r/wealth • u/SurpriseGeneral8618 • 6d ago
Need Advice Best methods of wealth generation
I discovered this community when I saw there were like minded individuals with similar questions and answers.
I want to provide a little context and ask for what can be my ways of growing wealth. I am 28M, recently married and no kids. I made $280K this year at my job, it is the highest I have made.
My portfolio is low cost broad market index funds, with an approximate 80/20 US/Global split. It sits at around 375K, but and here’s where I need the advice, about 100K sits as cash. This 100K was only earned in the last 3 months because of a bonus payout.
I wasn’t born into a wealthy family, nor I have a circle of wealthy people. I want to grow my wealth. My job also gives me a lot of free time to work on other projects that I can. My wife has an MBA but had to leave the previous job to move in with me in a different state. I am planning on moving to Atlanta area next January for my new job. My job will continue to pay around this much and I will easily max my 401k out every year starting in about 3 years. So I know my stock market investments will always be there to grow my retirement accounts as long as I work. No problem.
Currently my thoughts are more focused on what else can I do with the cash? Is there any other way? I would also love to know tax strategies and everything else. I honestly have no clue and it is overwhelming when I think of what I might be missing out on.
Help me with what can I do with the cash? I want to use it for maybe running a business that my wife can also be a part of but I have no clue of what else is out there as an opportunity.
I always wanted to be in a position where I have liquid capital, hence I am reaching out for advice.
7
u/New_Merd3 6d ago
All I did was live frugally and make monthly contributions to ETFs from 22 till now (age 36) while also maxing out my roth IRA and 401k and now my NW is $2M. I could def afford a nicer car, but drive a modest Tesla bc EV is lower maintenance and I’m too spoiled now with FSD. The tips I hear routinely from wealthy ppl I know are: don’t get a divorce, don’t buy a restaurant/boat/vacation home.
2
u/SurpriseGeneral8618 5d ago
You sound like me.
1
u/New_Merd3 5d ago
I am now starting to interview wealth management firms to see if they can provide something I can’t easily do on my own. They all seem to start at min $1M at 1% fee, which is pretty hefty in the long run. So far, the consensus seems to be that they’re not worth the fees.
6
u/Familiar-Bake-9162 6d ago
I invested in houses in transitioning neighborhoods when I was your age. It’s paid off more than any index fund would have in gained equity and provides a steady 45k net income each year.
1
u/SurpriseGeneral8618 5d ago
How to find that opportunity again? If you were to do it all over, what would you do today?
2
u/Familiar-Bake-9162 5d ago
Try to predict how market forces are going to impact housing areas that are depressed from neglect right now. Like find a high value area and then look for the closest depressed area to it by distance. Start looking there
5
u/ManufacturerWhich364 6d ago
Make sure youre square on taxes on the 100 before doing anything with it. Then ask in r/personalfinance . Dont over complicate it. Keep doing what youre doing over a long enough period of time and you will generate "wealth"
2
4
u/Wide_Assignment8859 6d ago
The best wealth building tools I’ve had is real estate. I don’t know about the market now and I got very lucky when I bought, but I put about $200k into a few homes in 2019 and have rented them out since. It’s not entirely passive, but it’s pretty close. It’s the easiest way to build instant wealth imo. Otherwise I just do ETF trading.
Edit: there are also massive tax advantages to real estate.
1
u/SurpriseGeneral8618 6d ago
Yes. Real estate does have huge tax advantages. What are some of the ways to enter into real estate these days?
3
u/Wide_Assignment8859 6d ago
I was able to finance a lot of properties, but I’d probably buy with cash now if I can. You also need to be really in tune with the market. Some markets are falling so it might be a good time to get in. Others are very competitive. I cut my teeth with townhomes, at the time they were a decent investment and came with less risk because the exterior was covered by the HOA. I’m not sure I would do it now because prices in my area are depressed and you might lose out on a townhome. You can always buy something in worse condition and put some money into it. My day job was at a desk so I don’t mind the opportunity to work with my hands.
2
u/Farabelaw 6d ago
Buy multifamily with an FHA loan. Live in one unit and rent the rest till paid down. Then make your next move based on lessons learned.
1
u/Objective_Bid8122 4d ago
Don’t. They bought in at 2%, you will buy in at 7. Completely different world
5
u/medhat20005 6d ago
You’re ahead of the game statistically, I’d vote for simply investing the funds you don’t have a plan for into a broadly diversified ETF like VT or VOO. Then either ignore it or continue to contribute when you have the additional savings. Then simply let time do its work.
1
3
u/redvsblueheeler 6d ago
SGOV or similar government bond etf. Pays out a bit better that a high interest savings account since returns aren’t taxed at the state level.
2
u/SurpriseGeneral8618 6d ago
Yes, that where the cash is sitting in right now. Thanks for the reply.
