This type of post only surfaces during a bull market, when greed tug at us the hardest, making satisfaction elusive. Ever since making my first public equity investment in 1996, I’ve been hooked, wrestling with the constant mental tug-of-war over how to be at peace with my investment decisions. Maybe you fight the same battles.
During the spring 2025 stock market meltdown, I deployed most of my rental home sale proceeds into the stock market. I started buying too early—in early March—only to watch stocks keep falling. Still, I kept dollar-cost averaging through mid-April. Eventually, the market rebounded.
Of the proceeds I invested during March and April, about $500,000 went into individual stocks, mostly in tech. Of that, $40,000 went into Meta, a long-time holding in my rollover IRA.
My first new Meta buy was on March 10 at $591.76 a share. When it dropped to $488.50, I felt like an idiot, but defiantly bought more. My last dip-period purchase was at $716.64 before rotating into value names.
As a DIY investor determined to outperform, active management can be very stressful. Unless you truly enjoy the investing process, you are better off sticking with 100% passive index funds or ETFs or hiring a financial professional to manage your portfolio.
The Need To Invest a Lot to Make a Lot
For two months, I felt more stressed than when guessing “C” on all the SAT questions I didn’t know. I was also just as nervous as waiting the 30 seconds for my Series 7 exam results to hopefully break 70%. Back at Goldman, failing would’ve been humiliating.
All that time, stress, and effort to put $40,000 into a volatile tech stock and five months later, I’m up ~40%. That’s a great return. But in dollar terms, it’s only $16,000 before taxes. That doesn't even cover half the cost of remodeling my parents’ two-bedroom in-law unit in Hawaii.
Yes, $16,000 is better than losing $16,000 in a bear market, but it's a bull market now so I expect to profit. However, the money doesn’t change my lifestyle as I strive to build more passive income. If I reinvested it in a 4% yielding asset, my annual gross passive income would rise by just $640. A couple of traffic tickets and the passive income is wiped out.
In addition, unlike real estate, the funny money gains in the stock market can evaporate quickly given how rich valuations are.
As an active investor with part of my capital, I also take losses. For example, I’m currently down about $6,000 from dollar-cost averaging into UnitedHealthcare since the $300/share level. What a disappointment as the S&P 500 marches higher. Thankfully, Warren Buffett and other institutions were revealed to have bought the stock in their Q2 reports, meanwhile UNH reported its currently outlook for its 2025 earnings with the same as six weeks ago, reinstating its full-year guidance.
The Courage to Take Big Risks Is Elusive
Looking back, I should have invested far more in Meta during that window or used options for leverage. But I wasn’t willing to take such a concentrated bet on a single stock that was plummeting. Government policy was highly uncertain and stocks were richly valued. As growth stocks ride the escalator up, they tend to take the elevator down.
Fear of loss naturally throttles one from making outsized returns. At least it does for me.
That’s the dilemma: to get really rich, you need to take outsized risks. Without them, it’s tough to outperform the crowd who mainly invest in index funds. But most of us are simply too afraid to take outsized risks because we fear loss more than we appreciate gain.
Take the MBA student from a top 25 school. They build connections, analyze companies through case studies, and learn how to build a business. But what do most do instead? They take well-paying jobs in finance, tech, or consulting.
After two years of lost income and $150,000 in tuition, playing it safe makes sense. That’s what I did, returning to Credit Suisse once my MBA was done. It then took another six years for me to finally take the leap of faith in 2012 and focus more on Financial Samurai.
My Biggest Single Investment Slug
In 1Q 2025, with markets so volatile I wasn’t about to put much more than $50,000 into a single stock. Instead, I mostly bought $2,000 – $10,000 tranches of the S&P 500 as the index was declining.
Then, in 2Q, I made my largest single investment with the proceeds, a $100,000 allocation to the Innovation Fund. Because it’s diversified across at least 13 private growth companies, I didn’t see it as overly risky. It was more like investing $8,000 in each of the companies in the fund.
In my podcast with Fundrise CEO Ben Miller, I asked about the fund’s concentration risk, given OpenAI, Anthropic, and Databricks make up about 50% of its portfolio. Although I may have sounded concerned, the truth is, I want even more concentration for this bucket of money! They’re hyper-growth AI companies, and $100,000 in that space is a bet I’m comfortable with.
Not Going to Get Rich on $100,000 Either
Sadly, investing $100,000 is probably not going to improve my life either.
