P.S. GhOSH & CO.

Corporate Financiers

The Exposed Brick Wall


Last night I found myself at a trendy restaurant in Soho. The type where people work very hard to be seen. You know the type. Exposed brick wall. Faux well-worn beams. French country house meets Bronx housing tenement. Waiter with a pretentious foreign accent and obligatory ponytail. At the bar, Hipsters with large beards looking like lumber jacks, even though they are coders at a FinTech company next door.

A few of us were invited there by someone whom I knew when she was 8 years old. Now she’s 50-ish. Let’s call her Sally. Like a lot of New Yorkers, it’s not clear what she does. Let’s just say she’s an activist with some side hustles.

What struck me about Sally were her life choices. She lives alone in a small studio. She has little to no retirement assets and no stable income. None of which gets in the way of her being a bon vivant. Someone who is ready with the esoteric quote at every toast, for any occasion. Someone who is a veritable connoisseur of the good life: exotic food, the best wine, the nuances of doing shots with Grappa. Don’t get me wrong. Living beyond one’s means is fun. But the trade-off is savings.

Savings sound boring. That’s probably why 40% of Americans say they don’t have $400 in savings, according to a survey by the Federal Reserve. Boring or not, it’s the key to financial freedom. In fact, freedom from ancient rules which no longer apply. The first rule which doesn’t apply: in your work, only pursue your passions starting from your first job. The second rule which needs questioning: live on a life-deferral strategy which presumes you’ll retire at some arbitrary age like 65 in the very distant future.

What we tell our corporate clients is that the sequence should be reversed for their hot shot high tech employees. It makes much more sense to maximize cash-flow as early as possible, even if it means not pursuing one’s passion for a few years. Then use this ever-increasing cash-flow to buy free time; using the free time to pursue one’s passions.

How ? Save like crazy even if your friends think you’re cheap. Don’t buy things you don’t need (like endless rounds of Grappa shots). Use these savings to purchase “strips of cash-flow” to generate Guaranteed Monthly Cash-Flow for Life (GM-CFL). And instead of waiting to turn 65, turn on this cash-flow spigot immediately and accumulate these cash-flow streams as you work. Not only is this possible, it is a little known secret that there are at least 5 vehicles which can be used to generate GM-CFL.

This is a lot easier than one thinks. That is, if one rejects the consumerist philosophy of buying things we don’t need, with money we don’t have, funding the difference with debt. Our valuation models tell us that the average 21 year old, working as a coder at a FinTech firm in NYC until the age of 28, would have enough Guaranteed Monthly Cash-Flow for Life to have 100% free time in Chiang Mai, Thailand. In New York City that same cash-flow stream would buy 25% free time. If you need more, save more and purchase incremental streams of cash-flow – until you have enough to purchase 100% free time in the location of your choice. Cash-flow first; passions second.

Maybe Sally would have been better off reversing her strategy; buying strips of immediate cash-flow early, activism later. Then again, maybe not. After all, this strategy is premised on a value judgement. What we do know, however, is that the exposed brick wall …is so…80s.

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