This is personal finance one O 1 from 2 Harvard and Stanford
graduates and let's be honest, they didn't teach us this in
school. We became self-made millionaires
in our 20s and we're sharing the tips, tricks and also mindset
that helped him get us there. I'm Cherie, I'm Jean and.
We're the Tiger sisters. And so the outline for this
episode is that Gina and I are going to share a little bit more
about our backgrounds, where we grew up, how we grew up.
We don't come from generational wealth.
So everything we learned, we kind of learned the hard way and
want to share that with you. And then in this episode, we're
also going to give very tactical advice and break it down from
beginner to intermediate to advanced strategies and.
We'll get started right after this break.
Hey guys, quick break to let you know that we now have merch on
sistersmatcha.com. We have sweatshirts and T-shirts
that we designed ourselves. Go check it out and please rate
US five stars on Spotify and Apple Podcasts.
These ratings are so important for the distribution and
survival of Tiger Sisters Podcast.
Thank you for your support and we're back.
So the first section, Gene and I are going to share more about
our backgrounds. And honestly, the biggest
contributor to becoming a self-made millionaire in our 20s
had to do with our first job out of college.
And this goes back to what we chose to study in school.
So Jean, can you talk a little bit more about how you thought
through that? Yeah.
So in college I basically had the concept that I wanted to
work in business or do something in business, but I went to a
liberal arts school, so we didn't have a business major.
So the closest that I could get was studying economics.
So that was kind of like where I decided to focus my energy.
And once I was actually in the economics program, what I did
was I looked to the older students and I kind of looked to
see who was sort of being like upheld and acclaimed as being
like the most successful seniors and like what jobs they were
getting. And it was like, pretty, it
became pretty obvious to me that there were just like a few jobs
that everyone was like, Oh my God, like you got, You got a job
at McKinsey. Like, Oh my God, you got, you
got into Goldman, you got into Morgan Stanley.
And so that was kind of like the first time I even really heard
about those companies because that's not what we grew up with,
right? So once I like heard that enough
times and I started to ask about it and like learn about what
these companies even were. That was kind of how I even
formed the goal for myself where I was like, OK, I want to get a
job at Goldman Sachs out of school.
That's going to be my goal for the next 4 years of my life.
So then once I sort of had that goal in mind, I worked backwards
and then I figured out like, OK, what are all the things that I
need to do in order to get this job out of school?
I need to get an internship my junior year at ideally at the
company, which didn't happen because it was the Great
Recession, but still it, it was, it was a good goal, right?
So I was like, OK, I need to get that internship.
Then before that, I need to do something valuable my sophomore
year so that I can like ladder up into the internship, like all
that sort of stuff. Even if you don't know what you
want to do, a lot of it is being curious and asking questions.
And then also like looking at people around you and people
that you admire and then learning from them and their
path and almost trying to copy them.
I think it's very legitimate to copy.
Yeah, it's really important, I think more than anything else.
Like, it's really important to have that mindset where you're
curious about others and then you, like, seek out information.
Yeah. You're talking to people.
You're Googling things. Yeah.
And like having you're like once you have the information, you
can create a plan of like how best to get there.
Yeah. And like, it's not saying that
just because you create the plan, it'll automatically be
successful, right? Like you could be hit with the
greatest recession in COVID, yeah, in like 20 years or
whatever. But as long as you have
something, an idea of like what you're working for, what you're
working towards, you can always pivot.
You can always make adjustments. I guess the take away here is
that like information is power in the sense that like even when
you're an undergrad, you didn't really know what roles out of
school would be like high paying or would be very successful or
lead you to like wouldn't lead you to long term career success.
But by like talking to more people and seeing what was
around you, you can kind of put the pieces together.
In that way, I feel like I was very lucky that the
opportunities were there, but then I had to do a lot of the
legwork to even like understand the opportunities and then
eventually position myself so that I was a good candidate.
And I think also in today's day and age, the equivalent of what
that would be is just doing a Google search.
There's like so much more information out there today now,
like on Glassdoor and also just, I don't know, like LinkedIn
salary. You can see what industry and
what roles in each industry, like which ones, how much money
they do they make and how to get there is a different story.
You kind of have to piece it together through networking,
etcetera. Check out our Networking One O 1
episode here here. But also, I guess, like,
information is power. You can now know like right out
of school what to expect in those more corporate jobs.
