A finance guide for millionaires and billionaires

Me on the floor of the New York Stock Exchange after doing an appearance on CNBC.The place is mostly a TV set these days.

This guide is primarily targeted to people who have 6 figure incomes and ay least 7 figures in assets.

If you’re a billionaire: thanks for reading! Hit me up at billionaire@agrawals.org. We can grab coffee. You can certainly afford to get more tailored guidance. But knowing the outlines might help you sanity check.

Everyone can benefit from the Banking and Spending sections.

This guide is focused on simplicity. You can obviously optimize further than the things I’ve described here. But many people recognize that saving time is more valuable than constantly optimizing for more money. Only one of those is replaceable.

Banking

First Republic is hands down the best bank I’ve ever worked with. My banker is fantastic. I’ve know her for 10 years and she always surprises me how much she is willing to do. And that’s when I had a whopping $5,000 on deposit with them. I had 100x that and Chase and didn’t feel like I got more service than if I had just a normal account. Same with Wells.

The only real requirement is you need to keep $3,500 in your checking account. They also charge northing for ATMs, provide refunds for ATM fees charged by the ATM owners and — something that is extremely rare — refund international ATM fees.

Their offices are generally in affluent areas (one is in the same building as a VC) and mostly coastal. If branch access is important to you, look elsewhere.

My personal banker is Ashley Churchill out of their Portland office. Yes, personal banker! Instead of dealing with a random pool of people, I have one person I can email with requests. It doesn’t matter if you’re actually based in Portland. I’ve lived in Portland, New York and San Francisco. Ashley has been with me the whole time.

Office: (503) 471-4903 | Email: amchurchill@firstrepublic.com

I’ve yet to hear “no.” Except when I asked about auto loans. They don’t have them. They will finance your jet though!

Spending

If you don’t pay off your credit cards each month, pay them off before anything else. Loyalty credits have extremely high APRs. Once you’ve paid them off, come back here.

  • Best credit card for people who just want cash back: Citi Double Cash. Essentially 2% back.
  • Best credit card for people who want cash back and a pretty good checking account to go with it: Alliant Credit Union. 2.5% without rotating categories. No annual fee.
  • Best credit card for people who want to get travel points for their spend: American Express Blue Business Plus. As of November 29, 2021. (I get a token number of points if you apply through that link.) No annual fee.
  • Best credit card for people who travel a lot and want luxury perks. American Express Platinum Card. If you apply through that link I get $100. You get 100,000 points.

There may be better offers out there for the AmEx cards, you can search for them. As I’m not – and don’t indent to be – a credit card blogger, I won’t be updating that information.

Investing

For investing, I split it into two: your marginable assets and other assets. (Assuming you have >$50,000 in marginable assets, otherwise this isn’t meaningful.)

Margin allows you to borrow against your stocks, but margin rates vary widely. At this writing,

Vanguard8.5%
Fidelity8.325%
Schwab7.82%
Interactive Brokers1.59%

In an otherwise competitive field, these differences are astonishing.

Why pay to borrow money you have? Your don’t pay taxes until you sell a stock. If you had $1M in stock and wanted to take $500k out, you could end up with a tax bill of $250,000. (Depending on state, holding period, etc.) But you can borrow against that money and use it for your every day expenses.

Ask Elizabeth Warren or Bernie Sanders how they feel about this.

Retirement assets

This used to be a lot more complicated given different trading commissions. Now that they’re basically all at $0, I’d just pick the one that looks easiest to you. This might be the same company that does your company’s 401k. (Fidelity and Vanguard do a lot of this.) Simpler to look at everything in one place.

A few other things that might make a difference:

  • Does the brokerage offer a large selection of cheap mutual funds? Fidelity and Vanguard both check this box.
  • What are the options commissions. Competition hasn’t affected this as much. I recommend that most people don’t invest in options. But if you do, you should do it in a retirement account regardless of what the conventional wisdom tells you.

Giving

You made a lot of money, even if a million isn’t what it once was. Give some of it away. VC and early Googler Hunter Walk has a guide to giving away money. His post has a lot more on this topic, including how to figure out how much to spend.

I prefer larger donations to fewer charities than small donations to a larger number of charities. If you donate $50, they will spend $40 in further mailing to get more money from you.

The most important thing when donating to charity is to not sell the stock before you give it to charity. You need to transfer it directly. Charities typically have a development person who can help with. If you have stock bought for $2,500, sell it for $10,000, you will have a taxable gain of $7,500. If you transfer the stock, you get to deduct the full amount.

Ask Elizabeth Warren or Bernie Sanders how they feel about this.

A better way to give money (and stocks) is through a donor-advised fund. You put your donation in to a special fund and get the tax break right away. You can decide actual charities and timing of donations later. This is especially useful for people who have highly variable income. Do the donations when your tax rate is 40% and don’t donate it when your tax rate is 20%.

Bribing government Campaign contributions

This one I’m torn on because representatives should represent the people, not corporate lobbyists and donors.

But some things are so high-impact it might be better to give $25,000 to a climate change PAC than a charity working on the same cause.

One that I’ve donated to is GrowSF, which is trying to make SF more livable. I also donated to Stacy Abrams’ Fair Fight. I like to think I played a small part in flipping the Senate. Donations to PACs and campaigns aren’t tax deductible.

Most importantly, tell people you’re giving! It may seem gauche, but peer pressure works. If we tell people we give, others might follow.

Thoughts? Where am I wrong? Leave comments and let’s get smarter together.

About Rakesh Agrawal

Rakesh Agrawal is Senior Director of product at Amazon (Audible). Previously, he launched local and mobile products for Microsoft and AOL. He tweets at @rakeshlobster.
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