Dear Financial Samurais,
At the end of March, Anthropic raised $3.5 billion at a staggering $61.5 billion valuation. Now, reports are swirling that investors are lining up at a $100 billion valuation. This meteoric rise makes me wonder: Are we taking enough risk to get truly rich?
In the personal finance world, index funds and ETFs are gospel—and for good reason. They’re low-cost, diversified, and easy to automate.But I don’t know many people under 60 with over $10 million in investable assets who got there by simply dollar-cost averaging into index funds. That kind of wealth usually comes from something more concentrated.
Think entrepreneurship. Think joining a private company early and riding a liquidity event. Think taking a calculated swing on a private investment before the crowd piles in. That’s how most people I know with eight-figure portfolios under 60 made it.
Sure, there are folks in banking, tech, consulting, and asset management who earn millions in compensation and save aggressively. But their wealth is often driven by income power, not index outperformance.
So what’s the takeaway? If you want to outperform the mass affluent, you’ve got to take more risk. Yes, you’ll face losses. Yes, some investments may go to zero. But you only need one or two home runs to change your financial trajectory forever.
Check out: The Richest People Are Not Index Fund Fanatics – Why Are You?
Clarifying the Step-Up in Basis and the Estate Tax Threshold
While visiting my parents recently, we touched on the topic of estate planning. It’s not an enjoyable conversation, but it’s an important one. Having the right documents in place—and knowing where they are—can save your heirs a lot of stress.
My wife and I set up a revocable living trust years ago so that our assets can bypass probate and be distributed according to our wishes. A will is better than nothing, but it goes through probate, which can be expensive, public, and painfully slow.
One question I’ve long pondered: what’s the point of the annual gift tax exclusion if your total estate is far below the estate tax threshold? And another: what’s the value of the step-up in cost basis if your estate is also well below the threshold?
In my latest post, The Step-Up In Cost Basis And Its Impact On The Estate Tax Threshold, I dig into both questions with real-world examples.
One of the biggest social epiphanies is this: Boomers may not be the greedy, asset-hoarding generation they’re made out to be. In fact, waiting to pass on assets might actually be the most generous thing they can do. Why? Because if you gift a house, stocks, or any long-held investments while you’re still alive, your kids inherit your original cost basis—and potentially a large capital gains tax bill. But if you hold onto those assets until death, they get a step-up in basis to current market value, often eliminating the capital gains tax entirely if sold soon after.
So even if you think your estate is nowhere near taxable territory, it still pays to understand how the step-up in basis works in tandem with estate tax rules.
YOLOing Home
After 36 days in Honolulu, I’m finally heading back home to San Francisco tomorrow. I’ll miss my parents and the warm Hawaiian weather, but there’s nothing quite like returning to the comfort of your own home.
I’ve found it incredibly helpful for both happiness and appreciation to toggle between different environments. Drive an old beater car for a while, and you’ll gain a new appreciation for your current ride. Do some manual labor like landscaping, and suddenly making money by typing or telling people what to do in meetings feels like a gift.
In the same way the personal finance community tends to overemphasize index investing, I think it also over-glorifies living in the smallest, cheapest home possible to reach financial freedom faster.
I’ve said this many times: hitting your FI number won’t magically make you happier. More often than not, you’ll wonder why you’re not happier—and then immediately start searching for the next goal to chase.
Buying a nicer home than you technically need can actually be a motivating financial decision. Not only do you get to enjoy your wealth now rather than postponing everything for later, but you may also find yourself inspired to hustle harder to replenish the liquidity you gave up.
So don’t wait until you reach your goal to start living. If you do, you might become so accustomed to frugality that even when you can spend more, you won’t. Enjoy the ride!
To Your Financial Freedom,
Sam
If you’re looking to take more risk and invest in the AI boom, check out Fundrise Venture. It holds positions in companies like Anthropic, OpenAI, Databricks, Anduril, and more. I personally invested another $100,000 last month. Fundrise has also been a long-time sponsor of Financial Samurai.
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