Posted by We continue the content of the previous article. If the family's annual income exceeds XNUMX or more, it basically belongs to the middle class in the United States.At this time, I also had the remaining money to do some asset allocation and planning.
Child education
This part is simple: if you want your children to go private before the undergraduate degree, and you want your children to go to the best undergraduate degree, then the education expenditure will be very high.A casual comparison between China and the United States will tell you: In China, the annual tuition fees for the non-special departments of the best universities are less than 1000 US dollars, and only more than 3000 US dollars in four years.For universities of the same level, the corresponding figure in the United States is 20 to 30 US dollars in four years.Normal Americans will have at least 2-3 children. It is conceivable that the pressure is very high.
The solution is similar to 401k: give you tax incentives, but only for education, otherwise you will be fined.The state governments have similar plans, run by various private companies.Keywords: 529 plan; Coverdell.In addition, in recent years, what has become more popular is the use of index-type universal life insurance policies for early planning.
life insurance
From the most reliable life insurance companies in the United States (there are no more than 5 such companies in the United States), one or two large-value insurance companiespermanent life insurance(That is, the so-called "saving insurance" in China, but the concept cannot be completely equivalent).The difference with term life is:
1) term life: A pure pocket tool, the monthly insurance deposit directly corresponds to the accidental death probability at the actuarial level, so it is very cheap when you are young (20-30 dollars/month, corresponding to 100 million dollars in insurance), there is no "investment" Part, so if the accident never happens (hopefully), all the deposits paid are only expenses.Only applicable to "young people" in their 20s to 40s, because in the future, the premiums will be too expensive for you to afford. (This is easy to understand: if a 100-year-old man has a life insurance of 100 million, what is his reasonable premium in that year? The answer is 99.9... million)
2) Permanent life: The premium corresponding to the insured amount of 100 million is not $20-30 per month, but about $400-500 per month.But among the $400-500, it is true that only $20-30 is purely corresponding to the accidental probability of death on the actuarial level, and the remaining part has entered the insurance company, which is as large as tens of billions to hundreds of billions of dollars. The investment management of insurance funds is carried out in the fund pool of the company.The logic is that as your share in this insurance fund pool increases, a larger and larger part of your 100 million insurance fund comes from your own savings and investment income in the insurance fund pool. It is guaranteed, so that the pure cost part that you pay purely corresponding to the accidental death probability at the actuarial level will be lower and lower.Therefore, even if your insurance policy is held to a very old age (usually held until natural death), this part of the pure cost can still be maintained at a very low level, and will be lower and lower, instead of term life Similarly, by the age of 40-50, it is too expensive for you to afford it.
At the same time, as your share grows in the insurance capital pool, the actuary will give you a number called "cash value".You can roughly think of this number as similar to the assets in your 401k: you don’t need to pay capital gains tax during the holding period, and you can’t withdraw it before the age of 59 and a half (but you can use this amount as collateral for unlimited loans)
Corresponding to the "five indicators" of wealth management/investment, the difference from a typical mutual fund is as follows:
1) Permanent life: The insurance capital pool is as large as hundreds of billions of dollars, and its investment targets cover all investment products you can think of in the world (the entire account is SEC exempted, what you love to do), and even the entire company .The yield of the best companies can reach about 8%, and the risk of the insurance capital pool can be controlled to the level of US Treasury bonds.This 8% rate of return will only be enjoyed by your family after you die (accidentally or die of old age).The only part you can enjoy during your lifetime is the 4%-5% "cash value" part (the risk of this part is similar to a checking account) given to you by the actuary.No capital gains tax is paid during the holding period, and the realization of cash before the age of 59 and a half is restricted.In the trust, the post-mortem deposit is not part of the estate and no inheritance tax is paid.
2) Mutual fund (mutual fund): A single fund is a little larger than billions of dollars, and its investment target has clear restrictions (stocks/bonds, derivatives that are not for speculative purposes).The typical rate of return of the best companies can reach 6%-7%, corresponding to the risk...not too big or too small.It can be cashed almost at any time, but it needs to pay capital gains tax every year.The book balance after death is counted as part of the estate and the estate tax is calculated.