In retrospect, I should have also invested more into the Innovation Fund, as $100,000 was less than 7% of my home sale proceeds. With Anthropic now valued at $170 billion and OpenAI offering secondary shares at $500 billion, a larger position would have yielded more upside.
My target for venture is usually 10–20% of investable capital, which would have meant $150,000–$300,000 in this case. But somehow, I just decided on $100,000, probably because it sounded like a nice round number. I didn't think things through, especially as uncertainty and fear abound.
This lack of consistency in investing is why the forced savings aspect of owning a home with a mortgage is such a powerful wealth builder. Even when you're the most distracted or scared, you'll stay pay down some principal every month.
Quick Calculation On A Potential $100,000 Return
If the fund delivers a 25% IRR over five years, $100,000 grows to about $305,000—just over 3X my money. Over ten years, it becomes roughly $931,000, or 9.3X. Those are impressive numbers, but at age 53, $305,000 wouldn’t move the needle much. Maybe I’d splurge on a Toyota Tundra in Honolulu, guilt-free, but that’s about it.
At 58, $931,000 could cover a full remodel of my parents’ old house. But after my last gut remodel, I swore I’d never do one again. It’s just too painful and time-consuming.
More likely, I’d put the proceeds toward buying a fully remodeled home in Honolulu. That said, I should already have enough for that once I sell my primary residence in San Francisco and use the tax-free exclusion benefit. So I'm not sure what the money will be used for, except to funnel into new investments.
I Want To Have A $500,000 Position
If I’m willing to save and invest ~$500,000 for each kid’s 529 plan, then I should be just as willing to put $500,000 into private AI companies that might make their college education obsolete.
Now, let’s dream for a moment: if I had invested $500,000 and somehow earned a 40% IRR for 10 years, that would grow to around $14.4 million. That’s truly life-changing money off a single bet.
With an extra $14.4 million, I could fly private, rent $100,000-a-month luxury vacation homes, buy a $200,000 family car, and donate a generous $5 million to help my kids get into college. How obscene! But that's what the richest people do all the time.
The problem? Sustaining a 40% IRR is nearly impossible without catching lightning in a bottle with an early-stage startup—or three. The other issue is that investing 33% of my stable home-sale proceeds into venture capital is aggressive, especially when my target allocation is 20%.
For context, the S&P 500’s historical average return since 1926 is about 10%. Still… it’s nice to dream big even if most of us won't really change our spending habits if we make life-changing money.
The Only Real Ways to Get Truly Rich Are:
- Start rich and invest heavily to get richer.
- Invest a large sum in an asset that massively outperforms over the long term.
- Build a successful business where you own a significant chunk of equity.
- Get lucky—by joining the right startup, climbing to the top of the ranks, or knowing the right people to help you get in on a great investment
Clearly, not everyone is born rich, has the skill to build a business, the courage to buy the dip, or can invest a large sum into a risky venture. And while luck is uncontrollable, you can take steps to improve your odds, like moving to San Francisco during the AI boom.
So what's the solution to potentially make life-changing money as an investor? Consistently swing for the fences with a percentage of your capital.
Carve Out a Portion of Your Capital for High-Risk Bets
The best way I’ve found to overcome the fear of high-risk investing is to ring-fence a small portion of capital and consistently put it into aggressive opportunities. I recommend a 10% to 20% allocation.
Take 10% of your investable cash flow, savings, or financial windfalls and put it toward the highest-risk, highest-reward assets you can stomach. If you lose it all, you’ve only lost 10%. But hit a 10-bagger or greater, and it moves the needle on your overall wealth.
As wealth grows, the instinct is to play defense and protect capital. After all, you don’t want to be forced back into the “salt mines” during the next downturn. But resist going too conservative with everything. Keep that 10% – 20% high-risk bucket alive.
Some sample allocations:
- Age 25, $50,000 investable: $5,000 speculative, $45,000 S&P 500
- Age 30, $200,000 investable: $20,000 speculative, $170,000 S&P 500, $10,000 liquid
- Age 35, $500,000 investable: $50,000 speculative, $250,000 S&P 500, $200,000 real estate, $50,000 liquid
- Age 40–60, $1,000,000 investable: $100,000 speculative, $600,000 S&P 500, $250,000 real estate, $50,000 liquid
Or take a percentage of monthly savings. If you save $5,000 a month, put $500 into speculative bets. Over a year, that’s $6,000. As your income and savings grow, so do the bets.
