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“What would you do if this was your house?” I asked my gardener this question a few weeks ago. I needed some work done, and he provided me with three different options. I wasn’t interested in learning the intricacies of how different lines will be put down. I wanted to know the bottom line. What would you do if this was your house?
Opinions are everywhere in the financial services industry. You can have the same person say one thing on TV on Monday and a completely different thing on Wednesday. And that’s okay. People are allowed to change their minds. But I don’t care about your opinion; I’ve got my own. I want to know how you actually invest. Are you making decisions with your own money based on what you just said?
Nassim Taleb once wrote, “Don’t tell me what you think, tell me what you have in your portfolio.”
Well, thanks to Josh Brown and Brian Portnoy, we’re gonna get some answers. In How I Invest My Money, Josh and Brian deliver to the audience, not opinions, but actual portfolios. They got some of my favorite writers and investors in the financial services industry to write a chapter about how they invest their money. Christine Benz, Tyrone Ross, and Perth Tolle, to name a few.
Today, I want to share with you how I invest my money.
Most of my investments are automated. I can’t trust myself to make decisions in the heat of the moment. Stocks go up? I buy. Stocks go down? I buy more.
My automated investments happen in three different accounts.
- Every other week I’m buying stocks in my 401(k). That’s a blend of domestic, international, and emerging markets. I use the same funds we recommend to our clients.
- Once a month, I invest in my Liftoff account, a taxable account powered by Betterment.
- Once a month, I invest in Titan, an automated asset manager, much like Betterment. Unlike Betterment, they pick individual stocks. Ben and I had them on the podcast last year if you’re interested in learning more about them.
To give some context for how much money goes where, for every $10 I invest in my 401(k), I put $6 into Liftoff and $3 into Titan.
Not all of my investing is automated. I have a play account where I pick stocks. I’m not trading. I’m building positions in a combination of what I think are stocks for the future and some beaten-down value stocks. I like to think of this as a tortoise and the hare portfolio. I have zero expectations of beating the market. This is purely for my own enjoyment.
I am all in on automating your investments, and I believe that the stock market offers the best long-term returns. However, my entire financial future is tied to the stock market. Between my ownership stake in Ritholtz Wealth Management, which is my largest asset by far, and my 401(k), I will go where the stock market takes me. For this reason, I have been diversifying into other asset classes.
On Animal Spirits, Ben and I have spoken to companies like EquityZen, MasterWorks, FundRise, and Edly. I’ve invested in all of them.
EquityZen gives investors the opportunity to access private companies before they go public. This is not seed investing or even series A, it’s companies that are already real businesses and are on track for an IPO. I have no desire at this point to invest in individual names, so I invested in a fund that EquityZen manages.
MasterWorks allows you to invest in Art, an asset class traditionally only available to wealthy people. The global art market has a long history of delivering attractive risk-adjusted returns. That said, each painting has its own idiosyncratic risk that I know nothing about. I am speculating with this money.
Edly allows you to invest in income share agreements or ISAs. An ISA is a contract where a college student borrows money for their education, and in exchange, they agree to pay it back and then some from their future earnings. Edly focuses on potentially high-earners from top schools all across the country.
FundRise gives investors access to private real estate, another investment that typically had high minimums and, in many cases, high fees. From commercial properties to new apartment developments, I have access to different areas of the real estate market in different areas of the country.
Lastly, and I hesitate to share this, I have been buying Bitcoin. My first purchase was on June 2, 2020. My thesis for owning Bitcoin is simple. Some of the smartest people in the world are bullish on it. That’s it. I didn’t buy it sooner because some of the least intelligent people in the world are also bullish on it. It was hard for me to square this circle. I bought an initial chunk in June and have been buying every week since then. I’m not a zealot, no predictions of $100k, but it’s an asset class that is about as far away from the stock market as possible.
All of these alternative investments have come about as a result of what’s happened to interest rates. With “high yield” savings accounts offering 0.6%, I didn’t see the point of having so much money earning basically nothing. I still have some money there in case of an absolute emergency, but there are plenty of other accounts that I can draw from in the event of something going bad.
So that’s it. That’s how I invest my money.
The only part of this set in absolute stone is what I’m doing inside my 401(k). I plan on buying stocks every two weeks for a long, long time. As far as everything else goes, we’ll see. I view all of the alternatives as speculative, pure and simple. Meaning, I will not invest any more than I can afford to lose. If it goes to zero, sure I’ll be annoyed, but it won’t change my financial situation in any way, shape, or form.
Congratulations to Josh and Brian. I can’t wait t read the book.