. The sooner you realize this, the more wealth you’ll be able to create!

The Cost Of Traveling To Asia: Time For Another Business Trip!

Angkor Wat, Cambodia by Linda Russell

Angkor Wat, Cambodia

Much of Financial Samurai’s culture is about bringing various worldwide perspectives to financial topics we care about. If we can assemble the best aspects of each culture onto one site, we could create a valuable resource of wealth and happiness for millions.

From 2011 – 2014, I traveled to Europe for several weeks at a time to understand the happiest people on Earth. We looked into more sensitive topics such as combatting apathy and whether it was so bad that America was turning into Europe with higher taxes, increased welfare, and an overall larger government presence.

I could go back to Hawaii or Lake Tahoe for a vacation, but I’ve decided it’s time to return to a region where I spent the first 13 years of my life. It’s been four years since I’ve been back and I’m curious to see how things have changed.

On this business trip, I’d like to research the following questions:

* Why are the Chinese so dominant in business in Malaysia? Malaysia is mostly made up of Malays, Chinese, and Indians with several rules favoring Malays. I wonder if those rules still exist. Are countries around the equator less productive? Or is this some type of misconception? I grew up in KL from 1988-1991 and want to better understand the country now as an adult. 

* What is the latest sentiment about China from the Taiwanese? When I lived in Taipei from 1984-1988, there was a lot of fear that China would invade Taiwan and take the country over. Now that China and Taiwan have prospered so greatly over the past 25 years, do they dare disrupt their fortunes over politics?

* How do South Koreans feel about the situation in North Korea? What is the existing attitude of South Koreans towards Japan and the United States? Are the family empires (chaebols) gaining or losing their significance? How is the manufacturing industry competing so well against Japan’s manufacturing industry? I’ve only been to Seoul once, but Seoul seemed like a dirtier, more chaotic version of Tokyo. Korean culture is the one culture I’ve never been able to fully connect with. 

Become An Accredited Investor: Private Companies No Longer Want To IPO

Investors shut out of private investments if not accredited

Investors shut out of private investments

Do you know what the market capitalization was of Microsoft when they went public on March 13, 1986? A mere $500 million (~$1 billion in today’s dollars). If you had bought just 100 shares of Microsoft at the $21 offering and rode it all the way up to its peak in 1999, you would have cashed out for $1.4 million. Of course the stock came tumbling down and then back up. But you’d still have around $1 million bucks today. Not bad.

I remember working on the syndicate with my US colleagues during Google’s IPO back in 2004. We took the company public at a $23 billion market cap. Meanwhile, Facebook went public in 2012 at a $100 billion market cap. See a trend here? Companies are going public later and later in the game, meaning the public is getting less and less of the upside benefit!

The people who are getting rich are 1) Private institutional investors such as the hedge funds, venture capital funds, venture debt funds, and private equity funds, 2) Accredited investors who are able to invest in such private funds, and 3) The employees qualified enough to get jobs at these hot startups. Everybody else is shut out!

Seeing if we can balance the scale is one of the main reasons why I decided to consult with Sliced Investing. Sliced Investing is lowering the bar to let more investors gain access to private company deals and private investment funds that were never available to the public or regular accredited investors before. For example, I never would have imagined being able to invest as little as $20,000 into Lyft’s latest fundraising at a $2.8 billion valuation. What’s $2.8 billion when Uber raised money at a $48 billion valuation last year? Working intimately with private companies over the past couple of years has really opened my eyes.

Is It Better To Be A Full-time Employee Or Contractor (Freelancer)?

The freedom of being a contractor is enticingAccording to a survey conducted by independent research firm Edelman Berland and commissioned by the Freelancers Union, more than one in three workers – 53 million Americans – is now freelancing. By 2020, more than 40% of the American workforce, or 60 million people, will be freelancers, contractors and temp workers, according to a study done by Intuit in 2013.