Practice Letting Go of High-Risk Capital
I already treat the money I contributed to my kids’ custodial accounts, Roth IRAs, and 529 plans as no longer mine. That mindset makes it easier to stomach downturns and stay the course. In fact, whenever the stock market drops, I get defiant and aggressively invest in my children’s accounts to help them build wealth.
Apply the same strategy to high-risk investments. Once you commit the money, mentally write it off. It’s easier to do when it’s just 10–20% of your capital and you still have the other 80–90% safe. This detachment makes it easier to make bets, hold them longer, and avoid panic selling.
Stay Consistent With Your Aggressive Investing
The formula for building serious wealth is simple but uncomfortable: invest large sums in concentrated positions, earn high returns, and repeat consistently. The real challenge is maintaining the discipline to keep funding that high-risk bucket year after year.
Automate contributions to your brokerage account, open-ended venture funds, and other investments. Over time, that steady drip adds up.
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I don’t know if 40% is really like catching lightning in a bottle? I mean, so many hot themes have exploded this year:
NBIS
HOOD
KTOS
LEU
Etc.
Even the largest market cap in the world is still moving a ton in NVDA. Just have to closely manage risk. But, yes, 10% from S&P doesn’t seem good enough. Can always hedge with SQQQ before bug events like Powell speech this morning.
I’d take a 28X return after 10 years (40% IRR) any day. But maybe I just have low standards.
Turning $500,0000 into $14 million is enough to provide for my kids when they are 15 and 18.
Did you make 28X in those names too? If so, how much did you invest in them?
Thanks Sam,
A couple of thoughts though. You’re referencing 2009′-present, which has been amongst the best periods ever to be a growth investors. However, had an investor bought the QQQ’s in 2000′, it would have taken 15 years to break even.
I get finding the best possible holdings to build wealth, but permanent impairment of capital can bring that process to a halt.
Furthermore, value stocks have outperformed growth over the longterm. Although it seems that people define value differently. Ironically, Buffet states “there is no such thing as value stocks. Just good investments and bad investments”
I fall into the dividend growth investor category that you referenced. My two largest individual equity holdings being COST and MSFT (most of my holdings are ETFs). Both have increased their dividends by over10% on average per year, which is what I desire as a retiree. Obviously the gains have been nice too.Ironically, I own the QQQs as well. Since 2008′, the dividend CAGR has been over 20%. Sounds odd, but I own the QQQs because I appreciate the durability of the companies cashflows within the ETF
Great points. It’s true — 2009 to now has been an incredible stretch for growth investors, and the QQQ from 2000 is a sobering reminder that high valuations can lead to painfully long recovery periods. A 15-year breakeven would test anyone’s conviction.
Value had a strong run from about 2000–2007, but since then, growth has been the main driver of market returns. The challenge for value is that the economy itself has shifted toward technology, software, and intangible-asset-heavy companies — which don’t screen as “value” on traditional metrics.
I think Buffett’s right: it’s really about buying good businesses at reasonable prices. Whether they’re labeled growth or value matters less than whether they can keep compounding earnings and cash flow. COST, MSFT, and even the QQQ fit that bill, which is why they’ve been such strong performers over time.
But lately, Buffett has also been underperforming.
Hi Sam — as a newbie to private investment, can you explain what happens after an IPO event? Usually there is a lock up period, but what happens eg fundrise innovation fund? The details of such a thing would provide needed insight for me (and others I assume idk)…perhaps a future post ??
thanks again for all you do – sk
Hi Sam,
I’ve seen a lot of recent content from you about Fundrise, and I see you disclose that you are an investor in Fundrise. Does that mean you have direct participation in Fundrise as a business (equity/debt/LP/etc)? Or you are just an investor/user on the platform?
For transparency, I am currently invested in the Innovation Fund. I’m in the tech industry, and the fund managers have done a fantastic job of identifying highly relevant companies with great products and sizable growth potential.
Thanks for the transparency, and to further understand your motivations.
Hi Rick,
I’m an investor in the Innovation Fund and Flagship fund. I’m not a shareholder in Fundrise, the company.
I’ve been writing more about venture capital because I recently invested $100,000 in the Innovation fund this summer and opened up a new account for earmarked for my kids with $26,000 in August. I didn’t realize they had a $500 bonus for new investors over $25,000 as I’ve just been dollar-cost averaging in my other account for almost two years. Now I’ve set contributions to auto-debit $3,000 a month.
