Dec. 30, 2025
139: Have $1M-$30M? DON'T use the 4% rule
Four years ago, one decision changed everything. Walking away from a tech executive career at 51 looked reckless from the outside—especially when the portfolio at the time was half the size of peers who were still working long hours. But there was one critical difference: while their wealth was just a number on a screen, this portfolio was already generating meaningful cash flow. Four years later, it has grown by more than $2M and now produces over $200K per year in income—without selling assets.
This episode breaks down why the traditional 4% rule quietly fails high earners and why so many people with millions still feel trapped in demanding careers. The 4% rule was never designed for people managing seven- and eight-figure portfolios, and it ignores one of the biggest risks retirees face: sequence-of-returns risk. When markets drop early in retirement, forced asset sales can permanently derail a portfolio—and most advisors still build plans that rely entirely on hope and market timing.
The conversation pulls back the curtain on a massive gap in wealth management. If you have under $1M, personal finance advice works. If you have over $100M, you can build a full Single Family Office. But between $1M and $30M, most investors are pushed into generic 60/40 portfolios that generate little to no income while charging substantial fees. This is what creates dependence on a paycheck long after wealth has been built.
The alternative explored in this episode is how ultra-wealthy families actually structure portfolios: never selling assets to fund life. Instead, they build Evergreen Portfolios designed around three coordinated categories—growth, preservation, and income. Growth assets compound long-term value, preservation assets protect liquidity and downside risk, and income assets generate consistent cash flow that funds living expenses regardless of market conditions. This structure allows families to ride out downturns without panic, selling, or lifestyle disruption.
You’ll hear exactly how this framework was implemented step by step—divesting concentrated stock positions over time, increasing liquidity, and deliberately building income-producing assets such as real estate, private credit, and income-focused strategies. The result was financial independence achieved not by guessing market cycles, but by replacing drawdowns with durable cash flow.
The episode also walks through the real-world math behind why this approach matters. In down markets like 2008 or 2022, portfolios dependent on withdrawals permanently lose ground, while income-driven portfolios continue operating and recover faster. Same starting numbers. Completely different outcomes.
If you’re managing between $1M and $30M, sitting on concentrated equity, or questioning whether the traditional retirement playbook actually works for your situation, this episode offers a clear, practical alternative. It’s not about chasing higher returns—it’s about building a system that supports your life today while still compounding for the future.
If you want to go deeper into how this Evergreen approach fits inside a Micro Family Office structure—and how to implement it systematically—this episode is the foundation.
Transcript
WEBVTT
00:00.031 --> 00:01.793
[SPEAKER_00]: So here they are side by side.
00:02.654 --> 00:08.081
[SPEAKER_00]: Like I said, retire in a good year, you're set for life, retire in a bad year.
00:08.482 --> 00:09.903
[SPEAKER_00]: You might be getting another job.
00:10.204 --> 00:12.927
[SPEAKER_00]: That's just not a risk that I'm willing to take.
00:13.288 --> 00:18.194
[SPEAKER_00]: Four years ago, I walked away from a tech executive career at 51 years old.
00:18.434 --> 00:21.718
[SPEAKER_00]: My portfolio was half the size of my peers.
00:21.698 --> 00:23.321
[SPEAKER_00]: who thought I was insane, by the way.
00:23.662 --> 00:31.457
[SPEAKER_00]: But I was generating $175,000 in annual cash flow, while theirs was just a big number on the screen.
00:31.577 --> 00:38.130
[SPEAKER_00]: Four years later, my portfolio grew by $2 million and now generates $200,000 annually.
00:38.251 --> 00:41.116
[SPEAKER_00]: I'm still retired and many of them are still working.
00:41.277 --> 00:42.559
[SPEAKER_00]: The difference,
00:42.539 --> 00:44.781
[SPEAKER_00]: I wasn't following the 4% rule.
00:45.082 --> 00:51.068
[SPEAKER_00]: I was doing something completely different that ultra wealthy families have been doing for decades.
00:51.429 --> 01:00.499
[SPEAKER_00]: I'm Christopher Nelson, and in this video, I'm breaking down exactly what I learned and how I structured my portfolio so that you can build it for yourself.
01:00.839 --> 01:01.620
[SPEAKER_00]: Let's dive in.
01:01.640 --> 01:06.845
[SPEAKER_00]: In 2012, I had millions in the bank, but zero income strategy.
01:07.126 --> 01:09.188
[SPEAKER_00]: Every advisor said the same thing.
01:09.168 --> 01:13.313
[SPEAKER_00]: 60-40 portfolio, 4% rule, you're set for life.
01:13.694 --> 01:14.735
[SPEAKER_00]: But here's what bothered me.
01:15.376 --> 01:21.284
[SPEAKER_00]: Despite having this wealth, I was still working 50-hour weeks in missing all my kids' events.
01:21.724 --> 01:28.273
[SPEAKER_00]: So while on those long train rides home, I started digging into the research behind the 4% rule,
01:28.253 --> 01:30.698
[SPEAKER_00]: and what I discovered was terrifying.
01:30.918 --> 01:34.485
[SPEAKER_00]: The 4% rule comes from a 1994 study.
01:34.705 --> 01:40.657
[SPEAKER_00]: It assumes a 30-year retirement, a traditional portfolio, and average market conditions.
01:40.857 --> 01:43.562
[SPEAKER_00]: But here's what it doesn't account for.
01:43.542 --> 01:45.969
[SPEAKER_00]: sequence of return risks.
01:46.390 --> 01:49.980
[SPEAKER_00]: So let me explain what this means in very simple terms.
01:50.341 --> 01:58.564
[SPEAKER_00]: If you retire in the market immediately drops 30% like it did in 2000, 2008 or 2022,
01:58.544 --> 02:04.855
[SPEAKER_00]: and you're withdrawing 4% every year your force to sell assets at the worst possible time.
