{"id":182474,"date":"2025-04-30T15:03:59","date_gmt":"2025-04-30T21:03:59","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=182474"},"modified":"2025-04-30T15:04:01","modified_gmt":"2025-04-30T21:04:01","slug":"money-moves-to-make-at-500k-net-worth","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/money-moves-to-make-at-500k-net-worth","title":{"rendered":"Smart Money Moves to Make at $500K Net Worth"},"content":{"rendered":"\n

You\u2019ve reached the halfway point to joining the two-comma club! Now what? <\/span><\/p>\n\n\n\n

Just like you outgrew that small floor mattress in your first apartment, you\u2019ve outgrown some of the money habits you had when <\/span>you were<\/span> trying to get your net worth to six figures. What <\/span>got<\/span> you there won\u2019t serve you as well now as you hone in on becoming a millionaire and beyond. <\/span><\/p>\n\n\n\n

As you set your sights higher, take these steps to shore up your finances\u2014and move closer to your <\/span>true<\/span> life goals. <\/span><\/p>\n\n\n\n

Update Your Estate Plan<\/span><\/h2>\n\n\n\n

Have a last will document? If so, when was the last time you updated it? <\/span><\/p>\n\n\n\n

At a half-million-dollar net worth, you probably don\u2019t need anything super fancy drawn up by an attorney. But you do need something legally binding, comprehensive, and in writing. Start with DIY platforms like LegalZoom or LawDepot to keep costs low. <\/span><\/p>\n\n\n\n

This<\/span> goes doubly for anyone with kids. Your will states clearly who should raise them if you meet an untimely demise. <\/span>But it also protects your spouse and clearly states your wishes regarding <\/span>how <\/span>your assets should be handled<\/span>.<\/span> <\/span><\/p>\n\n\n\n

Chat With a Financial Planner<\/span><\/h2>\n\n\n\n

I get it: You\u2019re a brilliant real estate investor, and no one knows more about investing than you. <\/span><\/p>\n\n\n\n

Do you know everything about tax loss harvesting? <\/span>Which types of assets <\/span>to<\/span> hold<\/span> in which tax-advantaged accounts?<\/span> How often <\/span>to<\/span> rebalance your portfolio, or how <\/span>to<\/span> automate it?<\/span><\/p>\n\n\n\n

It\u2019s time to get over your ego and speak with an expert. They\u2019ll help you spot the gaps in your knowledge that you don\u2019t even know about. <\/span><\/p>\n\n\n\n

I have them. You have them. We all have blind spots\u2014and if we knew what they were, they wouldn\u2019t be blind spots. <\/span><\/p>\n\n\n\n

Start Rebalancing Your Portfolio<\/span><\/h2>\n\n\n\n

Your investment portfolio drifts over time as some asset classes perform better than others. <\/span><\/p>\n\n\n\n

Rebalancing helps you sell high and buy low. It forces you to sell off your overperforming investments and <\/span>buy<\/span> the underperformers that will <\/span>come back<\/span> around sooner or later. <\/span><\/p>\n\n\n\n

Robo-advisors can handle this for you. <\/span>For example, I use Charles Schwab\u2019s <\/span>robo-advisor, which is free and<\/span> requires just $5,000 to get started.<\/span> <\/span><\/p>\n\n\n\n

Form an Independence Plan<\/span><\/h2>\n\n\n\n

Do you want to have to work when you\u2019re 80 to keep a roof over your head?<\/span><\/p>\n\n\n\n

I want to reach <\/span>financial independence<\/span><\/a> as early as possible. <\/span>When you can cover your living expenses with passive income from investments<\/span>, work becomes optional<\/span>.<\/span> <\/span><\/p>\n\n\n\n

Keep in mind<\/span> that you come to this problem from the expense side, not just the investing side. If you reduce your living expenses, it gets much easier to reach financial independence. <\/span>In fact,<\/span> there are countries <\/span>in the world<\/span> where you can live comfortably on $2,000 a month. <\/span>You might be financially independent <\/span>already<\/span> if you moved to one!<\/span> <\/span><\/p>\n\n\n\n

I know firsthand\u2014<\/span>I live overseas<\/span><\/a> as an expat myself. <\/span>And I still invest in U.S. real estate every <\/span>single<\/span> month<\/span>, <\/span>to keep growing my passive income.<\/span> <\/span><\/p>\n\n\n\n

Keep Adding Passive Income Streams<\/span><\/h2>\n\n\n\n

You can and should also attack the problem on the investing side: building more passive income. <\/span><\/p>\n\n\n\n

Sure,<\/span> you<\/span> probably earn a little passive income from your <\/span>S&P<\/span> 500 index fund.<\/span> But don\u2019t expect to live off those dividends at the current yield of 1.27%. That\u2019s lower than the inflation rate. <\/span><\/p>\n\n\n\n

Every month, I invest in passive real estate investments through SparkRental\u2019s co-investing club. I invest $5,000 at a time (instead of the typical minimums of $50,000 or $100,000), and most <\/span>of the<\/span> investments pay ongoing income. <\/span><\/p>\n\n\n\n

On the low end, some of the syndications we\u2019ve invested in pay distributions <\/span>in<\/span> the 4%-6% range. Others pay 8%, and some don\u2019t pay any distributions <\/span>yet<\/span> if the property requires major renovations. <\/span><\/p>\n\n\n\n

We\u2019ve also invested in notes <\/span>paying<\/span> 10%-16% interest. One has matured and repaid in full; the others continue to pay as promised. <\/span><\/p>\n\n\n\n