I am thrilled Ben and team own the top AI companies I want to invest in. There’s just no way to invest in these names without connections or big checks. I also never would have invested in Ramp, Anduril, Vanta, or Canva, which are four companies that are doing well. They were simply not on my radar and I’ve never heard of them until 2 years ago. Sitting here in San Francisco, AI has been all the rage since end 2022/early 2023. And the Innovation fund is a great way to get involved.
Readers are free to invest however they wish. I’m just showing what I’m doing, as I’ve done since FS started in 2009. Personally, I’m laser-focused on getting a $500,000 position as soon as I can so my children are hedged and I can ride the investment trend for as long as possible. I am just limited by income.
Cheers,
Sam
I sold my car to CARVANA in late 2022… they gave me $10K cash to take a 10 year old Hyundai off my hands that I had paid $15K for brand new 10 years prior. The car had no maintainence done in 10 years besides oil changes. The tires needed replaced, the bottom of the car bottomed out a ton due to potholes and probably a new suspension needed. The seats were permanently stained with spills from our toddler over the years. But CARVANA gave us $10K without even test driving it.
I loved the experience as a consumer and felt I was ripping off Carvana. Peaked at the stock a month later in early 2023 and it had crashed down to $4 a share and bankruptcy talks were rampant. I for a second thought maybe I should put the $10K they gave me for my car into the stock.. then sobered up and thought that would be nuts. Fast forward less than 3 years later and the stock is 344 a share. My $10K investment in 2022 would have me sitting on $860K today! I’m kicking myself for not throwing atleast $500 of that $10K at the stock back then.. would have 100% paid for the new car I used the $10k downpayment for the new car. Sometimes… even a tiny investment gets you 2000%-3000% returns. I’ve decided to put a small investment in every company i do business with from here on out. Especially ones on the brink of bankruptcy. If I’m wrong… the one i’m right about will cancel out all my losses in the ones that do go bankrupt.
Over the last 20 years… the best method for investing I’ve found is to put a little money in everything you buy. I bought Apple in 2003 after buying their product, I didn’t buy Netflix even though I’ve been a subscriber since 2004. I didn’t buy Amazon directly even though I’ve been a subscriber to PRIME since 2003. Follow what 20 year olds are spending their money on and buy those stocks. Some might go out of business but the ones that don’t will make you millions.
Carvana was indeed the greatest comeback story ever! I was looking at it at that time as well, but I thought it was gonna go bankrupt. Oh well!
Buying Apple in 2003 is great!
yep, paid for our home downpayment and still a big part of our retirement portfolio. Just wish I had invested more.. be retired.
Well done turning some funny money into a real asset you can enjoy!
Giving you 10k for that car is also why many very respected investors think CVNA is cooking the books or taking some very risky positions behind the scenes that is boosting profits – and it will end badly. How can they be making money by giving you 10k for that? Think about it.
Another point to make is that the more you rely on investment returns to live (eg don’t have a day job), the more emotionally charged you will be to invest and try to make outsized returns.
Most people are not FIRE and will never come close, so they just methodically save or don’t save and invest or don’t invest in their 401ks or whatever as they go. Their expectation is that they’ll have a job until 60-65 and retire.
FIRE expectations are for freedom, far sooner, hence the demand and desire for far more money now.
Very good points. When you don’t have a day job and neither does your wife or husband, the pressure is on to make hay when the sun is shining.
I do feel this pressure more acutely given I also have to raise two children in an expensive city. So I have more pressure to get my Investments right because I don’t have a back up just in case I skip a month or Invest in some really terrible investment.
I have another view on all of this. Once you get to a certain level (which would be different for everyone depending on circumstances), no amount of additional money will be life changing. As Buffet says, at some point money has no more utility. To throw a figure out there, I venture to suggest this is $10m. But for many it is probably in the $5m to $10m range. Once you have that sum working for you, having $20m, $50m, $100m is not going to change your life other than likely silly things at the margins. How much better does a 6 bedroom house verse a 4 bedroom house make to your life? How much better does first class verse business class make to your life? The need for a life-changing return is when you have, say, $1m, and need to get to $5m – $10m. Once you are at that $5m to $10m range, nothing is going to materially improve your life, and at that point it is all just a game – a game of can I win on the “monopoly” board faster than my peers? For me, I am in that $5m to $10m range, and am totally content with life. I have everything I need and pretty must all I want. I don’t need the added stress of chasing super high returns or the stress of wondering whether my peers are doing better than me. Which reminds me of more Buffet wisdom – don’t risk what you have and need, for what you do not have, and do not need.
