This is a free Financial Samurai newsletter that was published on August 25, 2024. Every week, I come out with a free weekly newsletter to help readers achieve financial freedom sooner rather than later. Join 65,000 other readers and subscribe here. This way, you'll never miss a thing.
Financial Samurai began in July 2009 and is the leading personal finance website today with over 1 million organic pageviews a month. Everything is written based off firsthand experience because money is too important to be left up to pontification.
Sam is a pioneer of the modern-day FIRE movement. He attended The College of William & Mary for undergrad, got his MBA from UC Berkeley, and worked at Goldman Sachs and Credit Suisse for 13 years until he retired in 2012 at age 34. Sam is one of the rare personal finance writers who actually has the background and experience in finance.
You can learn more about Sam Dogen by clicking his About page. You can also visit his Top Financial Products page to help you save, invest, and organize your finances better.
Newsletter for August 25, 2024: Cautious Optimism
While hobnobbing in Jackson Hole, Fed Chair Powell gave us some clear and good news. Here are some highlights:
“The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
“My confidence has grown that inflation is on a sustainable path back to 2%.”
“We do not seek or welcome further cooling in labor market conditions.”
“”Inflation has declined significantly. The labor market is no longer overheated, and conditions are now less tight than those that prevailed before the pandemic.”
“We will do everything we can” to make sure the labor market says strong and progress on inflation continues.”
It's nice to see the Fed focus on its other mandate, about ensuring the sustainability of a healthy labor market.
Some now expect the Fed to cut rates by 100 bps (1%) by the end of the year, and 200 bps (2%) by the end of 2025.
If the economy continues to grow, albeit more slowly, it's hard not to get optimistic about real estate, stocks, and other risk assets. As a result, I'm still going to buy any dips until something changes.
A Moment Of Weakness
Even though I'm rebuilding my public equity exposure (from 18% to 25% of net worth), I sold about 8% of my equity holdings in my rollover IRA on August 20, 2024. The S&P 500 had nearly reclaimed its all-time high, and I saw this as a second chance to reduce my equity exposure. For context, my rollover IRA is entirely invested in equities and accounts for about 23% of my total equity holdings.
However, I changed my mind the very next day and used the cash to buy back various stocks. This was a moment of uncertainty and weakness.
On one hand, I wanted to lock in gains and reduce volatility. On the other hand, I reminded myself that trying to time the market is often a losing proposition, and I still have 13 years before I might consider withdrawing the funds penalty-free.
Perhaps some of you are feeling a similar level of uncertainty?
Although Powell's comments were dovish, we're at a pivotal moment with the first rate cuts in four years probably starting in September. There is also uncertainty surrounding the upcoming election.
If the Fed decides to cut rates by 50 basis points, instead of 25 basis points, in September, it could be interpreted as a negative signal, indicating a faster deterioration in the labor market than expected.
Additionally, there could be a knee-jerk reaction down if either Harris or Trump wins, as both would likely implement changes to solidify their legacies. Let's see if there will be political gridlock or not, depending how Congress shapes up.
All this to say, I highly recommend talking to a professional about your portfolio to help you understand your risk exposure, risk tolerance, and financial goals. I'm cautiously optimistic about the future. But I also loathe giving up gains.
Found My Old Empower Consultation Notes
At the end of 2012, when Empower was still called Personal Capital, I had an in-person meeting with one of their financial advisors at their San Francisco office.
I had just left my job in finance and wanted a second opinion on my portfolio, given the significant life change I was going through.
Looking back, I was surprised to see that I had allocated 52% of my taxable portfolio to cash! The cash was actually in CDs yielding around 4.5% on average.
But it made sense at the time because I no longer had a steady paycheck and was still shaken by the mass layoffs and substantial stock market losses from 2008-2010.

During my second session, I was provided with a suggested asset allocation tailored to my age (I had just turned 35), risk tolerance, and goals.
While I didn't follow this recommended optimal allocation exactly, it did motivate me to invest about 80% of my cash into stocks within three months. Then in 2014, I used 100% of an expired CD for a down payment on a fixer-upper in Golden Gate Heights, San Francisco.
In my mind, I was a 35-year-old retiree who needed to significantly reduce risk, like a traditional retiree at 65-year-old. But in the financial advisor's mind, I was still a young man with plenty of energy and financial opportunities ahead of me. Therefore, I could afford to take on more risk—certainly more than having 52% of my portfolio in cash.

