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Net Worth Goals For Investors and Entrepreneurs Aged 35-45

Last updated: November 09, 20222 Comments

net worth 35-45 years old

Over the past years, I’ve spoken to many entrepreneurs and investors in my age group (35-45), and one of the questions I like to ask is what their net worth goal is, irrespective of where they’re currently at. It’s a question that is designed to make them think about what is the amount of money that would cover all their dreams at the moment and foreseeable future, while also being believable.

Interestingly enough, it turns out that almost everyone’s answer falls around the same figure: 10 million dollars.

Now, that’s a lot of money, especially if you come from a modest background. My net worth in my mid-twenties was practically zero, and if you were to talk to me about these kinds of figures they would have been hard to conceive. However, once you start forging ahead in your financial status, you start revising your goals and relationship with money.

Here are a few ways that people in this age group have been able to achieve that net worth figure:

  1. Gain leverage at your job: become a unique and indispensable player in your company and in your industry. You can then break free of the typical salary ceilings that exist within any company and industry.
  2. Open your own business: here you assume higher risk in the hopes of higher returns. The higher theoric risk is reduced by your mastery and knowledge of the industry. Put simply – you’re more likely to succeed than the rest of your peers, because you are already one of the best people in the space.
  3. Start to invest: when the job or business starts to give off more money than you need for your living expenses, invest the rest.

Why is the $10 Million Figure So Attractive?

I believe that it is the most commonly mentioned figure due to being a nice round number, and the fact that most young entrepreneurs and investors tend to have amassed a few million during this age bracket, but have enough knowledge of their skills and the niche they operate in to see themselves getting to that $10 million figure. Sometimes it might mean having to sell their business, and that comes with its own disadvantages, but they typically see it as an attainable figure.

With $10 million dollars, if you have high aspirations and love the finer things in life, you won’t be set for life, but rather you will have a very nice platform to launch off from to even bigger things.

For example, you can afford to:

  • Buy a very nice house in a great neighborhood, cash payment
  • Get yourself some nice cars and other toys
  • Send your kids to the best private schools
  • Travel first class or even using rented private jets
  • Eat out at fine dining locations regularly

It basically allows you to do whatever you want with your life while also giving you the opportunity to make some expensive capital acquisitions like a house and cars.

I describe it as a launchpad because I wouldn’t personally be sitting on my laurels at that $10m level without having a plan in place to double or triple it within the next decade. Cashflow is extremely important to sustain a high flyer lifestyle, and the biggest mistake one can do is to think they’ve made it when they hit a goal like a $10mm net worth, when in reality they have no cashflow.

That’s why getting a big amount of money from an inheritance, fantastic investment, or sale of your business is actually quite hard to handle. Yes, you end up with a lot of money, but if we’re thinking long term, upgrading your lifestyle to the points I just mentioned means the money will run out in a few years at best, and it’s much harder downgrading your lifestyle once you’ve gotten used to better quality all around you.

Meanwhile, some NFT holders don’t even fancy selling their JPEG profile pic for almost $10m:

Why I rejected a 2500 ETH ($9.5M USD ) offer from @poapxyz on CryptoPunk #6046

This could have been the largest ever on-chain NFT sale in USD, but I chose to reject the offer.

Here is the story and why 👇 pic.twitter.com/zeURo4C5z6

— richerd.eth (@richerd) October 16, 2021

Let’s Talk Liquidity

Having a high net worth is great, but unless it is liquid net worth, it can be quite hard to really enjoy it.

For example, you might own a business that is worth $8 million, but that doesn’t really translate into anything practical in your life, since you can’t spend any of that money, and there’s also the risk that the valuation might change at any point in time. We’ve seen how the valuations of public companies can change drastically from one year to another in recent years. For private companies, you have the same story. This is especially true if you’ve been working towards building a company that can be acquired. At certain times the economical circumstances might mean that venture capital dries up, or this is a general dearth of acquisitions in your industry, meaning you’ll need to wait a few more years for the exit. For some companies, this can indeed drive them to the verge of collapse if they haven’t been managing their runway and cash flow property. In short – it’s a treacherous journey and you can’t really change the way you live based on your company’s theoretical valuation.

