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  • #16
    Originally posted by White.Beard.Doc View Post

    It is my understanding that they are all in on real estate, meaning all of their eggs are in that one basket. But just the same, she and her husband have devoted 100% of their energy to mastering everything real estate. So their personal advantage over others in the market is based on deep knowledge combined with unfathomable commitment. They are able to generate massive returns in real estate that they could not achieve investing in the stock market.

    Elaine bought a cheap house in Oklahoma City when she was a very young adult. It was cheaper than renting, and she simply did what she did as a young single person. She had no intention of becoming a real estate entrepreneur at that time, but that ended up being the path that her life took. She still owns that house today, and it is occupied by her tenant.

    Elaine is a friend, and she is one impressive young doctor/entrepreneur.
    I'm definitely of the more stock/bond persuasion than RE, but there's no doubt that RE can get you there faster because there's more risk, work, and leverage involved. It'll be interesting to see for me whether i take it up for not, it seems much scarier than simply investing in retirement and taxable accounts. That said, i'm surprised they haven't taken advantage of their retirement accounts! With that net worth it wouldve been awfully easy to max those out every year.

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    • #17
      Originally posted by White.Beard.Doc View Post

      It is my understanding that they are all in on real estate, meaning all of their eggs are in that one basket. But just the same, she and her husband have devoted 100% of their energy to mastering everything real estate. So their personal advantage over others in the market is based on deep knowledge combined with unfathomable commitment. They are able to generate massive returns in real estate that they could not achieve investing in the stock market.

      Elaine bought a cheap house in Oklahoma City when she was a very young adult. It was cheaper than renting, and she simply did what she did as a young single person. She had no intention of becoming a real estate entrepreneur at that time, but that ended up being the path that her life took. She still owns that house today, and it is occupied by her tenant.

      Elaine is a friend, and she is one impressive young doctor/entrepreneur.
      But the way they are doing it is also a full time job. Which is fine, if they enjoy it. The bogle heads approach is about as passive as you can get where they are as active as you can get.

      Arguably, they would be able to make more with a passive approach and doing the careers they trained for (psychiatrist and whatever tech stuff he does). But this way gives them more flexibility with their schedules—but probably not much more time off.

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      • #18
        There are a lot of experts and masters out there when everything is going good and prices are going up.

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        • #19
          Originally posted by Anne View Post

          Arguably, they would be able to make more with a passive approach and doing the careers they trained for (psychiatrist and whatever tech stuff he does). But this way gives them more flexibility with their schedules—but probably not much more time off.
          I sincerely doubt that they could make more doing their doc and tech work compared with what they have achieved with their real estate ventures, but I would also assume that they are among the top tier of successful real estate investors.

          As far as their time commitment, you are correct. Although they run their own business and don't report to anyone other than themselves, they work incredibly hard with long hours building their real estate business. If their success continues, they will build far more wealth with their real estate empire than they could have built with more typical, traditional medical and IT careers. That is the choice they have made and the life path they have chosen.

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          • #20
            The fastest path to wealth generation is concentration of either personal capital and financial capital. Leverage on either magnifies the returns.
            Diversification or a decrease in concentration of either lowers risk. This is the technique of serial entrepreneurs with the added skill of cashing out.

            The problem is that much is being in the right place at the right time and doing most everything right. Tough to emulate, though.
            Sounds like they concentrated investments of both and used leverage and have survived the "eviction moratorium. Good for them.

            Cities have cycles too. Think Kodak in Buffalo and the auto industry in Detroit. Sounds like they would pull the plug when needed. Some don't and some don't need to.
            Some get creamed. The point is every plan and business works until it doesn't. I hope they continue to be fortunate.

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            • #21
              Taking highly leveraged real estate positions (on 180 properties), doesn't seem to be wise way to build wealth. Like the saying goes, everything is fine..right up until the time it's not. Not a great ROI on the medical school and residency either.

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              • #22
                Kamban
                Physician
                Kamban These episodes are like 15 minutes long. Still easy to listen to at 1.5x (although there was one that was pretty exhausting at 1.5-- this wasn't it).

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                • #23
                  Originally posted by Brains428 View Post
                  Kamban
                  Physician
                  Kamban These episodes are like 15 minutes long. Still easy to listen to at 1.5x (although there was one that was pretty exhausting at 1.5-- this wasn't it).
                  Rookie, I’m 2x for life!

                  I agree with the general sentiment here. I’m 100% equities, but I plan to start adding bonds in as my NW increases. Our portfolios is a little under 400k (in my 4th year as an attending). The reason we’re 100% equities is because we don’t have that much to lose if stocks go down and stay down. When we have a multi seven figure portfolio, that will hurt a lot worse. She has a lot to lose. I can’t imagine a 30% decline and knowing I’m upside down on an 8 figure portfolio when I had 5M a year before.

                  She’s won the game. Delevering would certainly decrease her returns, but the question is what’s a bigger sin: losing everything or giving up many million in wealth later in life. I would argue former.

