How 5 Washington, DC Wealth Managers Invest Their Money

These personal stories from wealth managers in Washington, DC show that there isn’t one correct way to invest your family’s money

One responsibility of a Washington, DC wealth manager is to help you invest your money. But how does she or he invest their own family’s money?

The answer to that question may not seem to important. But the specifics can give you extra confidence in the recommendations they make for your own life.

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Think back to the last time you received financial advice.

Maybe you received a tip from a colleague during a work break. Or you suffered through some stern (but well-intentioned!) guidance from a parent. Perhaps you just scanned a blogger’s generalized advice in a trending post.

In any case, you probably didn’t hear what financial decisions these individuals made for themselves and their family.

And you may not have cared much. You almost certainly didn’t expect such a disclosure. But when you become interested in actual financial planning for your life, you might really value this information from your wealth manager.

At the very least, you may feel a little less daunted about sharing your own very personal financial hopes and fears with someone else.

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What Should You Expect From a Wealth Manager in 2024?

If you’re new to financial planning, you may assume that a wealth manager in Washington, DC only focuses on investment advice. And that belief can make you feel excluded if you have other financial questions or interests.

But many independent wealth managers take a more comprehensive approach, including expertise in student loans, housing, child-related costs, and college financial planning.

What Criteria Must a Wealth Manager in Washington, DC Meet to Offer Investment Advice?

The DC wealth managers that you’ll hear from today are all Certified Financial Planners, the highest designation in our business. We consider the CFP marks the minimum standard that you should accept from a wealth manager. But, at the very least, you’ll also want to ensure that your wealth manager:

• Holds the appropriate state license (for example, I hold the Series 65 license)
• Is registered and in good standing at the state and/or federal (SEC) level
• Does not have any negative disclosures or complaints on their record (available on BrokerCheck)

How 5 Washington, DC Wealth Managers Invest Their Own Money

As you’ll see below, the stories and explanations here are all very personal to the wealth manager who wrote them. You shouldn’t view any of the information here as investment advice or a recommendation for your own life. Instead, hopefully you’ll be able to tell that we all view money a little bit differently.

Kevin Mahoney, CFP®

A Wealth Manager in Washington, DC at Illumint

In the years after college, learning about the stock market made me feel more like a real adult. I probably felt a bit more sophisticated. And, most importantly, I felt more in control of my finances.

Fortunately, my investment education didn’t take place on misguided Reddit threads. Instead, I stuck to well-researched, time-tested books such as A Random Walk Down Wall Street. And I learned, as a result, that investing doesn’t need to be complicated to be successful.

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Since that time, I’ve only invested in low-cost, diversified index funds. I previously relied on about five such funds to achieve the diversification about which I had read. In recent years, though, I’ve mostly stuck to two Vanguard funds that give me broad exposure to U.S. and international stock markets.

Under this philosophy, I don’t need to pay much attention to stock market headlines. Instead, I focus on consistent contributions to my investment accounts.

Even this step doesn’t take much effort, though – I’ve automated most of these investments. Our family’s tax-advantaged retirement accounts receive either biweekly or monthly contributions. And then I’ve also set up monthly contributions to a taxable brokerage account and our kids’ 529 plan accounts.

The automated contributions aren’t large. But this effortless setup ensures that we always accomplish two goals:

• We consistently save money for future uses
• We invest at various points in the stock market cycle, which avoids poor investment timing 

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A quick word on investment accounts. We use just about all of the accounts available, if only to make the most of the different tax advantages that each one offers. For example:

• Our health savings account (HSA) will give us a “triple” tax break over time 
• Our 529 plans will maximize the dollars available specifically for college educations
• Our 401(k) accounts play the biggest role in reducing our current tax burden    

But perhaps most notably, we also invest regularly in that brokerage account, which doesn’t offer any specific tax benefits. Why?

As my preference for index funds suggests, I don’t invest as a form of entertainment (note that I don’t invest in individual stocks). And I don’t invest to try to get rich quickly (note that I don’t own any crypto). I invest to build the life I want to live with my family. A few of these investment decisions, such as contributing to a 401(k) account, will help us do that when we’re much older. The brokerage account, though, empowers us to invest for future time abroad, a future home renovation, or some other wonderful use that I haven’t even identified yet.

