Invest With Investors You Respect And Trust: I’m Following USAA’s Lead

US Military - Fallen Soldier MemorialWhen the Japanese bombed Pearl Harbor, my grandfather was there to serve as a Captain in the Army. During the Vietnam War, my father also served in the Army and was sent overseas to be a stockade prison guard in nearby Thailand. Then there's me. A man who did not carry the family tradition of serving one's country. I felt unworthy.

I wanted to join the US Foreign Service to help America in a more diplomatic way, but I felt too stupid to pass the Foreign Service Exam, so I did not try. One of the duties my father had while serving at the State Department in Washington D.C. was to be an oral exam examiner. He shared with me stories of the difficulties in making it through.

I've discussed a lot about having money guilt in the past, and I think part of my guilt comes from not being able to serve our country as my father and grandfather have done. A part of me is driven to make up for my lack of contribution by helping people with their personal finances. Money is a means to a better life, and I hope to make some sort of difference.

It's an atrocity that there are homeless veterans in America. The government needs to do more to make sure that every single veteran finds a job when they come home. The private sector has to take the lead as well. If there are veterans out there who would like to share their story or become a writer for Financial Samurai, shoot me an e-mail.


If there's one financial services company I respect and trust more than any other, it's USAA. I've been a USAA member for the past 20 years thanks to my father's and grandfather's service in the military. USAA was founded in 1922 by a group of U.S. Army officers to self-insure each other when they were unable to secure auto insurance due to the perception that they were a high-risk group.

USAA is extremely customer focused and I have never once had a bad experience with them over the phone. I've got multiple accounts open with USAA, including: CDs, home insurance, renters insurance, personal property insurance, life insurance and an umbrella policy. When I lost my watch on the beach several years ago, they made it extremely painless for me to receive my insurance claim. They also pay out dividends to members every year and have some of the best rates in town.

When I found out USAA was one of the leading investors in Personal Capital's $50 million Series D round of funding I was ecstatic! For those of you who don't know, I've been consulting for 25 hours a week at Personal Capital in San Francisco since January, 2014. I am the Managing Editor for their blog, which I think has turned into the #1 corporate blog on the web.

I've been contemplating a lot on what to do for the next year as I always do in 4Q. This year I failed to visit my parents once, so I'm making up for that this week by flying to Hawaii on Veteran's Day for 10 days. I also failed to visit a new country as I've done every year since college I believe. I also haven't produced a new book, worked on my guitar and singing, pushed forward on a new invention I've been contemplating for a year, or experienced another “Eat, Pray, Love” moment. The adventurous life is slipping away.

This site's traffic and revenue have continued to grow as I mentioned in my newsletter and I was seriously thinking about reverting back to my vagabond days of 10+ weeks of travel and just living a 100% carefree lifestyle between 3/2012 to 1/2014. But I also realize everything could go away one day and it's probably best to make the most of any opportunity now.

Given that I respect USAA so much, I've decided to continue consulting with Personal Capital in 2015. They are seriously one of the key variables that helped push me towards more work rather than more fun. USAA is one of the pioneers of direct marketing given most of its clients are military people around the world. They've conducted business over snail mail, the phone, and now the Internet. Personal Capital's business model is similar because they don't have offices all around the country. Instead, their financial advisors speak to their clients over the phone or through co-browsing over the Internet. Virtual services reduce costs and make for a more scaleable business model. It's good to have USAA on the board.

I'm not entirely familiar with USAA's private investing acumen, just their history and superior service. But, I also don't have a $1 million dollars or more like USAA and the venture capitalists to be able to directly invest in Personal Capital. Hence, the next best way to invest is by earning stock options through consulting. A reader highlighted the grim realities of stock options in the past, but I've got to believe in something. I have a feeling that 2015 is going to be the year where I make the most out of both work and play.

For those of you who want to invest in super companies who are private like Uber, AirBnB, and Theranos, I'd strongly consider joining them now to gain some options. These three companies clearly look like they're going to grow even larger over the next five years.


If you know nothing about investing, a simple solution may be to buy Warren Buffet's Berkshire Hathaway stock, or invest in funds managed by people with a consistent track record for outperformance. But overall, active fund managers consistently underperform the index as a whole. Investing in a pure index fund or ETF like SPY and managing your asset allocation is probably best for 98% of us out there.

Investing in a startup or private equity like USAA has done is a much different animal than investing in public equity, so let's recognize the apples to oranges comparison. We never know what will hit, which is why diversification is always important. By earning stock options at Personal Capital, I'm further diversifying my investment portfolio, which contains assets in stocks, bonds, structured notes, Bulldog Gin, a venture debt fund, and now a private digital wealth management company.