Thanks for sharing your perspective. I largely agree with what you’re saying. The life-changing amount is different for everyone. In SF or NYC, I think that amount is at least $10 million.
So I’m curious, with you in the $5 million-$10 million range, have you left your job and pursued something you are more passionate about? If yes, what did you end up doing? And if no, what is it that you do that gives you so much joy to spend 40 hours a week doing?
One of the challenges I’ve seen is people actually walking away from a sub optimal situation once they say they have enough money.
I think you’ll enjoy this post: What it feels like to reach various millionaire milestones ($1M – $20M)
Absolutely I have left my job. In 2019 at age 53 I left a highly stressful career in Banking/Technology. What have I ended up doing? Most of our time we travel which is our passion. In the last year 1 month NZ, 1 month Australia, 2 months Singapore, 2 months Japan, 1 month China, and the remaining 5 months in Thailand. We have property in Singapore, NZ, and Thailand. Like you mentioned in another post recently, we have our properties rented most of the time to maximize passive income. Right now we live a great life, go where we want, do what we want, and are spending ~40% of our cash flow – which is the other point – if you are in the $5m to $10m range you can live a great life and continue to GROW your wealth – you are not drawing it down at all ! I do agree though if I was in the SF or NYC rat-race, I would want/need more. But I have had enough of being a rat in a wheel – my remaining TIME is the most valuable asset I have.
This post and this discussion resonate greatly with me. I got lucky and finally dipped my toe into crypto, buying ~100k worth of FETH about 2 months ago, which has nearly doubled. My (foolish) reaction is regret for not buying more as it doesn’t have a material impact on my NW, despite being completely lucky on that move.
I’m 55, have a high level exec job that I don’t hate but absolutely don’t love. I’ve had more than enough to retire comfortably for my relatively modest lifestyle for a decade, but being the product of hardworking first generation American parents, I just can’t seem to get myself to the point where I can hang it up and enjoy life more. Not (at all) expecting anyone to break out their tiny violin for me, just like hearing stories like Mark’s where he knew what his ‘enough’ was and was able to get through the matrix and to the other side. The psychological aspects of money and life can be fascinating.
Maybe one more year for me… :).
The question is what would your 57-year-old self say to yourself.
As a 53-year-old, I know that future self wants to enjoy the fruits of my labor while I still can.
Mark,
This is a great perspective. I’ve got a 2 yr old with aspiration for more kids & passive income streams. Maybe it comes down to energy level & legacy, but I see where you’re coming from. However, I do think w/ inflation & overall cost pressure in SoCal, that NW calc will most likely trend upward. PS – If you have kids, have you thought about gifting/giving at an earlier age than death?
I have 2 adult children, both with good careers, and both doing well financially – the best gift I have given them (so far) is to teach them how to manage money and both took the advice onboard (fortunately). As to your question. All I can say is that I have thought the pros/cons of this endlessly and I really don’t have a good answer. On the one hand giving now may be nice, although they are doing well on their own already. What if I give now, and a black-swan like a major medical event hits me? (I am in the $5m to $10m range, so I am still at risk in such a scenario unlike being at $20m+). I could write endlessly here debating this issue, but I won’t bore you! The answer to your question is a definite YES, I do want to give before death. I just cannot decide when is the right time or how much is the right amount. If they had an immediate need for the Bank-of-Dad for some reason, like buying a house, of course giving some now would be as easy decision. But both have a house without using the Bank-of-Dad, so I remain in limbo not being able to fully address this very important issue/question.
Perhaps start with the gift tax limit of $19,000 a year.
I would leave big stuff, like a house, after you are gone so they can get the step up in cost basis. Pls read the post. Super important to not have to pay more taxes than you need to.
Ah… Not being American, I don’t have the gift tax problem. I could give them $1m each tomorrow with zero tax. :)
Great feedback and it sounds like you’ve raised some winners! Like Sam, I’m always trying to figure out ways to raise good kids and provide resources when appropriate. The Step-Up in basis is a great idea. That “Buy, Borrow, Die” theme is definitely trending right now! Lol.
Great perspective here! I would add that one has to be careful with more money and some of the trappings it can bring – example: bigger house = more expenses.