02:05.055 --> 02:10.405
[SPEAKER_00]: And your portfolio never recovers because you're selling low when you should be holding.
02:10.625 --> 02:15.373
[SPEAKER_00]: That's when I realized the 4% rule isn't the guarantee that it's made out to be.
02:15.674 --> 02:20.282
[SPEAKER_00]: In fact, it's more of a gamble and I wasn't willing to bet my family's future on it.
02:20.262 --> 02:22.305
[SPEAKER_00]: So, I did what anyone would do.
02:22.325 --> 02:23.666
[SPEAKER_00]: I asked for help.
02:23.686 --> 02:31.997
[SPEAKER_00]: I sat down with wealth managers at big name firms, you know, the big ones, billion dollars asset managers, fancy offices, impressive credentials.
02:32.358 --> 02:34.000
[SPEAKER_00]: Everyone told me the same thing.
02:34.561 --> 02:43.312
[SPEAKER_00]: Christopher, you need a balanced portfolio, 64ty, stocks and bonds will rebalance quarterly, you'll be fine.
02:43.592 --> 02:48.058
[SPEAKER_00]: But when I asked about
02:48.038 --> 02:53.566
[SPEAKER_00]: They dodge the question, in here's why, there's a massive gap in wealth management.
02:53.906 --> 03:03.900
[SPEAKER_00]: If you have less than a million dollars of investible assets, you get the basic personal finance advice, index funds, Roth IRAs, budgeting apps.
03:03.920 --> 03:12.953
[SPEAKER_00]: And if you have more than a hundred million dollars in assets, you build a single family office, a dedicated team managing every aspect of your wealth.
03:13.173 --> 03:14.535
[SPEAKER_00]: But if you're in the middle,
03:14.819 --> 03:21.054
[SPEAKER_00]: The $1 million to $30 million, you're stuck in what I call the Financial Services Desert.
03:21.074 --> 03:22.398
[SPEAKER_00]: And here's the real problem.
03:23.059 --> 03:29.976
[SPEAKER_00]: Financial advisors put you in the same cookie cutter portfolios, they recommend to somebody with $500,000.
03:29.956 --> 03:32.539
[SPEAKER_00]: and they charge you 1% a year to do it.
03:32.559 --> 03:39.468
[SPEAKER_00]: On a $5 million portfolio that's $50,000 annually for advice that you can get from chat GPT.
03:39.748 --> 03:51.343
[SPEAKER_00]: I started calling them fast food wealth managers, because their entire business model is to get as much money under management as possible, put it in products that require minimal work and collect fees.
03:51.684 --> 03:56.790
[SPEAKER_00]: They actively discourage you from pursuing
03:56.770 --> 04:01.636
[SPEAKER_00]: because those strategies require more work and not all of them generate a fee.
04:01.977 --> 04:08.705
[SPEAKER_00]: So I decided that if advisors wouldn't show me how ultra wealthy family structure portfolios, I'd figured out myself.
04:09.006 --> 04:16.956
[SPEAKER_00]: I spent the next 10 years studying the ultra wealthy interviewing chief investment officers of single-family offices.
04:16.936 --> 04:24.980
[SPEAKER_00]: analyzing portfolio structures and understanding what actually separated generational wealth from good intentions.
04:25.341 --> 04:27.688
[SPEAKER_00]: And I discovered something that made me
04:28.006 --> 04:30.450
[SPEAKER_00]: and if I'm being honest, a little angry.
04:30.791 --> 04:33.115
[SPEAKER_00]: You see, the strategy isn't complicated.
04:33.676 --> 04:41.590
[SPEAKER_00]: It's just been hidden by traditional finance firms because they think it's too complicated for us and it reduces our dependency on them.
04:41.610 --> 04:47.901
[SPEAKER_00]: The ultra wealthy don't use the 4% rule because they don't need to sell assets to fund their lives.
04:48.222 --> 04:50.706
[SPEAKER_00]: They have built something completely different.
04:50.686 --> 04:57.438
[SPEAKER_00]: Ultra wealthy families structure their portfolios around one core principle, never sell assets to fund your life.
04:57.799 --> 04:58.099
[SPEAKER_00]: How?
04:58.440 --> 05:01.285
[SPEAKER_00]: They build what I call an evergreen portfolio.
05:01.465 --> 05:05.352
[SPEAKER_00]: They have three categories working together like a financial engine.
05:05.372 --> 05:08.037
[SPEAKER_00]: Category number one, growth.
05:08.017 --> 05:15.046
[SPEAKER_00]: This is your public equity stocks, index funds, growth oriented investment, but this is where most people stop.
05:15.066 --> 05:18.910
[SPEAKER_00]: For ultra wealthy families, this is only one third of the equation.
05:19.151 --> 05:21.994
[SPEAKER_00]: Category number two is capital preservation.
05:22.435 --> 05:26.199
[SPEAKER_00]: This is your bonds, cash reserves, stable value assets.
05:26.860 --> 05:32.547
[SPEAKER_00]: The goal isn't to make money, it's to protect what you have and provide liquidity when you need it.
05:32.807 --> 05:33.869
[SPEAKER_00]: And here's the missing link.
05:34.229 --> 05:35.931
[SPEAKER_00]: Category three.
05:35.911 --> 05:36.672
[SPEAKER_00]: income.
05:37.313 --> 05:40.718
[SPEAKER_00]: This is the category most financial advisors never talk about.
05:40.818 --> 05:44.364
[SPEAKER_00]: This is where you invest in assets that generate consistent cash flow.
05:44.924 --> 05:49.411
[SPEAKER_00]: Real estate covered call ETFs, structured notes, private credit.