It’s worth noting that a well-known financial trick of the super-rich (typically $25m+) is to leverage their best assets to obtain loans, but this is not that easy to work out for younger people with lower net worth figures and typically in risky assets. The super-rich can leverage their own private company stock, or their public stock portfolio, real estate, etc, but again they tend to have lower-risk assets and much bigger amounts, making them way more interesting for banks and institutions who are considering lending them money.

In conclusion, the dream state seems to be $10 million in liquid assets plus a healthy cash flow that covers all your monthly costs. Even better if that monthly cash flow is as passive as possible, which would give you the free time to actually use that higher purchasing power and enjoy material possessions, travel and other experiences.

I would also like to add that having lofty net worth objectives does not mean that there are no intermediate stages and that one would only be happy and satisfied if they reach that goal. I do believe that money does buy happiness to a certain degree, but there are diminishing returns the higher you go. Financial strife is one of the most common problems for people, even contributing to the breakup of marriages, and we should all be trying to attain a level of net worth that eliminates or lessens those kinds of basic financial problems.

Once the lower levels of the hierarchy of needs are covered, we’re already in a great position and can now think of fulfilling dreams and ambitions rather than worrying about basic needs. At that point whether it’s time to kick back and relax or continue to work very hard on achieving a higher net worth level depends entirely on one’s dreams.

What’s your take on this topic? Leave a comment below to continue the discussion.

Filed under: Thoughts & Experiences

The Revolution You Seek is Within – Why We Don’t Need Collectivist Ideologies

Published: October 22, 2022Leave a Comment

RevolutionThis is a quick post that I hope to be able to expand on in the future. I was inspired to write some notes after an interesting and intense discussion with a communist friend of mine. I’ve gotten similar thoughts and feelings after heated debates with other people who held strong beliefs about certain things, most typically politics or religion.

I am no expert in politics, it’s an area that I’ve always shied away from, rightly or wrongly. I grew up in a middle-class family in Malta, within a fairly religious (Catholic) environment, and I’ve experienced many of the frustrations that typically haunt people in their late teens and early twenties. Ultimately, the biggest mistake that one can do within this period is to think that some authoritative figure, political party, religion or institutions can provide the solution to your problems.

I feel that it is best to have strong opinions that are weakly held. That means that I will strive to reach informed conclusions about things as fast as possible, but be very open to change those conclusions if someone or something comes along that offers better reasoning. Even further, I strive to prove myself wrong by reading opposing opinions and engaging in discussions with people on the total opposite side of my ideas, always in a respectful manner so that I can really understand their point of view and their emotional background for their thinking.

When I’m in doubt about something, I like to go back to basics. One can observe nature and the behavior of animals as well as our historical records and theories of evolution. These usually shed a lot of insight into human behavior that can be used to reach certain conclusions.

For example, it is pretty clear to me that people mostly think and act in self-interest.

The saddest part for me is that I do believe that most people want the same things, but they get really radicalized by these idea viruses that create so much hate and destruction.

Ultimately, the revolution and change that you seek generally lies within. It’s in the way you think and view life and the things that happen to you. Even if deprived of all autonomy and freedom (prison, physical incapacity), people can have vastly different experiences of life depending on what their outlook is.

This is why I abhor ideologies like socialism and communism, and love ideas that promote freedom and individual rights with minimal government intervention.

Socialism and communism have failed wherever they have been tried out, with extreme pain and loss of life inflicted on the people that were enslaved in those regions. It is quite telling that such regimes have to enforce border control in order to prevent their people leaving. Why would so many people want to leave if the ideology’s implementation is so good?

