Category Archives: Investing

Early Retirement: Removing Barriers

Many people dream of reaching early retirement.  Few people, however, are willing to do what it takes to make it a reality.  In most cases, to reach early retirement, a person must live differently from how the masses live.  People generally don’t want to be viewed as being different from their fellows.

The masses are living for the day, spending most of what they earn, landing in debt, and are in denial about their personal finances.  They have high hopes that their financial future will be secure.  Hope, however, is not a strategy.

To reach early retirement, a strategy is needed.  That strategy will require action and more action.  The primary objective of that strategy will be to first reach financial independence.  Financial independence is what enables people to retire early.  If a person is no longer working, the money to sustain their lifestyle needs to come from somewhere.  For most early retirees, that somewhere is their passive investments.

The path to being able to retire early is full of barriers.  Many are external like being able to maintain a budget while marketers are doing everything they can to get you to break your budget and buy whatever it is they are selling.  Some barriers are mental.  The purpose of this post is to identify a few of these barriers and to establish a plan of action to avoid them.


Most people are unaware of what is required when it comes to planning for an early retirement.  That is even true for those who have attended college.  People who hold a 4-year degree or beyond still struggle with doing what is required to escape having to work for a living.

When it comes to establishing a financial plan, many people truly do not understand what is required.  They feel that things will just work out like they have in other areas of their life like landing a good job or getting a mortgage to buy a house.  They are generally in denial about what is required to build a large enough net worth to sustain their desired lifestyle once they are no longer working.

The good news is that once a person decides to learn more about personal finance, there is an abundance of great information.  Once a person takes that first step towards learning about budgeting, saving, and investing, they have removed one barrier.  Once that barrier has been removed, they will discover that the basics can carry a person a long way.  The basics alone might be enough to carry some people to financial independence.


Procrastinating is another barrier that stands in the way of reaching early retirement.  Not knowing about a topic is one thing.  Knowing and not doing anything is another.  To reach early retirement, it takes many years of earning a salary, saving a large percentage of that income, and investing it wisely.

The longer a person waits to start this process, the harder it becomes.  That is based on compound interest.  Let’s assume that an investor needs to have $1,000,000 saved to declare financial independence.  They also want to reach this milestone by age 50.

Based on an 8% percent return, if an investor starts to save $1,800 per month at age 30, it will take 20 years to reach their goal.   If they wait until age 40 to start saving, they will have to save almost $6,000 per month.  If they started at age 22, however, they would only have to save $900 per month.

When you are young, time is on your side.  The older you get, the harder it becomes.  Don’t procrastinate if your goal is to reach early retirement.

Not investing in stocks

To receive a return close to 8%, an investor will need to have a large percentage of stocks in their asset allocation.  Based on how investments are projected to perform for the next 10 years, an 8% return might not be reasonable.  Large-cap stocks are projected to earn 6.7% threw 2026.  For that same period, investment grade bonds are projected to earn 3.1%.

The average person has the tendency to shy away from stocks.  In the short-term, they are volatile.  Over long periods of time, they are one of the best wealth building investments for individual investors.

Instead of parking your money in a money market that returns 1%, consider adding stocks to your asset allocation.  A good place to start is to look at a balanced portfolio of 60% stocks and 40% in bonds.  This allocation is popular because it provides growth from the stock allocation and the bond allocation reduces volatility when the stock market has a correction.  Another general rule of thumb is to invest (110 minus your age in stocks).  If you are age 25, you might want to consider having around 85% of your asset allocation in stocks.

Lifestyle Creep

Lifestyle creep is a form of inflation.   As a person advances in their career and their earnings increase, it is natural for their spending to increase.  As raises and promotions pile up, people have the tendency to upgrade their lifestyle.  Instead of saving more of their earnings, people buy bigger houses, fancier cars, and go on expensive vacations.

If there is lifestyle creep in your life, it is a major barrier between reaching early retirement and being stuck as a wage earner.  Lifestyle creep inflates how much money you need in your retirement account before you can retire.  In contrast, if you keep your monthly expenses low, the less you will need to be able to retire.

If you plan on withdrawing 4% from your retirement account, have $100,000 in annual expenses, you will need $2,500,000 in retirement savings.  For those who only have $40,000 in annual expenses, they just need to save $1,000,000.  The higher your annual expenses are, the more you need to have in retirement savings.

To avoid lifestyle creep, some management is required.  A solid budget is needed.  A financial plan is also a vital tool.  First, focus on the big expenses.  Keep your housing, transportation, taxes, and education costs low.  For example, live in your starter house forever, buy an economical car, live in an area that does not have high taxes, and take advantage of public schools and state universities.

If you can avoid lifestyle creep on the major expenses, you will have more money for savings.  This will also lead to less financial stress.  Instead of stressing to cover your bills that are always increasing, you will be able to better enjoy your life because there will be less demand for having to earn more and more.


For most people, the road to early retirement takes a long time.  It generally takes a couple decades of solid earnings, a high savings rate, and compound interest.  To achieve this ambitus goal, there are barriers that need to be identified and managed.

To be successful with personal finance, education is required.  The great news is that there is an abundance of good books, blogs, and forums that provide unlimited information.  A good place to start is the Resources page on this blog.

There is no such thing as an overnight success.  Most overnight success stories have been a fifteen-year work in progress.  If you want to be financially successful and retire early, start today.  It is not an overnight endeavor.

Without some risk, there will only be a little return.  Identify the correct mix of stocks and bonds for your situation.  Be sure to take your age and risk tolerance into consideration.

Manage your expenses.  The greater your expenses, the more money you must save and grow.  By keeping your expenses low, the less money you will need in retirement.

There will always be barriers that stand in the way of reaching early retirement.  Once they are identified, they can be managed and overcome.  Keep your eyes open for other barriers that might pop-up.  Be vigilant and stay focused and you will be sure to reach financial independence and retire early.

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Funding Retirement with the Bucket Approach

Have you ever considered separating the money that you plan on drawing down during your retirement based on the phases of your retirement?  A common approach is to allocate different piles of money in separate buckets based on when you plan on using the money.  The Bucket Approach was made popular by Raymond J. Lucia, CFP as the result of his book Buckets of Money.  The theory is based on building a diversified portfolio and spreading the risk out across different buckets of money.