What has changed the most for me is being able to spend more time doing the things I enjoy more: passion jobs, relationships, family time, and health. I hit the original life changing amount but doubling or tripling that amount is just excess I am not concerned about.
I appreciate reading your perspectives and advice on investing. I am sorta over reading posts that either say “Dollar cost average into the S&P 500 and set your withdrawal rate to 4%” or say “Buy *random cryptocurrency* and diamond hands, bro.”
Your advice is not crazy nor risky nor out-of-touch with the average investor, IMO. You have clear stretch goals for your investments, but you also seem grounded. Thanks for the sample allocation framework.
(I also caught the UNH falling knife. I am licking my wounds and writing covered calls, getting my cost basis down.)
My advice to people starting out: start young, open an investment account, have a goal, trade a few stocks, make a few mistakes. Consider bad outcomes to be the cost of tuition and learn from them.
Thanks for your comment. Let’s hope our bloody hands heal eventually!
Glad Buffett joined us with buying UNH! Now if he and others would only buy billions and billions more….
The FOMO is real in a bull market! I made a lot in 2020-2021, then lost a lot in 2022, then made it back and then some since.
There are only certain windows of time where everything goes on at once. And right now, more millionaires and billionaires are created through AI than ever before (CNBC article).
The time to press is now. Maybe up the range from 10% – 20% to 40% – 50% with new cash flow or Treasury bonds set to expire. That’s what I’m doing, while ensuring I still have lots of safety and living expenses left over (24+ months).
Wow, 3% annual fees for the fundrise innovation fund, not cheap..
Not cheap. But much cheaper than the 3% and 35% of profits (carry) I’m paying as an LP of a closed-end venture fund with no liquidity. The fee is actually 1.85% with no carrying cost, but there is an operating fee that gets waived after hitting certain investment milestones.
Nobody is forcing me or anybody to invest. However, I will happily pay a 2% – 3% fee and 20% – 35% of profits for a GP to make me a 10 bagger that I couldn’t have gotten otherwise.
In one VC fund that charges 3% and 30%, it owns Rippling at the Series A stage. I only invested $140,000 b/c that was all I was allowed to invest. But the return should be about 10X after fees, seven years later. I wish I was able to have invested much more.
Do you invest in venture capital?
Thanks Sam for your perspectives. A 10 bagger is fantastic, you’ve done well!
The place I work for allows me to invest in their PE funds with no fees or carry. The returns are good but not as good as your 10 baggers!
If you are working at a Private Equity shop, hang on. You will likely earn an incredible amount of money over time. One of the best businesses and careers in the world.
“The formula for building serious wealth is simple but uncomfortable: invest large sums in concentrated positions, earn high returns, and repeat consistently. The real challenge is maintaining the discipline to keep funding that high-risk bucket year after year.”
I’ve found the formula for building serious wealth is consistent investing over time and let compounding work its magic.
Its not exciting but it’s extremely effective.
Yeah, definitely not exciting, but something standard and that we all do.
I feel life is too short for me to wait so long, which is why I left work in 34 in 2012 to do my own thing. So it’s a natural extension to try to swing for the fences with a portion of my capital so I didn’t have to wait until 60 to make life-changing money. Remember, I kickstarted the modern-day FIRE movement in 2009.
To each their own!
Great advice !!
I suspect you’re going to receive some flack for this post given you’re writing outside the norms. Normies just save and invest in index funds, so anything out of that plan is a violation of their beliefs. Norms don’t take outsized risk either, which makes them extremely uncomfortable.
But if you look at every rich person out there who made life-changing amounts of money from investing, it’s priceless because they bet big on a concentrated number of assets.
I don’t want to be an average person either, as there are so many ways and examples of getting rich today. But because so many people who write and record investing and personal finance content have no investing background, they just stick with the basics.
Thanks for sharing!
This is the only blog I read because Sam shares his real experiences, both the good and the bad and he has so much experience investing. Other blogs have no soul, no stories, nothing tangible nor based on reality. It’s obvious those other sites use use generic copy generated by AI and are simply not worth my time. Sam tells it straight and also breaks through boundaries and encourages us to think outside the box. Two thumbs up from me.
Yeah, it’s understandable if you don’t go with the majority. But as a minority since coming to America in 1995, I’m used to getting flack.
But doing things out of the norm, like negotiating a severance package in 2012, or starting a site in 2009, as helped me live the life that I want. And for that, I’m grateful.
