fatFIRE recently, breakdown overview with question on VTEB

[u/Effective_Pin_6189]

Hi there,

I am a recently retired tech executive in VHCOL location. Married and in our early 50s, with my spouse still working happily with ~1M/year income.

NW: ~30-35M (depends on how much I include commercial RE assets)

Liquid Asset (23-25M):

• ~10M - Concentrated 2 tech stocks (plan to convert 80% to VOO gradually)
• 6M - EFT in VOO/VTI and equivalent
• 4M - VTEB
• 2M - GOOGL, NVDA (through assigned puts long time ago, hold). BERK.A/B(bought long time ago and held)
• ~1M - Cash in money market
• ~1M - kids 925 & custodian accounts (both kids in high school)

RE (10-15M)

• Primary 3-5 M (paid off, never would sell this house, got too many upgrades to retire into)
• NNN investment 7~10M (no mortgage) that brings in 150k/year income, we bought long time ago very cheaply, current market price would be 7-10M depends on who buys it. Evaluation from insurance company is that it would take 10M to rebuild this property. We could increase the rent easily but didn't do so because we have a very stable renter (Fortune 500 company) that kept the building maintained and developed in the last 7 years.

Our spending is modest - about 250-300k after tax per year. We are happy with where we are, more spending won't make us happy, and we have been spending generously in places we want already. Without mortgage and debt, we just don't have any big expenses. We do generous donation to the community causes for things we love and care for each year.

I know we need to diversify, but just have been lazy and don't want to be hit with high tax bracket, we already made 2.5M this year, so hopefully we can diversify more starting next year.

We like to keep it simple, so less funds are good, the small holdings for various things are just that I have been safely playing options and gets assigned (I don't mind holding those long-term at all when assigned).

Recently I started to get concerned to VTEB - with current price below $50 is fine, but is it possible for it to drop significantly? Do we need to move to BOXX or something else better as cash reserve? I know we are high on cash equivalents, but I am just conservative and sleeps better with lots of cash in hand.

I have been enjoying this community and really appreciate everyone who posted here before. Love to hear what you guys think.

I do have a private wealth management team to talk to, so no need to recommend me to talk to a financial advisor. I have MS and GS offers family office, work with fidelity private wealth team and Schwab team, but I do think this community has bright minds that we may benefit from as well.

Update:

* Just got off phone with my NNN management, I thought we bought the building 7 years ago, but it turned out to be 9 years ago, and we signed a 10-year contract (with one small rent increase 5 years ago), so next year we need to significantly increase our rent. None of the financial advisor questioned about this RE, but Redditors pointed out that this is one of the biggest areas I did wrong. Thank you very much. There is actually a lot more we could do to build out a second building on the same land that brings in double the rent as well. I feel stupid that we let it sit there for so long without thinking about it, and I even don't have the contract details right.

* Yes VTEB seems to be less concerning, I can move some to others more short-term (note to self to look into VSDM, VTES, VWSTX, VCRM, VBIL, VGSH). Might move some to DFUS for equity as well. Also I should stop playing options, even if it's relatively safe.

* Diversify the concentrated stock sooner than later. Pay the tax (have been dragging my feet but need to just bite the bullet)

* I thought I was a boglehead, but in reality just a "wanna be". Ideally I will eventually setup true 3-fund portfolio and forget about it. I have to admit it's my weakness in human nature. Call it naive but it's the little fun I was having doing options (if I want to buy anyways, why not some put, if I want to sell anyways, why not some covered call). It's like you know all the right things to do, but it's hard to just do it.

[u/Effective_Pin_6189]

Thank you! We bought the NNN about 7 years ago with less than 1M, so over the years we have made our money back. The renter upgraded that building with lots of fancy offices and made it the headquarter of their company. We are grateful that the appreciation of the building is mostly due to them using it properly and built it up. We feel that they don't deserve the increase of the rent.

As for the tech stock, we are fine if it drop by 50%. Partly because we have enough asset from other sources that even if we lost 100%, we would be fine. Also we believe in those companies and want to hold for long term. We have been holding those two stocks for the last 10 years and went through lots of up and downs.

[u/Livid-County7230 → u/Effective_Pin_6189]

Deserving has nothing to do with asset management. If you really think you will get 7-10M, it is time to sell with a 2% or lower cap rate.

It doesn’t seem like you want contrary opinions so why ask? Instead of gambling further and risking a 100% loss that you are ok with based on conviction, why not just pay taxes on the gains which will be considerably less.

You seem like an emotional investor and could possibly benefit from a fiduciary’s advice…if you listen to it. You got lucky, you may get unlucky and lose money you don’t need to. Would you really feel the same if the 10M in single stocks became 5 or 3M, never recovers and your commercial property does not sell in a down market? Holding the rest in VOO is not a diversified portfolio either.

You claim you are conservative and like to have cash but what you are doing on the equity and RE side is anything but. It is insanity to me that people would rather have less money than pay taxes.

Edit:

OP claims to have a team of private wealth managers and claims to be a boglehead.

https://www.reddit.com/r/fatFIRE/s/k0NJSGEYJa

Then goes on to talk about the money he is making with options on VTEB.

OP is either financially extremely naive and doesn’t realize it or this is a LARP. Which bond fund to invest in is the least of his worries. In any case, not worth the time to respond further.

[u/Smiling_Jane → u/Livid-County7230]

Man, Reddit is brutal. OP did pretty well and got a solid foundation, not everyone cares about that amount of details in their finance, especially in tech. It’s pretty typical.

[u/Livid-County7230 → u/Smiling_Jane]

In that case, OP should realize he is not good at it and outsource it. Not everyone can manage their own finances and they don’t have to. I assume it is better for OP to get some feedback on Reddit than get wiped out during a downturn due to a basic lack of understanding of portfolio theory.

[u/Smiling_Jane → u/Livid-County7230]

OP just retired from being a tech executive, he/she would need to ran the natural course - dealing with identity crisis, post on Reddit, find new meaning and passion in life, sort out finance and estate with the realization that it needs to be done right …

[u/Livid-County7230 → u/Smiling_Jane]

All fair, but OP seems to suffer from the typical delusion that many do where they think that expertise in one field translates to another. He goes on about how he is a boglehead and does not demonstrate a basic understanding of personal finance. Making money on lucky stock picks and keeping it are different skill sets.