My Four-Bucket Approach to Personal Investing
It’s a bit surreal to be asked how I invest my money. I grew up poor in rural Maine with my step-grandfather, and from ages 11 to 14, I was homeless, bouncing between neighbors' houses. So, at 43, being in a position to share my financial strategy is something I don’t take for granted.
This year marks a decade since I founded Dynasty Financial Partners, a platform that provides services, capital, and investment products to independent wealth managers. We’re now approaching nearly $50 billion in assets on the platform. As the President and CEO of this , a significant piece of my net worth is tied up in the business, right alongside our partners and equity owners. While some might argue against this “all-in” approach, my bet on our strategy, our people, and our clients has worked out well so far.
That said, my wife Mary Ann and I don’t have all our eggs in one basket. Our approach to is structured around our concentration in Dynasty. We think of our capital in four distinct pools.
1. Our Personal Capital
Since Mary Ann and I are still relatively young and in good health, our personal portfolio is geared toward aggressive growth. It’s a diversified mix, with index funds forming the core. For small-cap and international exposure, we use managed money. We also maintain a 10% allocation to fixed income and another 10% in cash.
About 80% of this portfolio is in growth investments. Half of that is in public markets, which is where our happens. The other 30% is in alternatives, split between a few private equity and funds. I also make direct investments in companies run by people I trust, as long as they aren't in financial services to avoid concentration risk. This kind of disciplined allocation is a key principle, even for .
2. Our Family Capital
This pool is primarily made up of Dynasty stock. However, we also use it as a tool to teach our two daughters about finance. We’ve let them pick some individual stocks, and it’s incredible to watch our 11- and 13-year-olds present their ideas to us at Friday night dinners. They also have their own educational funds, which are invested in aggressive, growth-focused public equity funds.
Managing finances when your primary income source is your own business is a unique challenge, and many of these principles of and entrepreneurs are what we hope to pass down.
3. Our Philanthropic Capital
This is the most conservatively managed of our four pools. We’re passionate about our giving efforts, which focus on education, ALS, poverty, and veteran services. The allocation here is about 30% in domestic equity indexing, 20% with a high-dividend value manager, 25% in taxable fixed income, 15% in international mutual funds, and 10% in cash. We contribute about 10% of our annual income to this pool and plan to fund it more significantly after a potential future liquidity event with Dynasty.
4. Our “Fun” Capital
We call this last bucket our H&H fund: houses and horses. We own a few personal properties that we enjoy with family and friends, and we have a stable of thoroughbred racehorses, often in partnership with friends. While both our in homes and the horses have the potential for financial returns—and we’ve been lucky on both fronts—that’s not the main goal. The real return is sharing these experiences. You can’t put a price tag on having 50 people celebrating with you in your home or in the winner's circle.