Statistically, that attitude makes it unlikely you’ll be an average investor. More likely, you’ll find yourself on the wrong side of the Bell curve you’re hoping to be. But, “no risk it, no biscuit!”
True, but so far over the past 10 years I’ve been very lucky with NVDA, GOOG, META, TSLA, NTFLX, and Bitcoin.
I’m so thankful to have taken more risk than just investing index funds. The difference has been about $2 million.
I also bought rental properties with leverage, so that’s made a big difference.
No bet no win!
Right on, you got the biscuit!
I find it hard not to get greedy as well In a bull market. As someone who comfortably retired at 50 with about $5 million, missing out on further gains can be uncomfortable to take sometimes. So I just try and remind myself that I have enough and am already free. And that my existing investments continue to benefit from the bull market as well.
There’s an endless amount of money to make! Have to let go and be satisfied at some point.
“With an extra $14.4 million, I could fly private, rent $100,000-a-month luxury vacation homes, buy a $200,000 family car, and donate a generous $5 million to help my kids get into college. How obscene! But that’s what the richest people do all the time.”
Ummm maybe go outside and touch some grass?
Pretty obscene right? The funny thing is, I don’t think most of us will change our lifestyles and spending habits, even if we did make life-changing money from an investment.
Would you? What is a life-changing amount of money for you?
It’s always fun to daydream, especially since it costs nothing.
After dropping off the kids at summer camp this morning, I’m going to lay down on a field at Golden Gate Park, touch some grass, and reflect.
I love your information Sam. Definitely helps me frame my mindset whenever I reach or approach your level of passive income. However, as someone who does not fit your 4 ways to get rich, I wonder about other approaches to get there if possible.
Hi Cody, thanks for reading. I like the approach of consistently ring-fencing a percentage of your available capital to swing for home runs.
What way do you fit in? And what are your investment plans?
I currently follow your advice of 10% of my investable capital a month towards these riskier investments, but at times I feel like it’s kind of worthless because it’s fairly small potatoes.
For example, I recently invested about $1k in NVDA based on one of your posts at the time, and bought when it was around $95/share. I had full confidence it was going to explode, and it being up basically 100% since that time shows I was right, but I think it fits in with this article nicely about how I really needed to have a LOT more money money to invest in it for it to be life changing. I can do all the research I want to do and be right 100% of the time but until I have more to invest, it’s still not going to change much.
Bingo Cody. This is exactly my point. In a bull market, we get greedy. And even when we are proven right, we want MORE, MORE, MORE. That is the human condition.
But there are people who never invest the 10% – 20% in more speculative investments. And as a result, they never outperform the crowd. This relates to investing, career, dating, working out, etc.
So even though we’re not making life-changing money, we at least, may be outperforming those who don’t take as much risk.
And, we should spend more time being satisfied with the 80% – 90% of capital we invest in a more risk-appropriate / lower-risk way.
It’s the investor’s perpetual struggle of fear and greed.
Congrats on making a 100% return on NVDIA!
So I don’t fit your 4 ways to get rich, but yet I’m in the bucket that you define as rich. Lately you have been starting to lose me on some of your observations and recommendations – that’s fine and I love other perspectives. But I do feel u have made a major bend in your philosophy lately. I’m still read as I always do and enjoy your work so don’t take it as hate and being a troll.
Thanks Dave. And no worries. Topics change as conditions change. Can’t always write to appease everyone. I’m really more focused on the sad reality of needing a lot of money to make life-changing money.
Please remind me how you were able to make life-changing money from your investments again? BDCs I think? It’s always good to learn new ways.
What is on your mind and what would you like to read about?
The life-changing money quite frankly came from investing in my earnings potential and focusing on my career – and then having the simple formula of Income greater than expenses (which i always have been conservative on). Yes it takes time, yes 10% isnt sexy, but ive always plan and calibrate that plan.
I believe most people are terrible at risk management and concentrated positions and high beta investments usually have bad outcomes for 90% of people. Doesnt mean it doesnt work, just it takes talent, timing and luck. I only invest in things i know and understand, care VERY MUCH about tax leakage, and i focus on the liquidity, leverage and exit plan/price heavily. I dont go for home runs. Just not who I am.
I mostly invest in liquid large cap or index funds. But have always invested in private markets, via as a LP in a closed-end fund, an evergreen fund, or public tickers of illiquid investments (think BDCs CEFs). I have an affinity for private credit (meaning Private Debt, CLOs, ABS, RE Credit, etc) because of my background. I was early, but all that means is I was making 12-15 rather than 8-12%. I still like some of these, but lots less than I used to. I care about the manager, fee structures (including incentive fees that will rip my winners) and thesis very much.
