Anne Mahlum: From a teenager at 16, 17, I told myself I'm gonna be somebody someday, whatever that meant. And that I was gonna make a lot of money.
Jamie: Meet Anne Mahlum, an entrepreneur in her mid forties who turned that dream into a reality. She has made bold choices founding back on my feet in 2007, a nonprofit that empowers unhoused people through fitness, which no one thought was a good idea at the time, but became incredibly successful, and then investing her own money to start the Pilates inspired fitness company, Solidcore. But the roots of her ambition go back to early childhood.
Anna Mahlum: Once my dad's gambling addiction surfaced and realized he took a lot of the money that my mom worked so hard to save and gambled away, you know, it rocked me. It tore my parents' marriage apart. I saw how much struggle there was actually in their marriage around finances. I didn't want money to ever be a factor in my relationships, and I didn't wanna depend on anybody for money.
Jamie: Then she watched her mother set a different example in the nineties. Her mom joined an all women investment club and built a portfolio that grew to a million dollars. All this on a public school teacher's salary. But Anne knew she needed to create her own relationship with money.
Anne Mahlum: My mom is pretty frugal. She had a plan for every penny, and she had to work really hard and be very disciplined. Her identity is wrapped up in dying with this money. And then my dad, uh, mindset is, "as long as I have enough for today, I do not need enough for tomorrow." Money does not stress him out at all. And so, my mom, who has a million dollars stresses more about money than my dad. So like I've really tried to not be like either of them, to be honest.
Jamie: As her business grew, so did her approach to managing money after two rounds of fundraising for solid core and selling part of her stake. Anne had $15 million in her portfolio, but she didn't spend much of it. She bought a few properties, but mostly focused on scaling the company to over a hundred studios nationwide until her exit in 2023. Then, with about a hundred million dollars in the bank, she had to make a big adjustment. As we heard, she didn’t grow up wealthy, so she wasn’t accustomed to managing so much money. She felt she’d earned it, but wanted to be intentional in how she spent it. Whether that’s treating herself to luxury items or amping up her generosity.
Anne Mahlum: If I don't start to increase my expensive ceiling, my giving ceiling, my gift ceiling, then what was the point of all of this? You know, $5,000 for a trip is gonna always feel expensive, but that's not relative to the amount of wealth I had. So when I found something I really loved, two things, my Bentley and a piece of art that was 150 grand, I bought it. And I just said, I need to see how this feels. And if I regret it, I need to sit and ask myself why? Because I can afford it. I gifted my family members, you know, a hundred grand, i've taken people on trips that have cost, you know, 200, 250 k, and I don't regret any of those things. It's trial and error. But I, I owed it to myself, the impact that I could make, my friends, my family, the charities I care about, to say, I have to level up all of those things. Otherwise, it all wouldn't have been worth it.
Jamie: Two years since the big sale. Anne is leveling up in more ways than one. She's on the board of Back On My Feet, the nonprofit. She started and with three TEDx talks under her belt. She's a sought after public speaker. She's working on a book and remains focused on her fitness playing volleyball almost every day.
She also invests in health and wellness startups, which she compares to being a grandparent.
Anne Mahlum: I'm sure you've heard, you know, this analogy, but a founder and entrepreneur, it's sort of like you're the parent where you've gotta change all the dirty diapers, but when you're now an investor and I get to be a board member, um, I get to be the grandparent, where I get to really help people, like strategically think through things, the pitfalls that are coming, but I don't have to worry about, you know, the execution of it or the operations, the people, the HR stuff, that all happens. Um, but I love sitting in that role and helping amazing founders that are building companies, uh, guide them and offer, you know, my mentorship.
Jamie: That parenting analogy is not completely metaphorical for Anne.
Anne Mahlum: We're expecting our first child. My husband and I got married late in life at 43, um, and I'm having my first child at 45. And I was somebody who was not pounding the table that I wanted to have kids. But for Brett and I, it just makes sense, and we're super excited about it, and stepping into a brand new era that, you know, I'm hoping my entrepreneur skills help me out a little bit.