05:49.651 --> 05:51.995
[SPEAKER_00]: Here's the part most advisors never mention.
05:52.135 --> 05:57.463
[SPEAKER_00]: Category 3 means that you never touch category 1 or 2.
05:57.443 --> 06:00.367
[SPEAKER_00]: you live off of cash flow, not drawdowns.
06:00.707 --> 06:10.920
[SPEAKER_00]: When the market drops 30%, ultra wealthy families don't panic, they don't sell, they keep collecting cash flow and maybe reallocate a bit, and they just wait for the recovery.
06:11.220 --> 06:13.944
[SPEAKER_00]: That is how generational wealth is built.
06:14.404 --> 06:19.410
[SPEAKER_00]: Once I understood this, I spent 24 months restructuring my entire portfolio.
06:19.591 --> 06:21.493
[SPEAKER_00]: Here's exactly what I did.
06:21.473 --> 06:25.237
[SPEAKER_00]: First, I invested of my concentrated tech stock positions.
06:25.838 --> 06:29.622
[SPEAKER_00]: I had way too much of my network tied up in just a few companies.
06:29.942 --> 06:33.386
[SPEAKER_00]: If these stocks cratered, my retirement plan cratered with them.
06:33.606 --> 06:39.153
[SPEAKER_00]: So I systematically sold down those positions over 24 months while minimizing taxes.
06:39.773 --> 06:45.920
[SPEAKER_00]: Second, I increased my capital preservation portion from 3% of total holdings to 5%.
06:46.260 --> 06:50.485
[SPEAKER_00]: I needed a bigger safety net if I was going to walk away
06:50.465 --> 06:53.935
[SPEAKER_00]: In third, I started building the income category.
06:54.496 --> 07:05.487
[SPEAKER_00]: I began with private equity real estate, specifically syndications where experienced operators were buying apartment buildings, self storage facilities in mobile home parks, assets that generally
07:05.467 --> 07:10.815
[SPEAKER_00]: rated 6 to 10% annual cash on cash returns that was tax protected.
07:10.835 --> 07:13.358
[SPEAKER_00]: The goal wasn't to maximize returns.
07:13.839 --> 07:18.546
[SPEAKER_00]: It was to build predictable tax advantage income that would fund my life.
07:18.826 --> 07:30.343
[SPEAKER_00]: By 2022, my income investments made up 47% of my portfolio and we're generating $175,000 per year in cash flow.
07:30.323 --> 07:30.744
[SPEAKER_00]: $150,000.
07:30.964 --> 07:35.070
[SPEAKER_00]: That's when I knew I was financially independent.
07:35.270 --> 07:39.957
[SPEAKER_00]: My portfolio income exceeded my living costs without touching principle.
07:39.977 --> 07:42.240
[SPEAKER_00]: So at age 51, I retired.
07:42.481 --> 07:45.825
[SPEAKER_00]: Like I mentioned the beginning, my close friend thought I was crazy.
07:46.466 --> 07:51.133
[SPEAKER_00]: One told me I was insane walking away with only $6 million.
07:51.113 --> 07:53.236
[SPEAKER_00]: He didn't understand how I was going to manage.
07:53.777 --> 08:00.066
[SPEAKER_00]: He had $15 million still had no clear path to retirement and was working 60-hour weeks.
08:00.387 --> 08:02.389
[SPEAKER_00]: But by now, you know his problem.
08:02.870 --> 08:08.699
[SPEAKER_00]: His $15 million was sitting in a basic 60-40 portfolio generating almost zero income.
08:08.879 --> 08:13.105
[SPEAKER_00]: He was completely dependent on his salary, and I wasn't.
08:13.085 --> 08:17.109
[SPEAKER_00]: Okay, let me show you why this matters with actual numbers.
08:17.129 --> 08:23.235
[SPEAKER_00]: 2022 was the year I retired and it was one of the worst market years in recent history.
08:23.435 --> 08:34.025
[SPEAKER_00]: The S&P 500 dropped 20%, a traditional retiree following the 4% rule, they'd be forced to either sell assets at the bottom or cut their lifestyle dramatically.
08:34.345 --> 08:40.611
[SPEAKER_00]: Me, my portfolio value temporarily dropped, but my income stayed steady.
08:40.591 --> 08:47.179
[SPEAKER_00]: I didn't sell a single asset and when the market recovered in 2023, my portfolio hit all time highs.
08:47.660 --> 08:49.462
[SPEAKER_00]: So here's the math that matters.
08:49.843 --> 08:58.674
[SPEAKER_00]: The traditional 4% portfolio after being forced to sell during the dip of 2022, you'd be down $200,000 by the end of 2025.
08:59.475 --> 09:04.522
[SPEAKER_00]: And an evergreen portfolio that wasn't required to sell, today it would be up $370,000.
09:04.982 --> 09:09.568
[SPEAKER_00]: That is a $570,000 difference.
09:09.548 --> 09:12.834
[SPEAKER_00]: same starting point totally different outcome.
09:13.074 --> 09:16.340
[SPEAKER_00]: Now, let's look at one more example to drive the point home.
09:16.620 --> 09:17.602
[SPEAKER_00]: Take a look at this table.
09:18.063 --> 09:24.293
[SPEAKER_00]: We're using a $3 million portfolio in a classic 6040 growth and preservation split.
09:24.554 --> 09:33.188
[SPEAKER_00]: If you retired in 2008 after the great financial crisis, your portfolio would have almost tripled in value in the subsequent 16 years.
09:33.509 --> 09:35.252
[SPEAKER_00]: While we're drawing 4%,
09:35.232 --> 09:40.082
[SPEAKER_00]: which is anywhere between $120,000 and $360,000 per year.