Update 2020: PC manages over $11 billion in client assets under management and is still growing steadily.



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32 thoughts on “Invest With Investors You Respect And Trust: I’m Following USAA’s Lead”

  1. As a holiday activity, I’m going over ALL your previous posts. Thanks for the hard work. When I read this one … I had to chuckle on the Theranos reference. When I briefly joined Magic Leap, a friend of mine remarked (not in a good way), that they were like the Theranos of AR/MR. One of the best books I read in 2018 was Bad Blood. It’s hard from outside to make a determination of a company (or persons) integrity, but the leaders of Theranos found themselves on the wrong side. But they fooled many good people.

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  3. selecting a company with strong funtamentals and investing in their shares is surely exciting but I think that playing it “safe” with index funds is the most appropriate for most investors. Thanks for sharing this article!

  4. I served in the Army on active duty for about 4 years and about 4 years on the reserve side. I do remember USAA being always highly talked about by all my other buddies that I served with. However, if you had a motorcycle your rates with USAAs were just not competitive at all. I ended up sticking with State Farm because I was able to get more full coverage insurance for a lot less than USAAs similar policy.

    I have browsed the investment side too. But last I checked which was several years, nothing looked too appealing because, most the funds had high Expense ratios. So I am sticking with Vanguard in that department.

      1. Totally get it! most the guys that I know who use them can’t say nothing but good things about USAAs customer service regarding auto insurance. Like I said, I gave them a go, but adding a motorcycle to the policy just was not worth it, compared to what I was paying with State Farm at the time.

        Currently I do not have any auto policy, since I am car less and have been for a while. But if I ever need car insurance again or motorcycle insurance, I will be sure to ask for a quote from them too.

        BTW thanks for the private news letter. I was actually wondering for some time if you were going to send one. I do enjoy reading them, but I was thinking maybe you gave up on them… since I did not see one in a while!

  5. Always nice to see positive comments about USAA. I use USAA for banking and insurance. I previously had a managed funds account there, but moved my investments to Vanguard to take advantage of much lower fees.

    My experience is that USAA is not particularly price competitive on the lending or investment side. It’s a shame because they have a great customer service, so my default is to use them when it makes financial sense.

  6. Work can be it’s own reward. I think even if I was financially independent I’d want to be part of building something, whether it was a charity organization or a company. There’s only so much clubbing on Ibiza, sailing around the Med, or living it up in Vegas that a body can handle! Maybe a perfect work/play cycle would be 3 months of work and then 3-6 months of play.

    Have you ever thought about volunteering with any organizations that do good work around the world? I’m sure Red Cross, Doctors without Borders, Bill Gates Foundation, or any other number of organizations would appreciate your marketing/writing skills. Might be a chance to make others’ lives better, travel a bit, and help that service/money guilt.

    1. But what about endless tapas in Mallorca after sailing on my yacht along the northern cliffs? That can’t get old!

      I haven’t been able to fully untether myself yet for longer than one month at a time. If I can, then I would definitely volunteer overseas for a couple months on end.

      Hard to fully break free!

  7. Great post.

    These are words to live by if you want a faster track to that top 2%. Keep it simple!!

    “…active fund managers consistently underperform the index as a whole. Investing in a pure index fund or ETF like SPY and managing your asset allocation is probably best for 98% of us out there. ”

    Of course you need to build in a habit of saving a LOT…as well.

  8. It’s a good thing you’re directly involved in Personal Capital’s Daily Capital blog, otherwise they’d be a rival to you in the time I have to read finance blogs. I read your articles and theirs…and the fact that you’ve written some articles that are ONLY available on Daily Capital is a huge bonus for me.

    I need to engage in a yearly review of my life and my life with my wife and baby (3 weeks old!) You sharing your process and some of your goals has inspired me to keep true to adhering to mine…some of which are similar – professional, travel, mandolin (vs. guitar), a start-up business idea, getting back into playing hockey, etc.

    Keep up the great work and have a safe trip tomorrow!

    1. Thanks JW for reading both! I used to be little conflicted into what I write where. But, I’m thankful there seems to be an endless amount of content to write on FS, and I’ve got a team of writers and employees to contribute at PC too, so that’s good.

      Good luck with fatherhood and goals!

  9. Great post Sam, it’s always awesome to see some of the real passion and purpose behind what you do and why you do it. And I think that just sums up why you’re choosing to keep working at something that has purpose to you. Sure, I’d like to think if I was in your position I’d work far less (and play golf much more, among other things!), but I think the sweet spot is when you can also put a little time each day to contributing to something important, whether a blog, another business, or another cause.

