Building A Portfolio For Retirement

"My CPA told me: You don't have to spend your HSA — just let it grow." Last week, I reviewed a client's tax return. They contributed $8,300 to their HSA... and panicked thinking they had to spend it all. They'd been saving receipts all year, planning a December shopping spree for eligible expenses. I stopped them cold: "That's FSA thinking. Your HSA never expires." That money? Still sitting there, tax-free, compounding. Completely untaxed growth — potentially for decades. Their face when they realized their HSA could become a stealth retirement account was priceless. The HSA is the ONLY triple-tax-free account in existence: - Tax-deductible going in (immediate savings) - Grows tax-free (no capital gains taxes ever) - Withdraw tax-free for qualified medical expenses — even decades later And if you don't use it for medical expenses? At age 65, it works like a traditional IRA — withdraw for anything, just pay income tax (no penalties). Here's how to actually win with an HSA: - Max out the contribution every year ($8,300 family limit for 2024, rising to $8,550 in 2025) - Do NOT spend it. Pay medical costs out-of-pocket if you can  - Invest the HSA balance — don't leave it in cash earning nothing - Keep every medical receipt digitally. You can reimburse yourself years later, tax-free - Treat your HSA as part of your retirement portfolio — not a short-term medical fund Remember: The average couple needs $315,000 for healthcare in retirement. Your future self will thank you for this tax-free medical nest egg. If your CPA hasn't explained this strategy to you, you're leaving one of the most powerful tax advantages on the table.

"I don't get 40 years as a creator or an influencer; maybe you get 10 if you build a sustainable business and get lucky. So, I am doing my very best to set aside as much money as possible so that I can take care of my future." In my conversation with Vivian Tu, also known as YourRichBFF, we covered practical aspects of financial literacy, including savings, debt management, investments, and the FU number that allows you to achieve financial freedom. So, here are the key takeaways: 𝐏𝐥𝐚𝐧 𝐀𝐡𝐞𝐚𝐝: Understand the costs of your goals. Even smart people can miscalculate without proper planning. 𝐈𝐧𝐜𝐫𝐞𝐚𝐬𝐞 𝐈𝐧𝐜𝐨𝐦𝐞 & 𝐂𝐨𝐧𝐭𝐫𝐨𝐥 𝐄𝐱𝐩𝐞𝐧𝐬𝐞𝐬: Vivian saves more than 20% of her income, focusing on the future. Aim to boost income while keeping expenses steady. 𝐒.𝐓.𝐑.𝐈.𝐏 𝐌𝐞𝐭𝐡𝐨𝐝𝐨𝐥𝐨𝐠𝐲: It’s a five-part plan designed to help you manage your budget with a focus on securing your future financial well-being. ▪️Savings: Have an emergency fund. Single folks need 3-6 months of living expenses; households need 6-12 months. ▪️Total Debt: Rank debts by interest rate. Pay off the highest interest debt first while making minimum payments on others. ▪️Retirement Funds: Use 401(k)s and IRAs for tax benefits. Invest to keep up with inflation. Aim to get the full employer match. ▪️Investments: Saving isn’t enough. Invest in high-yield accounts to keep up with costs. ▪️Plan: Develop a comprehensive financial plan and adjust it as your life circumstances change. Calculate your financial freedom number (FU number) by determining your annual expenses and dividing by 0.04. For instance, if you need $1 million annually, your FU number would be $25 million. 𝐑𝐞𝐚𝐥 𝐄𝐬𝐭𝐚𝐭𝐞 𝐋𝐞𝐯𝐞𝐫𝐚𝐠𝐞: Leverage debt if the economics work in your favor. For high mortgage rates, paying down might be wiser. For rates under 7%, investing might be better. 𝐌𝐨𝐧𝐭𝐡𝐥𝐲 𝐏𝐥𝐚𝐧𝐧𝐢𝐧𝐠: Use spreadsheets to manage finances, track credit card statements, and have regular financial discussions with your partner. Vivien’s approach emphasizes understanding your finances, making informed decisions, and continually adjusting your plans to align with your goals and circumstances. Thanks for such a great conversation! #YourRichBFF #VivianTu #MoneyManagement #FinanceTips #FinancialLiteracy

Most retirees spend decades saving, deferring taxes, and building a retirement nest egg. But when it’s time to withdraw, they follow the traditional advice: “Spend taxable accounts first, let tax-deferred accounts grow.” That’s the mistake. By deferring too long, they stack up massive RMDs in their 70s. And this pushes them into higher tax brackets just when they thought they’d be paying less. I’ve seen it happen over and over again. Clients assume their tax bill will shrink in retirement.  Instead, they’re hit with: - Higher Medicare premiums → IRMAA surcharges catch them off guard - More of their Social Security taxed → because of income thresholds. - Less flexibility → because RMDs are mandatory, whether they need the money or not. This isn’t just bad luck—it’s bad planning. We need to help clients control their tax brackets, not just defer taxes blindly. That means: - Strategic Roth conversions early → locking in lower rates while they can. - Blending withdrawals → taxable, tax-deferred, and tax-free for bracket control. - Using tax-efficient investments → because unnecessary capital gains make things worse. The reality is, without a plan, retirees can end up paying more than they ever expected. And by the time they realize it, it’s too late to fix.