Yeah, And even I think I feel like podcasts such as ours, like
where we really try to lift the veil and share with everyone,
like, what are these jobs actually like?
What are the jobs that are out there?
I think the information is out there, but you do have to do the
legwork to find it. So Sheree, how about you?
How did you think about what major to do in school and like
what sort of path you wanted to be on in undergrad as it relates
to personal finance and your first job out of school?
Yeah. So college was an interesting
time, I guess just in the personal finance aspect, like
Jean and I both had student loans of some sort.
And so that definitely like weighed on my mind of like, yes,
I want to have a really interesting college experience
where I can choose all the like most amazing classes and just
really follow my curiosity purely, but also balancing like
the reality of like, Oh my God, I definitely need a a job out of
school that will help pay loans that I have and pay the expenses
that I have. Jean and I don't have
generational wealth or family money to fall back on.
So really when we say we're self-made, it, you know, double
underlined there. So I felt really lucky because
obviously Jean was like looking around to people who are older
than her when she was a college student.
And I have my older tiger sister, Jean, and she was the
one who put me on computer science.
So I would originally wanted to be a doctor in college.
I really, I was good at bio and I liked helping people.
So I'm like, why don't I be a doctor?
And doctors at the time make a decent living.
But then Gene put me on computer science where then I was like
further immersed in those classes in the world of Silicon
Valley, not only learning about like what engineers do, but how
vast this industry is and also how much this industry can pay
in kind of like a crazy entrepreneurial business way as
well. You know, like there's a very
steady paycheck of like you can be a doctor and you know, you
earn this much in salary, But there was kind of like a bit of
a gamble at the time when I was a student of like, Oh my God,
there's so many startups blowing up like this is it could be a
like crazy lucrative life changing career.
So I think that was really appealing to me as well.
In addition to like I enjoyed my computer science classes, but it
would be, I'd be lying if I said like if I had the chance to like
pursue for example, art history or a more like liberal arts
degree, that it might not be as easy to get a job out of school.
Like that could have also been a path that I went on, but I
definitely knew that I couldn't given that like I don't, it
might, I might not see success there, but I could see more
success doing engineering and having more guaranteed,
guaranteed. It's never guaranteed.
But like, yeah, job financial. Success.
Yes, financial success. Because there's a lot of
different ways you can define. Success.
I meant financial success given the loans and the bills.
Yeah. And so like the context from my
perspective is that it kind of worked out since we're seven
years apart, that by the time I had wrapped up two years at
Goldman, my first job out of school, I was kind of looking to
decide what I wanted to do next. And I wanted to work in tech.
And by that time I kind of figured out, OK, the role that I
want to do is product manager. And having done all this like
research and having all these conversations, I really found
out that it's, at the time it was very, very hard to break
into a product manager role if you didn't have a technical
background, meaning if you didn't study computer science
and an undergrad and have a computer science degree.
So I kind of like, I don't know, I feel like I, I got lucky and I
was able to like leverage the skills that I have and the
network that I have to get a product management job without a
computer science degree. But that was when I told Sheree,
because you started undergrad in 2013.
That was why I told her I was like, you need to study computer
science because it's going to set you up and have it's going
to set you up so that you have the most options out of.
Undergrad, I think that's the best way to put it, is that like
it just gives you more freedom. You know, finding it gives you
more financial freedom if you study something that like, you
know where you will. I don't know what am I trying to
say. Where you know that should you
want to take it, there is a there are lucrative
opportunities right out of undergrad and like.
Also, I'm not saying I don't know if the exact same advice is
true today, because, you know, in the year of our Lord 2025, I
don't know if a computer science degree is as valuable as it was.
Chachi BT be replacing engineers these days.
So I don't know if it's like exactly like word for word like
you should get a computer science degree so that you can.
It's more the mindset. It's more the mindset.
It's more like try to talk to people and figure out and
understand like what is the best way for me to position myself
for my goals right out of school?
And if your goal is to maximize your earning potential right out
of school, then, you know, follow that path.
Yeah, and honestly, maximizing your earning potential right out
of school, the reason why we're talking about it is it just
gives you more freedom to then choose what you want to do.
I think a lot of people ask me like right now, like how are you
able to have a podcast as a full time job and have the startup as
a full time job? It's because of the decisions
that I made that were informed by Jean back when I was 19 years
old that lead me to where I am at 29.