09:40.342 --> 09:45.012
[SPEAKER_00]: You'd be walking around with your chest poked out, feeling like a financial genius.
09:45.312 --> 09:50.322
[SPEAKER_00]: But in reality, you got lucky and retired in a good year.
09:50.603 --> 09:52.948
[SPEAKER_00]: Let's contrast that with somebody less lucky.
09:53.188 --> 09:54.591
[SPEAKER_00]: Look at this table.
09:54.571 --> 09:59.078
[SPEAKER_00]: same portfolio, same allocation, same withdraw percentage.
09:59.458 --> 10:05.387
[SPEAKER_00]: Fast forward 16 years and this $3 million portfolio is actually smaller than when they retired.
10:05.567 --> 10:11.436
[SPEAKER_00]: And their ability to withdraw amount to live a comfortable life has been impacted seriously.
10:11.716 --> 10:16.403
[SPEAKER_00]: They were only able to withdraw between 80,000 and 120,000 per year.
10:16.723 --> 10:19.347
[SPEAKER_00]: Now, if they had increased their withdrawals,
10:19.327 --> 10:25.657
[SPEAKER_00]: or even just held them steady at $120,000 per year, the portfolio would be even much smaller.
10:25.999 --> 10:28.189
[SPEAKER_00]: So here they are side by side.
10:28.372 --> 10:35.660
[SPEAKER_00]: Like I said, retire in a good year, you're set for life, retire in a bad year, you might be getting another job.
10:35.981 --> 10:38.684
[SPEAKER_00]: That's just not a risk that I'm willing to take.
10:39.044 --> 10:43.830
[SPEAKER_00]: Okay, so you're probably thinking, this makes sense Christopher, but I'm not you.
10:43.870 --> 10:45.532
[SPEAKER_00]: Where do I even start?
10:45.832 --> 10:46.953
[SPEAKER_00]: That's a fair question.
10:47.494 --> 10:49.897
[SPEAKER_00]: Let me break this down into four simple steps.
10:50.497 --> 10:53.461
[SPEAKER_00]: These are the exact steps I'd take if I were starting today.
10:53.681 --> 10:57.265
[SPEAKER_00]: Step number one, assess where you are right now.
10:57.245 --> 10:59.010
[SPEAKER_00]: what's your current portfolio structure?
10:59.572 --> 11:02.841
[SPEAKER_00]: How much is in growth, capital preservation and income?
11:03.503 --> 11:10.523
[SPEAKER_00]: For most people, they have 80 to 90 percent in growth and maybe 10 to 20 percent in capital preservation, zero income.
11:10.764 --> 11:12.469
[SPEAKER_00]: What's your current income need?
11:12.449 --> 11:17.238
[SPEAKER_00]: not what you make at your job, but what you actually need to fund your lifestyle.
11:17.258 --> 11:18.461
[SPEAKER_00]: And what's your timeline?
11:18.842 --> 11:22.128
[SPEAKER_00]: Are you trying to retire next year or 10 years from now?
11:22.409 --> 11:24.933
[SPEAKER_00]: The answer dramatically changes your strategy.
11:25.194 --> 11:32.348
[SPEAKER_00]: Now step two, if you're over concentrated in a few stocks or tech equity, you need a divestiture strategy.
11:32.488 --> 11:34.913
[SPEAKER_00]: This isn't sell everything tomorrow.
11:34.893 --> 11:42.607
[SPEAKER_00]: It's a systematic approach to reducing concentration over at 12 to 24 months while minimizing tax impact.
11:42.988 --> 11:49.661
[SPEAKER_00]: I work with a specialized CPA and CTP certified tax planner who helps structure these transitions.
11:49.981 --> 11:56.794
[SPEAKER_00]: If you try to do this yourself, you'll likely overpay in taxes or make emotional decisions that will hurt you in the long run.
11:56.974 --> 11:58.437
[SPEAKER_00]: Then there's Step 3.
11:58.417 --> 12:00.859
[SPEAKER_00]: start building your income category.
12:01.160 --> 12:11.810
[SPEAKER_00]: Begin with education, research different asset classes that produce income, private real estate, private credit, dividend strategies, and cover-called ETFs to name a few.
12:12.150 --> 12:17.935
[SPEAKER_00]: Join investment groups or networks where you can learn from others who are already doing this.
12:18.276 --> 12:25.943
[SPEAKER_00]: The Welfop's community, for example, has members actively sharing
12:25.923 --> 12:34.242
[SPEAKER_00]: Deploy $50,000 to $100,000, and if you well that in investments first, learn the process, then scale as you build confidence.
12:34.542 --> 12:37.850
[SPEAKER_00]: And lastly, step four, this is critical.
12:38.090 --> 12:39.874
[SPEAKER_00]: You need the right structure in systems.
12:40.656 --> 12:45.467
[SPEAKER_00]: This means setting up legal entities properly, LLCs and trusts,
12:45.447 --> 13:04.011
[SPEAKER_00]: working with a CPA who understands the evergreen portfolio model, hiring a certified tax planner who's aligned with your goals, building a reporting system to track performance across all asset categories, creating a simple decision-making framework so your emotions never do the investing.
13:04.211 --> 13:07.275
[SPEAKER_00]: This is exactly where most DIY investors fail.
13:07.435 --> 13:11.320
[SPEAKER_00]: They don't have the operational
13:11.300 --> 13:16.008
[SPEAKER_00]: Now, you don't need $100 million to build a family office structure.
13:16.168 --> 13:21.797
[SPEAKER_00]: What you need is the right framework, the right team, and the discipline to execute systematically.
13:22.098 --> 13:24.221
[SPEAKER_00]: I call this a microfamily office.