Jamie: And that's where we'll start today. I'm Jamie Rowe. Welcome to What Should I Do With My Money? An original podcast from Morgan Stanley. Usually on this show we hear from guests who are in the early stages of building their wealth and managing their finances, not Anne Malam. She's applied the same confidence and rigor that made her a successful entrepreneur to educating herself about investments and managing her money.
But she still has questions. For Anne growing her portfolio is a way to scratch that entrepreneurial itch she's had since exiting her company. She has a keen eye on her finances with every dollar accounted for in a meticulous spreadsheet. Here's a brief rundown. She's got about a third of her assets in public equities and a quarter in real estate.
About 15% in private investments and about the same in hedge funds and private equity. The rest is in bonds, private loans, Bitcoin, and even about 2% in art, but with shifting priorities and a big life change on the horizon, she's rethinking where and how to allocate her wealth, whether that means maintaining her current monthly spending of $150,000 or planning her estate as her family grows. To help Anne unpack what comes next. We have Victoria, a managing director and private wealth advisor at Morgan Stanley, and like Anne Victoria, made a promise about money at a young age.
Victoria Bailey: I actually grew up in a house where money was a very, very big topic, and created a lot of strife, because my mom was a single mom working three jobs to support us. And when I was in high school, I made a promise to her that she was never gonna have to pay for me to go to college, and I would be completely independent after.
Jamie: it's a promise she ended up keeping, but in a way you might not expect.
Victoria Bailey: I grew up in a house where my mom was, uh, a former concert pianist. So, I grew up singing. And so once I realized that I could actually sing on stage, answer questions in front of judges, I actually participated in the Miss America pageant. It was very foreign to me, but it's the largest scholarship organization in the world. And uh, it ended up helping me to fund a lot of my education. And then the second thing was that Jack Bogle, who founded Vanguard, had offered a four year full ride to the next student from my high school to get into Princeton. Every student for eight years had actually applied for that scholarship and no one had gotten in. And I was the lucky one that actually got that scholarship. And so between the Miss America scholarships that I got, and then also having Jack's support, I pieced all of that together to fully pay for my education.
Jamie: Victoria's journey to finance had a few more twists and turns, the first one being returning to the stage to pursue her passion for singing. She moved to New York and even landed a few gigs as a professional opera singer, but it wasn't enough and she knew she'd have to pivot and find a new way to support herself.
Victoria Bailey: The first person who wanted to hire me was somebody that worked in finance, and I didn't know the difference between a stock and a bond at that point. So I was probably the worst analyst on Wall Street, but I really did learn this business from the ground up, because of that, I had to dive in and figure out every single basic thing that other people had grown up knowing about. But because of that, I actually feel like I'm better at my job.
Jamie: And that job includes being one of Morgan Stanley's select group of financial advisors with a founder's specialist designation working with clients just like Anne. This is an elite group of advisors who can integrate investment banking, workplace equity planning, and personal wealth management. They're bridging the gap for founders between private company ownership, solutions they need for their companies. Personal financial strategy to manage their own wealth.
Victoria Bailey: I lead a team of 14 people and we manage over $10 billion of assets. We largely work with entrepreneurs that have, you know, gone from private company to either public company or sold their companies, and helping them through those transition events is really where our specialty lies. Do they wanna give money to their kids? Do they wanna make sure their kids are protected from the trappings of wealth? Do they want to be giving philanthropically, uh, either publicly or anonymously? All of that changes the dynamic of how we're actually thinking about day-to-day investments.
Jamie: Between their need to achieve financial independence at a young age and their drive for excellence in their chosen fields. Victoria and Anne are perfectly matched for this conversation. They also have another passion in common. Let's get to it.
Victoria Bailey: So nice to meet you, Anne. Thanks so much for taking the time to do this. I guess I'll just start by asking you what has motivated you to have this conversation? And are there any big questions on your mind that you wanna explore today?