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                  • #24
                    Good for her and her husband. Think I'll stick to boring and passive wealth building for now. I work hard enough during my day job.

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                    • #25
                      Originally posted by VentAlarm View Post

                      Rookie, I’m 2x for life!

                      I agree with the general sentiment here. I’m 100% equities, but I plan to start adding bonds in as my NW increases. Our portfolios is a little under 400k (in my 4th year as an attending). The reason we’re 100% equities is because we don’t have that much to lose if stocks go down and stay down. When we have a multi seven figure portfolio, that will hurt a lot worse. She has a lot to lose. I can’t imagine a 30% decline and knowing I’m upside down on an 8 figure portfolio when I had 5M a year before.

                      She’s won the game. Delevering would certainly decrease her returns, but the question is what’s a bigger sin: losing everything or giving up many million in wealth later in life. I would argue former.
                      i'm 100% equities as well
                      i don't think you should add bonds based on NW i think you should add bonds based on age
                      if you have a time horizon you are likely going to be fine

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                      • #26
                        Originally posted by MPMD View Post

                        i'm 100% equities as well
                        i don't think you should add bonds based on NW i think you should add bonds based on age
                        if you have a time horizon you are likely going to be fine
                        I know common sentiment is to add bonds based on age; I realize I’m the outlier, but I think it makes a ton more sense to add bonds based on percentage of FI. I just think it makes more sense.

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                        • #27
                          Originally posted by VentAlarm View Post

                          I know common sentiment is to add bonds based on age; I realize I’m the outlier, but I think it makes a ton more sense to add bonds based on percentage of FI. I just think it makes more sense.
                          I am not sure I follow that logic

                          Bonds add safety.
                          Bonds have less growth potential over time than stocks.
                          Bonds are useful when you want to start withdrawal of money.
                          If you are 4 years out of training, you should be planning to work for an average of 15+ years and not think of withdrawing from your investments in that time frame.
                          Adding bonds within that time frame will only stunt growth of the portfolio without serving any specific purpose.

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                          • #28
                            Originally posted by Kamban View Post

                            I am not sure I follow that logic

                            Bonds add safety.
                            Bonds have less growth potential over time than stocks.
                            Bonds are useful when you want to start withdrawal of money.
                            If you are 4 years out of training, you should be planning to work for an average of 15+ years and not think of withdrawing from your investments in that time frame.
                            Adding bonds within that time frame will only stunt growth of the portfolio without serving any specific purpose.
                            I realize I am a bit of a contrarian in this regard. The way I see it, if I got an unexpected inheritance today worth 10M, I would immediately change my allocation to 60:40 even though I would like to keep working. I understand that the expected growth would be lower, but, at that point, I have won the game and am more concerned with making sure I stay FI than maximize long term potential. Yes, my risk capacity would be high, but my need for risk would be low. Time to retirement/agility to take risk is only part of the equation.

                            I forget if it was on WCI podcast or one of the other financial podcasts I listened to, but I distinctly remember listening to someone who had 10M in tech stocks that blew up. When asked if increasing NW to 20M would have changed their life at all, the answer was no.

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                            • #29
                              Originally posted by VentAlarm View Post

                              I realize I am a bit of a contrarian in this regard. The way I see it, if I got an unexpected inheritance today worth 10M, I would immediately change my allocation to 60:40 even though I would like to keep working. I understand that the expected growth would be lower, but, at that point, I have won the game and am more concerned with making sure I stay FI than maximize long term potential. Yes, my risk capacity would be high, but my need for risk would be low. Time to retirement/agility to take risk is only part of the equation.

                              I forget if it was on WCI podcast or one of the other financial podcasts I listened to, but I distinctly remember listening to someone who had 10M in tech stocks that blew up. When asked if increasing NW to 20M would have changed their life at all, the answer was no.
                              Easy to say that kind of stuff after something dumb happens, and its probably not realistic either.

                              No one is forcing you to take your money and concentrate it somewhat recklessly in a few bets.

                              Bonds are low, and there is the possibility of inflation on the horizon, not a good scenario for real returns (these forecasts could be wrong ofc and arent necessarily mine).

                              With bonds you can easily predict your return, its not hidden or up for speculation, it will almost certainly return you the coupon/yield over the duration. Not difficult.

                              If you can, you should be much more into equities, especially if you're younger. 60/40 sounds great but was devised in an era of massive coupons and has worked great because rates have fallen for 40 straight years. Sure they could fall some, but without committing to violating the zero lower bound they cant go crazy.

                              I add or decrease bonds tactically based on where they are relative to what seems reasonable over the longer term, which is def beyond what people here want to do. Even then when bonds gained in June I didnt sell bonds (cuz i didnt have any) I instead bought banks, which has a double tailwind of does well if economy good and will gain from an increase in rates, which they did.

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                              • #30
                                The way i see it there's the "are you going to flip out factor" and the "can you literally survive a loss" factor. Flip out factor may mean you need more bonds than "recommended" no matter your age, can you survive factor seems like a function of how much money you need to avoid dining at petsmart AND how much human capital you have left.

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