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Yes, investing consistently helps us to grow our wealth. But from my perspective, wealth isn’t the actual goal. We invest to create opportunities to use our money in ways that make life worth living.

Cady North, CFP®

A Wealth Manager in Washington, DC at North Financial Advisors

I like to look for ways to build wealth, not only in my business as a financial advisor, but outside my business as well.

Investing is a great way to build wealth outside my business. The key to successful investing is small steps done consistently. In this case, saving is the first and most important step. I like to save between 20-30% of my take-home pay. The next step is where to put the money. I like to create tax diversification as well as asset diversification, so I invest in the following ways:

• In a tax-deferred self-employed retirement account
• A backdoor Roth conversion annually 
• and I invest outside retirement in a taxable brokerage account. 

This is after I keep enough cash on hand for emergencies and planned large, short-term expenses. That way, I have different buckets to draw on depending on my needs. I view these two steps as more than 60% of “the work” of investing.

What I invest in is even less important than the third step: staying invested. After I choose my investments, which are typically an 80/20 mix of low-cost stock and bond ETFs, I make sure that I don’t keep cash in my investment accounts. And even when I rebalance, I do it in a way that means I get to stay invested in the market to earn dividends and interest even when markets are down. I make sure that my investments are diversified among different types of stocks and bonds rather than chasing returns. 

Andrew Katz Moses, CFP®

A Wealth Manager in Washington, DC at Katz-Moses Financial

I once thought it was cool to Buy The Dip. For example:

• I bought Chipotle stock after a rat-in-store video went viral
• Under Armour after bad NBA news, and 
• An energy mutual fund during some international crisis I can’t remember. 

I felt like a genius when my shares went up. I checked my account every day and wondered, “Do I sell now? Should I wait a little longer?” Of course, when they went down, I felt stressed and embarrassed.

I realized the way I was investing was costing me time, energy, and happiness. Also, I wasn’t very good at it! I decided I was done with short-term investing and got rid of all my individual stocks.

Now, I keep a year’s worth of living expenses in a savings account and invest the rest in low-cost, diversified stock index funds. The mix is roughly 60% in a total US stock market fund and 40% in a total international stock market fund. I have a mix of pre-tax, Roth, and taxable accounts for maximum flexibility. I bought a small amount of cryptocurrency a few years ago to learn more about how it worked. I’m not a fan.

Generally, I say no to investments that will add complexity and stress to my life, like rental properties or individual company stocks. Ok, I still own one individual stock – it’s a share of my friend’s company that I bought with money I won in a bet with him. It’s the worst performing thing in my portfolio and it makes me smile every time I see it.

Hui-chin Chen, CFP®

A Wealth Manager in Washington, DC at Jade & Cowry

One thing I love about the Washington, DC area is the number of people with interesting international journeys. Whether you left / came to the U.S. for work, family, or marriage, or intended to stay six months, three years, or forever, you can find someone whose story resonates with you.

You may resonate with my story: I came to the U.S. from Taiwan to pursue my master’s degree. Stayed for a job. Naturalized so I could come and go as I pleased. Married an American, so the U.S. eventually became my second home. As soon as we married, we embarked on a decade of foreign assignments as U.S. expats, moving seven times in 10 years.

Managing money as a globally mobile and connected U.S. citizen can be highly complex. So much so that it has become my career and now I share with others how to do it without losing sanity. These are the major principals and examples of how I make my investment decisions:

Flexibility over maximizing tax benefits

The U.S. taxes its citizens and Green Card holders on worldwide income regardless of place of residence. On the other hand, foreign tax authorities still also want their tax dollars. 

U.S. citizens with a foreign presence, assets, or income therefore need to consider two different countries’ taxation rules, at a minimum. Maximizing U.S. tax benefits alone doesn’t always result in minimizing global tax and tax filing-related costs.

This is the reason why I don’t contribute to a Health Savings Account (HSA) or 529 college savings account. In other countries, such U.S. tax-advantaged accounts do not receive special tax treatments, so you may still have to report annual earnings and pay foreign tax.

I do contribute to U.S. retirement accounts as a self-employed person overseas. However, how much deferral is allowed in the foreign country and how U.S. Foreign Earned Income Exclusion impacts contribution amounts varies by country.