Anne Mahlum: Yeah, I think the conversations around money I get, I get passionate about talking to everybody, but particularly, you know, women. I always reference that it like wasn't that long ago that, you know, women couldn't get their own mortgage. We couldn't get a credit card without a man signing for us. Um, and I think women getting comfortable stepping into understanding money, how it works and deserving wealth. And literally asking for, you know, what it is that your value that you bring to the table. It's a, it's a big part of my personal, sort of, mission right now is getting women to advocate for themselves and to talk about money.
Victoria Bailey: I love that. And I, I share that passion completely and making sure, also, I think, tangentially, women feel confident in the conversations with their advisor. I find that a lot of women come to the table and don't know what role they play in that relationship.. So, I guess, take me back to when you created your wealth, how did you think about the asset allocation that you built, and how did you actually implement it? Like, were there passion projects that you really wanted to explore, or did you wanna go with more of a traditional asset allocation? How did you think about that? Yeah.
Anne Mahlum: Yeah, I think it's been a journey, and I will say I don't feel like I always have it figured out. I feel like there'll be times when it's a little Jekyll and Hyde, but I'm conscious of it and I'm just like, hold on here, because as an entrepreneur, you know, I try to like define money for people. Like what does money mean to you? You know, Solidcore money was a trophy, right? Like the valuation and the payout that I got were just constant validation that I am great at what I do. So I feel really, really proud about the fact that I built my wealth on making people stronger, happier, healthier, creating jobs, and building a business that is actually adding, you know, tremendous value to people's lives. So as I started to, you know, after the Solidcore sale, you know, where I put this money, what to do with it. I started to explore spending it a little bit and, and then I got really into my spreadsheet. My husband jokes, like I know where every dollar is. You know, once a week I, I sit down, I look through everything, you know, what'd the market do this week? You know, okay, what's our net worth? Um you know, going over things that if we have upcoming spending, whatever else, and I can get caught up, Victoria, in the game of making more money because I wanna feel smart, you know? It's like, because I'm not working and building a company anymore, I can look at my investments as my entrepreneurial sort of itch and like, okay, how do I turn this into as much money as possible? And like the Jekyll and Hyde piece for me comes from, well, wait a minute. Like I gotta be careful because if I don't quote unquote "need" more money, I'm playing this game for the sake of playing this game. You know, be cautious here, because I don't want my self-worth or whatever tied up in just continuing to grow this bucket of money. But it, it is a battle every day, because you wanna feel smart, you wanna feel like you took a hundred million and turned it into X, Y, and Z. And simply the power of the math that I have done, like, we'll be billionaires by the time we're in our seventies by simply, you know, the portfolio that I have, and compound interest. And you're like, okay, well then what?
Victoria Bailey: Absolutely, and I think that "now what?" question is the right next question. Like, so if you think about yourself, and you're so young, you have such a long time period, so you're spot on. Like ,you have a lot of time for your portfolio to continue to compound. There's really only four places that your money can go when you pass away, right? You can either spend it during your lifetime. You can give it to charity. You can give it to other people, your future son or daughter, congratulations, by the way. Um, or you've paid taxes. And so one of the things that we work with clients on is if there's really only four buckets there, which ones do you wanna maximize? And most of our clients wanna minimize the tax bucket, and then it's really a combo of the other three buckets. Have you spent any time thinking about that and figuring out the balance of, you know, giving money to the next generation versus charity versus spending it?
Anne Mahlum: I, I have and I find it changes and it evolves. Have you, um, heard of the book Die With Zero by Bill Perkins?
Victoria Bailey: I have.