Some funds and <\/span>private partnerships<\/span><\/a> we\u2019ve invested in also pay high yields. One land-flipping fund pays a 16% distribution yield. <\/span><\/p>\n\n\n\n

The point:<\/span> It\u2019s <\/span>a lot<\/span> easier to start covering some living expenses with passive income when you earn those kinds of yields, compared to 1.27% from the stock market. Every $100,000 I invest in that land-flipping fund adds another $16,000 to my annual income. <\/span><\/p>\n\n\n\n

Start Offsetting Passive Income With Depreciation<\/span><\/h2>\n\n\n\n

As<\/span> you build more passive income and investment profits (capital gains)<\/span>, you\u2019ll owe more taxes<\/span>.<\/span> Taxes may not have cost you much earlier in your journey, but they\u2019ll <\/span>start adding<\/span> up as you scale <\/span>both<\/span> your passive and active income.<\/span> <\/span><\/p>\n\n\n\n

Fortunately, they\u2019re easy to wipe off your tax return with <\/span>depreciation<\/span><\/a>. <\/span><\/p>\n\n\n\n

When you invest in real estate\u2014<\/span>either<\/span> directly or through syndications\u2014you get to write off the value of the buildings and everything inside them. <\/span>In the case of syndications,<\/span> operators accelerate this depreciation write-off with a cost segregation study.<\/span> <\/span><\/p>\n\n\n\n

The bottom line:<\/span> You show a loss on your tax return, even as you collect real income. <\/span><\/p>\n\n\n\n

This<\/span> forms the basis of the \u201c<\/span>lazy 1031 exchange<\/span><\/a>\u201d strategy. You offset your passive income, capital gains, and depreciation recapture by <\/span>simply<\/span> investing in new syndications. <\/span><\/p>\n\n\n\n

Best of all, you don\u2019t have to fool around with qualified intermediaries or stiff timelines. <\/span>You <\/span>just<\/span> invest in new syndications in the same calendar year as you collected income or profits to offset them.<\/span> <\/span><\/p>\n\n\n\n

And <\/span>when you invest<\/span> $5,000 at a time, like I do, <\/span>that<\/span> gets extra easy and convenient.<\/span> <\/span><\/p>\n\n\n\n

Get More Strategic with Retirement Accounts<\/span><\/h2>\n\n\n\n

You can do more clever things with your retirement accounts than you realize. <\/span><\/p>\n\n\n\n

At the simplest level, start by getting more strategic about which assets you hold in which accounts. For example, put your high-growth stocks in your Roth IRA, where they can shoot up in price tax-free. Put your more conservative investments in your traditional IRA or taxable brokerage account. <\/span><\/p>\n\n\n\n

Earn too much to invest in a Roth IRA? Make <\/span>backdoor Roth contributions<\/span><\/a>. <\/span><\/p>\n\n\n\n

Open a health savings account (HSA) as a secondary retirement account. You\u2019ll certainly have no shortage of health-related bills in retirement, and these offer the best tax benefits of any account in the U.S. <\/span><\/p>\n\n\n\n

When you\u2019re ready to dig deeper, consider opening a self-directed IRA or solo 401(k). Read up on <\/span>creative ways to use your retirement accounts<\/span><\/a> and keep more of your own money. <\/span><\/p>\n\n\n\n

Start Buying Back Your Time<\/span><\/h2>\n\n\n\n

Money is a renewable resource. You can create more of it. <\/span><\/p>\n\n\n\n

On the other hand, time is not renewable. You have <\/span>a certain number of<\/span> hours remaining in your life, and the clock is ticking. <\/span><\/p>\n\n\n\n

Wealthy people understand that their time is their most valuable asset. They look for ways to buy more free time and spend their working hours doing only what lights them up. <\/span><\/p>\n\n\n\n

Do you need to do your <\/span>own<\/span> yard work? Or can the neighbor\u2019s kid do it for you for $20? <\/span><\/p>\n\n\n\n

We order most of our groceries online nowadays. I rarely visit the grocery store or run similar errands. Neither my wife nor I do housework or home improvement projects. I walk to a co-working space rather than sitting in traffic on a commute. <\/span><\/p>\n\n\n\n

Some people don\u2019t check their <\/span>own<\/span> emails. They pay a virtual assistant to manage their inbox and connect with them once a day for 15-30 minutes to update each other.  <\/span><\/p>\n\n\n\n

Start finding ways to buy back your time so you can focus on doing only the things that light you up. As you <\/span>get closer to a seven-figure worth<\/span><\/a>, aim to increasingly protect your time\u2014to shrink the <\/span>hours you spend unfulfilled<\/span> and scale up the hours spent with family, friends, hobbies, and meaningful work. <\/span><\/p>\n\n\n\n

I love looking over passive investments and speaking with other investors in our co-investing club <\/span>about them<\/span>.<\/span> Even after reaching financial independence, I plan to keep working\u2014because I love what I do. <\/span><\/p>\n\n\n\n

As you earn more, put yourself in that position of loving your work so much that you\u2019ll keep doing it long after it becomes optional.<\/span><\/p>\n\n\n","protected":false},"excerpt":{"rendered":"

You\u2019ve reached the halfway point to joining the two-comma club! Now what?  Just like you outgrew that small floor mattress in your first apartment, you\u2019ve outgrown some of the money […]<\/p>\n","protected":false},"author":158586,"featured_media":182478,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7385],"tags":[],"class_list":["post-182474","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wealth-management"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/182474","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/158586"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=182474"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/182474\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/182478"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=182474"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=182474"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=182474"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}