Asset Mix and Management

December 18, 2017

I’m often asked how much do I have in the stock market?  How much in real estate?  How much in cash?


Here is a breakdown of my assets.  I am not saying this is the right mix.  I am very heavy on the IRA side as I’ve been a saver/investor my entire life.  I’ve maxed out my company 401k and IRA for over 20 years.  As you know, once money is in your IRA (or 401k), you DO NOT want to bring it out until reach retirement age or you face penalties and taxes. The last thing you want to do is give more of your hard earned money to Uncle Sam unnecessarily.  Leave your nest egg alone until you reach the age you can tap into it!


Over the years despite having some ‘wealth’, I’ve generally been cash poor.  This is not a bad thing as it forces me to budget and live below my means.  On the flip side, if and when an investment or business opportunity comes up or an emergency arises, I have not always been prepared from a cash standpoint.  Idle money stresses me out.  Idle meaning making no return (<3%).  Even the best savings accounts or money market accounts only pay up to 2%.  This rate doesn’t even match inflation so you’re losing money by having it “idle”. 

I breakdown my assets into 5 categories:  Retirement (IRA / 401k), real estate, cash/cash equivalents, equities (stocks outside of IRA/401k), and royalties (income producing music assets).


Retirement 72%

Real Estate 17%

Cash/cash equivalents 5%

Royalties 4%

Equities 2%


As I am getting older (currently 47), I have become more interested in income producing assets as I ponder pulling back on how much I work in the next 5-10 years.  Five years ago, royalties would have been 0% and real estate about 5% (my primary residence only).  However, I’ve increased these two asset classes as they produce income.  Even though they produce cash flow, some of this cash I re-invest, into either more income production assets or equities.  The old saying “the rich get richer” is actually true for the wealth-minded investor or entrepreneur.  Think of it.  You have a big tree in your backyard that produces seeds.  You can either consume these seeds OR plant them to grow more trees that produce more seeds!  The wealth-minded plant them.  Over time, you’ll have a huge farm of trees (assets) producing seeds (cash).        


I don’t like to give advice on how the mix of your assets should be managed.  Each person has different needs and goals.  And these change over time.  Plus, you have to focus on assets you are comfortable with.  I have a relative who’s wealthy.  He owns no equities!  This surprised me.  Our mix of assets is quite different.  However, he made his money owning his own business and in real estate so his mix are high in these two asset classes.  His IRA/401k is probably very low as he’s not been a corporate guy but an entrepreneur.  His retirement is his business and real estate, which he’ll eventually convert to cash if he chooses to sell it off and retire. 


If you’re serious about wealth, I highly encourage everyone to have a financial planner (or wealth advisor as I now hear it called a lot).  It doesn’t matter if you’re worth $100 or $100 million. The right planner/advisor can help you maximize growing your wealth while mitigating risk.  I’ve been with mine for over 15 years, starting back when I had peanuts.  Such professionals don’t make you wealthy, that is up to you!  However, they can guide you on financial decisions that give you the best chance for success while avoiding disasters.  I view them as professional golfer would view his caddy.  Trusted guidance and advice.


I found my planner through a trusted friend.  They were accountability partners at their church.  I mention this because I feel the best way to find such professional is through a referral of someone you trust.  Trust is a huge factor to me when it comes to money.   There are still Bernie Madoffs out there, beware!


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Indianapolis, Indiana


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