Ultimately, the free financial consultation was a positive as it helped me see a different perspective and take action. Luckily, the stock market has done well since 2012.
Questions To Ask The Financial Advisor
When you speak to a financial advisor, here are some questions I'd consider asking during your first or second session:
- How are other investors with a similar profile to mine currently investing?
- What are the biggest concerns for investors with my profile at the moment?
- What is the average cash balance for investors like me?
- How do you anticipate the investing landscape might change under a Harris or Trump presidency?
- Based on my recommended optimal asset allocation, how do you expect it to perform relative to the S&P 500 during both bull and bear markets?
- What are your thoughts on the benefits of direct indexing and tax-loss harvesting?
- Given the lag in real estate performance compared to stocks and the declining mortgage rates, how should real estate factor into my portfolio?
Was On Vacation Last Week
My family went up to Lake Tahoe last week for our final summer vacation. The weather was great, and since we went from Sunday to Thursday, there weren’t many people around. We try to visit our vacation property twice in the summer and twice in the winter to make better use of it.
It’s hard to believe I bought the property 17 years ago—I still remember the day it closed as if it were yesterday. The sellers gave us a box of chocolate-covered strawberries, probably thrilled to offload the property as the condotel market was collapsing.
Although buying this vacation property in 2007 was the biggest financial mistake of my life, I'm glad to finally fulfill my vision of taking my family up there. For over a decade, only the king-size bed was used, while the two queen-size beds sat empty. How sad.
If you're thinking of buying a vacation property, my advice is: don’t. It’s a luxury expense that isn’t worth the money for most people. That said, if you're in decumulation mode, then by all means, buy a vacation property—you likely won’t use it as often as you think.
Related post: The Reasons Why You Should Buy A Vacation Property
A Scary Moment
On Tuesday afternoon, I took my two kids to the pool by myself. Both know how to swim and were excited to ride the water slide. I told them I’d stay at the bottom to videotape them. They took a couple of runs, and everything was going well until a big girl came barreling down the slide before my 4-year-old daughter had even hit the water.
The big girl ended up crashing into my daughter, submerging her underwater. WTF! I immediately jumped into the pool to save her.

First, I asked the girl why she didn’t wait for the pool to clear, and she said she didn’t know. Then I looked at her father, who didn’t say a word and kept staring at his phone from the lounger.
Finally, I went up to the top of the slide to ask the traffic manager—who was also on his phone—why he didn’t tell the big girl to wait. He initially said he did, which was clearly a lie since I had the whole incident on video. Then he recanted and asked me if my daughter was okay and apologized.
Thankfully, she was fine. But for a moment, I thought she might have been knocked out under the big girl’s weight. It was a terrifying moment which reminded me that one look away could mean disaster for little kids.
Does Anybody Really Care?
This episode also reminded me that a lot of people don’t care. Many don’t take responsibility for their actions. In a world that’s growing more selfish, where everyone expects something for free and adopts a “what have you done for me lately” attitude, if you find someone who cares, cherish them!
If someone consistently shows up for you, take a moment to thank them. Then take the next step and do something kind for them. It’s easy to take people for granted over time, but you’ll likely miss them when they’re gone.
Related: The Source Of All Stress In Life: Giving A Giant Crap About Things
Meritocracy in Real Estate
After receiving proof last week from a large real estate brokerage that commissions are coming down, I believe performance-based commissions will become more popular over time.
If a real estate agent truly believes in their skills, they should accept a performance-based commission structure. The higher the sales price the listing agent secures, the higher the commission they’ll receive, and vice versa.
Since everyone believes in merit, this type of commission structure will likely gain traction. Only agents who are poor negotiators or lack confidence in their value will decline. Sellers should also favor this structure because it provides downside protection if the sales price disappoints.
In my new post, Top Agents Will Offer Performance-Based Commission, I share key strategies sellers should consider when negotiating this way of selling.
Clean the Floors Yourself, No Matter How Rich You Are
Finally, I've been thinking more about the most common self-inflicted obstacles to getting rich. One of them is pride. If you start thinking you’re too good to do something or to interact with certain people, you might never build a solid foundation for greater wealth.
Think about an actor who gets lucky and lands a role in a blockbuster movie and then refuses to take smaller roles because they now believe they’re too good. Five years later, you never hear from them again because there’s always a new, hungry actor willing to do whatever it takes to get ahead.
In my new post, Rental Property Maintenance with Your Kids Solves Two Problems, I discuss a quandary: spending decades working hard and saving aggressively to enjoy the life you have now, only for your kids to see the fruit of your labor without understanding the work that went into it. As a result, they might grow up spoiled and entitled, making the world a worse place for others.
Teaching by doing is more effective than teaching by telling. That’s why it's important to get your hands dirty while your children are still figuring things out. The world is too competitive for them to grow up feeling entitled.
To Your Financial Freedom,
Sam
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