And no, Scandinavian countries are not a great example of the success of socialism. In the Scandinavian countries, like all other developed nations, the means of production are primarily owned by private individuals, not the community or the government, and resources are allocated to their respective uses by the market, not government or community planning.

Socialism is the Big Lie of the Twentieth century. While it promised prosperity, equality, and security, it delivered poverty, misery, and tyranny. Equality was achieved only in the sense that everyone was equal in his or her misery.

On the other hand, capitalism, while certainly not perfect, is the only working system we have. The strength of capitalism can be attributed to an incentive structure based upon the three Ps: (1) prices determined by market forces, (2) a profit-and-loss system of accounting and (3) private property rights. The failure of socialism can be traced to its neglect of these three incentive-enhancing components.

As I said, this is mostly a very rough draft of some thoughts I want to continue expanding upon in the coming years. Feel free to comment or ignore as you see fit.

Filed under: Thoughts & Experiences

Is Trading Crypto in Portugal Tax-Free?

Last updated: November 14, 2022Leave a Comment

The main reason for the enthusiasm about Portugal from people involved in the crypto space is that until 2022, crypto earnings are tax-free in Portugal.

The current proposal for the 2023 budget includes an amendment that will ensure crypto trading gains will be taxed at 28%. However, crypto held for more than one year will not be taxed on disposal, which still means that Portugal is one of the best places to live in for crypto and NFT investors. The NHR program is also still firmly in place and can result in very attractive low to zero tax rates if the right structure is implemented.

Here’s the information on the pre-2023 situation which led to crypto gains for Portuguese residents being tax-free:


In a 2016 official ruling, the Portuguese Tax Authority analyzed the possible classification of cryptocurrencies within certain types of income that are subject to Portuguese tax, notably capital gains, capital income and income from business activities, and decided that, as a general rule, natural persons should not be taxed in respect of gains derived from the valuation or sale of cryptocurrencies, except that, in the case of sale of cryptocurrencies, if they correspond to the individual’s main recurrent activity, income obtained from such activity could be subject to Portuguese tax.  It should also be noted that this was only a partial decision that did not elaborate on other types of income derived from other cryptocurrency-related activities (e.g. mining and farming activities).

Have a look at the 2016 binding information as it’s the most relevant document for crypto investors. The linked document is in Portuguese, but it consists of the Portuguese tax authority’s reply to a direct question about crypto taxation.

I’ll provide a basic interpretation (in my own words, not a word-for-word translation) for those of you who don’t understand Portuguese:

Cryptocurrencies or virtual currencies are not technically considered money due to not having legal tender in Portugal. However, they can be exchanged, with a resulting profit, for real currencies (euros, dollars, or other) at exchanges, with the prices being determined by the demand for said cryptocurrency.

Thus, cryptocurrencies can generate different types of taxable income:

  1. Gains obtained from the purchase and sale of virtual currency units/exchange from the cryptocurrency to real currency (whatever it may be)
  2. For obtaining commissions for the provision of services related to obtaining cryptocurrency.
  3. For gains derived from sales of products or services in cryptocurrency

This document only considers the first scenario. This is the scenario faced by most crypto investors.

The profits from this activity are candidates for three categories of income types:

  1. Capital Gains – category G (e.g. sale of an apartment, sale of shares)
  2. Capital Yields – category E (e.g. rent of an apartment, dividends)
  3. Professional Income – category B (e.g. consultancy, freelance work)

Category G

Article 10 of the IRS Code specifies the cases that are taxable as capital gains. The key thing to note here is that when the legislator created this law, they resorted to a closed type, meaning that the law is specifically for the items mentioned and nothing else. Since cryptocurrencies do not fall within the specific cases mentioned, and their value is merely determined by supply and demand, therefore we can conclude that they are not taxable within this category.