    And you really sound like you’re enjoying what you’re doing, which is the dream! Seems like your real issue is choosing among the many options available to you to ‘optimise’ your happiness!

    As for my own investments, I’m not very diversified at the moment, all in listed stocks, but am coming off a small base and looking to grow it reasonably aggressively, so expect to diversify more as the portfolio grows. Private equity would be a great addition though, particularly given my risk / reward profile at the moment!

  10. Hello :) I thought you’d be interested in knowing that HUD and the VA have teamed up to provide housing Section 8 vouchers to homeless vets. Look up the VASH program when you get a chance. The program needs more funding but has gotten off to a great start.

  11. “For those of you who want to invest in super companies who are private like Uber, AirBnB, and Theranos, I’d strongly consider joining them now to gain some options. These three companies clearly look like they’re going to grow even larger over the next five years.”

    When you say joining them to gain their options, what do you exactly mean? Do you mean joining as an employee, which would be pretty hard for anyone non-tech? Or joining them in funding which would also prove difficult if you are not a VC and early in your career?Please clarify! :) I would love to know the options.

    I am in my mid 20’s and new to this. Besides my 401k, and some steady company stocks, I haven’t expanded my investment portfolio as much yet, but eagerly want to learn and maximize my returns.

    1. Join as an employee, as a consultant who is eligible for stock options, or as an investor if you’ve got the fire power.

      What I’ve realized is that there are a lot of private companies that are just blowing publicly traded companies out of the water regarding growth and wealth creation. Join before they get to a huge steady state.

      1. That makes total sense. But let’s say you can’t join them as an employee or a consultant? I mean you might not have the skill set you are looking for or whatever the reason might be. To be honest, they mostly look for tech and I am not tech. I am strategy but in a very different domain (retail pharmacy).

        What else can you do then? I know your point is not focusing on just those 3 companies. It is about joining any startup which has the potential to do well, but sometimes, all they are looking for is tech and you are not that, then they have very general positions which don’t align with your career or pay well, i.e., community manager. Then, what do you do?

        I am actually job hunting too right now, so I want to be somewhere I can maximize my learning potential as well as earning potential. I am looking to move to NYC where my husband lives and I recently got married so limited in that sense too :(

        1. You will be amazed at how many different jobs are open at Uber, for example, beyond tech if you take a look. Communications, marketing, finance, project management, and more. Tech is just a piece of the puzzle.

            1. Hey, as you probably know, healthcare is big for start-ups too. There could be some good, established (i.e., late stage) start-ups that have the same compensation opportunities as are available in the tech industry.

              Good luck.

  12. The benefit of early retirement as I see it is not that you don’t have to work, but that you can be more choosy in the work you actually take on.

    1. That is indeed the benefit. And for those who always feel the pressure of being the best or trying to be the best, that pressure fades a little as you take on a more balanced approach.

  13. Stefanie @ The Broke and Beautiful Life

    I don’t have any private equity investments, but I do try to invest in companies that align with my values.

    In terms of continuing to work, I think it’s important to have some kind of structure in life that gives you purpose and direction. How you choose to channel that is up to you, and since the way you’re doing it now seems to make you happy and satisfied, I say more power to you. You’re living the dream, enjoy it!

    1. That’s the key, investing/working for companies that align with one’s values. It makes work feel that much more purposeful.

      I think too many people do things solely for the money or out of necessity, rather than for the love of what they do.

  14. John C @ Action Economics

    I absolutely don’t think you are crazy for continuing to work, even though financially you have put yourself in a position where you certainly don’t have to. I see building a nest egg as a form of insurance, it’s to have options and so that if and when I physically can’t work, or I really really don’t want to, I don’t have to. I have worked with several men in their 50s, 60s and 70s in physical jobs who didn’t save well and have to work a job that they are in pain from all the time because it is their only option.

    I think there are three main factors to deciding to work, Personal finance is one of them, and the other two are feeling a contribution to society, and doing something you find to be interesting and/or fun. If you enjoy what you are doing and feel you are doing something productive that helps other people than I would say that is winning all around.

    1. Thanks for the feedback John. I think a big part of working for a financial tech startup is that it fits w/ my skill set of finance/content/marketing, and there’s an interesting adventure I’ve never experienced before.

      Furthermore, there’s a lot of great observations and writing material for a future data. I’m constantly looking for interesting scenarios to write about. When you’re a consultant, you don’t care as much about office dynamics and politics, and to observe how things unfold in this capacity is quite fascinating!

      2015 will be the year to replenish the liquid cash reserves. Consulting will help.

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