A common approach is to use three buckets, however, more buckets can be used:

Bucket A – Money that will be used for the first few years of retirement (years 2 – 5)

Bucket B – Money that will be used for the second period of retirement (years 3  – 10)

Bucket C – Money that will be used to fund the remaining years of retirement (years 11 – 25 and beyond)

Asset Allocation for Each Bucket

Since Bucket A is going to be the first source of retirement funding, it is suggested that this portion of the asset allocation be ultra conservative.  That is to prevent a major stock market sell-off or recession to deplete the money that will be used to cover the first 2 – 5 years of retirement expenses.  In this bucket, the assets should be invested in CD’s, money market accounts, short-term bonds, or FDIC insured savings accounts.  By always having between 2 – 5 years worth of expenses in liquid assets that are easy to access, it helps from having to sell-off stocks when they have gone down in value.

Bucket B is going to be constructed of a more moderate asset allocation than Bucket A.  This bucket is designed to produce higher returns than Bucket A.  This bucket should have an asset allocation of around 65% in bonds and 35% in stocks.  The bonds are a low-risk investment that provides higher income than short-term holdings.  The stock portion is used to fuel growth and stay ahead of inflation.  The bond allocation could be made up of both an intermediate-term bond fund and a TIPS fund.  A large-cap index fund or large-cap dividend fund are good options for the stock portion of Bucket B.

Bucket C is going to have a more aggressive asset allocation than Bucket A and B.  This bucket of money will be used for long-term growth.  It will be made up of an asset allocation of 75% in stocks and 25% in bonds.  By keeping a portion in bonds, an investor can rebalance annually.  This practice of buying low and selling high improves the long-term performance and reduces the risk of this asset allocation.  For the bond allocation, a total bond market fund is a good option.  For the stock allocation, a more diversified mix of large-cap, small-cap, and international stock funds are used in this portion of the bucket for aggressive growth.

Refilling the Buckets

With a more traditional approach to asset allocation, a portfolio is viewed as a whole and not fragmented into different categories based on when the money will be needed.  For example, a balanced portfolio might be made up of 40% in bonds and 60% in stocks.  If stocks have a good year and the new asset allocation is 65% stocks and 35% bonds, the investor simply sells the stocks high and rebalances back to the desired asset allocation.

With the bucket approach, there is rebalancing within each bucket as well as replenishing between buckets.  Bucket A has 2- 5 years worth of living expenses.  When Bucket A has 1 years worth of living expenses drawn down, the difference will be replenished from Bucket B.  The same process applies between Bucket B and Bucket C.  When money is moved from Bucket B to Bucket A, Bucket B must be replenished from Bucket C.

Buckets vs Systematic Drawdown

Some financial advisors favor the buckets approach for the psychological benefits it provides investors.  When an investor is faced with a major market decline, they feel more confident because they know they have 5 years of living expenses in cash.  That financial cushion helps to prevent investors from selling stocks when they are at or near the bottom of a market.  Bucket A provides a level of comfort during good times and bad.

Other financial advisors prefer a systematic drawdown approach.  It is viewed as an easy approach for investors to understand and apply.  They feel that it is less complicated for an investor to view their portfolio as a whole and to use a safe withdrawal rate of 3 – 4% from a conservative portfolio of 50% in stocks and 50% in fixed assets.

There are more similarities between these two approaches than there are differences.  Even though there are three different asset allocations, in the three different buckets, when they are added together, they still can simply add up to the same mix of 50% in stocks and 50% bonds in the portfolio that is applied in a systematic drawdown approach.  It is just a different way of mentally accounting for assets during retirement.

Implementing the Buckets Approach

The buckets approach should be considered by people who are planning on retiring early.  Many people save up substantial resources in their 401K, but cannot access their money until age 60.  The buckets approach can be an alternative to a Roth conversion.  This approach just has to be planned years in advance because it requires an investor to build up substantial savings in their taxable account along with their tax-deferred accounts.

For this example, let’s assume that a person wants to retire at age 50, requires $50,000 per year for living expenses, and has $500,000 of their $1.5 million-dollar portfolio in taxable savings.  This scenario would be ideal for the buckets approach:

Bucket A – $250,000 in taxable savings (age 50-55)

Bucket B – $250,000 in a taxable account (tax-free bonds, age 56-60), the remaining mix of assets in an IRA or 401K to be drawn down after age 60

Bucket C – All in an IRA or 401K


The buckets approach is slightly more complex than a systematic drawdown strategy.  The main benefit is that it helps to keep the mind of the investor more at ease during all market conditions.  If managed correctly, the theory is that an investor will always feel secure because they always have 2 – 5 years of cash to fund the next few years of expenses.

The buckets approach is customizable to your unique situation.  The three buckets approach is the most common strategy.  It is the most ideal for a retiree who has at least 25 years of living expenses in savings.

More buckets can be added.  For example, if you have more than 25 years worth of projected living expenses in savings, you can add more buckets to extend your savings further out into the future. You also must take into consideration if you have a taxable account, a 401K with RMD’s (Required Minimum Distributions) at age 70, a Roth IRA account that does not require RMD’s, and Health Savings Account (HSA) to cover future medical bills.

If you are looking at establishing a conservative drawdown strategy, a buckets approach is worth considering.  It requires a little more work than a standard systematic strategy.  However, if you enjoy the mental accounting, the extra work might add to your peace of mind.  Just as when you were working towards building your wealth, the best plan is the one that you can follow.

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Is Investing Like Gambling?

Is investing like gambling?  Over the years, I have heard people compare investing to gambling.  It normally occurs during periods when the stock market is experiencing negative returns. People will make comments comparing investing in stocks to casino gaming.  Those who market alternative investment products will use heavy rhetoric and refer to conventional investments as the Wall Street Casino.

There are a few similarities between investing and gambling.  Investing and gambling both require money.  Both can be profitable.  Both can cause you to lose money.  Both require consideration.  Gamblers and speculators who trade frequently will look for favorable odds and try to come up with their own strategy to capitalize on what they think is a sure thing. That is basically where the similarities end.

Gambling is a game of chance.  Gambling is based on greed.  It involves a wager on an uncertain outcome.  Gambling comes in many different forms.  A gambler can bet on a sporting event like a football game or horse race.  Gamblers can play cards, roll dice, spin a roulette wheel, or play other casino games.  Buying lottery tickets is also a form of gambling.

Some forms of gambling are legal and others are not.  Betting on a horse race at a track like Churchill Downs is legal.  Calling up a bookie to place a bet on the big game is illegal.  The major difference between illegal and legal gambling is based on regulation and taxation.

