Dear Financial Samurais,
As the stock market continues to sell off, I’ve been steadily buying to get my equities allocation to around 30% of my net worth. Since 2012, I’ve maintained a 25%–35% target range for equities because that’s what I’m comfortable with. What’s interesting is that as your wealth grows, maintaining your target allocation actually gets harder due to long-established spending habits.
For example, if you have a $100,000 net worth and allocate 50% to equities, that’s $50,000. But as your net worth grows to $1 million, $5 million, or $10 million, maintaining that same 50% allocation means having $500,000, $2.5 million, or $5 million in equities. At some point, the sheer dollar amount at risk starts feeling too large, even if the percentage allocation remains the same.
If you're a personal finance enthusiast, your spending likely won’t increase as fast as your net worth. So when markets correct by 10%, losing $50,000, $250,000, or $500,000 can feel more painful than before. This is one reason investors diversify into real estate and alternative assets—these tend to have lower volatility and don’t create the same gut-wrenching daily price swings.
Diversify your wealth through private real estate: Invest in real estate without the burden of a mortgage, tenants, or maintenance with Fundrise. With about $3 billion in assets under management and 350,000+ investors, Fundrise specializes in residential and industrial real estate. I’ve personally invested $300,000 with Fundrise to generate more passive income. The investment minimum is only $10, so it's easy for everybody to dollar-cost average in and build exposure. With stocks on shaky ground, I believe real estate is set up to outperform in the coming year.
The Wealth Effect Is Stronger Than Ever
Coincidentally, I came across a chart from Bank of America showing that U.S. household equity holdings as a percentage of total financial assets have reached a record high of 29%. I was surprised by how closely this aligns with my own long-term 30% equities target over the past 14 years.
That said, even a 10% drop on a 30% net worth allocation stings—it translates to a 3% decline in net worth. Depending on your wealth level, age, and risk tolerance, this latest correction might sting for you too.
Given that household equity exposure is at an all-time high, the negative wealth effect should be more pronounced. The bigger the correction, the greater the impact on spending and sentiment. If the S&P 500 doesn’t start rebounding after “Liberation Day” on April 2, expect a sharper slowdown in economic growth and a tough year for equities.
Tariff Equality Would Be Nice
Everyone’s talking about U.S. reciprocal tariffs under Trump, but hardly anyone mentions the tariffs imposed on the U.S. According to the WTO, USTR reports, and 2024 national trade data, here’s how various countries’ tariffs on U.S. goods compare to ours:
- Mexico: 7.0% on U.S. goods | U.S. tariffs: 2.4%
- Canada: 4.2% vs 1.9%
- China: 17.5% vs 17.5%
- Japan: 2.5% vs 1.6%
- UK: 2.8% vs 1.6%
- France: 2.8% vs 1.6%
- Germany: 2.8% vs 1.6%
- Russia: 4.2% vs 4.0%
Hopefully, the rest of the G20 lowers their tariffs to match the U.S.’s average tariff rate—or at least reduces them in good faith—because if not, we all lose. I’m hoping for a compromise, but I’m also prepared for another 5%–10% decline in equity performance. I suggest mentally preparing for more downside and keeping some cash on hand to dollar-cost average further next week and into April if needed.
New Posts for the Week
When to Cut Your Financial Losses When Paying for a Service
If you hire someone and pay by the hour, you might find yourself in a tough spot if the job takes longer than expected. At some point, cutting your losses could save you more time, money, and stress. Here’s what happened when my hot tub broke down—and the lessons I learned.
Helping Others While Making Millions on YouTube and TikTok
I firmly believe our children will face fewer opportunities in the future due to globalization and technological advancements. Bill Gates recently predicted that AI will replace doctors, teachers, and more within the next decade, making humans “unnecessary for most things.” While I don’t think the shift will happen that quickly, it does raise important questions about the value of an expensive college education and the risks of not securing financial independence early.
To explore this further, I spoke with Humphrey Yang, a personal finance vlogger with over 5 million followers. If you’ve seen recent surveys, the #1 career choice among young people is becoming a YouTuber. If you’re interested in doing the same, and building a brand, we discuss how he made it happen.
Ways Your Children Can Earn Money from a Business
Continuing with the theme of helping our children prepare for the future, I’ve put together a practical list of ways kids can earn money. I also ran the numbers on how much they could realistically make in a year—and what they might accumulate by the time they leave home.
Final Week for Signed Millionaire Milestones Bookplates
A big thank you to everyone who pre-ordered a hard copy of Millionaire Milestones: Simple Steps to Seven Figures and requested a free signed bookplate! Based on demand, I expect the supply to run out by Sunday, April 6—so if you haven’t filled out the form yet, don’t miss your chance.
On April 6, I’ll be introducing a new promotion for those interested in a 1-on-1 video consultation with me—stay tuned! Your support for my books, which only come out every 2–3 years, is what helps keep this newsletter going. I truly appreciate it!
Meanwhile, we’re heading into another exciting week of market chaos and uncertainty. Will we see an enormous relief rally on April 2, or will consumer sentiment take another hit and drag markets down further? If stocks continue to get hammered, at least real estate owners can take comfort in rising property values.
Here’s to the power of diversification and hope for the best!
To Your Financial Freedom,
Sam
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