Let me be clear: Your property management team is the linchpin that can either make or break a real estate investment. Brokers might dazzle you with their presentations, but how many of them stick around a decade later to check the accuracy of their projections? I'd venture to say, not many. That's why your property management team is paramount. But here's the catch: Most investors are clueless when it comes to choosing the right property manager or management team. Drawing from my early career experience in property and asset management, here's what I've got to say: 1. Seek a property management team dedicated solely to property management. There's a sea of brokerages out there with property management divisions, whose primary aim is just to break even or make a modest profit from property management. Their real hope? That they can win your leasing or sales business in the end. 2. Recruit a property management team that treats your property as if they own it. Some firms out there do the bare minimum for minimal pay. If you're hands-on, that might work. But if you want your property to appreciate in value, you need a team that's invested in its growth. The ideal scenario? Link their compensation to the property's success, not just occupancy rates. 3. Choose someone who knows the ins and outs of property management. In today's real estate market, struggling brokers often add property management to make a quick buck. They might not have a clue about effectively running a property. Just because they can lease it out doesn't mean they can manage it. Look for a firm with someone sporting years of experience, education, and credentials like the Certified Property Manager (CPM®) from @The Institute of Real Estate Management. Seek out certifications and designations that are grounded in real-world experience. 4. Opt for expertise in your property type. Different property types come with different needs and expectations. What flies in the industrial sector may not work in multifamily. If you want your property to be managed to its fullest potential, you need someone who's an expert in the nitty-gritty specifics. So, property managers out there, what's your take? Did I miss anything crucial?

During annual reviews and meetings with new prospective families, I have been reviewing a plethora of 401k plans and documents. I wanted to share my 4 BIG takeaways and provide potential real-life next steps for you to consider. ☑ Don’t Save Too Fast In almost every other area of life, saving and investing more is encouraged. With an employer-sponsored retirement plan, that is not always the case. In many plans, you only get your employer match during the period you make contributions. In other words, if you max out your plan before the final paycheck of the calendar year, you could be forfeiting a portion of the employer match. You must understand your employer's plan. Fortunately, every plan must make a plan document available to you upon request. Your plan provider can provide a wealth of insight with a simple phone call. ☑ Beneficiary Designations While this one might seem obvious, mistakes happen way too often. Find the beneficiary tab of your employer plan online and confirm you have the correct beneficiaries. Common mistakes: parent instead of a spouse, ex-spouse, minor children ☑ Breaking Up with Your Target Date Fund For most employer-sponsored retirement plans, your investment contributions go to a target date fund by default. This is based on the year that you turn 65. For example, if you were born in 1980, your default investment option might be the ABC Target Date 2045 Fund. I do not think a person’s age should determine how their investments should be allocated. On average, I see that the average expense ratio in large employer plans is generally 0.40 to 0.45%. Inside the TDF, the fund allocates the funds to a combination of U.S. and International Stocks, Bonds, and cash. If you have a written financial plan, it should detail the investment asset allocation to help you optimally pursue funding your dreams. This could often be achieved by selecting 3-5 index funds without your 401k lineup. I see that passive index funds have an average expense ratio of 0.05%. ☑ Rebalance and Redirect When changing from target-date funds to your own mix of index funds, there are essentially 3 critical steps. First, you need to rebalance your existing holdings to the desired mix. Second, you need to re-direct future contributions to the desired mix. Finally, you need to select a date to do an annual rebalance. Hopefully, the plan provider will have an option for you to select to make this happen automatically. ★ Conclusion In a recent Vanguard study, Vanguard attempted to quantify the value of advice. They suggest that financial planners can add .45% of value by recommending low-cost index options and .35% for rebalancing. Hopefully, by reading this post, you improved your lifetime annual returns by 0.80% per year. Cheers, Nic #National401kDay