One of the main differences between gambling and investing is that gambling is quite often based on immediate results.  For example, the results from a scratch-off lottery ticket are known as soon it is scratched off.  Some forms of gambling have longer waiting periods to know the outcome based on the results of a future sporting contest.  With all gambling, once the results are in, the outcome is known.

Investing is not a game of chance.  It is not a game of probability.  Investing is based on being prudent.  When you buy a mutual fund, it is not similar to hoping your number will come up when you roll dice.  By the way, you have a 2.778% chance of winning at rolling two dice and the casino has a 97% chance of taking your money.  Those are not favorable odds.

To invest in the stock of a company is to buy ownership in that company.   That company produces a product or service.  It is an entity that has financial statements and records.  Those records generally reflect why the stock price is worth its current value.

A mutual fund or ETF is a basket of different stocks.  By owning more than one stock in a fund, it helps to reduce risk and increase the likelihood of better returns. That is known as diversification and is based on the efficient frontier.

Diversification does not improve the odds when it comes to gambling.  It does not matter how many times you roll the dice.  The odds of rolling a pair of 6 sided dice will always be 2.778%.  The best you can do to improve your odds with games of chance is a switch from rolling dice to flipping a coin.  That would improve your odds to a 50% chance of winning.

Bonds can also be used to improve investment returns.  When stocks go down in price, bonds tend to go in the opposite direction.  Bonds are a loan to the government or corporation.  Some are guaranteed by the government.  They have a quality grade and risk associated with the term length.  Generally speaking, the shorter the term, the less risk.  Bonds are used for offsetting the risks of stocks or for income.

Stocks and bonds are also different from gambling when it comes to time.  Gambling is bound to time.  When the game is over, it is over.  There is just one opportunity to win or lose with gambling.

When an investment such as a stock is purchased, the amount of time that an investor has to earn a profit is based on how long they own the stock.  It can be a profitable investment for many years.  It can also lose money, but recover and become profitable again.  It is a time rewarding activity.  That is why many financial experts suggest a buy and hold approach.

Another key factor that separates investing and gambling are dividends.  Ben Carlson writes about this in his book A Wealth of Common Sense.  By investing in investments that pay a dividend, investors are rewarded for putting their dollars at risk based on market performance.  By holding on to a stock, a company will continue to pay a dividend.  Dividends are a key factor for making money in stocks over long periods of time.  There are not any dividends with gambling.

Investing also uses the power of compound interest.  This is another time rewarding aspect of investing that does not apply to a one-time wager.  For example, if you invest $100 and it has a 10% annual return, the following year the investment is worth $110.  If the investment is held for 25 years and continues to have a 10% annual return, the final amount of money will be $1,205.

Not only are gambling and investing different, they are totally different.  Every form of gambling is a game.  It is a game of probability.  The probability is always in favor of the house because of the vigorish.  It is a one-time chance to place a wager that might have a payout.

Investing in stocks is a business transaction.  It does not matter if you buy stock in a single company or buy hundreds of different stocks in a mutual fund.  It is a business transaction because the investor is buying ownership in a company or group of companies.  It is only a small fraction of ownership, but it is ownership never the less.

With investing, there are ways to improve performance and reduce risk.  An investor can buy stocks that pay dividends.  An investor can hold on to their investments and let compound interest work its mathematical magic.  The short-term market risks of owning stocks can be offset by also owning bonds.  By owning both stocks and bonds, an investor can rebalance their holding and always be buying low and selling high.

With gambling, the odds do not change.  As I explained with the dice example, there will always just be a less than 3% chance of winning.  The odds will always be in favor of the house.

During the next major market correction, you are likely to hear people say that you are better off taking your money to the nearest horse track or gaming parlor than to put it at risk in the stock market.  Yes, in the short-term, investing in stocks can be volatile.  Over the long-term, however, stocks are the greatest wealth building investment for the individual investor.  When they decline in value, look at it as a buying opportunity.  Gambling is based on a one-time event and the odds favor the house.  As long as you invest wisely and have patience, the odds are far greater in your favor than by playing games of chance.

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How to get Started with Airbnb

I am very excited about today’s post.  This is a guest post from my new friend Cubert from  In this post, Cubert shares how he is planning on retiring at age 46 and to abandon his cubicle for good.  As a more passive investor, this post has provided me with great insight into real estate investing as well as an introduction to what is required to operate an Airbnb business.  I hope you enjoy it and find it as educational as I did.

How to get Started with Airbnb

For those of you who don’t know my story, here’s a little primer. I go by the pseudonym Cubert to keep a little anonymity on my blog, I’ve been a student of early retirement since the fall of 2014.

Around that time I discovered that it is possible to retire early with very little actual sacrifice and much to gain. That’s a good thing. See, we’d had our first kids – twins – just a year earlier. If life wasn’t crazy enough with work, the home front changes pushed us over the line.

I’m now within a year and a half of ending my cubical days for good. I’ll be 46, which is nowhere near as exciting as others who’ve reached that milestone in their 30s. But then, I have no regrets. And honestly, who can complain about being done working for the man a good 15 or 20 years before Fidelity says you should?

My Plan

It’s interesting how life-changes sometimes come in bunches. Within a span of two years, we started a real estate rental business, changed jobs, had twins, and then locked in on early retirement. Whew. Makes my head spin just thinking about it!

The real estate rental business turned out to be crucial in our wealth building progress. We definitely went out on a limb, but with the help of a good friend already in the business, I had enough confidence to buy our first rental – a short sale single family house.

We weren’t flush with cash. I had to take out a home equity line of credit on our primary residence to afford the down payment. Once we closed, the list of improvements grew to a tally of almost $5,000. Man, what had we gotten ourselves in to?!?

Long story short – this first house got rented out within two months of closing. Rent checks started flowing in. We closed on our second rental just six months later, right around the time we welcomed our twins into the world. Rentals three and four followed in 2015 and 2016.

Ultimately, each of our four long-term rentals have paid off handsomely. Thanks to a strong market here in Minneapolis, we can command good rents. Plus, the tenants we attract have been great to work with. Never a late payment, and often they’ll put their own money into small improvements. We clear about $500 in net profit per house, per month.

1 Our First Rental – “Rental A”

How Airbnb Came into the Picture

In 2017, the pickins were slim. The housing market had really taken off in the Twin Cities. Houses that once sold for $100,000 were now going for $150,000. In my quest for our fifth rental, I kept running into windmills. Cash-on-cash returns just weren’t adding up on the overpriced dumps that were available.

