Hey, welcome back.
You're just in time for coffee with you're host,
ex-Google, ex-Facebook, multi-millionaire, Tech Lead.
And today, I thought I would make a quick episode
talking about how I manage my millions of dollars.
And, you know, you may be wondering,
what am I investing my money in,
what apps I'm using,
am I doing cryptocurrency,
gold, stocks, real estate, cash?
And am I using E*TRADE, Robinhood, Vanguard, Fidelity?
So I thought I would give you a quick rundown
about the way I'm doing things.
And I'm not going to pretend I'm a professional at this.
I may be a professional YouTuber,
but if you have any suggestions for me
or advice on how I can improve my wealth management,
then I'm all ears.
I'd love to hear, post in the comments below,
I read everything.
And remember to smash that Like button
also for Graham Stephan.
So let's just jump into it.
Most of my investments are in the stock market,
about 80% or so.
And you may be wondering, well, what apps am I using?
Am I using Robinhood, Vanguard?
And I'm actually not using any of them really.
What I'm using is Interactive Brokers.
And you may be wondering, well what is this?
You may have not heard of it.
Interactive Brokers happens to be a professional
stock trading brokerage platform.
It's not so much targeted at new people,
but there's one reason why it outperforms Robinhood
and every other free zero-commission brokerage out there.
And for me that reason is the low margin rates.
So if you were to take a look
at the margin rates for these,
And margin is essentially the percentage
that these brokerages charge.
When you over-invest or when you have negative funds
in your account, how much interest do they charge on that?
Currently, Interactive Brokers charges about 3.1%,
which is one of the lowest in the industry.
By comparison, E*TRADE charges like 10%.
Most discount brokerages are charging about 10%.
And meanwhile, Robinhood charges about 5% margin rate
on their Robinhood Gold plan,
which is an additional $5 per month.
Overall, it's still pretty low,
it's still a pretty decent rate.
Although, it's not nearly as low
as what Interactive Brokers is doing.
So for me, given the amount I'm investing,
sometimes I could be on the margin loan
from $10,000, $20,0000,
to $50,000 for a few weeks.
Sometimes I need to make like a tax payment,
I need to pay somebody,
I may need to pay a credit card bill,
or I just need some funds for some random purposes,
I could be moving money around here and there.
And because of that, these margin rates
are very important for me.
And I could get slaughtered on them if the margin rate
is as high as like 10%, over at E*TRADE.
Which is why even though Interactive Brokers,
they don't have a really great UI,
it's not the friendliest for beginners.
They continue to charge trading commission fees
when all other brokerages are dropping them to zero,
They charge like a $10 monthly minimum fee
just for market news and data.
But even with all of that,
the low margin rates make it worthwhile for me.
In addition, they also offer something called IBKR Lite.
Which is kind of a version that has no trading fees,
in which they're trying to compete with other platforms.
Now if you're not really going on margin all that often,
then I might recommend you check out Webull.
So there will be a link for you in the description below.
Sign up for Webull, it's a stock trading app,
and you will get two free stocks.
So it's a great deal.
Webull is a highly well reviewed stock trading app.
No commissions, free trades, no minimums,
no monthly/annual fees, or any of that.
And a very clean, easy to use, user interface.
So check 'em out.
There will be a link in the description below.
Sign up through my link and you'll get two free stocks.
If you've seen my previous videos,
you'll know that I've lost $350,000, or more,
in the stock markets.
And that has shaped a lot of my stock investment philosophy.
These days I tend to just buy-and-hold, I go long.
And I don't mess around with all these complex
trading vehicles like options,
futures, option-futures, Forex.
I've played around with these before
and it's just way too complicated.
As well as getting into the whole day trading game,
where I'm reading news all the time.
It just seemed like a poor investment
of my own personal time.
And a lot of stress.
You know, I could be spending a lot of time
trying to get good at this stuff and still,
after months of research,
I had very little to show for it sometimes
if something just happened randomly and stocks tanked.
And I was not really building up my skills.
So these days, I just tend to use
very simple investment strategies.
I tend to use something known as asset allocation.
Where I just determine, like say,
"I want 20% cash, 30% bonds, 50% stocks,"
something like that.
And then I would pick a few ETFs
that might represent what I wanna buy.
For the stock portion, I tend to invest a lot in SPY,
which is just the S&P 500.
Some people invest in Vanguard's global stock fund.
I may also invest in VYM, which is like corporate
dividend-yielding stocks.
I pick a few individual stocks occasionally,
usually a small portion of my portfolio.
Like I may say, "Well, I would take 5%-10% Tesla,"
and that's fine.
Like if someone just told me they wanna
pay me in Tesla stock,
I'll say, "Fine, yeah, I'll take it."
And it's not like I'm going to convert that into cash
right away, maybe I'll just hold on to that.
If someone was to tell me that they wanted
to pay me in Amazon stock.
I may hold on to that as well,
but if I were starting to get paid too much in this,
like 20% of my portfolio was say Amazon stock,
I might say, "Okay, let's sell some of those.
