Investment Strategies

Author Note

Part One: 23 Years Old

Part Two: 45 Years old

Part Three: 62 Years Old

Part One: 23 Years Old

For my job, I would be a Real-Estate Appraiser. This would be after I obtain my Master’s Degree (in Finance, at Wilmington University) in five years after my graduation from high school. As a trainee-appraiser, I’ve made $40,000 before taxes. Since I would have my Master’s degree and would be a certified residential appraiser in New Jersey. Typically speaking, I would be working relatively close to both Philadelphia and New York City. I would assume that my salary would be $60,000 (before taxes). After taxes, my net income would be $48,000 (approximately 20% of my income was taxed). Per month, I would be clearing $4,000. Out of the $4,000 monthly budget, I would need to set aside money towards my expenses. According to my budget as of right now (and it wouldn’t be any different than it is now), my expenses are between $1,900 and $2,400.

On average, my bills are about $2,000 a month. This leaves me with $2,000 a month to work on an investing budget.

Out of the $2,000 budget, I would diversify my monthly investments into my own mix. The saying I abide by is “The youth have more opportunity to invest when they are young, while the old need to be conservative”. Knowing this, I would take it a step further. Breaking down my investment plan (while knowing what I know now), I would tailor my plan towards the investments that I believe in the most.

The average plan for a young (18-34 year old) person, a middle-aged (35-50 year old), and Peak/Retiree (51-65+) is to diversify into Stocks, Bonds, REITs, Alternatives, and Cash holdings. It just differs by the age groups.

The percentages are normally as followed:

Although this might work for young, novice, investors; this just doesn’t work for me. As I stated in my blog post, “Invest in what you know”. I know, understand, and follow cryptocurrency to a T. I would include cryptocurrency as an “Alternative”, or simply an equity. I would keep at least half of my investments in cryptocurrency. Here is an accurate representation of my ideal situation (because the situation takes place in 2021):

The reason that my ‘stocks’ and ‘bond’ percentages are so low is that I do not have any confidence in either of these markets. Sure, they’ve made plenty of people great fortune; but, they are both at a time in history where they are doomed to fail. Interest rates are extremely low, and personally speaking- Jerome Powell is too old to handle all of the innovation that is coming to the financial industry. I firmly believe that the petro-dollar is on its last leg, hence my position on investing 2.5% into it (no more than $50 a month). The stock market used to be a bigger priority; however, I wouldn’t invest more than $150 a month in no more than two revolutionizing companies (Fin-Tech companies, Marijuana corporations, technology sector, or anything else that presents a solid fundamental base). Together, these two areas will take no more than $200 from me each month. Next, REITs (Real Estate Investment Trusts)/Real Estate would account for 25% of my investments per month. This is about $500 every month. The main reason for a higher-than-usual investment into the residential/commercial estate markets is because I invest in what I know. Real Estate has been a great successor in my family. It is also worth mentioning that I am currently a licensed trainee appraiser. With the markets, material, and labor booming, it is foolish to stray from real estate.

Moving onto the alternatives/equities market, I would go on a limb and invest half of my investments into an abundance of different asset classes. Doing the math is equivalent to $1,000 a month. This would include (and not limited to) metals, collectibles, automobiles (Yes, I realize that they are depreciating assets. I will explain this in detail), and cryptocurrencies/digital assets.

First, the metals markets are known mostly for their security and their scarcity. Typically, I would invest 2.5% ($25) into a fixed asset portfolio. $10 would go into silver, $10 into silver, $2.50 into copper, and the remaining $2.50 into the fluctuation of the Gold-to-Silver ratio. More detail about the remaining $2.50, if the ratio goes up (in Gold’s favor) from 17:1 to 20:1, I would invest $0.30 into gold, and $0.10 into silver. This is because the ratio went up in Gold’s favor by 3:1. The same rules would apply if the opposite were to happen, -3:1 would result in $3 into silver and $1 into gold.

Second, collectibles/NFT’s (non-fungible tokens) are rarities that hold significant value in any market. The market I would like to specify is the sports card industry. Football, baseball, and basketball cards typically appreciate in value. I would invest 0.5% every month ($5), and I would set aside a budget for these cards, and buy/evaluate my profits/losses every quarter (March, June, September, and December) to adjust my strategy.