About ready to give up, we visited my folks in Charlevoix, Michigan last August. I was perusing the local paper and decided to take a peek at the real estate listings on the back page. I noticed a condo for sale in the same development where my parent’s spend their summers. It was bare bones, with zero updates since having been built in 2005.

I figured, at $125,000 list price, what could it hurt to have a look? This area is a great summertime destination. A new vacation rental option started to dance around in my head.

What is Airbnb?

For those uninitiated (which included yours truly until a few years back), from Wikipedia:

Airbnb is an American company which hosts an online marketplace and hospitality service, for people to lease or rent short-term lodging including vacation rentals, apartment rentals, homestays, hostel beds, or hotel rooms. The company does not own any lodging; it is a broker which receives percentage service fees from both guests and hosts in conjunction with every booking. In January 2018 the company had over 3,000,000 lodging listings in 65,000 cities and 191 countries.

For a company that started nine years ago, that’s a pretty impressive number of lodgings. How long did it take Hilton to build that many rooms? All Airbnb’s founders had to do was harness the Internet, create the marketplace, and take their 3% cut from each booking. Genius.

As we worked through the offer process and closing on the condo this past fall, I was also digging into my research. We’d stayed at a couple of Airbnbs, but we sure as heck hadn’t hosted any. A few helpful sources: Pinterest (see Financial Panther) and a very helpful book called “Get Paid for Your Pad” by Jasper Ribbers and Huzefa Kapadia.

The Easy Parts

Setting up your digs, whether it’s a spare room in your house, or a wholly furnished separate dwelling is pretty straightforward on Airbnb’s interface. I give them credit for creating a highly intuitive experience for hosts.

I will warn, however, that there are a LOT of variables that come with hosting. You don’t just set your nightly price, upload a bunch of pics and wait (and hope!) Nope. You’ve got to figure out check-in, check-out times. You need to create a house manual.

There’s more. Do you want to set a strict or flexible cancellation policy? Do you want to include a security deposit? How much will you charge guests for cleaning? This is where that handy book “Get Paid…” was a real life-saver.

1 So many variables to set!

Once you do get everything all set up, there’s a certain amount of apprehension that sets in. You have ZERO ratings. Who in their right mind would rent from you? This is why it’s super important to channel your inner marketing skills.

Study this sh*t out of your area Airbnb market. Use the best photos. Make sure your prices are strategically set to account for seasonality and local events. Even after you think you’ve got a handle on everything, be prepared to wait patiently.

I’ve got four whole bookings set for the next 9 months. Once reviews (hopefully 5 stars) start coming in, I’m certain the bookings will ramp up.

The Hard Parts

Then, there’s getting a place ready for prime time. In our case, we had purchased a really solid condominium unit that was not much over 10 years old. As they say with houses, “the bones were good.”

That said, the place was used as a Coast Guard rental. The carpet was original, and the walls were beaten up all to hell. There certainly weren’t any improvements that I could see during that first walk through. All original fixtures, and a lot of wear and tear.


The bottom line is you’ll likely need to put in some good ol’ fashioned elbow grease to get your property ready for vacation rental use. A LOT of elbow grease. Remember, these types of rentals have to be fully furnished (unlike long-term rentals, where tenants furnish the space.)



I’m really enjoying the journey to my early retirement. Over the past three-plus years of the countdown, I’ve come to appreciate all the trouble I can get into outside of a cubicle. Working on homes and managing properties gets me out of a seated-all-day position. I get to produce something tangible.

We’ll see how the Airbnb Experiment goes. I’m optimistic about its potential, but I’m still learning and researching as much as I can before the high season hits this summer. Just this week, I’ve opted to fire up a listing on Marketing through more than a single channel is never a bad idea.

I’ll leave you with one last bit of advice: More than anything, I’ve learned that early retirement is simply a means to an end. It should never be just an escape from a bad situation. Instead, “early retirement” is best when you use it as a launch pad for big ideas, projects, and hustles that align with your passion. Endless vacations get a little stale after a while.

Fire Your Financial Adviser

I have been on the journey toward financial independence for a long time.  I started saving and investing to reach financial independence at age 20.  When I decided that I wanted to become wealthy, I knew that I needed to be educated on how to turn this goal into a reality.

While at college, I studied Business Management.  Even though I tried to take as many finance classes as possible, I did not learn much about personal finance.  Sure, I studied financial analysis and other classes, but the content was mostly geared towards learning how to dissect financial statements.  It was taught more from the standpoint of learning how to become an administrator.  Those classes have helped me during my career, but not so much as an individual investor.

My goal was to learn how to invest to receive optimal returns.  There are many mixed messages when it comes to investing.  My focus was to learn how to become a successful investor.  In order to do that, I had to learn how to sift through the noise and to find the most practical content to help me learn how to manage my finances.

Since 1997, I have read almost 100 investing books.  Over the years, I have subscribed to many different personal finance magazines and journals.  Most of the time that I spend online has been reading investing articles, forums, or blogs.

I have read many great financial journalists, bloggers, and random forum posts that have helped me with my financial planning.  There has been one person, however, who I have always enjoyed reading.  That person is Doctor James Dahle.  Before I knew him by his actual name, I knew him as The White Coat Investor.

The first time that I came across The White Coat Investor was in 2007.  This was a very volatile time for investors.  The Great Recession was on the horizon.  There were many posts on the forum from The White Coat Investor that helped me to stay the course, tune out the noise, and to focus on investing for the long-term.  I am thankful for those posts by The White Coast Investor and grateful that I followed his advice.

The White Coat Investor’s target audience is primarily Medical Doctors and other high-income folks.  Most of what The White Coat Investor writes about, however, transcends profession and tax brackets.  His financial advice can be applied to anyone who is working, saving, and investing to reach financial independence.

To help Doctor’s and other high-income professionals reach financial independence, The White Coat Investor has recently launched a new course.  The focus of this online course is to teach high earners how to create a financial plan that is tailored to their unique financial needs.  It is a step-by-step course for creating and implementing a financial plan without having to use a financial advisor.

The course is based on 12 learning modules.  I have reviewed the content.  It is truly a bargain for only $499.

There is a reason why this course is titled Fire Your Financial Advisor.  After you complete this comprehensive course, you will no longer have to pay a financial advisor for their services.  You will be prepared to manage all of your finances by yourself.