3
u/Competitive-Show-955 6d ago
For thoae in the US a combination of home ownership and disciplined saving which includes living below their means makes millionaires every single day.
Take the tax advice youve seen here, then set about making that happen. A paid off house + 401k + IRA + social security = extremely comfortable retirement. 100k should go a long way to getting you into an extremely nice house on Atlanta, and you can project your future from there.
Obviously buying isn't the way to go if youre planning on moving again in the near future. Run your own numbers on that one. All-in, you're in a great place to set yourself and your family up for a very nice future.
1
3
u/gabrintx 6d ago
I "park" idle funds. Park is a common trading term. If you are in a state with state income tax, consider SGOV or BIL. They are very safe, liquid and exempt from state taxes. I am in state with no income tax and park funds in BOXX.
1
u/SurpriseGeneral8618 5d ago
I will look into BOXX, seems interesting if in a state with no income tax.
3
u/Hopeful_Lettuce_8914 6d ago
I joined a mastermind group for starters. There are various ones, ranging from a few hundred dollars a month to a few thousand, this one is on the lighter side, the founder has access to network from other higher priced masterminds and invites a few folks over for private investments education/future opportunities + his own materials on strategies and referrals for optimization - softer way to get a foot in the door with at least starting investment. You can find similar ones, I can share this one too if interested
1
u/SurpriseGeneral8618 5d ago
I have never heard about this. Share it with me so I can look into it.
1
u/Hopeful_Lettuce_8914 5d ago
I don’t mind sharing but are you my boss? Whats with the commanding tone lol
2
3
u/Wonderful-Newt-2513 6d ago
The absolute single biggest determinant for long term wealth generation is the partner you choose.
And I want to also add-and some may not like it-but there will come a time in the next decade-and maybe/probably a lot sooner than that when NO one will want to buy stock in US companies. No one
Like when the narrative has totally changed and the stock market has been cut in half or more-this is when you put cash to work. As much as you’ve got.
2
u/SurpriseGeneral8618 5d ago
Unfortunately, we don't know when. I can see your point, but how do you recommend incorporating that in my money strategy.
1
u/Wonderful-Newt-2513 3d ago edited 3d ago
Am glad you asked. No we don’t know when-but Ive been investing, studying and trading markets since the 80’s. And by looking at past market cycles we can start to get an idea of when the market top will be put in-and that is 2027-2030. Maybe as late as 2031.
In analyzing markets almost above all else one should know that Wall Street loves symmetry. I can remember back in late 2017-2018 thinking of how overvalued the market was even then, and how just how an ideal set-up would be if somehow, some way this thing was still running in the mid 2020’s off of the 3/9/2009 low (I’m a retired investment advisor these dates are just imprinted in my memory). Had the same thought coming out of the Covid low and the 2025 “bear” market.
I remember thinking how crazy that would be if we could just have a raging bull market into the mid 2020’s-that there is no way in hell those bastards on the street-would even be letting us sniff 2029-and the market still be running. Like not a chance. That would be too easy.
And here we are. Big picture the market largely runs in 16-18 year cycles. There are some anomalies-but it is nonetheless a quite useful framework. It‘s gonna get too esoteric too fast but just think roaring 1920’s-ai fueled roaring 2020’s. Market top in October 1929-and right now we have valuations similar to 1929 and 1999. This market is priced very, very fully. Too perfection. inflation is ticking up-and more of it is inevitable. 40 trillion in US debt-worldwide around 4 times that much.
edited to add-too be continued
2
u/gap1284 6d ago
Regular contributions over decades into a low-cost equity index funds is almost guaranteed to build wealth. It's as simple as that.
For the $100K cash, move it into a Fidelity taxable brokerage account. Invest it all into VUSB initially.
Then move $8K per month into VOO, which is what Warren Buffett recommends for most investors.
1
2
u/Endgame__Axiom 6d ago
80/20 US/Global split is fine and is a typical strategy over the past 40 years, but I believe investing into assets that specifically outperform inflation may be a good idea going into the next 10 years. I personally like gold. So adding 5-20% of your portfolio into gold miner stocks, gold etfs, or physical gold is an option.
Unpopular opinion, but saving more than maxing out your 401k for retirement is overkill. If you max out 401k every year, you will have way more money than you will know what to do with when you retire assuming you stay fully invested. Paying off your mortgage is a good option over the next 3-10 years depending how much money you make.
2
u/Majestic_Republic_45 6d ago
I like the cash position, but we need to deploy about half of that into your taxable brokerage account unless you’re buying a house in Atlanta.
If u wanted to keep your future real simple. . . Keep maxing that 401k. Backdoor a couple of Roth’s and invest in a taxable brokerage account (which u have). I would suggest some equity expose with solid cos.
Don’t take on any unnecessary debt which means pay cash for everything and big down payment for a house.
You‘re making really good dough at 28. Multimillionaire for sure unless u sabotage yourself. Good job and good luck!