Category E

This category clearly does not apply to the sale of crypto assets since it relates to yields on capital e.g. dividends, rental income. On the other hand, I would note that the income derived from services such as YouHodler and other crypto interest accounts would probably fall in this category. The same goes for income from crypto staking e.g. Ethereum staking.

Category B

Here’s the tricky one. Category B relates to the income of a self-employed worker. When a type of income can be classified as of category B or any of the other two categories considered here, category B would prevail. So in this category income can be taxed whether it comes from sales, whether it is capital income, or any other nature, pursuant to paragraph 1 of article 3 of the IRS Code.

To determine whether the income falls into this category, one would need to consider its frequency and the orientation of the activity towards obtaining profits. If the existence of the exercise of a business or professional activity is verified, then the taxpayer is obliged to comply with the declarative obligations contained in paragraph 6 of article 3 of the Code of IRS, i.e. to issue an invoice or equivalent document (electronic invoice-receipt), whenever you sell some product or provide a service.

The reason I say that it’s a tricky one is that crypto traders need to consider carefully whether their activities would be considered professional income or not. Here I would suggest that if you’re in doubt you should consult a tax lawyer. The general rule worldwide is that if trading is your main source of income and you are opening and closing positions on a daily basis you would most likely classify as a professional trader and your income will fall in this category – therefore not being tax-free.

The conclusion of the document states clearly that the sale of cryptocurrencies is not taxable in Portugal unless due to its frequency it constitutes a professional or entrepreneurial activity, which would make it taxable under category B.

This latter point also results in a lot of questions about whether or not one would be classified as a professional trader.

There are several factors that determine whether one’s trading activity is professional or not. These include:

  • Number of trades per day/week/month/year.
  • Holding period of financial products
  • Complexity of traded financial products
  • Number of trading platforms used
  • Debt-to-equity ratio, credit financing
  • Profit level and relationship to other income
  • Additional relevant trading activities (such as advice)
  • Traders’ main activity (where else do you get your money from?)

The fact that one of the factors listed above applies to you does not automatically make you a professional trader. Ultimately one must look at every individual’s overall situation, and this can only be reliably done by involving a tax lawyer who will give you a written opinion.

In summary, cryptocurrencies in Portugal are only taxable if you do it as a professional trading activity and therefore you need to open an activity as a trader and pay taxes according to your profit, otherwise they are considered non-taxable in Portugal due being unable to fit in any category.

Note that the above is true for individuals but not for corporate entities. If you hold your crypto in a Portuguese company, all the gains from cryptocurrency trading are taxed together with any other profit the company had, irrespective of whether the company is engaged in trading or whether it held the crypto as a long-term investment.

Contact me if you need to speak to a tax lawyer who knows how to deal with crypto. It’s very important that you assess your individual case before making any decisions.


One should also keep in mind that the NHR program is really the main attraction for moving to Portugal from a tax perspective. In my article on European tax strategies I highlight some examples of how one might lower their overall level of tax liability by implementing structures spanning multiple countries.

Filed under: Cryptoassets, Money

Where to Live in Spain as a Young Rich Expat

Published: October 07, 2022Leave a Comment

If you’re thinking of moving to Spain as a young and rich expat, you’ll probably be looking at a few shortlisted locations. Now the word “rich” can mean many things, but I’m using it to define young entrepreneurs, investors, and professionals who have a relatively high income or net worth.

Here’s my view on where to live in Spain if you fit that description, based on what I’ve seen during my time in Spain.

In my experience, people tend to consider the following locations:

  • Barcelona (Catalonia)
  • Madrid (Comunidad de Madrid)
  • Costa del Sol (Andalucia)
  • Costa Blanca (Comunidad Valenciana)
  • Balearic islands (Islas Baleares)

First, I will explain why I listed them in this fashion.

For Barcelona and Madrid, they are pretty much the only serious destination within their autonomous regions, so I put down the city names directly.

For the two coasts (del Sol and Blanca), expats tend to be a bit more spread out and refer to the names of the coasts when explaining where they live.