Anne Mahlum: So, I've read that book a couple times now, and I really love the mentality, um, a around it. Again, it can still be difficult when you think about, I'm competitive in everything I do in my life, but I wanna be mindful of not chasing more money for the sake of more money. So with those four buckets, obviously I'm sure I'm with most of your clients and like, yeah, let's minimize the tax. I also don't love the idea of gifting a ton of money to even my current family, you know, members I mentioned my dad is a gambling addict, so, you know, I've given a couple hundred grand to my siblings, but I would never give my dad a couple hundred grand. I give my dad a very, you know, nominal amount of money a month so that he doesn't find himself back in the casino, because I'm trying to figure out what my family relationships are with money. My mom won't take money from me, but she'll let me take her to London, and go sit at incredible seats in Wimbledon, and fly her business class, and stay at a five star hotel. So like I spend money on my mom that way. So I have to figure out with people what their comfort level is, while also not just gifting so much where, you know, I take away their ambition, or that they just sort of think, "Well, Anne's gonna give us, you know, another million dollars, so we don't need to worry about XY," I don't wanna do that to, to, to people. Um, and I don't feel good about that either. So I'm, I'm calculated and mindful, um, on that gifting part of it. And I also don't wanna leave a ton to my kids. So I kind of end up in this place where, you know, Victoria, I'm like, "What do I love to do every day?" I mean, I'm going to the DR this this weekend with seven of my volleyball girlfriends, and I'm flying us all private. I'm like, this is a perfect opportunity to do this. You know, I wanna do this. There's no point for us to be at the airport for three, four hours. You know, we're only going for four days. We're flying private. So I'll do things like that, no problem. But the majority of things I love to do just don't cost a lot of money. Um, so I've, sort of, like, ugh, I don't really know what to do with it besides keep it invested and have it growing more until I figure it out.
Anne Mahlum: And yeah, I give to charity. I've just, you know, announced earlier this year, I'm giving a million dollar pledge to the nonprofit that I started back in 2007. Um, and I'm giving that because I'm back on the board and I'm intimately involved in where that money's going.
Victoria Bailey: Yeah, and I love that you're being so conscious about figuring out what it is that brings you happiness with your spending, right? It's not, it's not necessarily spending for the sake of spending. It's not buying tons of real estate such that now your carrying cost is so high, but you're not actually enjoying the places you're going. It's those experiences, which also is a really interesting nuance on spending because it's not recurring, right? Like if you think about longevity, spend rate is one of the most important things to making sure that you have the ability to not run outta money. Um. But if they're more one-off experiences, you can shut that down much more easily. The one thing that I noticed about your balance sheet, um, there was a lot of illiquid investments that I noticed. Some were real estate, some were private investments. And so, I guess one question I wanted to ask is whether or not, as you've been thinking about your spend rate and your investments and the, the intersection of those two, are you thinking about your spend rate as relates to all of your portfolio or just your liquid portfolio?
Anne Mahlum: Just my liquid portfolio. And I, you know, I still bring in about 150 grand a month, between speaking, consulting, private loans that I do, cashflow real estate, you know, I've got property that rent out, you know, and we pretty much spend that every month, like it's 150. So I'm not even touching the principle right now. Not that I wouldn't. You know, again, like we just bought another Bentley, to be honest. And like obviously we, we spent 300 grand on that. Um, I don't mind doing those things. But our, sort of, spend on a monthly basis that turns out to average around 150 k, um, that's happening through the revenue that we're bringing in.
Victoria Bailey: That's great. Perfect. Yeah. 'cause sometimes people fall into the trap of thinking about their spending based on their entire portfolio. But if a lot is illiquid, they're potentially winding down that liquid portfolio so quickly such that they find themselves in a position of having to sell something illiquid, which is always dangerous. So. Yeah.
Anne Mahlum: Yeah. And I think too, I mean, I'm sure you have clients, who've got, you know, $500 million, and they won't spend more than $300 in a hotel room. You know, it doesn't seem to matter how much money you have, if you do not do the work on your relationship and your mindset with money, and your identity around what it means to spend it, to invest it, to save it. So, you know, I'm, I'm curious how you work with clients where you feel like they have so much, but their mindset is still one of, of such scarcity.
Victoria Bailey: Yeah, no, it's a great question. And it's, it is an evolution, kind of like what you've been on, right? We have clients in both buckets. We have clients that have so much money but don't spend a dime. Um, and then we have clients that have a lot of money, and spend so much that they might end up with nothing. Um, and that's where it goes back to that conversation of, at the end of the day, what do you wanna have happen? If you want money to go to your kids, or you wanna maximize your philanthropic giving at the end of the day, the spending does play a role into that. But there is identity around wealth. And I think you've touched on a really interesting point, because you do have to grow into it, right? That first Bentley was probably super uncomfortable, at that first moment, you're like, "Oh my gosh, what is this gonna feel like?"
