I’m in the process of getting my Act 22 paperwork done here in Puerto Rico (an amazing Act for US Citizens that allows you to skip Federal Income tax, and pay 0 capital gains taxes if you’re a resident of Puerto Rico) and I’ve been thinking about my finances more than normal. Investing is a lot more fun when you won’t get your potential gains taxed away, but I’m also becoming cognizant that being sloppy with money can cause stress later in life.
I thought I would briefly talk about my personal current investment plan, so sorry if this is a boring interlude from my usual topics. I think disclaimers are lame and unnecessary, so feel free to lose your money or get FOMO by following/not my plans.
10 years ago I made a good amount of money when I worked in the trading world (which I’ve recently slipped back into on a smaller level), and subsequently haven’t had a traditional job since. I recognize how lucky and fortunate I was to be in that place at that time, but I did develop some bad spending and investing habits.
I read about personal finance my entire life since I was a child, but I actually never followed any of the rules. The one traditional thing that I did, buying a condo to live in Chicago, saw me get burned even after the “market recovered”. I’ve never invested money into an IRA/retirement, or bought and held an index fund for more than a few months. I’ve put my money into plenty of high-risk ventures, mostly run by myself, but nothing has ever worked out to as much success as my trading efforts as a youngster.
I’ve been settling into a less expensive lifestyle and absolutely loving it. I think that’s probably the number one thing to be done to acquire extra money. I’ve lived a life that is 10X+ a month more expensive than I currently do, and I’m pretty sure my happiness was exactly the same. I could comfortably live even less expensively than I do now, but I haven’t wanted to explore the edge of that just yet.
On the topic of investing I wanted to outline my current strategy. It’s a bit random and particular to my risk tolerances, but I’m pretty happy with it. I have 3 buckets that I want to increase on a regular basis: my personal bank account, my Betterment account, and my Bitcoin/Ethereum portfolio.
As far as my personal bank account I just want a steady state in my account. I like having a number that psychologically makes me feel like I have a bit more than enough sitting in cash, without being too wasteful. I naturally have some periods of higher spending (mostly due to trips) and lower. If I start spending more than normal, I have to cut down on my investments. This is contrary to normal investment advice, but I also put more money into my investments when I get a surplus of income. Putting less in my investments for me is also a negative incentive, and makes me want to cut back on spending naturally without living under the thumb of a budget.
I used Betterment last year, and have started using it again. I run their basic 90/10 stock/bond portfolio and like it. I could replicate it in my Etrade, but for me the ease of use and extra features they have offset the pretty minimal fees. I have a bi-monthly auto-deposit/invest, but also put some extra money in periodically. I’ve come to terms with I’m not going to get rich quick investing in index funds like this, but it’s a good way to get rich slow while hiding money from myself. I think about it like the best version of a long-term savings account.
Lastly I have an approximately 70/30 split in my crypto currency portfolio between Bitcoin and Ethereum. I have a bunch of other coins as well for trading purposes, but I keep my positions relatively small in comparison. If I didn’t trade I would just hold Bitcoin and Ether with 70% at least in Bitcoin. Any profits from my trading activities I plan to re-invest half into Bitcoin and Ether, and the other half get cashed out for my personal account + Betterment. If I had a different income source I would put money into these as I think they have a chance to make such a huge return that it is worth the risk that I wipe out a portion of my wealth. I’m mentally fine with this as I put money into boring stable stuff now via Betterment. I actively follow these markets though which adds to my personal comfort and abilities to change my thoughts if necessary.
If you also have a flexible job, want to save on taxes, and interested in coming to Puerto Rico, here is a normal day in San Juan (Isla Verde area yesterday):