Well as a full time job, bootstrapped without having
raised money like we haven't raised any.
Venture capital or? Like any sort of Angel funding
or anything like that, we support and pay for everything
on our own. Yeah.
So I think it like, that's kind of what I'm harping at and I
hope it's not taken the wrong way, but like we're genuinely
like sharing our advice so that like if this is what you want to
do as well, maybe you can develop a path to that as well.
Yeah, And I think even just like being conscientious of it and
like thinking about is that something I want to optimize
for? Like do I care?
Or maybe the answer is no. Like I actually don't care to to
do that. Like I'm not stressed about
student loans or I don't have student loans and like I
actually want to take the time out of undergrad to explore and
like try a lot of different paths then that's great.
But this is just like. More security for the insecure
way that I think. But I will say, you know what,
here's another me revealing and being vulnerable, another
insecure way. I know people who have studied
art history or have studied political science more like
liberal artsy majors in college and then started working at
McKinsey or started working in investment banks, like they were
able to do that as well. I know I like, I just don't
think I'm that smart that I'm able to do that quite honestly,
like or. It's not all about smart, but
sometimes it's about access. It may be well, I just know that
like I was not in a position to do that, which is why I needed
more of like a bulletproof, foolproof plan that I was like,
I'm going to be an engineer. At the time people were hiring
for engineering and in tech press, product managers.
This is what I know is going to be a bit more certain.
And so that's why I chose that path.
Yeah, you were doing everything you could to maximize your
chances. Exactly.
So now you guys know that's some of the background of how we even
thought about like what to study and how to land our first job
out of school to set us up on this path.
So that, you know, the next things that we're going to be
talking about in terms of like beginner, intermediate and
advanced tactics are kind of based off of like having
expendable income and also having a mindset of like, how do
we guarantee savings, guarantee a more like stress free
financial life over the next? Decade.
OK, so Sheree, let's say you're at the point now where you've
actually gotten the first job out of school.
What are some of the things that you should look out for or
definitely do? So the first thing we're going
to talk about, and this is like the very beginner recommendation
for us is basically it's free money.
Free money is 4 O1 KS. If you have a job out of school,
especially at a big company, they often have 401K matching
and basically This is Money that you're putting away for your
retirement. You put it away now, you know,
when you're not retired, when you're working, so you can take
the money out for when you are retired, when you're, you know,
62 to 65 or possibly older. There's different time periods
you can take it out. But basically, I think people
don't take advantage of this enough because they're not
thinking about the future in a way that is accessible.
You're like, oh, OK, 65 year old me.
You're like, I don't think about that Now, you know, I'm 2122
years old now. Like, why am I saving for the
future? But I say that this is free
money because many big companies have matching programs.
So what this means is that, you know, you go inside the portal,
you have to set it up so that when your paycheck comes every
two weeks, it automatically takes a portion of that out and
it puts it into your 4O1K. So you're basically
automatically taking it out and you have some money put into
your retirement. That amount of money.
Some companies do really great matching.
They're like whatever money you put in, we'll put in the same
amount. That's what I had at my company,
which was fantastic. And that's why it's usually
referred to as like free money with these matching.
Programs up to like a certain percentage, usually like up to
3% or something like. That exactly some other programs
that they have are like will match up to, you know, some sort
of X percent. So you guys just have to do some
research to figure out what your program is if you work at a big
company. But I would say so many people
miss out on this because they they don't think about
retirement and they don't think about the future because it is,
you know, I don't know, 40 years.
Away and then just to sort of set the basic context, the
reason why you would even want to contribute to the four O 1K
program through your company is because the money that you put
into the four O 1K is contributed pre tax.
So let's say you put in, you know, $100,000 over the course
of however many years instead of if you receive that money as
your income, usually you would have to pay like say $30,000 in
taxes. But if you had put all of that
into your 4O1K, then all of that 100,000 goes straight into the
investments and it sort of grows.
And then you only get taxed when you actually take the money out
post retirement. And the thinking is that after
you've retired, you aren't really making money, so that you
pay a lower tax rate in the future and you've had time for
all of those investments to compound and you've invested
more money than you would have were it not in a 401K.
That's a really, really good explanation.
Thank you. That it was super clear.
And I think I would double underline the word compound.