This class goes a step beyond what a financial advisor traditionally helps with.  Fire Your Financial Advisor is not just another way to promote passive investing in index funds.  It is tailored to the needs of physicians and other high-income professionals.  After finishing the course, you will be more confident on how to manage your student loans, insurance, taxes, estate planning, legal protection from lawsuits, as well as everything you need to know about managing your investments.

As part of the 12 modules, you are provided with 7 hours of lectures, videos, and screenshots that you can refer to at any time.  As you advance through the material, there are pre-tests, quizzes for each section, and a final exam.  Upon completion, the course is set up to ensure that you have total mastery of the material.

It would take hundreds of hours of independent research to learn what The White Coat Investor provides in Fire Your Financial Advisor.  As a busy professional, do you have the time to read 30 or 40 books on these subjects?  Even if you do, you will not find many where the content has been written by a physician who understands your unique situation.  The White Coat Investor does all the heavy lifting for you.  He provides you with what you only need to know.  There is zero waste in this course.

Another great feature about the Fire Your Financial Advisor course is that there is not any risk.  Buy it and check it out.  If you find that it does not provide you with what you need to optimize your finances, there is a 7 day, risk-free, guarantee to return it.  It would be difficult if not impossible to hire a financial advisor who offers a money back guarantee.

The White Coat Investor is one of the good guys in the world of personal finance.  If you are a doctor and want to take control of your finances, check out Fire Your Financial Advisor.  You truly have nothing to lose other than $10,000 or more in annual fees that your financial advisor will charge you for what you can be doing yourself for free.

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Individual vs. Institutional Investing

As an individual investor, it is important to know where you stand.  To succeed, you need to know your goals.  For most individual investors, their goal is to be able to fund their retirement expenses or even to be able to retire early.  Other goals might be paying for a child’s education, starting a business, or building a dream house.

To reach those goals, there is a simple path for an investor to follow:

  •       Earn a reasonably priced college degree that will lead to a high paying profession
  •       Limit debt
  •       Live below your means
  •       Max out your 401K and Roth IRA
  •       Invest in low-cost mutual funds that meet your age and risk tolerance

That is the basic formula for an individual investor to succeed.  It is easy, however, for an individual investor to stray from these simple steps.  It does not just occur.  The marketers who work for the financial industry muddy this simple message.  They tell you that being average is for losers.  To succeed as an investor, you must do hours of research and trade like a professional stock picker.  If that message sounds too overwhelming, the next best thing that they can offer you is a commission based financial advisor who will sell you overpriced mutual funds or an annuity that will more than likely underperform the S&P 500.

Know Your Competition

Despite most people having a 401K that holds stock and bond mutual funds, individual investors do not control the stock market.  As recently as the 1970’s the majority of trades were conducted by individual investors.  People would follow the performance of their stocks by reading the investing section of the newspaper and call in trades to their stockbroker.

Those days are long gone.  People no longer track their investments in the newspaper.  They now use online investing platforms.  They also no longer control the volume of trades.  Today, almost 95% of the trades are performed by institutional investors.


If an individual decides to try to invest as an institution does, they are trying to compete with institutional investors.  Individual investors do not possess the resources that institutions possess.  Individual investors lack the scale that institutional investors have.  They have access to investments that non-accredited investors do not have.  Large institutions such as Pension funds, university endowments, foundations, and fund managers have billions of dollars in assets under management.

Institutional investors employ teams of professional investors who have attended the best Ivy League Universities and business schools.  Only the best and the brightest are hired to manage these large pools of assets.  They hire teams of professional investors who are experts in specific markets.  It is beyond a David vs Goliath comparison to compare the resources of an individual investor to an institutional investor.  The individual investor is simply out of their league.


When an individual investor buys shares of a security, that purchase is not just an exchange of money for shares of a publicly traded company.  It is a statement.  The trade can be interrupted to mean that the investor knows that the stock is undervalued.  It is not correctly priced in relation to the market.  It is a vote of confidence that they know more than what the entire financial industry knows about that stock.  The individual investor knows that the company has the management, financials, and potential for revenue that nobody else is aware of at that moment.

Odds are, the individual investor does not know anything that the whole world already does not know.  Individual investors are actually the last ones to know.  The first ones to obtain the facts about management, financial statements, and the potential for growth of a company are the industry experts, insiders, professional analysts, and then the financial media.  Unless you have insider information, you are getting your information from the financial media.  At that point, the price of the security is priced based on its business fundamentals and potential for growth.


The stock market is efficient over the long term.  Yes, an individual investor can occasionally find an undervalued stock.  When that does occur, it is more than likely the result of luck than analysis.

Most individual investors do not have the education or analytical training to properly research securities.  They also do not have the time if they already have a full-time job.  Yes, the commercials for trading platforms state that anyone can do it, but it is just not true.  If it were true, individual investors would not underperform the market the way that they generally do.

When there are rare buying opportunities like the fall of 2008, most individual investors do not take advantage of this buying opportunity when almost the whole stock market goes on sale.  Rarely do individual investors have the courage to go against the grain and buy when the world is selling.  When these opportunities do become available, most individuals are selling low and waiting on the sideline to buy when the prices increase.

It is a better practice for individual investors to let professional financial analysts try to analyze hundreds of companies to find the best stocks to invest in.  They get paid to try to outperform the S&P 500.  Over the long haul, most of them fail too.  If institutional investors with almost unlimited resources and talent cannot consistently beat the market, what chance does an individual investor have?


For an individual to be a successful investor, they must invest for the long term.  Dollar-cost-averaging, rebalancing, and compound interest are the tools that will drive the success for the individual investor.  By dollar-cost-averaging a fixed amount into a 401K, an investor will get to purchase stocks when they are priced both high and low and capture the average price and return.  That along with holding those stocks for decades will allow for compound interest to work.

For example, let’s examine the performance of a portfolio composed of 60% in the S&P 500 and 40% in The Total Bond Fund that was rebalanced annually.  How did this portfolio perform 1996 to 2016?   If an individual investor invested $500 per month into this balanced portfolio that portfolio would have averaged a return of 7.4% per year.  That portfolio would have grown to $192,000.

This is where the individual investor has an advantage over the institutional investor.  The institutional investor must work to beat the S&P 500 or whatever benchmark they are compared to depending on the type of securities they invest in.  The advantage that the individual investor has is that they just have to capture the market average that the index produces.  The fund manager is highly compensated for short-term performance.  If the fund manager does not perform, they will be replaced.  If the fund continues to underperform, they normally merge with another fund.  It is getting harder and harder for professional investors to beat the market due to the Shrinking Alpha.  Based on the data provided by SPIVA, Over the past 10 and 15 years, only 18% of domestic funds outperformed the S&P 500.