“Now, let’s dream for a moment: if I had invested $500,000 and somehow earned a 40% IRR for 10 years, that would grow to around $14.4 million. That’s truly life-changing money off a single bet.” a 40% IRR for 10Years (assuming u mean gross) with a MOIC of 28x just doesnt happen in a fund – and if it DID, so much of it goes to the GP. For a single investment sure, but i dont think this reader group should be encouraged to invest in early VC single names that make up such a high amount of their wealth. But I get it – and people do.
I just come back to its ok to be W-2 and use 401k (including the mega back door i told u about), 529s (which can be used to skip generations), IRA, stock investing, company share purchase discounts, etc and get to life changing money. But its takes discipline, expense control, risk management to get there.
I should i manage my liabilities the same way. Think about whats MTM, whats recouse, whats fixed, whats likely to get rolled over etc.
Want to give my non-MTM 75% leverage for 5 years on an early VC Investment for $400K, i might think differently and add some positions!
Dave, would love to hear you elaborate on this as I’m feeling similarly. What “major bend” in his philosophy do you feel he’s taking lately? I feel like FS’s posts are more recently pushing (albeit not forcefully) Fundrise, curious as to your take?
Feel free to share as well jp how you’re feeling. The more critical feedback, the better. And if you have thoughts on how you are investing in this bull market, I’d love to hear them!
Personally, I’m hyper-focused on making sure my kids survive the AI crunch, so I am trying to invest in AI in a responsible manner. And given the amounts I am investing in, I need to be careful that I’m not missing anything. Meta and other tech companies are one avenue, the Innovation Fund is another, and I have several closed-end venture capital fund opportunities as well, all with $200,000+ minimums.
One of the beautiful things about life is that we all evolve at a different pace while at different stages. To learn different perspectives is wonderful, so please share!
I mentioned that I feel your support for Fundrise is brought up frequently. Not opposed to that at all, I would however like to hear more examples of other areas you’re leaning towards….for example in addition to Meta, which other public tech companies in your opinion fill the AI basket?
Got it, it’s because I recently invested heavily in the Innovation Fund, and I write about my experiences in real time. If you hang around, I’ll write about new experiences as they come.
What are some of the things you are investing in? Do you have a concern about AI disrupting your future or the future of your children? Unfortunately, this is my main concern going forward and I’m trying to figure out solutions.
I own all the magnificent seven stocks, for an average holding period of about 12 years. I’d love to learn more about you and what you are doing to make this a collaborative environment.
Thanks!
What do you think is the reason why you cannot focus on the topic of the post – the reality of needing to invest a lot of money to make a difference? Rather, you focus on what Sam is investing in. And yet, share nothing about how you’re investing and how you plan to build wealth for the future.
Sam has been transparent in that Fundrise is one of his Clients. They pay him to advertise on the platform. I don’t think they are paying him to invest in Fundrise and sharing with us that he is investing, it is great, etc. At least I have not heard him state that or that there is some quid pro quo. I think he legit wants to get in private equity and Fundrise is a way to do it.
What do you mean by “major bend” in philosophy? I’m also a regular reader and don’t follow what you’re eluding to. I agree with Sam that it’s natural for topics to change with the times and also what’s happening in his life. We can all agree that life does not go in a straight line. Personally I love the way Sam brings his own personal experiences into personal finance topics. That’s what makes his blog so unique and fascinating to read. Very few people are willing to lay out their cards publicly, expose wounds for the sake of helping others learn and not make the same mistakes, and also sharing wins to back up his beliefs. This is what makes Sam awesome and I bet what also has led you to be a regular reader of his work too.
I think what Dave is referring to is as Sam’s wealth has grown, and he writes what is relevant to his experience, some of his goals are a bit less relatable to some folks. I have a 10M net worth and never made a big outsized bet. Frankly I can’t imagine having three houses in San Fran. But again I am 61 and built most of my wealth the old fashion way – consistent DCA, mutual funds, nice boost from co-ownership in a firm. I didn’t have a goal to retire in my 40s or maybe I make that big bet. I find his writing insightful and fascinating. I like learning from someone who is much more comfortable with risk but yet not dumb risk. I have always been pretty conservative.