Illiquid Assets and Over-investing in Yourself

Moneywise

Hampton

Business, Entrepreneurship, Investing

4.8 • 674 Ratings

🗓️ 23 April 2024

⏱️ 35 minutes

🔗️ Recording | iTunes | RSS

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Summary

If you’re already living the lifestyle you want, what is the point of liquid assets? Is there too much risk in tying up the vast majority of your assets? And more importantly, if you already have far more money than you’ll ever need, what is the purpose in continuing to invest for the future when you could be enjoying that money in the present? “Dave” is worth about $150 million, yet he lives on a $600,000 salary that doesn’t even cover his monthly spend. Instead of using his existing wealth, he’s keeping most of it tied up in private businesses, angel investments, crypto, real estate, and a very small public portfolio. But why? “Dave” is in the early stages of an experiment where he massively over invests in himself, just to see what he can do. That also includes hiring a personal team so he doesn’t have to lift a finger with home chores. In this episode, “Dave” will walk us through why he’s living this way, how it impacts how he can spend his money, and we’ll get a detailed breakdown of exactly where all of his money is and how much he has access to. He’ll also tell us about his experiment: why he’s running it, what it actually looks like, and how it’s working out. This is Moneywise, a podcast where host Sam Parr is joined by high-net-worth guests to explore exclusive insights into personal finance and lifestyle tailored for other high-net-worth people, or those on their way. They'll get radically transparent about the numbers, revealing things like their burn rates, portfolios, and spending habits Who is Sam Parr? Sam is a serial entrepreneur and the co-founder of The Hustle, which he sold to HubSpot in 2021. He's also the co-host of one of the world's top podcasts for entrepreneurs, My First Million. Known for his insightful business acumen and candid communication style, Sam Parr continues to be a prominent figure in the world of media and entrepreneurship. Sam's newest and biggest venture yet is Hampton, which he co-founded in 2022. This podcast was made for the Hampton community, a private, highly-vetted, peer membership community for founders and CEOs of fast-growing, tech-enabled startups. Chapters: Dave’s childhood family finances (2:39) How Dave made his money (4:36) How much Dave has in liquid vs illiquid assets (7:11) Dave’s journey to finding confidence (12:22) Dave’s assets breakdown (17:31) What Dave’s current income his (20:14) How he is investing in himself (21:59) This podcast was produced in partnership with Lower Street and distributed by Morning Brew.

Transcript

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0:00.0	It's weird to have like a paper thing where you're thinking it, okay, in five years or something, I should be able to do X, Y, or Z, but you have practically none of that spending power or access today.
0:15.4	Today's guest is my anonymous friend who will call Dave. Dave is worth around $100 to $150 million. However, the vast
0:24.4	majority of his net worth is in privately held companies, which means they are illiquid. Despite his
0:30.0	huge success in multiple businesses, Dave is living on a relatively modest income, an income that
0:35.6	doesn't quite fully cover his monthly expenses.
0:39.0	I have to pull a very small amount from the overall net. Regular income is like five to
0:44.9	600 a year, pull like 150 to 200 a year. However, Dave spends a lot. He has a full-time chief of staff,
0:53.4	multiple assistants, and all types of household help
0:56.2	to the point where he basically only focuses on friends, family, and work.
1:00.6	I wanted to understand why he's living like that.
1:03.0	And as it turns out, a lot of it comes down to the confidence and willingness to bet on himself.
1:07.7	And betting on himself has actually become a pretty significant part of his finances recently.
1:13.0	I have made the decision in the last like 18 months. This is somewhat of a reason thing to like
1:18.3	massively overinvest in my wife and I as like a unit. I'm over investing in angel opportunities
1:25.6	that I think are good. We have a personal assistant, an EA,
1:29.2	and a chief of staff that all work for us. In this episode, we're going to look at Dave's portfolio.
1:34.6	We're going to look at his liquid portfolio as well as his huge ill-liquid portfolio and his
1:39.0	investments. We're going to ask why he does it this way and how this impacts his life.
1:43.5	The reason why this episode
1:45.0	interests me is because Dave is super interested in over investing in himself. And he's very
1:50.4	systematic about it. He refers to it as an experiment. And so we're going to learn a ton about that.
1:54.5	And as usual, we're going to get super specific about the numbers. Have we made it my love? Oh, honey.
	...

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