Third, I would invest 7% ($70) a month into my personal side hustle: automotive sales. This is a big successor for me. Although $70 a month isn’t going to get many people that far, there need to be two things for this budget to work: an established bankroll and cash-on-hand. The bankroll needs to cover five years’ worth of my budget. According to this budget, I need to have a bankroll of $4,200 (either in a car’s value or cash tied to my automotive bank account). The cash-on-hand needs to equate to the same amount as the bankroll. If done correctly, I should have about $8,400 before I even start my side-hustle, while funding myself $840 every year (paid to myself quarterly). The reason that I list automotive income, a depreciating asset, as an investment is that I’ve continuously proven every doubter wrong. I buy certain makes (Toyota, Honda, and Nissan; along with their sub-companies) and models of cars that are known to succeed while staying within a 10-15 year range (the range is because the demand is lower for a car that is more than 15 years old (due to rust and antiquated technology); while cars made within 10 years are usually (not always) overpriced). When investing in cars, it is all about finding the best value for the money. My knowledge of profiting off of automobiles is so prominent that I am currently in the works of writing a book.

Lastly, cryptocurrency is the majority of my alternatives/equities portfolio. This will account for $500 a month of my total portfolio. Regarding my portfolio, I've essentially created a healthy net-worth through digital assets (first known as Bitcoin, or simply, cryptocurrency). In fact, the majority of my net worth is not in a savings account but is in cryptocurrency. Not in the highly volatile cryptos, but in coins called stable coins. For example, USDC is pegged to the US Dollar. Essentially, they are the same thing, except the digital dollar is traceable with better APY, while a traditional savings account is essentially useless (regarding incentives, you would be lucky to earn .5% APY (after all of the fees associated with having a bank account). Basically, I use cryptocurrency/digital assets to get rid of the middle-man, simply known as the banks. If you want to take it a step further, there are plenty of ways to keep your investment stable and safe from inflation, middlemen, and other fees associated with holding fiat. For instance, staking coins, farming coins, mining coins, and Defi alone have revolutionized an obsolete industry. Bitcoin has allowed me to reach financial freedom alone while maximizing capital gains by re-investing in other cryptocurrencies (known as alt-coins). These alt-coins play a huge factor in my successes. I plan on continuing my dollar-cost averaging with some of my favorite tokens: XRP, HBAR, QNT, POLY, XDC, ALGO, ZIL, and VET. Although I live by a '20-investments-per-lifetime' rule, the fact of the matter is that there are so many projects that have insane potential; they are simply disruptive to the whole financial system. By 2040, there will be textbooks that name this era the "Fin-Tech Revolution". Anyone that spreads FUD (fear, uncertainty, doubt) about the crypto-space is simply misleading because they are either uneducated or they are doing it for their own personal reasons. One solid argument that I always state (and never hear a rebuttal) is the total market cap of cryptocurrency is over 2-trillion dollars. If the government (or any higher authority) wanted to shut it down, they would've by now. The key is that they cannot. Blockchain and the majority of digital assets are decentralized; unlike the banks and the stock market. Sure, there are still some flaws in the ecosystem; but, as technology advances (as it has been exponentially for the past 15-25 years), so will the crypto-space. It is 2021, we are still considered the "early adopters" of the space. Imagine the crypto-space is a party; you are one of the first ten people to show up out of 100 people that were invited. It is never too late. 2040 will still bring on plenty of value.

Part Two: 45 Years Old & Part Three: 62 Years Old

If you made it this far, congratulations! For the sake of keeping this assignment under 10 pages, I am going to lock in all of my types of investments. The difference between the first part and part two/part three is that I will allocate my money differently. I will also change the variables of a couple of figures.

Let it be known that I plan on following Warren Buffet’s footsteps (regarding his change of lifestyle). In other words, if I buy a house, it is going to be the same exact mortgage payments as my current rent payments. If I am married, that means I will be supporting two people (as head of the house); however, I will also cut my current monthly expenses.

Basically, I am stating that it is completely possible to keep my current monthly payments the same at age 45 as it at 23- $2,000 a month. I would assume that my salary is $90,000 a year. After taxes, my salary would be $75,000. This means that I will clear $6,250 every month at age 45. The same allocation percentages will apply for the “Alternatives” subfigures. Instead of investing $2,000 a month, I would be investing $4,250 a month.

Rolling out the same budget, I would be making $180,000 a year at age 62. I would then clear $150,000 a year. This equates to $12,500 a month after taxes. After $2,500 a month in expenses (following the Buffet method + a late child), this comes out to $10,000 to invest.

The investment types would stay the same, just the allocation would point to a more conservative portfolio. Here are my allocations for each portfolio class:

Let it be known, no matter what my portfolio balance is, it will always be $0.00 at every age group. Why? The same reason as sports players coming back for the second half; it is a psychological preference. For the terms of this assignment, I would have made $1,000,000 for each section of the assignment. This is going from 23 to 45 and 45 to 62.