Anne Mahlum: Mm-hmm.
Victoria Bailey: But you have to explore those things in order to find out the answer to that question, right? And you found out that that was comfortable. That was great. That was something that brings you happiness and value. And giving money to your friends and family is probably the most dangerous thing that people do, right? In that undoubtedly it does change your relationships. And how do other people react to that, right? And where we find it gets really challenging is when people are so generous early on, that it then becomes the expectation. And once it's an expectation that you're gonna pay for everything, some of that happiness goes away, because you don't wanna feel like you're expected to. So, just pivoting slightly, have you done any estate planning around your wealth? Because obviously you're well north of the estate tax exemption, right? Like if you passed away today, you would owe 40% on any amount above your exemption amount. So have you done any of the basic planning and then more advanced planning to go back to that mitigating tax concept to mitigate the long-term estate tax?
Anne Mahlum: I have, um, and it changes 'cause I decide, you know, an an experience happened where I wanna change something. But yeah, we, of course, have talked about irrevocable trust, revocable trust, you know what, what goes where. Obviously, you know, I'm married. So, you know, what goes to Brett that's not, you know, taxed. What's the step-up in basis. You know, trying to protect all those things as much as possible. But again, it's like, it's a lot of money to gift. And a lot of it is frankly going into a foundation, um, with trustees that will be responsible for deploying, you know, that money. I just don't believe in leaving millions of dollars to individuals. The die with zero mentality, which I love is like, there's really no point in like leaving money to people when they're in their eighties and nineties. So if I wanna gift to money right to my family, I forget the exact number, I think as a couple, Brett and I have like a $23 million lifetime gift. Is that right?
Victoria Bailey: It's, uh, yeah, 13.99 per person, so 28 million.
Anne Mahlum: 28 million. Yeah. Like that's a lot of money,
Victoria Bailey: Yeah.
Anne Mahlum: you know, to, to gift somebody tax free. And I'm just like, if we wanna do that again, I don't think we'll ever do all of that to our family members, you know? But it's like, okay, let's gift them now when they're sort of young. Um, I mean, we just do life backwards so often, where like people work and they don't take the trips and they're not optimizing their health, um, and their bodies in any sort of real way to push themselves when they're young. And I've seen people, right? There's no guarantee your health lasts in your seventies and eighties. But to your point, I change it every time. I think, I'm like, "Oh, this feels really good." And then six months go by and I'm like, "I can't believe that I was gonna leave 500 grand." You know, like, it's crazy
Victoria Bailey: I love that you revisit it on a regular basis, 'cause most people don't. And I'm actually curious to see how this evolves as you have your first child. Do you know if it's a boy or girl? Aw, if- as your son grows, like whether or not your views on that would change and evolve over time, and that can play into the estate plan as well.
Anne Mahlum: Yeah, totally. Um, and I'm curious too, 'cause sometimes I've thought about, so I don't get wrapped up in the chase of more of like, okay, let's just park, you know, like this this will never go below 25 million. Let's just let that grow and there'll be enough or whatever. But like, I'm never allowed to touch that. And the rest of it, if I wanna take 4 million, do something, whatever, like I'm gonna do that. But like when I see like 99% of my money is in an investment. It's either in, you know, a, a startup, which I know is risky, but I'm, you know, I try to do as best as I can to choose those. It's in real estate, it's in the market, it's in private equity, I'm doing loans. Like, everything I sort of have besides our cars is at appreciating, you know, assets. So I've gotta figure out a way, even for me, to say, I, I feel like I need to be spending more. And now again, people might say like, well, if you don't know what you wanna spend, that's silly. I'm like, well, yeah, but like I, I feel like I need to even push myself more than, than I am.
