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A bite sized discussion on timely financial news and investment topics, to help you maximize your net worth and wealth for the next generation with Justin Dyer and Mena Hanna of AWM Capital.
Justin Dyer: Hey everyone.
Welcome back to another
episode of A WM Insights.
I'm your host, Justin Dyer, chief
Investment Officer here at a WM.
Joined, uh, alongside, um, Mina
Hana, portfolio manager here.
My right hand man.
Uh, and we're, we're gonna jump
into a question we got onto,
uh, to talk about, um, today.
And the, the title we're running,
we're running with, um, thanks to.
To, uh, good old AI is wealth in
motion going from paycheck to paycheck?
How do we think about investing across
different income and wealth levels?
It was a great question.
We framed it, um, reframed
it in that title and.
The question specifically was, Hey, is
there any difference or how to think
about, you know, if you're, you're just
starting off, whether you're just starting
off as a professional athlete or in your
career, this can really go, go across,
um, across industries and, and careers.
Uh, if you're just starting off, how,
how do you think about investing versus
someone who has kind of completed
the journey and accumulated wealth?
Um, and now, you know,
really is, is playing the.
The spending game, if you will.
So, um, you know, it's
a, it's a great question.
It's a, it's a, it's a
nuanced question, I would say.
Uh, but really I would say the,
the starting point for both of
these is, is more or less the same.
And the starting point really
begins with discipline.
Mena Hanna: discipline.
Justin Dyer: Now where, where you apply
that discipline is potentially different,
but it's really disciplined with respect
to savings if you're at the front end.
And then discipline with respect
to spending, um, exactly where
you emphasize your discipline.
Probably depends on where
you are on this spectrum.
If you're just starting out or
you've already accumulated wealth.
Uh, but.
Mena Hanna: but.
Justin Dyer: What matters is that
discipline, knowing what your
targets are, that you need to hit
both from a savings and a spending.
I mean, spending is the flip side
of savings, but what those targets
are you need to hit and, and staying
to that and really not deviating,
especially for the listeners of this
podcast, 'cause they're, we allude
to this time and time again, right?
Earnings are compressed
for professional athletes.
You're also much younger than the
typical, you know, I guess financial
advice is geared towards, right?
Much of it is geared towards people
who are later in life, later in their
career, starting to ask a question around
retirement, and so making mistakes with
such a longer timeframe ahead of you.
Has the potential to compound
even more drastically, right?
So you have to hit those targets.
Your earnings win, your earning window
is compressed, and then the compounding
impact of those mistakes can be
magnified because you have, you know,
70 years to, to continue to, um, pull
on those assets as opposed to, right.
Typical retirement.
I don't pick your number, 30
years, something like that.
Right?
Much, much shorter.
So, um.
Right.
The discipline is key.
It's absolutely critical.
You need to both save on the front
end and then watch your spending
as a result of that, right?
Naturally as you're, as you're
tar hitting your savings target.
But then once you've hit that wealth
accumulation, you need to make sure
your spending is incredibly dis
disciplined, so you're not drawing too
much from what your assets can support.
So.
That's the general framework.
Starting point concepts
are exactly the same.
But then as we go to investing, as
we transition into the investing
side of, uh, right, 'cause we're all
playing this game to, uh, accumulate
wealth through our human capital
into investing financial capital.
And we have to do that
in a disciplined way.
So how do we do that?
Well, simple framework.
And then I'm gonna bring me into this
conversation and stop, uh, stop my
monologue here is, um, I like, I like
this idea of Maslow's hierarchy of need.
Mena Hanna: You're not
we'll pull a graphic right here,
um, if you're watching on YouTube,
Justin Dyer: we'll,
we'll put it in there.
But it's a, it's a, it's a,
uh, psychological sociological
concept around how humans pursue.
Um.
To fulfill their needs, right?
And you start with the most basic,
basic, basic, uh, concepts, right?
Physiological needs.
Hey, I need to, I need
my body to stay alive.
And then you go to safety, right?
Food, shelter, clothing, then
social love and belonging,
uh, esteem, et cetera, right?
There's this pyramid of, of needs
and portfolio construction in
our mind should be no different.
You start with this basic foundation and
we'll get into exactly what that means,
and then you get to start to add on.
The, the, you know, whatever, more sexy,
more interesting type of investments.
But once we have that foundational,
um, layer, so as wealth accumulate
accumulates, it does start
typically to introduce more
complexity and more opportunities.
Good, bad, or indifferent, right?
Just 'cause you have more wealth doesn't
mean you're, you're getting better
opportunities, but there are more,
there's more complexity, et cetera.
So, um.
I mean, I'll turn it over to you.
So how do we then take this general
concept, this framework of, you know,
like I say, Maslow's hierarchy of
portfolio needs, not the physiological
or psychological needs, uh, and
then implement it into a portfolio.
Mena Hanna: Yeah, and your point
about the start looking very, very
similar for someone that has $800,000
or $80 million is completely right.
You can think about constructing a
portfolio, like building a house.
You always have to start with a
foundation, and that foundation
is your fixed income portfolio,
your protective reserve.
your.
It is just there to stabilize
your, your property or your
portfolio and be the foundation.
No one's ever going to compliment
you on your foundation.
You're never gonna be stoked to see,
you know, people pouring concrete.
when you knock into that
wall and see your foundation.
Yeah, yeah, No one's gonna compliment
you
on it.
You're, not even gonna care about it.
And you're never even going see it.
But it
Justin Dyer: until it matters.
Right.
Until it matters until you hit,
you have an earthquake here in,
uh, on the west Coast or whatever.
Yeah.
Tornado or
Mena Hanna: something.
Yeah.
But that's, that's really
the core
of your, of
your home.
And then you'll start building up.
Tying
this back
to discipline.