13:24.542 --> 13:34.137
[SPEAKER_00]: It's applying family office principles at the one in 30 million dollar, network level, using fractional experts, technology, and simple systems.
13:34.438 --> 13:36.902
[SPEAKER_00]: This is exactly what I teach in world bobs.
13:36.882 --> 13:48.060
[SPEAKER_00]: It's the same system that I use to retire at 51 years old, and it's the system dozens of others in our community are now using to transition from money makers to money managers.
13:48.360 --> 14:01.641
[SPEAKER_00]: If this sounds like something you want to learn more about, I host a live workshop every few weeks for those with $1 million to $30 million in that worth who want to start managing their wealth like a business and not a side hustle.
14:01.621 --> 14:13.792
[SPEAKER_00]: You will learn how to architecture portfolio strategy using the evergreen framework, build the operational infrastructure like a real family office, and run your wealth systematically without it consuming your life.
14:14.172 --> 14:21.959
[SPEAKER_00]: So just head to wealthops.io forward slash go to join our next workshop or click in the link in the description below.
14:22.019 --> 14:31.628
[SPEAKER_00]: And if you want to learn more about what a micro family office actually looks like and how it works, check out this video right here where
14:31.608 --> 14:35.070
[SPEAKER_00]: Thanks for watching, I'll see you in the next one.
00:00.031 --> 00:01.793
[SPEAKER_00]: So here they are side by side.
00:02.654 --> 00:08.081
[SPEAKER_00]: Like I said, retire in a good year, you're set for life, retire in a bad year.
00:08.482 --> 00:09.903
[SPEAKER_00]: You might be getting another job.
00:10.204 --> 00:12.927
[SPEAKER_00]: That's just not a risk that I'm willing to take.
00:13.288 --> 00:18.194
[SPEAKER_00]: Four years ago, I walked away from a tech executive career at 51 years old.
00:18.434 --> 00:21.718
[SPEAKER_00]: My portfolio was half the size of my peers.
00:21.698 --> 00:23.321
[SPEAKER_00]: who thought I was insane, by the way.
00:23.662 --> 00:31.457
[SPEAKER_00]: But I was generating $175,000 in annual cash flow, while theirs was just a big number on the screen.
00:31.577 --> 00:38.130
[SPEAKER_00]: Four years later, my portfolio grew by $2 million and now generates $200,000 annually.
00:38.251 --> 00:41.116
[SPEAKER_00]: I'm still retired and many of them are still working.
00:41.277 --> 00:42.559
[SPEAKER_00]: The difference,
00:42.539 --> 00:44.781
[SPEAKER_00]: I wasn't following the 4% rule.
00:45.082 --> 00:51.068
[SPEAKER_00]: I was doing something completely different that ultra wealthy families have been doing for decades.
00:51.429 --> 01:00.499
[SPEAKER_00]: I'm Christopher Nelson, and in this video, I'm breaking down exactly what I learned and how I structured my portfolio so that you can build it for yourself.
01:00.839 --> 01:01.620
[SPEAKER_00]: Let's dive in.
01:01.640 --> 01:06.845
[SPEAKER_00]: In 2012, I had millions in the bank, but zero income strategy.
01:07.126 --> 01:09.188
[SPEAKER_00]: Every advisor said the same thing.
01:09.168 --> 01:13.313
[SPEAKER_00]: 60-40 portfolio, 4% rule, you're set for life.
01:13.694 --> 01:14.735
[SPEAKER_00]: But here's what bothered me.
01:15.376 --> 01:21.284
[SPEAKER_00]: Despite having this wealth, I was still working 50-hour weeks in missing all my kids' events.
01:21.724 --> 01:28.273
[SPEAKER_00]: So while on those long train rides home, I started digging into the research behind the 4% rule,
01:28.253 --> 01:30.698
[SPEAKER_00]: and what I discovered was terrifying.
01:30.918 --> 01:34.485
[SPEAKER_00]: The 4% rule comes from a 1994 study.
01:34.705 --> 01:40.657
[SPEAKER_00]: It assumes a 30-year retirement, a traditional portfolio, and average market conditions.
01:40.857 --> 01:43.562
[SPEAKER_00]: But here's what it doesn't account for.
01:43.542 --> 01:45.969
[SPEAKER_00]: sequence of return risks.
01:46.390 --> 01:49.980
[SPEAKER_00]: So let me explain what this means in very simple terms.
01:50.341 --> 01:58.564
[SPEAKER_00]: If you retire in the market immediately drops 30% like it did in 2000, 2008 or 2022,
01:58.544 --> 02:04.855
[SPEAKER_00]: and you're withdrawing 4% every year your force to sell assets at the worst possible time.
02:05.055 --> 02:10.405
[SPEAKER_00]: And your portfolio never recovers because you're selling low when you should be holding.
02:10.625 --> 02:15.373
[SPEAKER_00]: That's when I realized the 4% rule isn't the guarantee that it's made out to be.
02:15.674 --> 02:20.282
[SPEAKER_00]: In fact, it's more of a gamble and I wasn't willing to bet my family's future on it.
02:20.262 --> 02:22.305
[SPEAKER_00]: So, I did what anyone would do.
02:22.325 --> 02:23.666
[SPEAKER_00]: I asked for help.
02:23.686 --> 02:31.997
[SPEAKER_00]: I sat down with wealth managers at big name firms, you know, the big ones, billion dollars asset managers, fancy offices, impressive credentials.
02:32.358 --> 02:34.000
[SPEAKER_00]: Everyone told me the same thing.
02:34.561 --> 02:43.312
[SPEAKER_00]: Christopher, you need a balanced portfolio, 64ty, stocks and bonds will rebalance quarterly, you'll be fine.