By focusing on being average, time is the ally of the individual investor.  The individual investor does not have to get bogged down with quarterly earnings reports or making a second career out of managing their investment portfolio.  There will be positive and negative quarters.  When there are negative quarters, it is a time to buy low.  When there is a positive quarter, it is still a time to buy, but also a time to watch those low-priced shares that were purchased grow in value.


Be true to yourself.  Know your strengths and limitations.  If you are not David Swenson, Bill Gross, Peter Lynch, or Bill Miller, you should not try to replicate how they invest.  How they invest is not useful to you.

Establish your goals.  Write a financial plan.  Identify what you want to achieve and experience.  What are you saving for?  How do you plan on using your money to improve your life and the lives of others?

If you are not a professional investor, stop pretending.  Stop trying to time the market.  You are just buying high and selling low.  You are wasting time, energy, and money.

Stick to the basics.  Establish what your risk tolerance is as an investor.  How much of a loss can you tolerate before you sell low? When will you need the money that you are saving/investing?  A good place to start is with a balanced portfolio of stocks and bonds.  If you are in your 20’s, you might want to allocate more in stocks.  If you are in your 50’s, you should probably consider holding less in stocks if you are retiring soon.  After that, let dollar-cost-averaging, rebalancing, and compound interest work for you.

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Bitcoin: Just Say No

Since I started studying investments, I can recall that there has always been a hot investment that was sure to make anyone who invests in it rich with little effort.  In the 1990’s, it was the stocks being traded on new online trading platforms.  In the mid-2000’s, it was flipping real estate.  Currently, it is hard to find a financial media outlet that is not talking about Bitcoin.  I don’t know if Bitcoin is a bubble like the stocks and Las Vegas real estate market.  The one thing that I can tell you is that I will not be investing in Bitcoin.

Since the first time I heard about Bitcoin, it did not sit well with me.  About three years ago, I was at a birthday party for my best friends Dad.  My friend’s nephew Denis who was fresh out of drug and alcohol rehab was also at the party.

I have known Denis since he was a little boy.  Denis seemed happy that I was at the party and struck up a conversation with me.  He told me that he was grateful to be sober and that his family has welcomed him back into their life.  He went on to tell me a few of his war stories from his addiction.  The one story that he told me was that he was using Bitcoin to buy drugs from the dark web.

As a teetotaler, I had no idea what Bitcoin or the dark web was.  At that time, I thought the dark web was a cheesy Lifetime movie.  He explained it to me as being a web portal where you can buy just about any type of contraband and the cryptocurrency that you use to conduct these illegal transactions was Bitcoin.  It might not be fair, but as the result of that conversation, I now always associated Bitcoin as the PayPal for the online black market.

My second real-life encounter with Bitcoin came last fall.  My own nephew told me that he was investing in Bitcoin.  Not to be harsh on this kid, but he is not as sophisticated as my friend’s nephew Denis.  He is just a nineteen-year-old boy who is working as a dishwasher at a nursing home.  He is debating on going into the military but has not decided what he wants to do with his life yet.

He told me that his friend at work invested $5 in Bitcoin and it grew to be worth $85.  He also invested a few bucks of his own and was hoping for the same return.  During this conversation, I think I knew how Joseph Kennedy felt when a shoeshine boy was talking about stock tips with him prior to the market crash of 1929.

I generally do not get involved in other people’s personal business.  That is especially the case when it comes to family.  The angles have taught me that only fools rush in.

The issue that I have with my nephew messing around with Bitcoin is that it will give him the wrong idea about what investing is all about.  Odds are, he will mature one day and have to save for retirement.  If his Bitcoin adventure blows up in his face, he might be afraid to invest for retirement.  That would be a tragedy.

The last conversation that I had about Bitcoin was over the holidays with my sister-in-law who was up north visiting from South Carolina.  She told me that she was going to invest in Bitcoin because she thinks that it has huge growth potential.  She even thinks that it might overtake the U.S. Dollar as the main currency in the United States.

I asked her why she thought that would occur.  She explained that her Mother who owns a beautiful bed & breakfast in Ashville, North Carolina is losing business because she does not accept Bitcoin as a source of payment.  She is considering making the change to accept Bitcoin to grow her business.

Now my Sister-in-law is far from being a dummy.  I have a ton of respect for her.  She is a Psychologist and is exceptionally intelligent.  She is an expert in PTSD and works for the VA helping veterans who are trying to readjust to civilian life.  Unfortunately, when it comes to greed, logic and reason sometimes go out the window.

I see Bitcoin as speculation.  It is not an investment.  When a person invests in stocks,  they are buying shares of a company that produces a product or service.  It is an entity that has financial statements to indicate why it is worth its current value.

Bonds are also an investment.  Bonds are a loan to the government or corporation.  They have a quality grade and risk associated with the term length.  Shorter-term bonds are generally less risky.  Most investors use them to offset the risks of owning stocks or for income.

I did not think that I would ever write a post on Bitcoin.  I have no interest in it.  I am only writing this because I fell that I owe it to anyone who is considering buying Bitcoin.

Bitcoin is not an investment.  It is pure speculation.  I consider it speculation because people are just buying it with the hopes that it will go up in price.  Hope is not a strategy or logical reason to buy an investment.  Bitcoin does not produce anything.  It does not provide a service to help anyone.  There is no reason to invest in Bitcoin other than the illusion of striking it rich.  I see it as simply gambling with your money.

Some people consider the Blockchain technology that Bitcoin uses to be truly cutting edge.  Blockchain is software that allows two people or computers to conduct a transaction when there is not a relationship between them.  Maybe that is why foreign drug dealers are using it as a means to sell poison to kids in the suburbs.

I imagine that there is far more good to Blockchain than bad.  Yes, I have a biased point of view.  However, my friend almost lost his nephew as the result of being able to use this technology to buy drugs on networks such as Tor.

As for those who want to invest in Bitcoin, my advice is simple.  Just say no.  Don’t walk away from it, run away from it.  If you feel that you absolutely must invest in Bitcoin, Limit your exposure to a very small percentage of your portfolio.  It is an alternative asset class.  If It continues to climb in value, you can brag about owning it to your friends.  If it crashes, you won’t lose all of your life-savings.