Therefore, in the United States, permanent life insurance mainly has three functions: 1. Like term life, hedging the risk of accidental hangup when young; 2. Using "cash value" as a temporary financing and pension supplement, similar to an almost zero risk , But the income is limited to 5% of 401k; 3. Estate planning: tax exemption leaves a lot of money to future generations/family.
Permanent life insurance is definitely a good thing, but in the United States, it is still a big pit. The main reason is that the quality of the company and the employees is too uneven (seemingly similar to the situation in China).
Life insurance and mutual funds are two completely different "biologies", and they also meet completely different financial needs.Investing in mutual funds is to pursue high returns and high liquidity under higher risks, while perm life is to ensure high returns and almost risk-free under low liquidity.The biggest advantage of life insurance is that it allows your funds to enter the insurance fund pool of hundreds of billions, which has reached a Sharpe ratio of 5 or more; instead of allowing your funds to enter at most billions of scales like mutual funds Investment pool to maintain the highest Sharpe ratio of 1.X.
Financial market investment
Investment in various financial markets.This refers to financial investments that do not have any taxation arrangements and liquidity restrictions, such as own stock trading, mutual fund investment, investment account management through money manager, and so on.Regarding your own stock trading, my personal attitude is always not to suggest that almost all middle-class people touch stocks, unless you are just speculating, or you really have the research and trading authority of large banks or major buyers in the United States.
There are two classic sayings about stock trading:
1) The average return of S&P 500 in the past 20 years is a little more than 8%, but the fluctuation is like a roller coaster.And in this long 5000 trading days, if you remove the best 20 trading days, this number will become about 4%; if you remove 20, it means less than 2%; if you remove 20, it will directly become a negative number. .
2) We have heard too many examples of "several times a year", but first of all, those more "losing to the end in a year" will not promote it everywhere, so there is only "a year The legendary story of "several times"; secondly, the institution can completely double N times in a few days under high leverage, but it is useless.The most radical large institution in the United States cannot guarantee a risk controllable trading return higher than 10%.And if a person can really guarantee that instead of "doubling several times a year," but just "increasing more than 20% per year," then he is Buffett and Berkshire Hathaway will soon be his— You know, Buffett is not just playing stocks and bonds, but he buys the entire company as a subsidiary at every turn.
About funds and mutual funds
There is not much to say about mutual fund. There are only about 10 reliable companies in the United States.Find any one, do a risk test, and put the money in it.This is suitable for investments with idle funds ranging from tens of thousands of dollars to hundreds of thousands of dollars.Usually there is a front-load fee or a back-load fee, depending on the style, high or low.
For the specific fund selection, there is no "best", only "more suitable".For example, if you have tens of thousands of dollars in capital, like high returns, and low liquidity caused by high risks (for example, don’t rush to spend money, so the market has fallen so badly in the past two years, you don’t care, because It can always rise back in a few years.) If you don’t agree with it, then it’s good to find the three largest funds directly and build a large-cap ETF.And if you are extremely sensitive to risks, or have high requirements for liquidity, then naturally you cannot hold a large-cap ETF with heavy stocks running naked.In short, there is no standard answer to this matter, and it will always be a balance of personal preferences of income, risk, and liquidity.
But at a single fund level, individuals are indeed like many friends, and they agree with Bogle's philosophy: through high trading, try to rebalance individual stocks/debts (not asset classes) within the fund, even if the model is correct, friction It will also overwhelm the benefits or risks that are not guaranteed.If you want to reduce the risk of a passive fund, you just need to have fewer shares and more debt.
If mutual funds can't satisfy you
If the investable assets reach hundreds of thousands of dollars and the upper limit is not capped, the risk corresponding to a single mutual fund cannot be hedged. You can consider finding a wealth management (or private bank) under a large American buyer or seller to open a discrete investment account .Set your risk preferences and return expectations, and then just leave it alone.At this level, the money manager (actually a super large team) will rebalance at a low frequency, but this kind of rebalance is no longer a matter of individual stocks/debt levels, but on the following four levels: 1. Industry 2. Asset category; 3. Fund company; 4. The best fund manager in the United States.