Victoria Bailey: I think your investments can marry with that though, because what we found is that the traditional asset classes are a little more boring, right? But they're a core to your portfolio. But then there are things you can do investment wise that are in line with your passions, right? And so sometimes that answers that need for people, instead of spending it. It's like, I wanna make an investment around affordable housing. Like that's something that's super interesting to me, and something that I see as a really big risk in society, and therefore I wanna be investing in that. Or, um, you know, just anything that aligns with your passions. But it also still can be either a yield flowing asset or an appreciating asset, so that it's not spent and gone, but it's satisfying both of those channels. And that could be startups, right? I think the only thing I would say around your strategy there is what I was referencing earlier, is making sure that you have enough liquid so that if you stop earning capital, you know, having that inflow from speaking engagements and everything, the portfolio can satisfy your 150,000 of spend a month. As long as that math works, anything beyond that is gravy.
Anne Mahlum: So curious on, you know, if you look at my portfolio, you know, again, which is about $110 million, uh, right now, different investments. What would your advice be for knowing that we spend 150k, but we're making that a month? How much would you advise of that to actually be liquid?
Victoria Bailey: The answer is whatever that amount is, such that if you stop making that 150k, you can earn that from your portfolio, and like have that be able to run for at least 30 to 40 years, because your timeline is so much longer, because you've made money so much earlier in your life than most people. So you wanna make sure that you are never going to be in a position where you have to work, or where you have to sell private assets.
Anne Mahlum: Yeah, and I, again, it's like I hear that and like it makes sense, but like then if you, like, if I never touch my principal, I'm gonna die with so much money.
Victoria Bailey: Oh, no, you can, you can touch your principle. There's math there that you can touch your principle for sure. I'm fully on board. We can run the math for you. In fact, I- we have this amazing tool that we use, and I actually built it for you to show, um, what you can spend. But we can even toggle it and say like, let's assume you earn that much for the next 10 years, and then you're like, "I'm done. I'm gonna enjoy just my life and not worry about income." We can change that input and show you what that number needs to look like.
Anne Mahlum: Cool. Yeah, I'm, curious to see how that lines up with my, my spreadsheet.
I just, I don't know any entrepreneur who doesn't get caught up in the same thing that I do, which is the winning. Of like, we all wanna talk about the growth in our portfolio. And I have an, again, an eight out of nine, you know, risk portfolio, meaning I'm invested in growth stocks, mainly tech, AI chips, so, which usually leads the market. And, of course, when the market has a downturn, those are usually the first ones that pull it down. Um, so it's just like, ooh, I feel smart. Like it makes you feel smart and money causes emotion. Um, but I have to check myself on a pretty consistent basis, um, 'cause I don't wanna be that person who just chases more for the sake of more. Yeah.
Victoria Bailey: Yeah. Oh, and I noticed, uh, in one of your podcasts, you were talking about having one position that has done exceptionally well, and is now about 5% of your portfolio. Has-
Anne Mahlum: It's actually like higher than that now. About, uh, 18% of my portfolio, which again, most people will be like, "We don't advise that." And I'm like, I, I get it. And, and I may decide to diversify a little bit. You know, I did do some tax harvesting early this year when the market dropped, and I sold some positions and put them in, you know, different positions that I thought were gonna rebound faster. Um, so I still have some losses that I can sell and, and offset the losses with the gains. So, we'll see
Victoria Bailey: yeah. Well, so, and I think what ends up happening when those positions run as much as they do is that you end up being a little hamstrung, right? If it's 18% of your portfolio, but you have a massive tax impact if you sell it, the decision is, is different, right? Like, it's not just a buy to sell decision, it's do I sell this and then have 20% less because I'm paying capital gains on it, and what is the return that I'm gonna need to make to make up that tax impact? Right? Like that break even analysis is very different. So we've worked with clients around that, because a lot of our clients come to us with concentrated equity positions. It's not just, "Do I buy or sell the stock?" It's "Can I do other things with it? Do I use it for philanthropy?" Like, as you're doing philanthropy, use that stock and then you can always rebuy and reset your basis if you really wanna keep that concentration. We run a lot of math with our clients around those positions as well, to try to help when there is concentration. Um, concentration's amazing for building wealth and not always great for preserving it.