02:43.592 --> 02:48.058
[SPEAKER_00]: But when I asked about
02:48.038 --> 02:53.566
[SPEAKER_00]: They dodge the question, in here's why, there's a massive gap in wealth management.
02:53.906 --> 03:03.900
[SPEAKER_00]: If you have less than a million dollars of investible assets, you get the basic personal finance advice, index funds, Roth IRAs, budgeting apps.
03:03.920 --> 03:12.953
[SPEAKER_00]: And if you have more than a hundred million dollars in assets, you build a single family office, a dedicated team managing every aspect of your wealth.
03:13.173 --> 03:14.535
[SPEAKER_00]: But if you're in the middle,
03:14.819 --> 03:21.054
[SPEAKER_00]: The $1 million to $30 million, you're stuck in what I call the Financial Services Desert.
03:21.074 --> 03:22.398
[SPEAKER_00]: And here's the real problem.
03:23.059 --> 03:29.976
[SPEAKER_00]: Financial advisors put you in the same cookie cutter portfolios, they recommend to somebody with $500,000.
03:29.956 --> 03:32.539
[SPEAKER_00]: and they charge you 1% a year to do it.
03:32.559 --> 03:39.468
[SPEAKER_00]: On a $5 million portfolio that's $50,000 annually for advice that you can get from chat GPT.
03:39.748 --> 03:51.343
[SPEAKER_00]: I started calling them fast food wealth managers, because their entire business model is to get as much money under management as possible, put it in products that require minimal work and collect fees.
03:51.684 --> 03:56.790
[SPEAKER_00]: They actively discourage you from pursuing
03:56.770 --> 04:01.636
[SPEAKER_00]: because those strategies require more work and not all of them generate a fee.
04:01.977 --> 04:08.705
[SPEAKER_00]: So I decided that if advisors wouldn't show me how ultra wealthy family structure portfolios, I'd figured out myself.
04:09.006 --> 04:16.956
[SPEAKER_00]: I spent the next 10 years studying the ultra wealthy interviewing chief investment officers of single-family offices.
04:16.936 --> 04:24.980
[SPEAKER_00]: analyzing portfolio structures and understanding what actually separated generational wealth from good intentions.
04:25.341 --> 04:27.688
[SPEAKER_00]: And I discovered something that made me
04:28.006 --> 04:30.450
[SPEAKER_00]: and if I'm being honest, a little angry.
04:30.791 --> 04:33.115
[SPEAKER_00]: You see, the strategy isn't complicated.
04:33.676 --> 04:41.590
[SPEAKER_00]: It's just been hidden by traditional finance firms because they think it's too complicated for us and it reduces our dependency on them.
04:41.610 --> 04:47.901
[SPEAKER_00]: The ultra wealthy don't use the 4% rule because they don't need to sell assets to fund their lives.
04:48.222 --> 04:50.706
[SPEAKER_00]: They have built something completely different.
04:50.686 --> 04:57.438
[SPEAKER_00]: Ultra wealthy families structure their portfolios around one core principle, never sell assets to fund your life.
04:57.799 --> 04:58.099
[SPEAKER_00]: How?
04:58.440 --> 05:01.285
[SPEAKER_00]: They build what I call an evergreen portfolio.
05:01.465 --> 05:05.352
[SPEAKER_00]: They have three categories working together like a financial engine.
05:05.372 --> 05:08.037
[SPEAKER_00]: Category number one, growth.
05:08.017 --> 05:15.046
[SPEAKER_00]: This is your public equity stocks, index funds, growth oriented investment, but this is where most people stop.
05:15.066 --> 05:18.910
[SPEAKER_00]: For ultra wealthy families, this is only one third of the equation.
05:19.151 --> 05:21.994
[SPEAKER_00]: Category number two is capital preservation.
05:22.435 --> 05:26.199
[SPEAKER_00]: This is your bonds, cash reserves, stable value assets.
05:26.860 --> 05:32.547
[SPEAKER_00]: The goal isn't to make money, it's to protect what you have and provide liquidity when you need it.
05:32.807 --> 05:33.869
[SPEAKER_00]: And here's the missing link.
05:34.229 --> 05:35.931
[SPEAKER_00]: Category three.
05:35.911 --> 05:36.672
[SPEAKER_00]: income.
05:37.313 --> 05:40.718
[SPEAKER_00]: This is the category most financial advisors never talk about.
05:40.818 --> 05:44.364
[SPEAKER_00]: This is where you invest in assets that generate consistent cash flow.
05:44.924 --> 05:49.411
[SPEAKER_00]: Real estate covered call ETFs, structured notes, private credit.
05:49.651 --> 05:51.995
[SPEAKER_00]: Here's the part most advisors never mention.
05:52.135 --> 05:57.463
[SPEAKER_00]: Category 3 means that you never touch category 1 or 2.
05:57.443 --> 06:00.367
[SPEAKER_00]: you live off of cash flow, not drawdowns.
06:00.707 --> 06:10.920
[SPEAKER_00]: When the market drops 30%, ultra wealthy families don't panic, they don't sell, they keep collecting cash flow and maybe reallocate a bit, and they just wait for the recovery.
06:11.220 --> 06:13.944
[SPEAKER_00]: That is how generational wealth is built.
06:14.404 --> 06:19.410
[SPEAKER_00]: Once I understood this, I spent 24 months restructuring my entire portfolio.
06:19.591 --> 06:21.493
[SPEAKER_00]: Here's exactly what I did.
06:21.473 --> 06:25.237
[SPEAKER_00]: First, I invested of my concentrated tech stock positions.
06:25.838 --> 06:29.622
[SPEAKER_00]: I had way too much of my network tied up in just a few companies.
06:29.942 --> 06:33.386
[SPEAKER_00]: If these stocks cratered, my retirement plan cratered with them.