For the islands, most expats will be found on Mallorca or Ibiza.

The autonomous region in brackets is important due to the fact that the tax implications differ between each region.

Housing

The best houses I’ve seen were in Madrid, Costa del Sol (look around the Marbella area as an example) and the Balearic islands. Barcelona also has some decent places, but they tend to be extraordinarily expensive and there are relatively few newer builds.

Young couples and families tend to prefer modern housing and there is a dearth of that type of housing in Barcelona due to bad socialist policies in place, among other factors. The city is also constrained by its geography, meaning the suburbs are actually quite distant compared to other cities. You will find decent housing in suburbs like Sant Cugat and Sitges, but you lose the proximity to the city.

Culture

For year-round cultural activities nothing comes close to Barcelona or Madrid. The difference becomes even more apparent in winter, when the other locations in my list become devoid of activity as tourism wanes.

If you value events, conferences and networking opportunities, then again you will want to stick to one of these two cities.

Expat Community

Barcelona wins this hands-down due to the large size of the expat community and its diversity. Other areas tend to be dominated by expats from certain countries (e.g. Germany/UK) whereas in Barcelona you’ll find a mix of people from all over the world.

Madrid is good too from this aspect but the expat community is smaller, especially when considering the type of person I have in mind in this article.

Politics & Taxation

In my opinion, Madrid and Andalucia are the two regions that are doing things the right way politically. They are trying to reduce taxation and encourage investment in the regions, while Barcelona is stuck in socialist hell.

Everyone has their opinion on politics, but regarding taxation the numbers speak for themselves, and show that Madrid and Andalucia are the best places for lower taxation in Spain, although it remains quite high in any case.

Education

If you have kids, and want to find a top international school, but also give your kids a holistic education in terms of sports activities and mixing with many other nationalities and locals, then you want to stick to either Barcelona and Madrid.

You can find some decent schools in the other areas, but you will miss out on the better availability of extra curricular activities and social life that the two biggest cities of Spain offer.

Keep in mind that once your kids turn eighteen and start looking at Universities, they will probably leave Spain and further their education in the US, UK, or the Netherlands. You might want to plan around that if you value living close to your children.

Travel

If you intend to travel a lot, then the best options are clearly Madrid and Barcelona, both of which have highly trafficked international airport. I particularly like the airport in Barcelona, but both are pretty good.

Travel between the two cities is also very convenient via the high speed train connection, which is important if you plan to conduct business in both cities. Madrid is better connected to the rest of Spain through both road and rail, so that’s another consideration if you want to explore Spain or have business all over.

Weather

If weather is very high on your priority list, then Madrid loses out due to its more extreme temperature highs and lows. It also lacks having the sea and the summer lifestyle one associates with coastal areas.

All other cities and areas I mentioned are great, but I would have to put Barcelona top due to its great and balanced weather. Summertime is always great in Barcelona and the Costa Brava, while the winter is not too cold and very pleasant for excursions. You also have several locations for good skiing within 2 hours drive from Barcelona.

The Balearic islands and southern coast of Spain are not my favorite because they tend to be more deserted in wintertime.

Some expats move to the Canary islands due to the great weather in winter, given their location, but in my opinion you would lose out on too many other things to make this a top destination.

Time to Move to Spain?

Spain is a wonderful country to live in as an expat, and has very few rivals worldwide if you seek overall quality of life. It might not be the top in anything, but it does have a bit of everything you need to live a happy life.

The biggest downside is inept politicians and a high level of taxation. This is why many expats are now choosing to move to Portugal instead of Spain. I have noted my thoughts on Barcelona vs Lisbon in a separate article, but in a nutshell, if tax optimisation and English-speaking locals is high on your priorities list, you will want to look at Portugal. For everything else, Spain wins out.

Have you moved to Spain as an expat? Do you agree with my assessment? Happy to continue the discussion in the comments section below.

Filed under: Expat life

Is WordPress Entering a Death Spiral?