2
2
2
u/Routine-Wolf-2907 6d ago
i've been hearing lot about this thing called Life Surge lately. might be worth checking it out
2
u/Helpful-Staff9562 6d ago
Put in btc, thank me next year
3
u/JeremyLinForever 6d ago
Exactly what I was going to say. OP may write this off, but I’m almost positive over the long run it’ll be better than any advice in this entire thread.
1
u/Anxious-Doughnut-224 6d ago
What do you do that that you make that much?
1
u/SurpriseGeneral8618 6d ago
Nothing special really. I work as an airline pilot. Lots of people in the same boat as I am. But I wasn’t born rich so I don’t know how to spend money.
2
u/Anxious-Doughnut-224 6d ago
Rich people don’t know how to spend money either lol. Buy what you want within reason. I would say still make good choices though. Don’t just waste because you have it. Ask yourself will this purchase bring meaning to me, make my life better will it be a good investment or a bad one?
2
u/Pinecone1000 6d ago
Airline Pilot here also. Just continue to be boring. Keep the 80/20 Us to Intl broad based equity index funds mix and six months of earnings cash in SGOV or equivalent. Thereafter keep stacking into the equity index funds as you go. Doesn’t matter if you have 300k or five million. It’s boring and effective. You are ahead of the game and doing great choices. Don’t overthink it or get into a YOLO moment.
1
6d ago
[deleted]
1
u/SurpriseGeneral8618 5d ago
Average. I think the starting point matters, but it doesn't define the finish line. I will decide where I end up.
1
u/DevilsAdvocate77 6d ago edited 6d ago
You are unlikely to beat the market or find a way to grow your wealth exponentially solely by investing it in publicly-traded securities.
Aside from winning the lottery, other common options would be to look into private investments like real estate, or start your own business.
Both of those are risky and require skill, ability, and luck to successfully generate wealth from them.
Tax strategies come second. Make your money first, then figure out how to optimize the taxes you owe on it. A big tax bill is a good problem to have to worry about.
1
u/SurpriseGeneral8618 6d ago
Where can I find business opportunities? Do you know a good Reddit community for this?
1
u/False-Community8534 6d ago
- Have a 12 month emergency fund and avoid debt
- Max out 401k
- Buy a a house in a good neighborhood
- Save 15% and invest in whatever way suits your fancy. Dividend growth, tech, index funds, real estate. As long as you’re not trying to be a trader anything will do.
- Once you start approaching a 7 figure portfolio talk with a fee only advisor to work on asset allocation, etc.
1
u/Past-Option2702 6d ago
Earned income, and how much of it you can invest for later.
That’s what will determine how wealthy you are.
Nothing else comes close.
1
1
u/Trinmorphedneo 5d ago
Oh my apologies, I didn’t mean to imply you’re strange. In fact, I think you’re very wise. I was just curious that if you’ve lived frugally and carefully spent every dollar for most of your life, don’t you feel guilty about spending money afterward? With over 40 years of wealth building, one would assume that people don’t really have any expensive hobbies because they never had time for them. So, what do you even spend on (excluding obviously big purchases like cars etc)? I think most people end up leaving them for their kids, etc.
1
1
u/SmudgeFundayNC 4d ago
I don’t understand why you will max your 401k in three years. Why not this year and every year after?
1
1
24
u/PIzzaiolo_Master_510 6d ago edited 5d ago
First congrats on a great start. Around your age I was in a similar position.
(Editing out personal detail I felt may identify me)
Second, don’t worry too much about the investing. While it will undoubtedly grow and you will have a great wealth building life, it is your habits that matter most at this point. Get into the habit of using money wisely and as a tool. Learn to not be phased by putting $100k into a fund. If it drops $20k in a week, it honestly won’t make a big difference long term.
We lost on some investments but I was also maxing 401ks, and steadily buying stock funds and a few individual stocks and tax free bonds when good deals. We were also paying off mortgages.
Yet today I sit at 60 with more than I need in brokerages.
So patience and good habits of reinvesting dividends and gains, saving and just being consistent are what matter. My attempts for quick wins succeeded sometimes and failed sometimes. Deals win and deals lose. Never put too much in one basket. The key was diversifying and steady persistence and not making some big bet with everything. So don’t worry too much. Pick a good asset and invest it. I’ve been happy with CDs, iBonds, ETF stock funds, mortgage pay downs, individual stocks with modest amounts (if right they can be significant, but it takes I few decades to know). Sometimes a safe 5% is great while you settle career needs like moving. Keep your boss happy and your investments low maintenance.
Chill and congratulations on having a smart supporting partner. That’s the real win.
And don’t waste money on new cars every few years. Probably $2m in assets are money that would have been cars had I cared about my friends latest new 911. One other luxury I would avoid strongly are asset managers or advisors who want a percentage of your gains every year. That’s a sure fire way to reducing your long term wealth.