Chances are high that you are currently a contractor or have thought about giving up your full-time job to be a contractor. When I left Corporate America in the Spring of 2012, I thought I’d never return. But in November 2013, I received an opportunity to contract for 25 hours a week, and here I am 18 months later still consulting! The X Factor I did not anticipate about building a large personal finance blog is that other companies would be interested in hiring me for my online content knowledge and services.

In this post, I’d like to discuss the differences between a full-time employee and a contractor. Some of you have told me that you never want to be a contractor because you don’t want to be treated poorly; like an outsider. While it’s true that as a contractor, you might not be treated as one of the team, there are plenty of other benefits that make the decision to contract or go full-time surprisingly difficult.

Which States Are Best For Retirement?

Retiring In Hawaii

Hawaii, obviously?

America is amazing because we’re free to relocate anywhere in the country that suits our desires. A lot of people scoff at the idea of just moving because of family and job responsibilities. But when you can take a plane anywhere in the continental US in under six hours, telecommute from home, and FaceTime with people you care about, why wouldn’t you at least give moving to a nicer place a shot? There are even plenty of flexible job opportunities by the sharing economy that can help pay the bills during a transition.

The best states to live in have a combination of low taxes and incredible weather. California is awesome, but our taxes are horrendous and we’ve still got a budget deficit! Hawaii is also amazing, but food and housing are also costly. At least Hawaii’s sales tax is only 4-4.5% and pensions are state tax-free.

I’ve been to a large majority of the 50 States and spent 10 years on the East Coast before moving out West in 2001. I’m totally biased for California and Hawaii so I enlisted FS reader, Steve from Green Diet to help me put together an unbiased assessment of our country based on cost of living to see which states are best for retirement. 

Buying Structured Notes For Downside Investment Protection

Hedged Upside With Structured Notes

Are your investments hedged?

We could be in another financial bubble, but nobody really knows when a correction will take place. You might not even care if your investments decline by 20% or more over a year time frame if you are looking to invest over the next several decades. But alas, none of us will live forever, and nobody really likes to experience downside volatility. Sooner or later, we’ll have to deploy our capital for life, leisure, and charity. Not everybody wants to leave a financial legacy to raise spoiled kids!

One of the strategies I’ve taken to protect against downside risk is to buy various structured notes based on different indices like the S&P 500, Euro Stoxx 50, and the Russell 2000, or buy single stock structured notes of specific companies. Not only do I regularly rebalance my portfolios, I also consistently dollar cost average every month. You’ll be surprised how big a fortune you can create after just 10 years by methodically applying these two financial practices.

Structured notes are derivative products that usually provide hedged returns. In this post, I’d like to explain to you another recent structured note I bought to help illustrate how structured notes work. I buy all my structured notes through a Citi Wealth Management account. My other investment portfolios include: a Rollover IRA, a SEP IRA, a Self-Employed 401k, and a Motif Investing portfolio. 

What Type Of Investment Property Should I Buy? Single Family Home, Condo, or Multi-Unit

Amazing Property Overlooking The Ocean

Buy property for lifestyle

For years, I sort of regretted buying a single family home in San Francisco instead of a multi-unit property.

Even though the idea was to grow into this four bedroom home, it felt wasteful during the meantime with only the two of us. So I finally decided to rent out the ground floor bedroom to a middle school teacher for below market rent. I’ve always had a soft spot for teachers, and it felt good helping someone who made less than $36,000 a year find a place in a good neighborhood within walking distance from work.

With the money I spent on buying the house in 2004/2005, I could have bought a two-unit building with a 1,300 sqft, 2/1.5 apartment upstairs and a similar size 2/1.5 apartment downstairs. I could have lived in one unit and rented out the other unit for maximum efficiency and profits, perhaps to the tune of an extra $150,000 – $300,000 over 10 years. Furthermore, having smaller units would provide more flexibility to accept new job opportunities – like the large offer in NYC I turned down – because of my perception at the time that it would be easier to rent out a 2/1.5 condo vs. a 4/3.5 SFH.

Then I rented out my whole house and had a change of heart.