The Bay Area is experiencing a boom of initial public offerings (IPOs) in 2019—and it looks like there’s no end in sight. With giants like Zoom Video, Uber, and Slack (among dozens of others) waiting to go public, it’s only a matter of time before a whole new crop of millionaires sprout in the Bay Area.
If you’re lucky enough to land a spot in the 1% club, you’ll have one of these two thoughts about your newfound fortune:
- How can I spend it?
- How can I save it?
No matter which one you choose, you probably want to do it in style. How much house can you afford? How many new cars can you buy? What extravagant vacation can you go on?
Even if saving is on your mind, you’re researching hot new ways to invest your money. How long would it take you to double it? Triple it? Is there a financial guru that can sell you his secrets to stock market success?
But, let me give you a little piece of advice. The best thing you could ever do with your new nest egg is get boring with it.
Not what you were expecting, huh? Let me explain what I mean.
There’s an endless cycle of innovation and wealth that happens in the Bay Area. As with any highly innovative part of the world, the cycle looks something like this:
Step 1: Someone creates a new product or service
Step 2: They build a new company around that product or service
Step 3: The company begins to scale
Step 4: After some success, the company goes public
Step 5: As a result many financiers and employees become wealthy
For the past 20 years, I’ve seen this process repeat itself. After working with some of these suddenly wealthy people, I developed certain hopes for every person that comes after them.
Here are my five hopes for every new millionaire in the Bay Area:
1. Check your reality and avoid comparisons.
How much money do you have after taxes? Half a million? Multi-millions? Billions, even? Whatever it is, be satisfied with it. There are always going to be people who have way more than you. Don’t compete with those people—it only sets you up for failure.
To top it off, you’re in uncharted territory. Now that you have wealth, don’t blindly trust that money will always be there. Map out how this new windfall fits into your life plan; own it and implement into your daily life.
2. Reward yourself for the hard work, but don’t become infatuated with your brilliance.
There’s no denying that luck helped get you this far. Yes, your aptitude and grit played a role, but the success of the company’s valuation was largely determined by luck. For every company that goes public, there are hundreds of others that either have low valuations or fail entirely. Remember Munchery? Even with a $300 million valuation, the company vanished overnight.
3. Don’t assume it will happen again.
Remember me saying you need to get boring with your nest egg? I mean it. The one regret I heard over and over again after the dot.com bust was that people wished they would’ve diversified their portfolio—which would have removed their concentrated risk.
Sounds boring, but putting your assets in a broadly diversified and completely allocated portfolio will always give you the most bang for your buck—it just may not happen as quickly as you’d like. So learn from their mistakes, diversify your portfolio, and get boring with your nest egg.
4. Recognize the world around you.
If you’re a millionaire under 30, then you’re incredibly successful compared to your peers. Turn that success into something significant. Have you ever wondered why no one comes close to people like Bill Gates, Warren Buffet, and Marc Benioff? It’s because they’re constantly giving back in huge ways.
Your wealth is a spectacular tool that can improve your life, but remember that you’re part of something bigger than yourself. Research proves that simply buying someone else’s meal brings a lot more sustained happiness than taking yourself out to a fancy dinner. How will you use your wealth to give back?
5. Don’t let it go to your head.
A strange thing tends to happen when people run into wealth—their egos grow the size of a football field. Can I be blunt for a second? No one (that matters) cares which Telsa, Porsche, or M series you drive. Try not to take your lessons from the “tech-bro” crowds and instead learn a lesson about humility from your “stealth-wealth” peers. Determine where you want to be twenty years from now and mindfully use your nest egg to take a few steps in that direction.