Hello business owners!
Our community is having our first meet-ups!
We will be in Boston, New York and London this month. You will get to strategize your exits, meet like-minded business owners, and have round table discussion with peers. Completely free to attend.
Reply to the poll at the bottom of this email for which one you’re interested in !
Now onto our story:
This newsletter is all about being strategic with your wealth and wealth planning
Today I want to talk about one of the most important and least mentioned aspects of a personal portfolio.
You hear plenty of people talk about returns…
Plenty of videos on risk…
You’ll even get a few who yap about tax…
But I don’t see many emphasizing liquidity
I’ve invested in dozens of markets and can say even with a paper profit: if the money isn’t usable, it doesn’t exist. Unsellable paper gains creates a false sense of security, especially as the market cycle changes.
We’re used to dealing with small businesses being illiquid - that’s the whole reason we advise on business sales - so why would you give your personal portfolio the same issue of illiquidity?
Note: solving this issue is why public markets were invented in the first place.
Property is a classic example. Real estate has made millions of entrepreneurs wealthy, and I’m not knocking it, but the slowness selling a property makes it very difficult to get the money you want, when you want.
In the current real estate market, I know several people (as I’m sure you do) who have a property with a capital gain that’s getting zero viewings, they can’t sell. Yes their capital is preserved, but preserved in what? Ice? Does your money really need to be trapped in carbonite like Han Solo just because everybody else is doing it?
Liquidity trumps capital gain
Yes, I even stick to that when taking into to account inflation. I know all the arguments for currency debasement, and they are fair points. But the opportunity costs of being liquid outweigh capital growth if you’re even moderately savvy with investments. I buy gold silver and bitcoin to protect against inflation, but I keep it mostly in liquid vehicles like ETFs and brokerage wallets.
Personally, one of my favorite techniques is currency arbitrage: you have different savings accounts in different major world currencies and invest in the one where you think the currency will appreciate. Over the last year I converted my dollar savings to pounds, then last month I converted my pounds back to dollars. I’m currently at an over 10% return just on cash alone and can invest in any opportunity I want whenever it comes.
Feel free to agree or disagree with me in any one of these meetups:
Here’s to your success!
Michael, Unlocking Wealth Weekly