Anne Mahlum: Yeah, I know. And I can't really decide which cat- i'm like 50 50. I have one foot over here and one foot over here, because again, I know that I'm young and healthy and, and all of those things. But also, you know, not stupid, but as you know, over diversification can really dilute any sort of gains that you would have. I don't think I'm ever gonna have that problem. Um, but yeah, I tend to have a high risk tolerance, um, and with time on my side, and I don't get emotional when the market drops, like it definitely was a test in, you know, whatever that April 7th, that week was- I'm sure you had many client phone calls
Jamie: Anne's referring to announcements about US tariff policy earlier this year that led to notable volatility in the market that week.
Victoria Bailey: And, and did you? Did you put money into the market on April 7th?
Anne Mahlum: Totally. Again, that's when I did a lot of tax harvesting. Sold things that I didn't think were gonna rebound as quickly. I didn't have a ton of liquidity at that time. I think I had like a couple million. I was pretty invested by then. Um, but we deployed some more capital for sure. And now I have, you know, again, I think I have got four, four-ish millions sitting in a money market waiting for the next opportunity, which it's like, you know, I don't know how you guys feel, but it just, I'm just like, how does this market keep climbing? Like, you hear this news and you're like, oh okay, where is all the tariff fallout? You know, the economy seems to be doing great for the top 10%, but the bottom 50 are really struggling, which I know the market and economy isn't a direct correlation, but I'm sort of waiting for the other shoe to drop. I'm an optimistic person, but I'm like, I mean, I'll take the gains that continue to go up, but I have to think there's a pullback coming in the next few months here.
Victoria Bailey: It's so funny, every time you think there's a pullback coming, though, the market just keeps climbing. Then you're missing that potential, that upside, right? So that the pullback that needs to happen has to be bigger to compensate for that time waited, waiting on the sidelines. So, um, the hardest thing we do as advisors is put money to work. So when we do it, the philosophy that our team uses is we, we create the schedule where we say, okay, here's the money that we're gonna put to work, here's the timeframe we're gonna do it, and we break it up into our, like, tranches. And we'll say, okay, at least every month we're gonna put some into the market. But if the market's pull back, 3, 5, 10% will accelerate that. So it gives us that flexibility, um, to be able to accelerate into a pullback, but still be averaging in. Um, but every single time we put money into the market, the next day we could look brilliant or we could look absolutely, you know, stupid. But that's where your timeframe is such a value, right? Like for our clients that are younger and have that long time horizon, if you look at any chart over time, the S&P goes up into the right, right? With those pullbacks in mind. And if you aren't emotional when the markets do pullback, and you have lost money on paper, and you either hold on, close your browser, don't look at what you know is happening in the markets and just continue with your day and or, in your case, which is great, like invest into it. Invest into that uncomfortableness of the markets being, being down. Those are the people that do the best long term.
Anne Mahlum: Would you even advise dollar cost averaging for somebody in my position?
Jamie: Dollar cost averaging is an investment strategy where instead of investing a single lump sum all at once, you divide your investments into smaller parts that you make over time. This way, you don't have to guess when is the right time to enter the market and your purchase prices average out with market ups and downs.
Victoria Bailey: I would. Yeah, I would. If you have $4 million sitting on the sideline, I mean that's 4% of your portfolio. I would carve out whatever you're gonna, you know, potentially do in the next six months. And then I would set it in a schedule and, and get invested. Um. There's always going to be a pullback. That's something that's guaranteed. But the question is that in three months, is that in three years? And I think there's so many dynamics happening in the markets right now that are not necessarily economy based, to your point, right? Like the economy seems like it's doing well, despite the fact that we have inflation risks and unemployment is rising. And, you know, we're seeing a lot of kinks in the armor, but then there's also a lot of history now of the government doing things to prop up the economy, because it's good for politics. And so whether that's quantitative easing or, you know, a tweet that reverses tariffs and then the markets rebound from that, the markets react very differently than they have historically. And so, you know, if you can stomach that volatility, even if it's short term, being in the markets long term with your time horizon is, is key.
Anne Mahlum: Yeah. Um, and, I post a lot on Instagram around money stuff, and one of my recent Reels was around me saying like, I think the stock market's a much better bet than real estate. And I mean, it's crazy how many comments and opinions are on there, but I'm curious of your take on that.