If you want to become a serious investor, think long-term.  Look for a balanced mutual fund that holds the right mix of stocks and bonds for your individual situation.  Take advantage of your employers 401K or open an IRA.  Don’t pay attention to investment manias.  They come and go and most of them wipe out wealth along the way.

Do you invest in Bitcoin?

If you do, please share why you see it as a valid long-term investment option.

Always consult with a financial professional before making any investment decisions and please read the Disclaimer Page.

The Benefits of a Balanced Portfolio

Balance is important in almost every area of life.  We should eat a balanced diet including food from every food group to ensure our bodies get proper nutrition.  We should balance the type of exercise we perform including strength training, cardio, and stretching.  Having a good work-life balance leads to improved productivity and happiness.  There should also be a balance in how we invest and that can be accomplished with a balanced portfolio.

To add balance as an investor means to invest in different asset classes that have an inverse relationship.  A balanced portfolio is an asset allocation that has balanced percentages of stocks and bonds.  It could be 50% invested in stocks and 50% invested in bonds.  Most balanced portfolios utilize an asset allocation of 60% in stocks and 40% in bonds.  However, the asset allocation might be outside of those bands.

The concept of the balanced portfolio was made popular by Harry Markowitz.  In 1952, Harry Markowitz wrote a paper in the Journal of Finance where he introduced his hypothesis on Modern Portfolio Theory (MPT).  The basic theory of Modern Portfolio Theory is that an investor can balance the expected return of a portfolio and risk by using diversification.

Modern Portfolio Theory suggests that an investor can construct an efficient frontier based portfolio by investing in more than one equity or fund.  Portfolios that are based on the efficient frontier are highly diversified.  The efficient frontier is a balance of diversifying across risky investments with a high potential for return with a low-risk investment that produces a lower return.  The optimal portfolio is designed to strike a balance between securities that produce the highest potential returns with securities that have a lower potential for return but balance out the risk.


Sample Balanced Portfolios

There are many ways to construct a balanced portfolio.  Below are two popular and simple balanced portfolios.  They are both based on a 60/40 asset allocation.  They incorporate a slightly different approach based on market capitalization.

Value Tilting

The Coffee House Portfolio was created by a Bill Schultheis.  Bill is a Seattle based financial advisor who created the Coffee House Portfolio for investors to build wealth, ignore Wall Street, and get on with their life.  The Coffee House Portfolio is considered a lazy portfolio.  Bill also published a book The Coffeehouse Investor that covers The Coffee House Portfolio in greater detail.  The Coffee House Portfolio uses a tilt towards small cap stocks as well as value stocks.  Small and value stocks have historically outperformed growth stocks.  Value stocks are undervalued based on fundamental analysis.  Please keep in mind, however, that there is no guarantee of this moving forward.  This asset allocation is well suited for investors who prefer a slice-and-dice approach to asset allocation.


Large Blend – 10%

Large Value – 10%

Small Cap Blend – 10%

Small Cap Value – 10%

REITS – 10%

Total International – 10%

Total Bond Market – 40%


1-Year Return = 10.94%

5-Year Return = 6.63%

10 Year Return = 5.97%

Market Capitalization Weighted

Another lazy portfolio is the three-fund portfolio.  While I am not sure if it was created by Taylor Larimore, it was made popular by him and the other Bogleheads in their book The Bogleheads’ Guide to Investing. The three-fund portfolio is made up of three mutual funds.  Even though it only invests in 3 mutual funds, it invests in 10,000 stocks.  This portfolio is highly tax-efficient because there is little turnover.  It contains every domestic and international large-cap, mid-cap and small-cap stock.  The three-fund portfolio is market cap weighted to prevent any front-running.  There is not any risk of underperforming the market like with value tilting because this is the market.  It is truly a simple portfolio to manage.  It can be allocated in many ways to suit an investors goals and risk tolerance.  Below is an example of how it can be used as a balanced 60/40 portfolio:


Total Stock Market – 40%

Total International Stock Market – 20%

Total Bond Market – 40%


1-Year Return = 7.05%

5-Year Return = 8.62

10-Year Return = 5.26

The Benefits

The best aspect of a balanced portfolio is that it allows the investor to control risk.  It is not risk-free like an FDIC backed certificate of deposit.  The risk is controlled by way of rebalancing.  A balanced portfolio is easy to manage and rebalance when it falls out of alignment due to market performance.

Let us assume that there is a market correction and a decrease in the price of stocks.  The portfolio that was once 60% in stocks and 40% in bonds is now out of alignment.  The asset allocation is currently 55% in stocks and 45% in bonds.  By rebalancing, the investor can sell bonds high and rebalance to the original asset allocation.

This systematic approach takes emotions out of the process and stands in the way of an investor making a poor decision.  This prevents investors from chasing performance.  It always forces the investor to buy low and sell high.

Just keep in mind that if this is done in a taxable account, it could trigger a tax consequence.  It is best to rebalance in a 401K or IRA because it has zero impact on taxes.  It is also wise to limit rebalancing to only once every year or no more than once every six months.

Unlimited Options

When it comes to investing, there is no such thing as having the perfect portfolio.  By using a balanced portfolio, an investor can avoid putting all of their eggs in one basket.  If an investor only invests in bonds their holdings will be secure, but the low returns might not keep up with the long-term rate of inflation.  On the other hand, if an investor only invests in equities, a major market crash could cut the value of their life savings in half.

A balanced portfolio is a diversified portfolio.  It reduces risk and can increase returns over the long term.  A balanced portfolio can be customized to meet the risk tolerance and investment goals for investors in every age group.  It can be created for both growth investors and for those who are seeking income.

A balanced portfolio can be constructed with many different funds or ETFs across various asset classes like the two above examples.  Individual securities can be used as well.  A balanced portfolio can also be made up of one mutual fund.

There are many options for investors who want to just use a single mutual fund.  There are options for investors who like to use low-cost index funds.  There are balanced funds for investors who prefer active management.

For investors who are near or in retirement, the Vanguard Wellesley Income Fund (VWINX) is a good option.  The Wellesley Income Fund (VWINX) is actively managed and is composed of 40% in stocks and 60% in bonds.  Even though it is an active fund, the Wellesley Income Fund (VWINX) has a low expense ratio of  0.22%.

Younger investors might want to own more stocks than bonds.  A more aggressive balanced fund for them to consider is the Vanguard LifeStrategy Growth Fund (VASGX).  The Vanguard LifeStrategy Growth Fund (VASGX) uses index funds for its allocation of 80% in stocks and 20% in bonds.