The logic behind it is actually very simple: if an industry/asset class/excellent fund manager has performed above average for a few years, he should "sell" them, and transfer them to industries that have performed below average for several consecutive years/ Asset class/excellent fund manager. (Among them, the "fund manager" is slightly subtle, because if a fund manager performs badly for several years, it may not be the normal fluctuation of the TA, but some life/mood changes in the TA)
The "disadvantage" of these investment accounts is the annual management fee. The advantage is that these large institutions will use their purchasing power to allocate investment products that you can't get personally, such as the first municipal bond, or even $66 per share. Alibaba, or give you a portfolio of mutual fund with a lower front load fee.In short, as long as the amount of funds is sufficient, the benefits you can get are much more than that of management fees. (The benefits are often not reflected from the "higher return" side, but more from the "lower risk".)
Here, the difference between the buyer and the seller, if any, can be simply and roughly summarized as that the seller (Wall Street) will be more aggressive, and the fee may also be slightly higher, which is more suitable for the purpose of “requiring high growth in the near future and then realizing it”.At the same time, the entry threshold of the largest sellers may be higher, such as XNUMX million US dollars; the buyer will be relatively conservative, and the fee may be slightly lower. The entry threshold is basically hundreds of thousands, which is OK, and it is more suitable for "putting the money." I’m too lazy to manage the purpose there.
In short, when it comes to "investment", something more important than "return" itself is always "risk".Therefore, before looking at the return, it is recommended to at least understand its corresponding "unit risk return".
A typical example is the so-called "P2P" that has been surging in China over the years.In the current environment where bank interest rates are not market-oriented, and banks only lend to companies that do not need loans, its existence may be somewhat reasonable.However, investors must be very clear about the fact that you clearly know that the long-term return of SP500 is 8%-10%, and you can also clearly know that the corresponding standard deviation is "more than ten percent", so , You can make a rational choice that suits your preferences—while taking clear risks and enjoying the corresponding benefits; but for things like P2P, you only know the benefits that are artificially given to you by a "interest chain" that is not transparent to you It's like 10%, but you can't understand the level of risk behind it-no one knows, because there is no data and no statistics.Therefore, no matter what your decision-making is and how the investment result is, its nature is "perceptual", that is, it is just gambling.
Inheritance of wealth
If you are already a "little rich", or are expected to leave a large taxable estate (for example, with assets worth more than tens of millions of dollars), you can set up an irrevocable trust as soon as possible to avoid inheritance tax.
I personally feel that if you are in the United States, your personal/family income is already at 100k-200k or even higher. In addition to some of the necessary content mentioned above (various insurances, pensions, children’s education), compared to all day long Thinking about how to save more money for investment, the better way of financial management is actually to "enjoy life."If you like a big house, buy a big house; if you like a good car, you can buy a BMW M10 or Nissan GTR R6 for $36; if you like to go fishing and sunbathing, you can get a good small yacht for $10. ; Like golf, he vomits blood all over the country; then there are all kinds of travel around the world.After all, the development stages of the two countries are different, and the biggest difference is not in the level of "sustaining a livelihood", but in the quality of life after the "small rich": many domestic luxury entertainment activities that can only be carried out by the "big rich" conceptually, in the US , "Upper middle class" and "small rich" can experience higher quality at the price of cabbage, why not?Many times you really need to calm down and think about it: What is the purpose of living?
Speaking of this, some people may be unable to sit still: When do you plan to talk about real estate investment? !
OK, that's it.
I don't understand why our compatriots love real estate so much.Is it because of the "visible and tangible" brick complex?Or is it because of the inheritance of smallholder consciousness?Or is it just to copy the real estate experience of my country's first-tier cities over the past ten years to the United States without discrimination?