Yeah. So the power of compounding,
it's amazing to talk about retirement funds because that is
40 years in the future. And my brain can't even
comprehend the power of compounding over time.
But think about like, your money over 40 years, literally in
investments, Like you just leave it in there and ostensibly,
like, you know, your investments will grow year over year.
How? However many?
Yeah. What is it?
The 10% or whatever. Yeah, it's the average.
I've never really thought about it that closely to be honest,
but it is actually really helpful that you're kind of like
putting in 30% more money that can then compound over time.
That's cool. Yeah.
And you don't really. Have to manage it either so the
reason why this is in the beginner section is that
basically all you need to do if you haven't already if you want
this is not financial advice you you guys can do whatever you.
Want I guess what we did, what we did and we are pleased about.
Is that just start putting money into your 401K through your
work? Just configure it once and then
it'll be taken out of your paycheck automatically.
You don't have to think about it.
Yeah, well. What percentage contribution did
you put? So I actually don't remember
what percentage contribution I did.
But the way I don't remember either, but it doesn't.
Matter. The way that I thought about it
was that I maxed it out every single year.
I maxed it out so that I would do.
You maxed out the match. I maxed out the match
contribution for MY4O1K which I think ended up maxing out.
Like however much money you can contribute to your 4O1K.
And it doesn't matter if you do that, if you choose to have the
most amount of money taken out of your paycheck for a short
amount of time or you kind of drip it over time.
It really depends on your lifestyle, your needs and your
need for liquidity in your life. If it's taken out even before
you get your paycheck, then you kind of don't miss it because
you don't realize that it was even there.
I think I had an ex-boyfriend who worked at the same company
as me and we talked about this, about personal finance, and his
strategy was to Max out the contribution over a short period
of time such that his like salary, his take home salary was
like $1000 a month. He's just like, let me just get
it over with, you know? OK, how did he pay for his like?
He had like, he had like savings and other stuff otherwise to use
from, but he's just like, let me just do this, you know, it was
just, I don't, that was his strategy where I dripped it out
over time. He wanted the Max Payne he
wanted. He wanted the Max Payne.
I don't know. But it just sucks to see your
paycheck is like $700. Like, I don't know.
I wouldn't want that. Yeah, OK.
And next, we'll be talking about the intermediate section of this
podcast and the most impactful book that we read that changed
our financial thinking forever. And Gene actually put me on this
book. Thank you.
It is Remit Sethi's book called I Will Teach You to Be Rich,
which is a very catchy, catchy title actually.
Should we make out the title of our podcast?
Sure. Of our podcast episode.
I mean, it's funny because the the the title is very catchy.
It's not really about teaching you how to be rich.
It's more about teaching you to have like a very healthy,
healthy habits to then I guess eventually be rich through
compounding and making money of your own that you then allocate
correctly. Honestly, that book changed my
life. Like I don't know who told me to
read that book, but or how I discovered it, but I read it and
there are things that I implemented that, you know, this
was like 15 years ago that are still my go to standard today.
Like for example. The OK, the good thing about the
book and obviously we encourage you guys to read it, is that it
had very directive specific things to do.
So one of the things that I remember it said open a Charles
Schwab checking account because 1.
You can do it online, just, you know, you don't have to go in
person. And then two, the ATM card that
you get gives you refunds for any ATM fees.
It was very tactical, yes, like it told you, like very random
tidbits. Yeah.
And it was like open a Vanguard fund specifically like put your
money in like this type of fund in Vanguard.
I love that. Well, I think it's also really
important that like these little actions compound over time.
Like we're going to keep talking about the power of compounding,
but also like to be rich and to be wealth and to be self-made
millionaires. Like there is no silver bullet.
Maybe I should have said this in the beginning, but there is no
silver bullet where like we got rich overnight.
Like everything we do is building and accruing wealth
over a long period of time. Wealth.
And I think it's also just like, feeling like you kind of like,
did the right thing and feeling like you have, like, a strong
foundation. Yeah.
Like I feel like that book really helped provide some just
really key steps when like after graduation I was like.
What do I what? Do I do?
I have no idea. Yeah.
I think. Thank you.
Also, I think the biggest take
away from from that book for me was the section on budgeting.
OK, And we'll go through a breakdown of like, how to think
about budgeting, but I want to start first about talking about
the mindset of budgeting. For me, when I was a new grad, I
was just like paralyzed for months.