💭 What If Your Family’s Legacy Depended on Information You Didn’t Even Know You Needed? Imagine the loss of a family leader, only to realize that crucial details about assets, values, and goals are scattered, incomplete, or entirely missing. For multi-generational families, managing wealth is more than tracking assets; it’s about safeguarding legacy. But without structured documentation, families often face a “we don’t know what we don’t know” dilemma, leading to stress, inefficiencies, and sometimes lost opportunities. A Family Owner’s Manual isn’t just about estate planning—it’s about preserving the “why” and “how” behind family decisions and values. This guide creates continuity, offering future generations the clarity they need to understand both assets and the intentions that define the family legacy. Consider These Key Elements: ➡ Transparency: Make information accessible for better decision-making. ➡ Education: Empower family members with the “big picture.” ➡ Continuity: Ensure future generations have a roadmap, not just for assets but for family values. Here are three practical steps to help your family build a guide that captures both wealth and wisdom: 1️⃣ List Essential Documents: Create a checklist of all vital financial, legal, and personal documents and their locations. 2️⃣ Define Family Values: Capture principles and goals that shape your family’s identity. 3️⃣ Leverage Technology: Software solutions, often developed by Family Office experts, provide tools to centralize information, streamlining legacy planning and simplifying organization. “A Family Owner’s Manual is more than estate planning—it’s legacy planning.” Whether you’re a family member or advisor, understanding the importance of capturing these details is crucial. By proactively documenting key information, families can avoid stressful scenarios, achieve peace of mind, and focus on a legacy that goes beyond wealth.

Chart of the week: Build a retirement income portfolio based on ability and willingness to take risk. It's one of the most frequent questions I'm asked... How should I investment my portfolio earmarked for retirement just prior to or during retirement? It comes up all the time, but particularly during times of market or economic stress when uncertainty about the performance of stocks rises. Stocks are still critical in a retirement portfolio, for most investors. But so are more stable investments, in our view, including cash, short-term reserves/investments, and bonds. You could use a general 60 percent stock, 40% bonds and cash "guideline." Or you could personalize your approach. I suggest the latter. The question to ask is... How much money may I need soon, from your investments? This requires creating either an assessment of how much you've been spending, or how much you plan to spend, as well as accounting for other potential income sources such as Social Security, annuity, pension, part-time work, or other sources. 1️⃣ Once you've done this calculation, considering set aside a year of what you'll need over and above those sources of income from your portfolio into cash investments such as a yield-bearing money market account. Spend from this account. 2️⃣ Then, multiple the amount by somewhere between 2 and 4, depending on your tolerance for investment risk. Keep that amount, equal roughly to 2-4 years of withdrawals, in steady investments to provide liquidity (meaning not just the ability to sell the investment, but do it at a price that's not highly dependent on the economy or market) and stability to whether a bear market and/or fund spending if needed from the portfolio. 3️⃣ Last, create and invest a long-term portfolio that includes stocks and bonds based on your risk tolerance and time horizon. This provides growth potential and funds future spending. Consider an example... What if you plan to withdraw about 5% from your portfolio next year and spend about the same amount per year in the next 2-3 years without much change in your income sources? Working backward, using the personalized steps above, this brings you close to a "traditional" 60/40 stock/bonds & cash portfolio used as a rule of thumb for retirement. But on your terms, based on your needs. The chart below provides an illustration. If you need help, as always complete a personalized plan and work with a professional retirement planner and advisor. #retirementportfolio #financialplanning #risktolerance #riskcapacity

I’ve advised dozens of first time investors get into commercial real estate. Here’s the roadmap: DO NOT SKIP STEPS. 1. Figure out what your goal is, then work backwards. Mistake: Blindly going online and finding the first coach who teaches you the strategy that worked for THEM. Everyone has a different skillset, risk profile, and unique advantage. Do not start with a narrow path without context of which other paths are out there. Also, your main goal should NOT be passive income if you’re starting out. 2. Figure out how much you have to invest, and whether you are raising money from investors or doing it yourself. Mistake: Going deal shopping without realizing how much you can afford. Just because you have the cash doesn’t mean you have to risk it all in one deal. 3. Pick an asset class and strategy. Mistake: Some assets (eg hotels) are much harder to operate than others (eg flex). Not all are beginner friendly. Also, the market demand will determine what you GET to build. You shouldn’t build anything just because you like it. 4. Go deal shopping without clear criteria. Mistake: Finding a deal is more like a job search (apply to dozens, hear one yes) rather than a home purchase (get shown 3-5, pick one). Beginner investors tend to fall in love and get overly invested in the wrong deals. 5. Analyze deals before you buy. Mistake: I’ve had so many investors come to me after they’ve already bought the land. If you’ve already bought it, there’s only so much I can help with. You’re stuck with the deal! Anything I missed? Leave them in the comments and I’d love to get the convo going!