Published: October 05, 2022Leave a Comment

My journey with WordPress goes way back, in 2006, to be exact. Over the years I’ve been first and foremost a user (running various blogs on WP), but I’ve also developed on the platform and run various plugin businesses too. For a while, I also ran an agency where I advocated hard for the benefits of open-source systems and WordPress specifically. This was at a time when the vast majority of websites were either custom coded or run on proprietary closed-source CMS systems, even before the growth of social media.

Back then WordPress really was the solution to democratizing publishing (its slogan) but over the past circa 20 years of its existence, things have changed a lot.

I’ve already highlighted my concerns with the trajectory it has been taking over the past few years, as well as raising doubts whether the slew of acquisitions are a good thing for the space.

Today I want to bring attention to a particular Trac ticket about a change in the .org codebase that took everyone by surprise.

The most commonly cited superpower of WordPress is its community, but there are serious reasons to think that this community is very fractured.

In my view, WordPress community is very generic and we need to understand what we mean when we speak about that. Here’s my take on what makes up the WP community:

  • WordPress leadership
  • plugin and theme developers that create free and premium products for WP
  • service providers (WP-specific or not) that create solutions using WP as part of their toolset
  • millions of end users who have no interest beyond using WP to power their site/s

The unique selling point of WordPress really is its flexibility. That flexibility comes from the fact that thousands of developers have built plugins and themes to cater to every possible need a website builder can have.

WordPress leadership, with founder Matt Mullenweg firmly at the helm and in control of things, likes to preach about community as one whole part, but it has become increasingly obvious that this is a fallacy.

Plugin and theme developers have felt unappreciated for many years, with many incidents over WordPress’ history fueling this feeling.

The removal of plugin growth stats is the latest such incident, and the public outcry from developers and users (and the responses from WordPress leadership) has really illustrated that things are severely broken at the top and we need to find a fix to avoid WordPress going into a long-term death spiral.

Here’s what went down.

On Friday 30th September 2022, the active install growth chart in the plugin repository was officially removed in a commit by Scott Reilly (coffee2code), a Tech Ninja at Audrey HC, LLC – an investment and research company run by Matt Mullenweg – WordPress co-founder and CEO of Automattic.

A very vague reason was given for the change, and in the ensuing hours and days many plugin developers were up in arms, and rightly so. A discussion ensued on WordPress trac, and there has been no resolution yet.

The ticket in question is #6511, go and have a look at the comments there before you come back to read the rest of this post.

I will add my two cents while looking at the bigger picture, because I believe that decisions like this really are very impactful in the long run.

In my humble opinion, failure to address the multitude of questions raised and going directly contrary to the wishes of the much-hailed “WordPress community” would confirm the following:

  • WordPress is decentralized only in name; in practice being a centralized entity with power in the hands of a few who can decide whatever they want without having to give any justification for their decisions.
  • There is no real incentive to help people build small businesses and earn a living through building plugins within the WordPress ecosystem. It is more desirable for acquisitions to happen more and more in order for the few big companies to obtain tighter and fuller control of the WordPress experience.
  • Individual developers and small teams can no longer compete reasonably with the long-time big players and should be preparing for acquisition by said big players, and looking at moving into other systems that have more opportunity and a growing rather than shrinking pie.

It is understandable that there are many interests involved, and as in any other industry, money talks, but I think an honest discussion must be had on the future of WordPress.

Actions like the one raised in this ticket only fuel the idea that the big guys in this space no longer care about the people whose work (whether voluntary contributions to WP core or through running plugin/theme businesses) has enabled WordPress to be in the dominant position it is today.

Hopefully, this Trac ticket will serve as the beginning of a more open WordPress and a confirmation that plugin developers still matter and are very much appreciated in the community. That is truly my hope, as the opposite would paint a very bad future for those building businesses within the WordPress plugin ecosystem.

Filed under: Tech

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