And I actually talked about this in therapy because I didn't have
a good relationship with money. I was like scared to spend money
because I didn't know how much money I was spending and how
much I could spend, which it was really useful.
So like I would kind of lived a lifeout of fear where I'd be
like, oh, I don't want to go to that event because I guess I'll
have to Uber. But like the Uber's like $30.
Can I afford that right now? You know what I mean?
Like it's like sent me into a spiral.
But you made like so much money out of.
Undergrad exactly like that was the bad part.
I just like didn't know where the limit was because I didn't
do some calculate like initial calculations.
It like came at me all at once because in undergrad I had this
mindset. Where like I had, you didn't
have. Money.
I didn't have money. And I was like, Oh my God, can I
spend that money on a sweet green salad?
Oh, wait, you know what I mean? Or like, should I go to the
dining hall? Like kind of like that mindset
which carried over, but it didn't make sense now that I did
make money. Right.
It was an outdated mindset. Exactly.
It was like scarcity in college, which didn't need to be, I
didn't need to have that mindset after school.
So I think the thing that was really important was to then be
like, this is how much I'm spending.
This is how much I and spend. This is how much should go into
savings. How much should go into four O
1K? My mindset when it came to like
budgeting out of school is that I didn't really do it.
I think I was also like avoidant about money, aside from like
these few things that roommate Sethi said to do in the book.
So I like did those things. And then other than that, I was
kind of like avoidant. Like I didn't want to think
about money, but luckily I had done the step where I kind of
tried to optimize for a job that was lucrative out of school.
So like, I definitely had enough money to like cover all my
expenses and more, but I just never like thought about that.
So I never budgeted. I never was like, can I afford
this? Can I afford that?
But I was pretty frugal because I was like similar to you.
I was, and also pretty much all I did was work and like
occasionally go out to dinner. But you also had many dinners
covered by work, too, yes. So like you didn't have to like
think about that. Yeah.
And like the gym was at work. I think we paid like a nominal
free fee every month for it. Like I just didn't really have
that many expenses. You don't have that many
expenses when you work 90 hours a week.
Like that's just and and like you're not really travelling
anywhere because you're working on the weekends too, right?
You know, so you didn't. Have the freedom of leisure time
yeah, to even spend your. Money, have time to spend money.
And then like occasionally, I don't know, like we would go out
to clubs, but like I was a girl. So then like this was 15 years
ago, but so like, you know, someone would have a table and
then you'd just be like at your friend's table.
And like, I wasn't spending that much money to be honest.
So I didn't really think about it.
So it suited my money avoidant mindset at the time.
I was avoidant too. Avoidant is such a good word
here, but I just didn't want to know because I was just scared
to know that if I was spending a lot of money, I was like scared
I would get in trouble with myself.
So I just like. So I just avoided it for maybe
like 5 months but it kind of like drove me crazy because I
was just like. Oh, you never talked to me about
it. Yeah, I talked to my therapist
about it. Oh.
Why didn't you ask me? Because I was afraid I was going
to get yelled. At by me, yeah.
For what? Reprimanded for not budgeting.
Oh. So this is the breakdown, this
is a guideline. Obviously the numbers are a bit
squishy and you can make it your own, but basically this is what
the the budget breakdown is at 50% goes into fixed cost.
This is like how much you're spending every month on like
rent and food, your car payment, things you need to live.
So you know, after you have your take home on salary, 4050% can
go to your fixed costs. And also, you know, these are
fixed costs like utilities, student loans.
These are generally things you can't really change.
I mean, you can get cheaper housing Gene and I always
optimize for cheap, cheap housing.
So, you know, take a look at where where things can flex. 10%
should go into your investments. This is like your 4O1K or your
index funds. Usually 5 to 10% can go into
savings. This is if you want to travel or
you have an emergency fund or if you're saving for, you know, a
wedding or a big thing in the future that's coming up.
And the last category, this is what remit Sethi talks about.
And what I really took away is guilt free spending.
Like I spent with so much guilt because I just like didn't know
how much I was spending and if I was going over.
But this is around 20 to 25%. This is like you can spend on
going to the spa, getting your matcha, getting your nails done
without feeling bad because you know, it's all within this
bucket of like this is spending for fun and for leisure that I
can just use up. I think probably I was a little
hyperbolic in saying that I like never budget in my life.