A
lot of people don't take the
step of building a foundation.
They're just like, Hey, I want a house.
I don't care about a foundation.
I'm sticking studs into the
ground and I'm moving forward.
Um, and, and that's where discipline
and also expertise comes in where
you have to take a step back.
You have to establish, Hey,
what am I actually trying to
build here and what do I need
to build
it?
So.
Your, your fixed income
portfolio as a foundation.
You start building, you know,
your general house, the bathrooms,
the family room, the bedrooms.
So you don't have to share a bedroom with
your, your kids or maybe your kids don't
have to share bedrooms with each other.
That's
kind of more
so the public market portfolio.
It's, it's there, it's
needed, it's necessary.
It's a way for you to actually
have a solid quality of life.
And then for those people that
have extended wealth, we're talking
about those families that do make.
A significant amount of money.
They all, all of these things tie
together, but you can start building, you
know, the pool, the pool house, the patio.
You can buy more land.
So what those items would be is probably
an extension of your private market
portfolio all in different ways.
But
if
you really take a step back.
The foundation
and, and the house are,
are the core parts of your
Justin Dyer: Yeah.
Yeah.
And I, so I love the, the analogy, but
one thing I I also wanna make sure we, we
hit on and underscore here is when you get
to that wealth level or, or desire to add
the pool house or the pool, or maybe it's
even a second property, you know, talking,
um, anecdotally here, you still want
to make sure that those have their own.
Foundations, if you will, right?
They're, you're, you're
hiring the right contractor.
You're doing it in the professional way.
You know, a great analogy here is
like all you listeners out here,
you know, you probably have your
old, old own cold plunge at home
and you did your research, right?
You found the absolute best cold plunge
out there and made sure that that was
gonna give you what you needed, right?
Building the portfolio is no different.
You go into the alternative asset
classes, private markets, you
wanna make sure that that is.
The best of the best and not just,
you know, the first thing you saw on
TikTok or an investing idea you saw on
TikTok, and you're chasing that, right?
So it's the same type of analogy.
You go to the best, you ask how you
ask the professionals, you ask the
experts, which one should I get?
And that will give you the best
chance of success long term.
Yeah,
Mena Hanna: and there's adjustments
made on, on size is like that.
That's one thing that I
really wanna highlight here.
Like maybe instead of one cold
plunge, you have a family of
athletes and you need five.
Your investment team, the investment
professionals around you, should
be able to guide you to, to right
size the amount of the extensions.
Hey, instead of having, you know, a
two car garage, you need a six car
garage Because of your, your interests
and your hobbies and your needs,
sizing things appropriately I will
say not getting ahead of your skis.
Um, usually people are not downsizing.
They're, they're getting
too far ahead of themselves.
Making sure that you're building something
that makes sense so you don't have, you
know, a 25 car garage on a small lot.
That's, that's essential.
And, and also just giving you
guys some foundational and, and
fundamental examples, you know,
the way that we will invest for.
Your obviously protective reserve
is going to be conservative.
The way that we're going to invest
for a priority, like a wedding in six
months is also going to be conservative,
even though that might not seem
like it's part of your foundation.
I would say family expenses definitely
are, especially these sensitive ones
that are coming up in the near term.
We don't want you to, you know, have
150 people on your wedding invitation
list and have to cut that in half
because markets aren't doing well.
Have that conversation with your,
with your significant others.
That's
absolutely
not what we want to do.
So when things come up, when things like
family expenses, maybe funding your, your
kids' schooling expenses, those items,
we will extend the foundation because
they're absolutely necessary versus.
If you're buying another property, if
there's another wishlist item, you know,
maybe you get excited and you want to
buy a Ferrari in 7 to 10 years, that's
not really part of the foundation.
That's part of the accessories
to your, to your property.
We are going to take more
risk with those investments.
We're going to invest them in public
markets, take equity, um, risk there,
and hopefully make more money or
potentially invest in private markets.
And make a lot more money there.
Um, but the downside of that is, you know,
you,
really have to consider these as
wishlist items and be okay with
pulling the trigger in 7 to 10 years.
So all of these, all of these items really
come together in a risk and timing matrix
where it's really hard to do it yourself.
You also have to be reasonable and
disciplined in how you actually lay
out property and make sure that.
You're getting what you need
at the right time, and you're
also not either overspending or
too conservatively investing.
Justin Dyer: Yeah.
Thank you for that.
I mean, I, hopefully the framework,
uh, and anecdotes we've shared today
are super helpful and informative.
Um, and just kind of wrapping right,
where this whole question around how to
think about investing across different
income and wealth levels starts with.
The same starting point.
Sorry to be redundant there, but Right.
It, it really is discipline.
Maybe that's discipline savings
versus spending, but it is discipline.
And then as wealth does accumulate
this framework of, of starting with
a foundation or this hierarchy of
needs for portfolio construction, I
think really is, is a great framework
to keep in mind and think about.
And then, um.
Uh, how we actually put that money
to work, meaning just ran through
a lot of those examples, right?
It really, there's a spectrum
here on the short end.
It's very conservative, little
risk for very important things.
And then on the longer end.
It's something that is like, Hey, yeah,
this is a nice to have at some point.
Or maybe even we're talking
multi-generational wealth and then
we can take more risk to match
those type of priorities and goals.
So it's a, it's a great question.
Great topic.
Super, super important.
I mean, really fundamental
and foundational to what we
do on a day-to-day basis.
So love talking about it.
Um, if there's any other questions
around this topic, shoot me a text.
Yes.
Mena Hanna: Yeah, 6 2 6
8 6 2
0 3 5, 5.
Love the engagement already.
So yeah, keep
Justin Dyer: going.
Awesome.
And uh, until next time, own your wealth,
make an impact, and always be a pro.
Thanks for listening.