Victoria Bailey: So it depends what type of real estate. Primary real estate is very different than investment real estate. Um, so whenever we think about our client's portfolios, our, the primary real estate is set aside. Investment real estate, it depends what type, but I, I tend to preference the markets, because you end up having liquidity when you need liquidity, and you can pivot if things change, versus in the real estate side, there's just natural illiquidity to it. So you have to be paid a premium to have that. And, at this point, I'm not seeing that premium existing. I'd rather have my money in public equities where I can actually change course.
Anne Mahlum: Yeah, totally. I mean, I live, I live in Florida and my primary house is here, you know, and there's obviously like you think about the house itself, as you know, my primary home, I live here and, and sure, I hope this house goes up in value. But this is my, my homestead. So I also get the tax benefit of being in Florida and this house, which I factor into the, my primary residence, you know, when I'm not paying, um, state capital gains tax here, uh, at all. But yeah, I think with, you know, insurance, my property taxes on this house, you know, we have a really nice house down here, it's 125 grand a year, right? And if we wanted to sell this house, we're paying, you know, 4% for someone to sell it, and then we're paying the taxes on that, and we are paying the property taxes every single year. I think people forget that, you know, you're not paying anything on your stock market portfolio until you sell. Like you don't get taxed every year like you do with real estate. So I used to be a lot more bullish on real estate, and I still have some that I rent out, but I do not plan to, you know, have a big investment portfolio. It's also just a ton more work.
Victoria Bailey: It is a ton more work and you're spot on. The carrying cost is not just the property, taxes. It's the carrying cost, right? Like you have to pay utility bills, which have gone up in value, and all of those things go into the costs on a yearly basis, which then, to our earlier conversation around spending, is that recurring spend number that you then have to account for.
Anne Mahlum: Yeah, totally. I just sold my New York property, um, that closes at the end of this month, and I like, love it, but I was just like, it's just not worth it. Like it's, we don't use it very often and it doesn't make financial sense. So, um, we'll just stay in a nice hotel and we go to New York.
Victoria Bailey: Yeah, it's a lot cheaper.
Anne Mahlum: Yeah, a-
Victoria Bailey: You can stay in a really nice hotel.
Anne Mahlum: Yeah. Yep. Yep. This was really, uh, insightful and helpful and appreciate your opinions on, uh, the questions I asked, I think the, the four buckets that you mentioned are really helpful to think about because as you said, there's not really any place else when you're talking about having wealth that you can put that money. And I also think it's okay for, you know, those things to change over time. And I've tried to remind myself of that. Like, like anything else, this is dynamic. This is how I feel today. To your point, after I have a kid, or we have two or three kids, like, how is my viewpoint on that stuff gonna change? The, the open conversation on what's important versus now versus what was, is allowed to be different.
Victoria Bailey: Well, and I just wanna say thank you to, to you for using your platform for getting women more comfortable with talking about money, because as I mentioned earlier, this is a personal passion of mine as well, and it's amazing to me how many women don't feel comfortable around finance. And so, the more people like you that have such a massive platform articulating this and getting women to think about it and feel more confident in their conversations around money is, is incredible. So, thank you for all you're doing there too.
Anne Mahlum: Yeah, of course. It's been a lot of fun.
Jamie: Well, Anne, thank you so much for taking the time to do this with us today. I think it was amazing and we really appreciate you coming on the show today and being so forthcoming with your own story and your information and having those conversations with us. It was a real treat.
Anne Mahlum: Yeah, my pleasure. Thanks so much. It's been a lot of fun.
Jamie: If you'd like a deeper dive on what was discussed today, or if you're a founder interested in connecting with one of our founder specialists, come see us@morganstanley.com slash my money.
I'm Jamie Roo. Talk to you soon.
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Footnotes:
1. https://fortune.com/2024/03/28/how-i-made-my-first-million-anne-mahlum-solidcore/
2. She Built a $100M Fitness Empire From Nothing - Solidcore Founder Anne Mahlum