"Bring that down to say 5%-10%,"
and just keep it around there.
And then what I like to do is,
I'll take all of my assets
across all of my accounts,
and input them into a spreadsheet where I can calculate
my total ownership percentages in each category.
And just figure out like, "Hey, if I'm 60% in bonds,
"maybe that's too much.
"Maybe I should buy more stocks to just balance that out."
Or I can check if the value of any
of my individual stocks is too high.
I like to keep each individual stock
at about 5%-10% of my total portfolio.
Just so that I don't have too much risk
exposed to any of these individual companies.
Generally though, if you're starting out
or you're not interested in speculation,
I would avoid those individual stocks.
Go for those ETFs, which contain a basket of stocks
and have less risk.
I would also avoid shorting stocks.
I've lost so much money on shorting.
The natural trend of a market is to float upward,
so if you do decide to short you need
to be very sure of that.
So that's my overall stock investing strategy.
I like to keep things simple.
Buy-and-hold through long term investing.
It helps avoid those taxes on short term capital gains,
freeze up my time.
And I don't have to compete with those high-frequency
trading algorithm bots, powered by machine learning,
which are so complex these days that I don't know
if any human will stand a chance against.
Aside from stocks, I like to keep 30%-40% in bonds.
Usually I like to hold bonds in my retirement accounts,
like IRAs, which are tax advantage,
so you're not paying taxes on those dividends
that they're spewing off each year.
And then I might have a 10%-20% cash position.
Sometimes I still think about just throwing
all the cash into the markets so I can be all in.
But if I do have the cash position
I'll be storing that in like a Certificate of Deposit (CD)
or a high-interest savings account.
You can check around, but the online savings accounts
like Wealthfront, Marcus,
they're offering around 1.7% right now,
which are higher than what you'll get
from the brick-and-mortar banks.
So there you go, that's pretty much
how I can manage my money.
Real estate may deserve some special mention.
I've been thinking of investing in real estate lately.
But at the same time, as a programmer,
I'm a software engineer,
my hands are delicate,
I can't even hold a hammer.
I ask myself sometimes if I'm really suited
to do real estate.
Not to mention, it requires me sometimes
to be on-site at a stable location.
And recently, I've been doing a lot to traveling.
So I think that real estate could be a good investment.
There are a number of tax advantages to it.
I may be more interested in investing
in like commercial real estate
that I rent out for rental income.
That sounds like more of an investment to me.
Not to mention, a lot of apartment complexes
can actually offer better living standards
than say, a house in Silicon Valley,
which is like 80 years old,
and very torn down and worn out.
Real estate though, it does require maintenance.
In a tough market, like Silicon Valley,
everything is overpriced.
And even if you were to bid on something,
like I think I bid on five homes in the past
I lost every one of them, even with pure cash bids.
So it's just kind of a hassle
to get through that whole process.
And then last of all, I use an app, Personal Capital.
I'll have a link for you in the description below.
If you use my sign-up link,
you'll get a free 20 bucks.
Personal Capital helps track your expenses,
your net worth, across all of your accounts.
You can just link up all of your bank
accounts and brokerages.
And you can quickly check all
of your transactions, income, expenses,
see if there's any fraudulent transactions.
Check your brokerage accounts.
And overall, stay on top of your money.
Now there's actually another hidden reason
why you want to be careful
about these no-fee trading platforms.
Especially, if you're a professional trader
or if you have a lot of money at risk here
that you're putting into the markets.
And that is about the execution quality of the trade.
What happens is a lot of these free trading platforms,
like Robinhood, could actually be giving
you poor quality trades,
such that, you are not getting a good price.
So there's an article here from the Interactive Brokers.
A CEO accusing Robinhood of not providing
good trade execution.
He says that, "The Robinhood model is not sustainable.
"That its model is based on providing
"inferior execution quality.
"So despite commission-free trading,"
he alleges, "That it derives revenues
"from how they are executing their orders."
That's one reason why I'm a little
skeptical about Robinhood.
And if you take a look at Interactive Brokers'
newest platform, they created this Lite version,
where they're giving you commission-free trades,
that they're very clear they say, "Equity orders
"on this new Lite platform will be routed
"to market makers in exchange for payment for order flow."
So you can see that even though platforms,
like say Robinhood, may be promising you free trading,
you have to take that kind of with a grain of salt
because you could be eating up the fees either way,
when you make your trades.
And at the end of the day,
if you're not doing that much trading
then it may not be that big of a deal.
But if you are, then I would recommend
that you check out the trade execution quality
on whichever platforms that you're using.
So that's just a quick rundown
of how I'm managing my money.
But let me know if you have
any additional tips or tricks for me,
post 'em in the comments below.
As well as any apps you may be using.
Again, the apps that I referenced are going to be linked
in the description below, check 'em out.
Remember to follow me over on Instagram, @techleadhd.
If you like the video, give a like and subscribe.
And I will see you next time.
Thanks, bye.