The Lone Star Perspective

by Matt Magee at mForce Capital​

This post went viral and looks great on paper. One, I believe these are almost always made up. Two, his math doesn't add up. He is spending $35 million, but the "guy" receives $34 million.

Here is my actual analysis and why Social Media is often a terrible place for financial advice.

Putting $25 million into VOO and QQQ is a terrible idea. These funds overlap significantly and give you no real diversification. I get the idea, but wrong execution.

There are so many better ways to handle this. If you want to hear more ideas, reach out.

$5 million into a home. It's a huge home, but alright. I won't argue with that. It's roughly 15% of his net worth. Property taxes, insurance, upkeep, you're looking at $100k at least.

$5 million into Section 8 Rental Properties. Yes, there are significant tax advantages here, like 100% bonus depreciation. The idea it would offset W2 income is nonsense. He or his hypothetical spouse would have to be a real estate professional and spend the necessary time to do that. Very few actually do this.

The two biggest challenges this guy has are not making terrible decisions with his money. Assuming he avoids all of that, he will have a massive estate tax issue in 60-70 years.

For example, if you assume he invests $25 million of the $34 million and has a 70-year time horizon. 7% growth rate, withdrawaling 3% annually.

He is going to end up with $389 million.

While a fun case study, Andy's advice here is not what I would recommend. If you find yourself in this situation, even with much smaller numbers, and don't know what to do. Give me a shout.

Yes to everything here. This narrative is everywhere online. While it can be done, the individuals usually have some experience and knowledge going into it.

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I'm always fascinated by business owners who bootstrap their way to huge companies that nobody has ever heard of. This episode of Moneywise is just that.

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About Me

For those of you whom I do not know personally. Here is a little about me and my practice.

I am a CFP® professional here in Fort Worth, Texas. I work with high-income professionals and business owners to manage their financial lives.

If this resonates with you and you want to schedule a meeting, you can do so here.

See Ya Soon

-Matt Magee

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Registered Representative of Sanctuary Securities Inc. and Investment Advisor Representative of Sanctuary Advisors, LLC. Securities offered through Sanctuary Securities, Inc,

Member FINRA, SIPC. Advisory services offered through Sanctuary Advisors, LLC., a SEC Registered Investment Advisor. mFORCE Capital is a DBA of Sanctuary Securities, Inc. and Sanctuary Advisors, LLC.

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