5 smart money-saving tips from Tony Robbins's financial adviser
Ajay Gupta is a serial entrepreneur, wealth manager, and a long-time advisor to Tony Robbins. He warns entrepreneurs not to be "emotional" about their finances.
At 45, Ajay Gupta has plenty to brag about. As the founder and chief executive of Gupta Wealth Management (GWM), his firm controls more than $1 billion in assets for high net-worth individuals. Since 2014, he's grown his client base by more than 100 percent -- thanks in large part to his all-star client, Tony Robbins.
Robbins included a shout out to GWM in his best-selling book, MONEY: Master the Game. In one chapter, the top life and business strategist lays out the difference between a traditional broker and the more attractive fiduciary standard. He describes Gupta's trajectory as a Merill Lynch escapee-turned-entrepreneur.
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In the months that followed, Gupta tells me, he began attracting more clients than ever before. "A large portion of the growth came because of that transfer of trust," he said. While the average profile of a client with his firm remains the same (the minimum amount that one can invest with GWM is $1 million, for a maximum fee of one percent), he notes that he's also seen an influx of younger Millennial investors.
Gupta also borrowed an investment strategy from hedge-fund billionaire Ray Dalio, one of Robbins's interviewees. By pouring over the taped conversation, he adopted a policy that "smoothes out" the volatility of his own client assets: First, he builds a portfolio for each economic "season" (periods of high earnings, low earnings, high inflation, and low inflation), and puts 25 percent of a client's risk in each.
No matter their age, he says there's plenty that entrepreneurs can do to stay financially safe and continue accruing funds to last.
Here are his top five tips to saving big, and making it last:
1. Avoid the three destroyers of wealth.
There are three major "destroyers" of wealth, says Gupta, and they are alarmingly simple: Fees, taxes, and emotional decisions.
"Intuitively, without emotions being involved, you could say that when things are down, I buy more," he explained. "When things are up, I sell." Unfortunately, he acknowledges most people aren't set up to be good investors.
At Gupta's firm, investors can minimize the toll of taxes by diversifying their portfolios with real estate investments. "When you own real estate, you're leveraging inflation," he said. "The majority of the income you'd receive is sheltered from taxes because you're benefiting from depreciation."
2. Don't put everything into your business. It could fail.
Entrepreneurs are already taking on an inordinate amount of risk, so Gupta advises against putting all your equity into a new startup. "One of the biggest mistakes entrepreneurs make is they put everything into their business," Gupta said. "Pay yourself first."
3. Pick a solid, cheap 401(k) plan.
Gupta emphasized the importance of picking a low-cost 401(k) plan for your employees -- especially since business owners are the fiduciaries of those plans.
Unfortunately, the majority of 401(k) plans are extremely expensive, so it's important to identify the low-cost funds first.
Gupta is particularly impressed by Vanguard's 401(k) tool. At his firm, he chose America's Best 401(k.)
4. Once the money comes in, don't make any impulsive decisions.
Entrepreneurs who've sold companies for millions (or even billions) are often tempted to reinvest their earnings elsewhere. Still, it's important not to take on too much too quickly.
"Take a step back, and sit down with a fiduciary again," says Gupta.
If it's a substantial amount of wealth, he suggests dividing it into two buckets: Your operating budget for the rest of your life, and the bucket where you put a "100-year" plan together.
5. If possible, keep it hush-hush.
Of course, Gupta acknowledges that entrepreneurs are typically "lifelong" business owners who are eager to lend funds to friends when they can -- or, often to start new companies. Still, he says it's a good idea to keep your wealth under the radar for some time.
"In this day and age, people will find out," he concedes. "But if you don't tell anyone, less people will come asking you for money."