Success is in the Specifics: The Subtle Art of Commercial Real Estate Investing. Commercial real estate (CRE) investing is not for the faint of heart. At first glance, the allure of handsome returns can seem enticing, but as seasoned professionals will tell you, "Success is in the specifics." Delving deep into the CRE world, it's easy to see that even the smallest oversights can have significant consequences. Here are just a few specifics that truly make the difference: 1. **Zoning Laws:** Ever-changing and complex, understanding zoning regulations can be the difference between a lucrative investment and a dud. 2. **Tax Implications:** Tax incentives, abatements, and consequences can drastically impact the ROI. 3. **Tenancy Contracts:** A well-drafted lease can protect your interests and secure steady cash flows. 4. **Maintenance Costs:** Predicting and budgeting for maintenance can significantly impact profitability. 5. **Market Trends:** Recognizing emerging neighborhoods or declining areas ahead of the curve. 6. **Financing Options:** Understanding loan-to-value ratios, interest rates, and optimal financing strategies. 7. **Environmental Concerns:** Potential contaminants or environmental protections can affect usability. 8. **Historical Value:** Properties with historical significance might come with additional restrictions. 9. **Local Economy:** The health of local businesses, job growth, and economic trends can dictate property demand. 10. **Utilization Potential:** The feasibility of repurposing or redeveloping a property. 11. **Easements and Encroachments:** Knowing existing rights and potential disputes associated with a property. 12. **Insurance:** Comprehensive coverage that addresses unique commercial property needs. 13. **Accessibility:** Public transport links, road networks, and foot traffic considerations. 14. **Stakeholder Relationships:** Building relationships with city officials, local businesses, and the community can offer invaluable insights. 15. **Exit Strategy:** Planning your exit before you even enter ensures you have a clear vision for your investment. For passive investors, the allure of diving into CRE independently can be tempting. However, each of these intricate details requires a level of expertise that's honed over years of experience. It's akin to mastering a craft. Just as you wouldn't expect to play in the symphony after a few violin lessons, CRE demands dedicated expertise. By partnering with seasoned professionals who live and breathe these specifics, you harness their knowledge, connections, and insights, ensuring that your investment is not just a gamble, but a calculated move backed by expertise. If you're considering the CRE journey, remember that success isn't just about capital; it's about understanding every nuance, every detail, and every specificity. ‼️ We have our first deal of the year, get in touch (for accredited investors) #realestate #realestateinvesting #commercialrealestate

The biggest mistake in real estate investing? Ignoring the risks. Every investment comes with risks—real estate is no exception. But when approached thoughtfully, real estate can balance your portfolio, provide passive income, and build wealth over time. Let’s break down some of the more common risks in real estate investing and how you can mitigate them: 1. Market Risk Risk: A downturn in the real estate market could impact property values and returns. Mitigation for Passive Investors: Diversify your portfolio: Invest across various markets to reduce reliance on one location. 2. Sponsor or Operator Risk Risk: The sponsor or operator may lack experience or mismanage the property. Mitigation for Passive Investors: Vet the sponsor thoroughly: Check their track record, reputation, and experience managing similar properties. 3. Property-Specific Risks Risk: Vacancies, unexpected maintenance, or a poorly performing asset can impact returns. Mitigation for Passive Investors: Review the business plan: Ensure the sponsor has a clear strategy to manage and improve the property, including contingency plans. 4. Illiquidity Risk Risk: Syndications often have long holding periods, making it difficult to exit early. Mitigation for Passive Investors: Align with your goals: Only invest capital you won’t need for the duration of the holding period (typically 3-10 years). 5. Economic and Interest Rate Risks Risk: Rising interest rates or economic shifts can impact property performance and debt costs. Mitigation for Passive Investors: Look for fixed-rate financing: Sponsors should use fixed-rate debt to avoid sudden cost increases. Why Passive Real Estate Investing Still Works? Passive investing in syndications offers something that stocks and other investments often cannot: ✅ Tangible, income-producing assets ✅ Potential for long-term appreciation ✅ Tax advantages that improve overall returns When done thoughtfully, syndications can reduce many risks of active real estate investing while providing reliable returns. Remember, all investments come with risks, but with the right approach, real estate can play a pivotal role in helping you achieve financial freedom. Want to learn more about how syndications can balance your portfolio? Let’s connect! Together, we can explore opportunities to invest with confidence and build wealth while managing risks strategically. #PowerOfPassiveRealEstateInvesting #YourLegacyOnMainStreet #BuildingWealth