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“If you have no idea how much is enough, you’ll never be satisfied with what you have.”
-Ben Carlson
I met with an employee of a publicly traded tech company earlier this year.
Over the past few years, the value of their company stock soared, and at the beginning of this year it was worth over $6 million.
But their company stock has been crushed this year and they never sold.
The value of those shares today is less than $1 million.
In his article “Don’t Try to Get Rich Twice,” Ben Carlson tells the true story of two brothers, Robert and Charles Evans.
They built an apparel company that was the hot startup of the time, and eventually bought by Revlon for $12 million ($100 million today).
The brothers were overnight millionaires.
Both were set for life.
In theory.
The problem was that Charles was more conservative while Robert was a gambler.
As Robert put it, Charles became a millionaire a hundred times over while Robert went “from boom to bust and back again — making a lot of money, losing it all and repeating the cycle.
More recently, Jack Raines shared the story of Jason DeBolt in a wonderful article called “Defining ‘Enough.’”
Jason is a former software engineer who retired in early 2021 at the age of 39.
How did he do this?
Jason started investing in Tesla in 2013, and invested heavily.
By 2021, he had a portfolio of nearly $12 million.
Did he sell any?
Nope.
Since then, as Tesla’s value has dropped heavily, Jason has remained steadfast in his Tesla conviction.
He’s even listed his house so he can buy more shares (could be a joke, but there is a zillow listing).
When Do You Go Out on top?
People get in trouble when they want that little bit extra.
When Michael Jordan came out of retirement for the second time to play with the Wizards.
When Keith Gill of Gamestop fame turned a $53,000 investment into $50 million and instead of selling out and diversifying, used the payout from his options to purchase more shares.
When Mohammad Ali couldn’t hang up his gloves and lost 3 of his last 4 fights
Ben writes later in his article,”The problem is making money and keeping money are two very different skill sets. It can be difficult to transition from a mindset of risk-taking to do-no-harm.”
Your “Tap Out” Number
Which is why it’s so key to think about the concept of enough.
What is enough for you?
One way to think about it is what's your “tap out” number?
The number that, once you hit it, you can “tap out” of working, if you want.
That number is highly dependent on your lifestyle and your desires.
Someone who can comfortably live on $100,000 would need a portfolio of $2.5 million, while a family who needs $250,000 / year needs a portfolio of over $6 million.
By the way, this doesn’t mean you have to stop working.
But you might think differently about working aka choosing to work versus having to work.
Putting it all together
You may have already hit it big through an IPO or acquisition.
Or you have one on the horizon.
Or you are working and investing diligently.
No matter where you are at, it’s important to recognize that at some point it shifts from making money to keeping money.
You can still have some riskier bets, but your strategy should change.
And it’s often helpful to have someone in your corner who can be objective with the situation, either a friend, family member or financial advisor.
Otherwise, you’re doomed to repeat the fate of “the athletes past their prime, [as] they quietly exit the scene with a mere fraction of their earlier successes.
Whenever you're ready, there are 3 ways I can help you:
1. Connect with me on LinkedIn, where I post every weekday (unless I’m on vacation). https://www.linkedin.com/in/marshalljoe/
2. Subscribe to the “Tech Financial Planning” newsletter to get equity comp and financial planning strategies in your inbox every Saturday. It’s free: TFP Newsletter
3. Want one on one help? Schedule a 25 minute “Are We A Fit?” meeting