To put it simply: In the United States, the growth rate of the composite value of residential real estate (not commercial real estate) is almost the same as the average inflation, which is 2.5%-3%.For S&P500, this figure is 8%.The volatility of civil real estate is not smaller than that of the stock market; and the volatility cycle may be much longer, that is, if you are at the bottom, you may not be able to rise back for many years; the cost of holding is very high-real estate tax; you, as an individual, do not Unable to invest in the "big market" of American real estate, but only able to purchase one or a few real estate, the individual corresponding risks are greater than the market.
What is the equivalent of this?It is equivalent to freezing a large amount of funds (hundreds of thousands to millions) on a "single stock" (single real estate with poor liquidity), enjoying only the gains from the average inflation rate, and having to bear a little The risk is not low, and the friction that can never escape (property tax).What is this picture?
Some people have said that houses in some parts of California are skyrocketing.Well, yes, it's skyrocketing, but it's the same as if you bought a piece of jade: the market is skyrocketing because someone is chasing it; but only if you sell it, the profit can be realized.But if you think there is still room for skyrocketing, how can you be willing to sell?So you moved your mind to sell, naturally you feel that you have gone too far.And if you think so, it's likely that everyone has already felt that way, and everyone wants to sell it.Everyone wants to sell, who will buy it again?No one buys, all want to sell, the result can be imagined.
What's more "ridiculous" is, what level is the so-called "skysurge" corresponding to real estate?When it doubles in a year, people get very excited.But in the U.S. financial market, find a stock that has doubled in a few days, and it’s a matter of minutes.Since you like the feeling of "skysurge" so much, why not play it thoroughly and just invest in individual stocks?The liquidity of individual stocks is still high.
Some people also say that investing in real estate is for renting, and the income is good if you include the rent.First of all, you must be able to rent out; secondly, you must not be afraid of the trouble, unless you spend 10%-15% to hire a property to manage it for you; finally, the average annual rent-to-sale ratio in the United States is about 20 to 50 times, corresponding The frictionless return is only 2%-5%, and if the value increases, the overall return is 5%-8%.Then the property tax is deducted, repairs or property management fees are deducted, and the empty rent is deducted. Even if you do not consider the huge uncertainty of the value of your property itself, how much is left?
in conclusion
In the United States, real estate investment only makes sense for two types of people:
1. Investors who are truly engaged in the development and operation of commercial real estate investment;
2. Very rich.In addition, for the middle class, real estate is a proper consumer product.That is, if you want to improve the quality of life, you should consider buying a better house or buying a few houses.And if you just want to invest, please keep in mind:
The United States is a country built on the financial market.
Therefore, even if you are interested in real estate investment, you should choose to put a portion of your funds in the REIT (Real Estate Investment Trust) instead of gambling on your own wealth and wandering in the muddy water.
In fact, the U.S. government has always used every tool you can think of to restrict people from freezing large amounts of assets in the real estate reservoir.As a developed economy, it is trying its best to prevent a large number of people from being able to live an ideal life by collecting rents. (Voiceover from the US government: Don't stay at home, just work for Laozi! Innovation! Realize the American dream!).The reason behind this is also very simple: a developed economy, especially the United States, an economy that can print money around the world, is most worried about not inflation, but poor capital operation. The people are all living on old money for days they have not pursued. , And the structural loss of social class mobility.
In summary, summary
1. Lower middle class: use various insurances to "cover the bottom" / 401k-403b-IRA / employee stock-option purchase / start saving money for children's education / buy a good house.
2. Upper middle class/small wealthy: use various insurances to "cover the bottom" / upgrade medical insurance / 401k-403b-IRA full / employee stock-option purchase / children's education fund / buy a great house / mutual fund / permanent life insurance/ wealth management-investment account/ Spend more money to enjoy life/ invest in a small amateur business.
3. "Regal": all kinds of comprehensive insurance/ permanent life insurance/ wealth management – investment account/ irrevocable trust/ taxation planning/ industrial and commercial real estate investment/ children’s education investment/ all kinds of money to enjoy life/ politics Donations / charity.
Click to view[New Immigrant Collection] How to invest and manage money in the United States? (getting Started)
This article is not original, and it is published after careful editing and collation on this site. It does not constitute investment advice.