I think what I probably, I think what I did at the time is I like
looked at these guidelines and I like assessed my own personal
situation like once or twice and I was like, OK, I'm doing fine
within these guidelines. And then I kind of just never
thought about it again. And I was like, OK, I'm making
enough money so that my natural inclinations and how I naturally
spend money is not exceeding these guidelines.
So like I'm good. And then I just never really
thought about it. But to be honest, I could have
been much more nice and to myself and like permissive in my
spending because I love shopping, I love fashion and I
like, love spending on clothes. And I think I could have, had I
had the time, just done more shopping and just like enjoyed
myself more I could. Have enjoyed life a bit more out
of school. Yeah, like one of my friends
bought a couch. This is maybe when I was like
2324 and still kind of in that scarcity mindset.
I, you know, and then he bought a couch and he's like, yeah, I
was like 2500. I was like, huh, like you paid
22 / 2000 dollars for a couch. I was like, not everyone gets
their couch from Facebook Marketplace.
Like, didn't you have a couch? Yeah, from Facebook Marketplace
that we paid $80.00 for 80. Dollars it.
Was like a used used couch. I guess that's a great deal
though. Did you like the couch?
No, it was smelly and uncomfortable and so.
But The thing is, your roommates also were in the same mindset as
you, even though they were. Doing the same thing.
Just as well. We were just so.
They were in the same. Same scarcity mindset.
Yeah, we were, we were in the same boat.
We've had the same experiences. It was kind of crazy that like I
could have had nicer things. I mean, you know, looking back
on it now or just enjoyed a bit more, but obviously we are where
we are. It's just so funny because your
roommates at the time worked in investment banking.
And in Facebook, yeah, right. And in tech, so like, and we got
like a stinky couch and we got like tables and stuff from
Facebook marketplaces for $10. Like our TV stand was an IKEA
table that was messed up. It's like scratched all over for
$10. I guess those things weren't
that important to you guys at the time it.
Wasn't, but I was just like, I guess we didn't need to do that
given how much we were spending, but it was our first place out
of school. Like it's not.
I guess it's not meant to be nice, but now I'm just like,
what the hell, like. I mean, that's, that's fine.
I don't. See, nothing, nothing matched.
I guess another thing was that like something that I'm very
proud of is that all my time living in San Francisco, I
didn't own a car and I made use of the public transit in San
Francisco. Well, because it served you.
It served me and I don't know, a lot of people complain about it,
but I'm just like, you can use public transit and SF the way
that you would in New York City. Obviously it's not as good, but
like I'm really proud that I did that and I saved money.
Cherie's personal story time. Cool story, bro.
OK, she's like I took the bus once.
No, I. Took the bus every.
Single day to work. I know so did I.
I took the 22 and the mission was just like a crazy ass line I
think I took. A38R Rapid.
I think that was what it was called when I lived in Pack
Heights, an upgrade from my life in Noe Valley.
She's sick. It's a joke because both of
those are like, beautiful. Really nice place.
Neighborhoods in San Francisco. And the last section is our
advanced section, and we're gonna just drop some like
terminology that you guys should be familiar with.
This is obviously for the advanced folks.
Once you've figured out your 41K, once you've figured out
your budgeting, these are things that Gene and I have done, but
they're a bit more complex and we just want you to know about
them and you can look into them, like do a Google search and
learn more about them if they apply to you.
So the first thing is a backdoor Roth.
There's also a mega backdoor Roth.
There's also HSA, which is a health savings account.
Look these up if you're interested in learning more
about them. And then what I want to talk
about is the Super, super advanced stuff.
And these are actually things that I myself and have not done,
but I recently learned about and I wish I had done.
So I'm going to kind of talk through them and then, you know,
you could always look it up more and see if it applies to you.
So this is more so for people who have worked at a company and
have received a lot of Rs US or stocks in that specific company
because a lot of companies, especially in tech, a lot of the
compensation is through stock, not just, you know, cash income.
And if you are in that case, a lot of times you have a very
highly concentrated equity portfolio where a vast amount of
your net worth is in just one share, which is not a good
position to be in. And again, yeah, diversify.
So I'm telling you guys all these things because this is
what I freaking wish I had done. And I recently learned them
through a friend of mine who is who leads a private net worth
like PWM team at Morgan Stanley. And two of the things to be
aware of, the first one is called an exchange fund.