06:33.606 --> 06:39.153
[SPEAKER_00]: So I systematically sold down those positions over 24 months while minimizing taxes.
06:39.773 --> 06:45.920
[SPEAKER_00]: Second, I increased my capital preservation portion from 3% of total holdings to 5%.
06:46.260 --> 06:50.485
[SPEAKER_00]: I needed a bigger safety net if I was going to walk away
06:50.465 --> 06:53.935
[SPEAKER_00]: In third, I started building the income category.
06:54.496 --> 07:05.487
[SPEAKER_00]: I began with private equity real estate, specifically syndications where experienced operators were buying apartment buildings, self storage facilities in mobile home parks, assets that generally
07:05.467 --> 07:10.815
[SPEAKER_00]: rated 6 to 10% annual cash on cash returns that was tax protected.
07:10.835 --> 07:13.358
[SPEAKER_00]: The goal wasn't to maximize returns.
07:13.839 --> 07:18.546
[SPEAKER_00]: It was to build predictable tax advantage income that would fund my life.
07:18.826 --> 07:30.343
[SPEAKER_00]: By 2022, my income investments made up 47% of my portfolio and we're generating $175,000 per year in cash flow.
07:30.323 --> 07:30.744
[SPEAKER_00]: $150,000.
07:30.964 --> 07:35.070
[SPEAKER_00]: That's when I knew I was financially independent.
07:35.270 --> 07:39.957
[SPEAKER_00]: My portfolio income exceeded my living costs without touching principle.
07:39.977 --> 07:42.240
[SPEAKER_00]: So at age 51, I retired.
07:42.481 --> 07:45.825
[SPEAKER_00]: Like I mentioned the beginning, my close friend thought I was crazy.
07:46.466 --> 07:51.133
[SPEAKER_00]: One told me I was insane walking away with only $6 million.
07:51.113 --> 07:53.236
[SPEAKER_00]: He didn't understand how I was going to manage.
07:53.777 --> 08:00.066
[SPEAKER_00]: He had $15 million still had no clear path to retirement and was working 60-hour weeks.
08:00.387 --> 08:02.389
[SPEAKER_00]: But by now, you know his problem.
08:02.870 --> 08:08.699
[SPEAKER_00]: His $15 million was sitting in a basic 60-40 portfolio generating almost zero income.
08:08.879 --> 08:13.105
[SPEAKER_00]: He was completely dependent on his salary, and I wasn't.
08:13.085 --> 08:17.109
[SPEAKER_00]: Okay, let me show you why this matters with actual numbers.
08:17.129 --> 08:23.235
[SPEAKER_00]: 2022 was the year I retired and it was one of the worst market years in recent history.
08:23.435 --> 08:34.025
[SPEAKER_00]: The S&P 500 dropped 20%, a traditional retiree following the 4% rule, they'd be forced to either sell assets at the bottom or cut their lifestyle dramatically.
08:34.345 --> 08:40.611
[SPEAKER_00]: Me, my portfolio value temporarily dropped, but my income stayed steady.
08:40.591 --> 08:47.179
[SPEAKER_00]: I didn't sell a single asset and when the market recovered in 2023, my portfolio hit all time highs.
08:47.660 --> 08:49.462
[SPEAKER_00]: So here's the math that matters.
08:49.843 --> 08:58.674
[SPEAKER_00]: The traditional 4% portfolio after being forced to sell during the dip of 2022, you'd be down $200,000 by the end of 2025.
08:59.475 --> 09:04.522
[SPEAKER_00]: And an evergreen portfolio that wasn't required to sell, today it would be up $370,000.
09:04.982 --> 09:09.568
[SPEAKER_00]: That is a $570,000 difference.
09:09.548 --> 09:12.834
[SPEAKER_00]: same starting point totally different outcome.
09:13.074 --> 09:16.340
[SPEAKER_00]: Now, let's look at one more example to drive the point home.
09:16.620 --> 09:17.602
[SPEAKER_00]: Take a look at this table.
09:18.063 --> 09:24.293
[SPEAKER_00]: We're using a $3 million portfolio in a classic 6040 growth and preservation split.
09:24.554 --> 09:33.188
[SPEAKER_00]: If you retired in 2008 after the great financial crisis, your portfolio would have almost tripled in value in the subsequent 16 years.
09:33.509 --> 09:35.252
[SPEAKER_00]: While we're drawing 4%,
09:35.232 --> 09:40.082
[SPEAKER_00]: which is anywhere between $120,000 and $360,000 per year.
09:40.342 --> 09:45.012
[SPEAKER_00]: You'd be walking around with your chest poked out, feeling like a financial genius.
09:45.312 --> 09:50.322
[SPEAKER_00]: But in reality, you got lucky and retired in a good year.
09:50.603 --> 09:52.948
[SPEAKER_00]: Let's contrast that with somebody less lucky.
09:53.188 --> 09:54.591
[SPEAKER_00]: Look at this table.
09:54.571 --> 09:59.078
[SPEAKER_00]: same portfolio, same allocation, same withdraw percentage.
09:59.458 --> 10:05.387
[SPEAKER_00]: Fast forward 16 years and this $3 million portfolio is actually smaller than when they retired.
10:05.567 --> 10:11.436
[SPEAKER_00]: And their ability to withdraw amount to live a comfortable life has been impacted seriously.
10:11.716 --> 10:16.403
[SPEAKER_00]: They were only able to withdraw between 80,000 and 120,000 per year.
10:16.723 --> 10:19.347
[SPEAKER_00]: Now, if they had increased their withdrawals,
10:19.327 --> 10:25.657
[SPEAKER_00]: or even just held them steady at $120,000 per year, the portfolio would be even much smaller.
