This week's newsletter is sponsored by Fundrise, my favorite platform for private real estate investing. With stock market volatility on the rise and a multi-year interest rate cut cycle about to get underway, now might be the time to diversify into commercial real estate. Fundrise has a track record of outperforming the S&P 500 during turbulent periods (2018 and 2022), though past performance is no guarantee of future results.
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Newsletter September 8, 2024: Recession Fears And Real Assets
Ouch, another rough week in the stock market, capped by a weak August jobs report on Friday. Only 142,000 jobs were added in August, falling short of the 161,000 predicted. Adding to the disappointment, employment numbers for June and July were revised down by a combined 86,000.
On a positive note, the unemployment rate dipped back to 4.2% (down from 4.3% in July), and wages grew by 3.8% over the past year, comfortably outpacing the 2.9% inflation rate.
Here are the specific employment revisions since April 2024, reflecting a concerning trend:
- April: Initial 165,000 -> Revised 108,000
- May: Initial 272,000 -> Revised 218,000
- June: Initial 179,000 -> Revised 118,000
- July: Initial 114,000 -> Revised 89,000
Another notable point: jobs for native-born Americans declined by 1.3 million over the past year, while jobs for foreign-born workers increased by 2 million. Additionally, full-time jobs dropped by 438,000, while part-time jobs rose by 527,000.
These trends are likely to fuel political debates in the coming months, particularly around the issue of illegal immigration.
Giving Up Your Career to Be a Stay-at-Home Parent
With the labor market facing increasing challenges, my post on being Careful About Giving Up Your Career to Be a Stay-at-Home Parent feels more relevant than ever. My daughter just started school full-time last week—time has flown by, and I’ve fulfilled my commitment of being a stay-at-home dad for the first five years of both my children’s lives.
In this latest post, I reflect on the past 7 years and 10 months as a stay-at-home father and share what I would do differently for anyone considering this path. Balancing childcare with work is a challenging reality for most families, and it often requires significant sacrifices.
I’ve come up with a strategic timeframe to help minimize regret while maximizing financial stability. In hindsight, I don’t believe staying home for five years per child is the best move, as I initially thought. Additionally, having both parents stay at home full-time is often suboptimal, despite the assumption that more help is always better.
Hug Your Real Assets Tighter
When the stock market is taking a hit, it helps to focus on the real assets you own that maintain their value and provide utility. My favorite real asset to build wealth is our primary residence—it offers shelter and a space for creating cherished memories. With the 10-year bond yield back down to 3.7%, many people with good credit can now secure a 30-year fixed mortgage in the high 5% range again.
Beyond your home or any rental properties you own, reflect on how your recent spending has added value and purpose to your life. Maybe you upgraded your pickleball paddle, bought some quality shoes, or enjoyed a memorable night out with your partner. Perhaps you even paid $120,000 in private school tuition for your kids—money that could’ve gone into NVIDIA stock when it was trading 25% higher!
The stock market's volatility reminds us to enjoy our money from time to time. After all, if you never sell your stocks, investing in them serves no immediate purpose since stocks don’t provide day-to-day utility. And just so you know—I’m still buying the dip.
As a long-term Apple shareholder (12+ years), I’m looking forward to the iPhone 16 announcement on September 9, along with any other product reveals. I’ve still got an iPhone 12, so I’m the prime customer ready for an upgrade.
One of my tenants, who works as a software engineer at Apple, mentioned how impressed he is with the AI integration in their new features. If Apple’s stock dips post-announcement, as it usually does, I’ll be buying.
The Rise of Direct Investing
Although I enjoy managing my stock portfolio, it can be mentally exhausting, especially during downturns. There’s something to be said for outsourcing portfolio management to a professional so you can focus on work and more enjoyable activities.
This is why I recently did a deep dive on Direct Indexing, an investment strategy growing in popularity among the mass affluent and wealthy. I used to think it was just another way to invest in index funds, which many of us already do.
However, Direct Indexing offers much more—it allows for more personalized investments with a tax management component that could potentially boost returns. More fintech companies are offering variations of this service, and the fees are relatively low.
Looking back, I probably should have outsourced part of my portfolio management when my son was born in 2017. At the very least, it would have lightened my mental load. At best, it might have increased my returns, as more of my money would’ve been invested immediately. Being able to offload responsibility when you're drowning at work or as a new parent is valuable.
See: Direct Indexing: A Growing Investment Strategy for the Wealthy
More Socioeconomic Diversity in College
Finally, the first college class profiles since the Supreme Court’s ban on affirmative action are being released. As an Asian American with children likely heading to college, I’m curious to see what, if anything, might change.
The racial demographic shifts are a mixed bag at elite institutions like MIT and Yale. However, I’m especially pleased to see an increase in low-income students at top universities like Duke and UVA. The more economic diversity, the better. Back in 2020, Berkeley rocketed to the #1 spot given Forbes began weighting more heavily the percentage of incoming students who received Pell grants.
I’ve grown tired of elite private universities claiming they want to help all students while refusing to expand the number of available seats. Meanwhile, Harvard has a greater percentage of students from the top 1% than from the bottom 60%. What kind of virtue-signaling nonsense is that?
As a personal finance enthusiast, I believe in helping those with fewer financial means, regardless of race. The resource gap between a child from a poor family and one from a wealthy family is enormous.
Although I wasn’t poor growing up, I remember only being able to access SAT prep books from the library because I couldn’t afford the $20. Meanwhile, my wealthier classmates were attending $2,000 Princeton Review courses. While I thought I was learning, seeing the answers at the back of the book gave me a false sense of confidence. My SAT scores were never great, partly because of this.
The socioeconomic implications of college will fascinate me for the next 14 years. My family is saving a small fortune for two kids to attend college, all while knowing that college may become less necessary thanks to technology and the internet. It’s a perplexing situation to navigate!
See: MIT and Yale’s New Class Profiles Post Affirmative Action Ban
To Your Financial Freedom,
Sam
Thanks again to this week's sponsor, Fundrise, where investors can start with as little as $10 to invest in residential and industrial real estate nationwide. I’ve personally invested over $270,000 with Fundrise to boost my passive income, diversify away from pricey San Francisco real estate, and gain exposure to private companies in the AI sector.
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