Just be aware that there is still a risk when investing in a balanced portfolio.  A balanced portfolio just helps to reduce risk.  It does not eliminate it.

An investor can design their own balanced portfolio.  There are also mutual funds that allow investors to own a balanced portfolio with one single fund.  There are options for investors of every age and risk tolerance profile.  A balanced portfolio is a good option for both new as well as experienced investors.

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Please consult with a financial professional before you ever make any investment decisions and read the Disclaimer page.

Crowdfunding 101


As the saying goes, necessity is the mother of invention. The economy of the world is expanding even though it has passed through some turbulent waters since the start of the new century. Business must make progress and innovative business minds will discover how to survive and grow even during times when credit is tight.

There are many projects and opportunities out there.  Many are begging for the needed funds to enable them to see the light of day. The reality of the above gave birth to this child of necessity called crowdfunding.

The objective of this post is to explain the basics of crowdfunding. Is it a viable opportunity for investors? What are the merits as well as the shortcomings of the system?


Crowdfunding is the practice of raising money to fund a project through the collective efforts of many people whose resources are pulled together to fund the project. It derived its name from the many people that come together with their money to fund the project. It is a form of alternative investing.

The JOBS Act of 2012 has expanded the investment opportunities for small businesses to raise capital.  Prior to this bill, only Accredited Investors had access to this type of investing.  Following the JOBS Act of 2012, every American can now invest in new businesses or start-ups that were once only available to hedge funds or Venture Capital Firms.

In 2015, the total global sum invested in crowdfunding projects was put at $34 billion. That total also includes Peer-to-Peer Lending. That goes to show the strength and interest of this alternative method of raising capital.  There are different categories of crowdfunding:


In a sense, this is entrepreneurship on open display.  An entrepreneur has goals for their new venture, but limited funds. A brilliant new product or service is set to be launched, but to bring this idea to market, an entrepreneur needs funding.  A wise businessman knows to avoid high-interest rates.  Entrepreneurs do not want to incur debt, nor do they want to sell equities/shares at this early stage.  In such a scenario, the soft landing is to pre-sell their product or services. The payments are sourced from people ahead of actual delivery and it is called rewards funding.


This method of operation is one by which the backer pledges an amount of money and in return receives equity shares of the company. This is basically investing in a privately held company. This usually happens in the early stages of the venture.  It is a common form of funding for new real estate projects. There is a high potential for returns on investment in this system.  However, like with most securities, there are not any guarantees in place to protect principle.

Donation Crowdfunding

Just as its name implies, Donation Crowdfunding is a way to raise money for a cause.  There is not a return on investment.  The money is used to support a community project, pay for the medical expenses for someone who is in need, or support a cause.  This type of crowdfunding attracts resources from sources that tend to have an emotional attachment to a cause.

Lending Based Crowdfunding

Lending Based Crowdfunding is also known and Peer-to-Peer Lending or P2P Lending.  This is the practice of one individual lending money to another individual.  The lender acts as a bank normally would.  The individual who borrows money pays back the principle along with interest.  These transactions occur on online platforms.  Borrowers interest rates are based on their credit history.

Who Can Invest

Before you consider investing in a venture that is raising capital by way of crowdfunding, you first need to know some of the rules and qualifications:

  • An investor can invest $2,000 per year if both their annual income and net worth are less than $100,000.
  • An investor can invest up to 10% of their annual income or net worth per year if their net worth and annual income are equal to or greater than $100,000. An investor cannot exceed an annual investment of $100,000 per year.

How to Invest

There are many online crowdfunding platforms.

Below are some of the most popular:

  • is a funding platform for various creative projects including new technology, gaming, artistic design, and films.
  • is a donation-based crowdfunding platform that allows people to raise money for various causes that include different life events.
  • uses its online platform to raise capital for scientists, technology-based projects, philanthropists, various artist projects, and business ventures.
  • is an international crowdfunding platform that provides funding for films, start-ups, and charities.


You might be wondering what magic makes people support a cause with their financial resources even when they know next to nothing about a project.  Four main reasons can be attributed to this behavior in people:

  • The greater purpose of the campaign is a source of attraction. They feel an emotional connection.  This campaign can make a positive difference.
  • There is the physical aspect of the campaign. The people see the business wisdom in a campaign. People take a calculative look at the rewards and project an above average return on investment.  They feel convinced based on the potential for financial gains.
  • There is the aspect of the marketing campaign that is so compelling and convincing that people are attracted to the project or the idea.
  • Above all, people are aware that they can sit at the remotest corner of the world and conduct their business through online means. The world is now a global village where even the smallest of business endeavors are transacted online.


For a successful crowdfunding campaign, there must be great preparation before results are achieved.  The marketing must be well structured for a campaign to get off the ground and pull together the needed capital for the project.  The preparations should include:

  • Social media is a vital marketing tool. This is where the market is. You will get the crowd that you want and bring them together online. Maintaining a strong and aggressive campaign online is important to success.
  • Before the project is launched, there is the need for the creation of an email distribution list. Members on the list are those that will form the mainstream of the needed crowd.
  • The local media also has a role to play in the scheme of things. They can be helpful for promoting the publicity of the campaign. They can bring about local buy-in.  This can help with the project going the distance. 


  • Potential for High Returns (above market averages)
  • Adds diversification to an investors asset allocation (beyond equities & fixed income)
  • Access to investments that were once only available to high net worth investors
  • The satisfaction of being able to contribute to a cause, project, or start-up 


  • Loss of capital (riskier than micro-cap stocks)
  • Liquidity (capital can be tied up for many years)
  • Lack of transparency in financial records (who audited the books?)
  • The project team is creative but has limited management skills


Based on the amount of capital that Crowdfunding has attracted, it appears that it has come to stay.  While there are benefits for both the creator and investor, this is a highly risky type of investment.  Equity crowdfunding is as speculative as investing in penny stocks.  If an individual investor decided to invest in a venture that is being funded by way of equity crowdfunding, they should consider limiting their exposure to 3% or less of their asset allocation.  That rule also applies to lending or rewards-based crowdfunding.  Donation-based crowdfunding is not an investment.  Limit the funds that you contribute to any crowdfunding cause to as much as you normally tithe or donate to charity.  That is a prudent rule of thumb for investing in any type of alternative investment.

Please remember to check with a financial professional and to read the Disclaimer Page before you make any financial decisions.