10:25.999 --> 10:28.189
[SPEAKER_00]: So here they are side by side.
10:28.372 --> 10:35.660
[SPEAKER_00]: Like I said, retire in a good year, you're set for life, retire in a bad year, you might be getting another job.
10:35.981 --> 10:38.684
[SPEAKER_00]: That's just not a risk that I'm willing to take.
10:39.044 --> 10:43.830
[SPEAKER_00]: Okay, so you're probably thinking, this makes sense Christopher, but I'm not you.
10:43.870 --> 10:45.532
[SPEAKER_00]: Where do I even start?
10:45.832 --> 10:46.953
[SPEAKER_00]: That's a fair question.
10:47.494 --> 10:49.897
[SPEAKER_00]: Let me break this down into four simple steps.
10:50.497 --> 10:53.461
[SPEAKER_00]: These are the exact steps I'd take if I were starting today.
10:53.681 --> 10:57.265
[SPEAKER_00]: Step number one, assess where you are right now.
10:57.245 --> 10:59.010
[SPEAKER_00]: what's your current portfolio structure?
10:59.572 --> 11:02.841
[SPEAKER_00]: How much is in growth, capital preservation and income?
11:03.503 --> 11:10.523
[SPEAKER_00]: For most people, they have 80 to 90 percent in growth and maybe 10 to 20 percent in capital preservation, zero income.
11:10.764 --> 11:12.469
[SPEAKER_00]: What's your current income need?
11:12.449 --> 11:17.238
[SPEAKER_00]: not what you make at your job, but what you actually need to fund your lifestyle.
11:17.258 --> 11:18.461
[SPEAKER_00]: And what's your timeline?
11:18.842 --> 11:22.128
[SPEAKER_00]: Are you trying to retire next year or 10 years from now?
11:22.409 --> 11:24.933
[SPEAKER_00]: The answer dramatically changes your strategy.
11:25.194 --> 11:32.348
[SPEAKER_00]: Now step two, if you're over concentrated in a few stocks or tech equity, you need a divestiture strategy.
11:32.488 --> 11:34.913
[SPEAKER_00]: This isn't sell everything tomorrow.
11:34.893 --> 11:42.607
[SPEAKER_00]: It's a systematic approach to reducing concentration over at 12 to 24 months while minimizing tax impact.
11:42.988 --> 11:49.661
[SPEAKER_00]: I work with a specialized CPA and CTP certified tax planner who helps structure these transitions.
11:49.981 --> 11:56.794
[SPEAKER_00]: If you try to do this yourself, you'll likely overpay in taxes or make emotional decisions that will hurt you in the long run.
11:56.974 --> 11:58.437
[SPEAKER_00]: Then there's Step 3.
11:58.417 --> 12:00.859
[SPEAKER_00]: start building your income category.
12:01.160 --> 12:11.810
[SPEAKER_00]: Begin with education, research different asset classes that produce income, private real estate, private credit, dividend strategies, and cover-called ETFs to name a few.
12:12.150 --> 12:17.935
[SPEAKER_00]: Join investment groups or networks where you can learn from others who are already doing this.
12:18.276 --> 12:25.943
[SPEAKER_00]: The Welfop's community, for example, has members actively sharing
12:25.923 --> 12:34.242
[SPEAKER_00]: Deploy $50,000 to $100,000, and if you well that in investments first, learn the process, then scale as you build confidence.
12:34.542 --> 12:37.850
[SPEAKER_00]: And lastly, step four, this is critical.
12:38.090 --> 12:39.874
[SPEAKER_00]: You need the right structure in systems.
12:40.656 --> 12:45.467
[SPEAKER_00]: This means setting up legal entities properly, LLCs and trusts,
12:45.447 --> 13:04.011
[SPEAKER_00]: working with a CPA who understands the evergreen portfolio model, hiring a certified tax planner who's aligned with your goals, building a reporting system to track performance across all asset categories, creating a simple decision-making framework so your emotions never do the investing.
13:04.211 --> 13:07.275
[SPEAKER_00]: This is exactly where most DIY investors fail.
13:07.435 --> 13:11.320
[SPEAKER_00]: They don't have the operational
13:11.300 --> 13:16.008
[SPEAKER_00]: Now, you don't need $100 million to build a family office structure.
13:16.168 --> 13:21.797
[SPEAKER_00]: What you need is the right framework, the right team, and the discipline to execute systematically.
13:22.098 --> 13:24.221
[SPEAKER_00]: I call this a microfamily office.
13:24.542 --> 13:34.137
[SPEAKER_00]: It's applying family office principles at the one in 30 million dollar, network level, using fractional experts, technology, and simple systems.
13:34.438 --> 13:36.902
[SPEAKER_00]: This is exactly what I teach in world bobs.
13:36.882 --> 13:48.060
[SPEAKER_00]: It's the same system that I use to retire at 51 years old, and it's the system dozens of others in our community are now using to transition from money makers to money managers.
13:48.360 --> 14:01.641
[SPEAKER_00]: If this sounds like something you want to learn more about, I host a live workshop every few weeks for those with $1 million to $30 million in that worth who want to start managing their wealth like a business and not a side hustle.
14:01.621 --> 14:13.792
[SPEAKER_00]: You will learn how to architecture portfolio strategy using the evergreen framework, build the operational infrastructure like a real family office, and run your wealth systematically without it consuming your life.
14:14.172 --> 14:21.959
[SPEAKER_00]: So just head to wealthops.io forward slash go to join our next workshop or click in the link in the description below.
14:22.019 --> 14:31.628
[SPEAKER_00]: And if you want to learn more about what a micro family office actually looks like and how it works, check out this video right here where
14:31.608 --> 14:35.070
[SPEAKER_00]: Thanks for watching, I'll see you in the next one.
