The Ledger
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Fallows: Only commission-earning salespeople pitch whole life insurance
“The only person who is trying to sell you a whole life insurance is someone who's getting a commission on whole life insurance.”
Fallows: Almost none of 7,000 ultra-high-net-worth community members hold permanent life insurance
“In our community of about 7000 people who are Either very high or ultra high net worth and, you know, price of a scan, these things, pretty much nobody carries one of these permanent life insurance.”
Fallows: Half of High-Net-Worth Community Members Have No Mortgage
“So half our members don't have a mortgage at all on their house.”
Fallows: Offshore trusts in places like Cook Islands create more risk than protection
“I think that's a pretty dangerous thing to do. The only reason that's relevant, if you are doing something really shady and any proper legal system would come after your assets and now you've parked them in the Cook Islands, but you know, one, that's probably …”
Fallows: Historical private equity returns average 10% to 12% versus 8% to 10% for public equities
“I think it's fair to say that on average, historically, the returns of private equity have been somewhat higher than public equity. Not three or four times as high, but if public equity is delivering eight to 10%, maybe private equity is delivering 10 to 12%.”
Fallows: Entrepreneurs and High Earners Handle Sudden Wealth Better Than Athletes
“So I think, you know, if you, if you're coming from a background which is significantly more common for somebody who generates significant wealth as let's say an entrepreneur, or maybe you are a high paid employee at a tech firm, you're a high paid employee at…”
Fallows: High-Net-Worth Community Allocates Well Below 10% to Bonds
“We do a annual asset allocation benchmarking survey and ask, hey, between
Stocks, bonds, cash, crypto, private credit, private equity, oil and gas, et cetera.
Where do you keep your money?
And I'd say the bond allocation is well south of 10%.”
Fallows: Borrowing 10% to 20% against a portfolio carries minimal risk
“I think borrowing 10 or 20% of your portfolio is perfectly fine because the way these loans work is let's say you have, for simple math, a million dollar portfolio. You're allowed to have debt depending on the brokerage you're working with of let's call it 50,…”
Fallows: Alternative asset allocations rise in direct correlation with investor net worth
“If you start to get into a seven or an eight-figure portfolio, people, we, you do find that their so-called alternative asset or their private market exposure goes up in correlation with their net worth. So whereas your average person with a million dollars ma…”
Fallows: Post-windfall investors should allocate only 0.5% to 1% per position
“So I would just start a little bit smaller. You know, put one percent or half a percent to position, not five or 10%, so you get a little exposure and experience and decide what you'd like without having made huge investments or, again, huge spending.”
Fallows: High-net-worth insurance costs roughly double mainline carriers
“And this insurance is a bit more expensive, but we're not talking 10 times more expensive. You're maybe gonna spend twice as much as going with a mainline carrier like an Allstate or a State Farm.”
Fallows: Umbrella insurance offers $5M to $10M liability coverage for $1K to $2K yearly
“It kicks in for literally another five or ten million dollars of liability above that, and it's shockingly cheap. We're talking maybe a thousand dollars a year, 2000 dollars a year to get five or ten million dollars of extra coverage.”
Fallows: A 40-Year-Old With $10M Will Likely Surpass $30M via Compounding
“More people will probably end up going over that than they think because someone with ten million dollars today, if they're age 40, they're probably going to have more than thirty million dollars by the time they pass away because they have a lot of compoundin…”
Fallows: Exchange funds allow investors to diversify concentrated stock tax-free
“A second one is what's called an exchange fund, and what that looks like is, let's say I've worked at Exxon, you've worked at Apple, and a third person over here has been working at Bank of America, and all three of those stocks have gone up. Each of us is ove…”
Fallows: Direct indexing generates tax losses to offset concentrated position gains
“A third option is what's called direct indexing. And indexing, as I'm sure you're familiar, is basically, if you want to own the S&P 500, you're getting exposure to 500 companies, as is in the name, or the FTSE 100 in England's roughly a hundred companies. Now…”