When in doubt and when you have a choice, keeping only a U.S. taxable brokerage account is completely acceptable. Otherwise, please consult a cross-border financial planner before making contributions.

Simplicity over direct foreign investment

The U.S. congress put onerous reporting and taxation rules on foreign assets of U.S. tax residents. You need to report FBAR, FATCA, and potentially PFIC and Foreign Trusts. This makes investing directly in foreign financial markets (without going through U.S. investment accounts and products) very costly, even if you have access. 

For long-term investments, I invest 50% in foreign markets. But they are through USD denominated ETFs, traded on the US exchange, and held with U.S. custodians. The U.S. offers one of the lowest cost, most diversified ways to invest in global markets through index ETFs. It is also easier for me to do so because now I only earn USD. If you only earn income in a foreign currency, you may want to consider exchanging to USD regularly through services like Wise.

Zach Teutsch, CFP®

A Wealth Manager in Washington, DC at Values Added Financial

I usually keep about $5k-$15k in my checking account. I could probably keep less to invest more. If I did, I’d have to watch much more closely to avoid bouncing checks. It’s worth it to me to not have to do that and also not have to worry about it.

I keep money in a high-interest savings account at the same financial institution, Ally. I’d like to move to a more socially conscious bank, but I haven’t yet.

When I have more money than I need for upcoming events (quarterly taxes, projects, etc.), I generally put it into my brokerage account. Then Ethic invests it into my “personalized index” for me. Rather than owning a pre-built index fund, Ethic uses values and statistics to choose individual company stocks for me and build me my own. When individual stocks go down, Ethic usually tax-loss harvests and rebalances. Ethic votes the proxies according to progressive guidelines.

This approach seems complicated (several hundred positions–ack!) but isn’t so bad since someone else does the implementation. The complexity is worth it to me since:

• I get tax benefits from companies that go down and also from ones that go up the most, which I plan to donate,
• I can be more precise with values screens,
• The proxy voting is more aligned with my views than many of the more cost-efficient ETFs and mutual funds.

After I file my taxes, I look to see how much taxable income I had and take 20% of that number. Then I contribute securities worth that amount to my donor-advised fund the next year. I ask Ethic to make a suggestion and then they implement it.

Likewise, if I need more money for a project than I have in cash flow or at my bank, I take the balance from my brokerage account.I also max out my backdoor Roth IRA ($6k/year) and generally max out my 401(k) contributions, which are much higher than normal since I am a business owner. I invested the max to i-bonds in 2022 and may do the same in 2023.

Should You Pay to Work With a Washington, DC Wealth Manager?

Not everyone needs a financial planner. And some people only need financial advice after specific events or during certain stages of life. Here are the 3 situations in which it’s worth paying a financial planner in Washington, DC or elsewhere:

1. You feel concerned that you’ll make a mistake due to complex terms or decisions
2. You’re not interested in spending too much time researching different financial options
3. You want confirmation that you’re on the right path to the goals you’ve set

How Should You Invest Your Own Money in 2024?

Generally speaking, three factors often set the stage for how you make investment decisions:

1. How you think you want to use the money
2. What the timeline looks like for using the money
3. How comfortable you are with different types of investment risk

The first two factors suggest that you may invest differently for different purposes. For example, you don’t necessarily want to invest in a 529 college savings plan in the same way that you invest in a 401(k) account.

But it’s important to define these factors before you start. One key to investing success is consistency, and this includes sticking with your investment plan even when stock market headlines make you feel nervous. Ultimately, the right investment strategy for you can be pretty personal.

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Recommended Money Reads for Millennials

If you liked this article, you may also want to check out:

• The Best Ways to Take Advantage of Government TSP Matching
• Turning Your 529 Plan into a Roth IRA

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About Kevin Mahoney, CFP®

Hi, I’m Kevin. I’m the founder of Illumint and a financial advisor in Washington, DC. I specialize in financial planning for Millennials like you. As a Millennial father and Certified Financial Planner™, I empower our peers to invest with confidence and flexibility. If you’re new to Illumint, I’m glad you’re here – you now have access to free personal finance tips written specifically for Millennial parents. I encourage you to read, watch, or listen to the ideas I share about exchanging your money for memories with your kids. And then when you’re ready, please send me your thoughts & questions!