If You Can Make It In Hawaii You Can Make It Anywhere

Kahala Resort & Hotel View

There’s an old saying, “If you can make it in New York, you can make it anywhere.” The idea is that with New York City being so competitive, only the strongest survive. I worked on the trading floor at one of the most hardcore investment banks around and I can unequivocally tell you that making it in NYC is brutal. The weather beats you up for at least six months a year, the work hours are long, and your money doesn’t go very far.

Two years and 15 pounds heavier I left NYC in 2001 for an easier life out in San Francisco where I didn’t know a soul. I thoroughly admit I didn’t make it in NYC. Perhaps I could have stayed on as a third year financial analyst, but surely Goldman would have made me go back to business school afterward rather than promote me directly to Associate. The thought of returning to school at the time and spending all that money wasn’t appealing.

By spring 2001 it was clear the economy was not in good shape one year after the NASDAQ collapsed. I decided to take matters into my own hands and jump to a competitor for that Associate promotion and raise instead.

Waiting to get let go is like waiting to die.

Why Do The Rich Hoard So Much Cash?

Cash And Net Worth Charts

The rich are bullish on the economy just like the investing middle class. The difference I’ve noticed from surveys and speaking to people of both classes is that the rich hold much more cash (risk free assets) as part of their net worth as compared to the average person. Citi Private Bank came out with a survey of 50 representatives who manage high net-worth families that nearly two-thirds of their clients think it’s more likely the stock market will go up at least 10% in the coming year than lose value. I can get behind this bet.

Yet these same wealthy investors have, on average, almost 40% of their portfolio in cash with stocks averaging only 25% of their portfolios! The rest are in bonds, commodities, and real estate. 40% is a shockingly high number that completely goes against the wealthy class’s beliefs about the future. I get prodded by young investors who’ve never seen a bear market all the time on why I have 25% of my net worth in 3.5-4.2% yielding CDs. Usually I just smile and move on because there’s no use arguing when times are good because everybody thinks they’re a genius.

This post attempts to understand why those with financial means stay conservative even in a raging bull market. I’ve spoken to dozens of multi-millionaires about their net worth asset allocation and have found similar, but not as extreme high cash allocations. These findings run very counter to the young bucks I encounter with $150,000 stock portfolios that make up 90%+ of their net worths.

Filling The Void In Early Retirement With Part-Time Work

Hawaiian Sunset With Sailboat In Retirement

Over the past one and a half years since leaving Corporate America I’ve done some deep thinking about early retirement through posts such as:

* How Does It Feel To Retire Early?

* Should I Go Back To Work Now That The Good Times Are Back?

* Do You Work Harder Or Relax More During Good Times?

* The Startup Riches Myth: Sell For Millions And Still Not Be A Millionaire

When you’re used to working 12 hour days every day for 13 years it’s very hard to suddenly downshift from sixth to first. You’ll blow up your engine if you do. There needs to be a gradual progression whenever large life changes are made.

The first six months of retirement I was second guessing myself on whether I made the right move. I had just turned 35 years old and short-circuited my career in finance so I could spend more time traveling and doing this new thing online. I worked my ass off to finish writing my book on “How To Engineer Your Layoff” so I could at least say that I produced something meaningful if all went to hell.

My doubts began to calm down during my second six months of retirement because I was able to take a 2.5 week long business trip to Europe to research the happiest people in the worldTraveling while writing and maintaing my online business helped crystallize why I decided to leave Corporate America in the first place – more freedom!

The final six months have been an absolute blast, with six weeks this summer in NYC, Mallorca, and Switzerland (links to FOMO, finding perfect summers, and eradicating apathy) and four weeks this winter in Hawaii all the while working of course. There’s absolutely no law against having fun while traveling to understand different cultures to share them with all of you in my writing. The key is moderation.

ONE THING MISSING FROM THE BELT

What’s In Your Big Juicy Wallet? – Sponsored Video

Financial Samurai's WalletEverybody has heard of Capital One’s catchy slogan, “What’s In Your Wallet?” so I decided to have a look for myself and hopefully do some comparison with all of you. Capital One was kind enough to sponsor this video post about their new Spark business credit card. Check out their seven second claymation Vine videos that highlight the peculiarities of work/enterpreneurial life.

I hate thick wallets because they are uncomfortable to sit on. If I could have a copy of my driver’s license that has the ability to act as a debt card, credit card, insurance card and identification card for multiple establishments that would be ideal. Too bad we’re still a long ways a way so I do what I can to simplify.

Here’s what’s in my wallet today:

What Doesn’t Affect Your Credit Score? Dispelling Common Misconceptions

Average Credit Score ChartIn “How To Improve Your Credit Score to 800+” I shared with you five steps to take in order to enter the exclusive 800 Credit Score Club filled with beautiful people, gummy bears, and free massages. It’s good enough to get the most amount of credit at the cheapest rate, but to be elevated to “Tier 1 Datable Status” is just amazing!

Following instructions is probably the easiest path to financial success. Sign your name at the end of the exam. Don’t buy depreciating assets. Listen to your elders. Wait for enough time to pass. Sometimes we do things we think are right, but are actually wrong. Other times we worry about things we’ve done which we think are wrong, but are actually irrelevant. This post is about irrelevancy as it relates to your credit score.

After doing some digging online, I found a site called Totally Money highlighting various misconceptions about what can negatively affect a credit score. I’d like to comment on each misconception, share some of my own, and perhaps get your thoughts as well.

WHAT DOESN’T AFFECT YOUR CREDIT SCORE