TE&MT #35 The ultimate guide to avoiding 3 common mistakes every new tech millionaire makes

Tech Employees are Making Millions; Now What?

The tech industry is creating more millionaires than ever before.

With companies like NVIDIA's value skyrocketing, many employees are seeing massive financial gains. In the last 24 months, the growth of NVIDIA to become one of the most valuable countries in the world has also created a set of new millioniares

Employees who have been there for 5 years or more make over 1 Million dollars a year. 

More Money; More Problems

However, newfound wealth brings challenges.

Here are three common mistakes tech employees make with their money and how to address them.

Three Common Issues Tech Employees Face When Managing Millions:

1. Freezing and Overexposure to Single Stock:

   • Many employees leave their stock compensation untouched, leading to overexposure to a single position. This creates significant risk in their portfolio.

2. Outsourcing Ownership of Their Financial Future:

   • Overreliance on financial advisors and wealth managers can lead to a lack of personal control and understanding of one's finances, which can lead to missed goals.

3. Treating Portfolio Like a Savings Account and Not a Business:

   • Without a structured approach, portfolios fail to maximize their potential benefits.

3 Steps to Managing Newly Acquired Wealth in Tech

Having experienced all of these myself at one point in the journey, here is a simple framework that helped me get unstuck.

Step 1: Divest to Cash

Problem: Many tech employees freeze, leaving their stock compensation untouched and becoming overexposed to a single position. This creates significant risk.

I have heard many stories of things going well until they didn’t. One thing I have learned and continue to share.

Wealth is built in Concentration and Maintained Through Diversification.

People tend to complicate this and want to consider where to invest next. When they don’t know where to invest, they freeze. Your first step is to get your money to cash as tax-efficient as possible.

Solution:

1. Find a Certified Tax Planner: Plan how to convert stock to cash tax-efficiently.

2. Use a High-Yield Savings Account: Store cash safely while planning investments.

Separate divestiture from reinvestment to reduce pressure and allow thoughtful investment decisions.

Why This Works: This approach reduces risk and provides time to make informed investment decisions, fostering diversification and long-term growth.

Step 2: Take Ownership of Your Financial Future

Problem: Overdependence on financial advisors, leading to a lack of personal financial control. Now I am not saying go at it alone.

Become the CEO of your Financial Future - Set the vision and hire (and fire) your best team.

Too many people are satisfied with mediocrity in their financial team. Don’t settle. Be the visionary and lead your team to success so that you and your family win.

Solution:

1. Set a Vision and Mission: Define your financial goals and strategies.

2. Build a Knowledgeable Team: Hire advisors but remain the decision-makers.

3. Education and Community: Continuously learn and engage with a community of like-minded individuals.

Like a CEO, lead your financial strategy, using advisors as team members who help achieve your vision. If they don’t meet your standard, then make the hard choice of firing them!

Why This Works: By controlling and understanding your finances, you make informed decisions and align your investments with your goals.

Step 3: Manage Your Portfolio as a Business

Problem: Treating the portfolio like a savings account rather than a business.

If you don’t build a business to make your money, you will likely always work hard for your money.

As you build a net worth of multiple millions, start learning what it means to grow it to ten million, not by working harder, but by making your money work hard.

When you learn how to make your money work as hard as you do, then the game has changed.

Solution:

1. Create a Corporate Structure: Form an LLC to manage investments and get tax deductions.

2. Define a Portfolio Thesis: Give your portfolio clear strategy and direction for the investments you want to make.

3. Measure and Manage Results: Set goals, track performance, and adjust strategies.

Example: Establish KPIs for your investments, just as you would for business operations, and conduct regular performance reviews.

Why This Works: Managing your portfolio with a business mindset ensures efficiency, accountability, and sustained growth. You will be more likely to hit your goals.

Get Moving!

By addressing these common mistakes, you can transform your newfound wealth into a sustainable financial future.

Begin by divesting and reinvesting smartly, owning your financial decisions, and managing your portfolio like a business.

TLDR:

• Separate divestiture from reinvestment to reduce pressure.

• Lead your financial strategy while leveraging advisors.

• Manage your wealth with a business mindset for sustainable growth.

Tech Equity and Money Talk is a weekly podcast showing you how to work for tech equity as a wealth-building strategy and meet your financial goals.

064: 🎙️ Build Your Ideal Manager Avatar to Accelerate Career Growth

Your manager has the most significant impact on your career, yet we take what we are given.

What if you actually wrote down what you wanted in a manager and went to look for that?

In this episode, I break down my manager avatar framework and how to create a vision for who you wan to work for so that you can attract them.

Check it out and let me know what you think.

Hit reply, I respond to every email!

Private Equity is Eating the World

You hear about more tech companies being taken private every day, as well as people investing in private equity commercial real estate.

So, what is the big deal about private equity? Well, a lot, actually!

Private Equity is where the ultra-wealthy have been making big returns for years and building generational wealth.

Here is my primer from the Tech Equity & Money University Vaults to get to you started.

Start Here:

Overview of Alternative Investments (LINK)—Here, I provide an overview of Private Equity and Alternative investments and what they mean to you.

Income Investments (LINK) - Private Equity Income is built different and there are more types than in the public market, understand income.

Go Deeper:

To understand private equity, you need to be exposed to different asset classes. Dive into these episodes, where I interview experts in different arenas.

• Multifamily (LINK)

• Mobile Homes (LINK)

• Debt Funds (LINK)

• Oil & Gas (LINK)

Education on investing is critical; take some time and start your journey today.

When you are ready, there are 3 Ways I can Help You:

1.) Get started on your learning - 🎧️ Follow our Podcast

2.) Watch our Videos - 📺️ Subscribe to our Channel

2.) Build a Career or Money Strategy 🧠 Book a 1:1 coaching session

Disclaimer: This newsletter is for informational purposes only and does not constitute financial or career advice. Always consult with qualified professionals before making any decisions based on the information provided.