The second thing is called a 0 cost collar.
So I'll just kind of talk to them at a high level.
The first one exchange fund. First of all, you need to have a
good amount of equity. It's usually several million.
I think sometimes the minimum is around like 5 million.
So this is for people who have like a super concentrated
portfolio. Actually, it happens a lot more
than you think. If like think about all those
people at NVIDIA like their net worth is probably like 90 plus
percent if. You're an engineer at NVIDIA.
This advice is for you. And if you're an engineer at
NVIDIA, call. Me.
That's funny. So the idea of an exchange fund
is that you pool your shares with other people and then you
somehow can buy into this diversified fund using your
existing single equity shares and you don't have to sell your
single equity. The thing is you have to keep
your money in that fund for a minimum of, I think it's usually
seven years. And then after that you can
actually take the money out. But the benefit of this is you
don't need to incur the like taxes of selling the shares that
you own in order to diversify. You could like take those shares
and just like diversify right away.
So it's like as if you had invested the same dollar amount
of those shares into a diversified portfolio.
I understand that because that's kind of what I do now anyways.
Is that when I have my stock I have to sell it and then
reinvest it my on my on my? Own but you have to sell it.
So 1 you have to pay those taxes and two, if those are short,
short term gains, you have to pay like pretty high taxes,
correct? As opposed to like, you know, if
you held them for longer for long term gains.
Yeah. So this allows you to kind of
like circumvent that. So like I was asking, I was
like, is this like a new invention?
Like how come I've never heard of it?
He's like, no, it's not new. So learn from my mistakes, my
friends. My costly, costly mistake.
Learn from our mistakes my NVIDIA friends who have over
$5,000,000 in stock at concentrated stock.
Is more is more common than you think.
So, OK, so that one has sort of like a cost minimum to it or
like a you know a floor of investment.
The second method which is called 0 cost collars is it
sounds a little bit complicated, but actually most people can do
it as a retail investor as long as you have the ability to buy
options, which most people do like even in your retail
account. The idea behind that is that you
buy a put option and you sell a call option.
And what that does is it limits your downside for your your
stock that you have like a lot of concentration in, but it also
caps your upside. But importantly, it limits your
downside. And the reason it's called a 0
cost collar is that profit that you get from selling the call
covers the cost of buying the put.
So this seems like pretty advanced, like you have to be a
bit more in the weeds and know what you're doing, which is why
this is in the maybe ultra advanced category.
So this is really good information for people who are
like not afraid of their personal finances, want to take
a more involved approach and also that involves Googling and
learning more. Or if you have a financial
advisor, you can talk to this about too and be like, hey, can
we do this? Like we always say, information
is power, right? These are things that I wish I
had known so badly, like let's say 5-6 years ago because then I
would have done a much better job of my own concentrated
portfolio situation. But you live and you learn.
And this is the lesson that I have learned that in the future
we will apply for whatever situation that we're in and that
we can share with you guys. And finally, just to wrap up
this episode, reminder, we are not financial advisors.
These are just interesting concepts that some of we've
applied to our own lives and some that we wish we've applied.
I did pass the series 7 and the series.
But I have not and I would like to not be sued for this episode.
OK also mine was like 15 years ago so it doesn't.
I'm not qualified so. We're not financial advisors.
Advisors, please Google everything to, you know, make
your own decision. This is big sister advice.
For you big sister advice, yeah. OK, so the key take away from
this episode is that you don't need to come from money to build
wealth, but you. Do need knowledge, discipline
and to understand the trade? Offs and also just a reminder,
money doesn't buy happiness but it can buy freedom and Peace of
Mind. And so if you are interested in
buying Remit Sethi's book, we're going to link it in our Amazon
storefront, which is connected. You can find it in the
description of this video. And I do want to, you know, give
a quick plug, Shameless plug Gene and I have a matcha brand
called Sisters Matcha. And while you're budgeting for
your, you know, I can just spend money on things that make me
happy. You can also and healthy and
healthy. You can purchase sisters matcha,
which is available on our website, also energetic and also
LinkedIn the description of this video.
So thank you guys so much for watching this episode.
Hopefully it was helpful for you.
Please remember to like, comment and subscribe and share this
episode with someone who would also find it helpful.
Yes, learn from our mistakes. Love you guys.
Bye.