I didn’t feel relief the morning I realized I had enough money to leave my corporate job. I felt terrified. My spreadsheet said I was ready. Every number I had been tracking confirmed it. I didn’t know what to do. 

I started the spreadsheet in 2016. Net worth in one column. Expenses in another. Portfolio income in the third. I was in my late 20s and had decided my goal was to become financially independent before 40 by having my portfolio generate enough income to eliminate my need for a salary. 

I achieved that goal at 38 when I resigned from my C-level corporate career to start a more intentional second act.

Here’s what helped me get there. 

Ignoring traditional retirement calculators

Most retirement calculators I’ve come across focus on how long it will take for your portfolio to match your current income in retirement. I disagree with this framing. The goal isn’t to match the income you’re making, it’s to cover your costs. 

Relying on retirement calculators that focus on meeting your salary artificially extends the amount of time you need to work before you’re able to retire. This is especially true for high achievers where income rapidly outpaces your underlying living expenses. Trying to match that income becomes a moving target.

Financial independence is a simple calculation.

When the income you can generate from your portfolio reliably exceeds your underlying expenses, you’re ready to go.  

Closely tracking expenses against portfolio income every month

I’ve sat down every month for the past decade to calculate our net worth, the income we generate from our assets, and our expenses. For expenses, I manually go line by line in my spreadsheet through our credit card and checking statements, categorizing everything against the budgets laid out at the beginning of the year. 

I am well aware I can use technology to do this but the act of going line by line makes our spending much more tangible. I also think more clearly about whether certain expenses were worth it. Like that ongoing subscription to YouTube Premium (the answer has been yes for 70+ months). 

Regularly examining our costs prevented unnecessary lifestyle inflation that would have delayed the timeline to leaving my corporate career. 

Plus the act of watching portfolio income gradually meet and then exceed expenses was highly motivating. It was like steadily leveling up in a video game month after month.

Viewing costs in terms of portfolio income

The more I went through my monthly planning process, the more I started thinking about everything in terms of portfolio income rather than salary.

The first question I asked about any major purchase wasn’t whether we could afford it based on my corporate salary. It was whether we could afford it based on income generated by our portfolio. The difference between those two calculations is significant when you’re trying to leave the corporate world.

In 2020 our realtor tried to convince us to look at homes $300,000 above the price we’d decided on. His logic was that mortgage rates were so low the extra $1,000 a month was barely noticeable on a C-level salary. He was right about the salary math.

But I wasn’t thinking about the salary. Here’s how that extra $1,000 a month actually looked to me.

$12,000 a year in additional mortgage payments. Another $300,000 I’d need to build in my portfolio to cover it at a 4% income yield. Potentially another year of working to get there.

We bought the house we originally planned to buy.

It’s a home Ryan Serhant isn’t about to come knocking on to film a video tour. I’d call it reasonable luxury rather than egregious ostentation. We love it.

The same logic applied to the school district we chose. Picking a strong public school meant we wouldn’t need to pay for private school. The difference between $8,000 a year in school taxes and $60,000 a year in private school tuition for two kids represents roughly $1.25 million in additional portfolio value I would have needed to build. That meant potentially three to four more years of corporate work.

You don’t have to be Spartan about everything. The small stuff barely moves the needle. But the large fixed costs like housing, cars, and schools are the decisions that significantly impact your timeline to financial independence. Getting those right is worth more than a decade of optimizing everything else.

Finding a good accountant early on

My taxes were straight forward for the first decade or so of my career. Up through my late 20s, I was renting in NY, just had a W2 income, a 401k and a modest taxable brokerage account. Standard tax software was good enough for handling this.

It was 2018 when things got more complicated. This was the year we sold our company and I had a liquidity event I had to manage. My investments started producing meaningful income and I was suddenly in higher tax brackets where finding ways offset income became significantly more valuable. 

I started working with an accountant who more than justified their ongoing yearly fee based on just the estimated tax penalties they helped me avoid in 2018. 

Working with an accountant also changed my mindset regarding taxes from something I passively calculate at the end of each year to something that I can actively manage. Which led me to…

Studying tax optimization

I believe in paying the taxes I owe. But I don’t think it’s necessary to leave the IRS a tip. 

The accountants have been good at helping me understand how to avoid mistakes in the future based on mistakes I made in the past. They are not as helpful with proactive tax mitigation within the year or minimizing taxes years from now.

So I started learning more about how I could actively manage my taxes throughout the year. I know most people like to avoid thinking about taxes as much as possible but the 10-15 hours a year I spent reading about and modeling different tax strategies has likely saved tens of thousands in taxes over the years (and possibly hundreds of thousands compounded). 

The optimizations I made to my approach ranged from taking advantage of credits for things we were going to do anyway like replacing the rusting water heaters that came with our home to implementing portfolio strategies like tax location and gain / loss harvesting.

The ROI from understanding and proactively managing tax strategies has been significant and immediate. The savings funneled directly back into reducing the timeline to reach financial independence.

Transitioning to an income-centric investing strategy 

One of my biggest fears about leaving my corporate job was timing.

What if the market collapsed in the first couple years after I left? The traditional retirement playbook of accumulating a large portfolio and then withdrawing 4% annually sounds reasonable until you think through what can actually happen in that scenario.

You need to sell assets to fund your life. Those assets have just dropped 30%-40%  in value. You’re selling significantly more shares than you planned to cover the same expenses. And this can go on for years. The markets recover eventually but you’ve permanently impaired your portfolio in the process.

This is known as sequence of returns risk and it’s one of the main reasons people who retire into a bear market never fully recover financially even if the market eventually does.

I wanted to solve for this.

So I built a portfolio designed to generate income from multiple sources rather than rely on selling shares to cover my expenses. The S&P 500 index was the right tool for growing wealth while I was accumulating. But I needed a different set of tools for a different job. Blue chip companies with long track records of paying steadily increasing dividends. Apartments around the country generating rental income. Power plants with contracted cash flows tied to inflation.

The insight that changed everything for me was simple. 

Price is what the market says your assets are worth today. Income is what your assets actually produce. You can live off income. You can’t live off a price.

The markets can drop 30% but the dividends from a company with 25 consecutive years of steady dividend growth still arrive. The rent from a well-located property with high quality tenants still gets paid. The power plant still provides electricity. 

The income keeps coming regardless of what the price of the underlying asset is doing on any given Tuesday.

This isn’t the same as being immune to economic stress. A severe enough recession can affect anything. But the income-centric portfolio is designed to keep funding my life through the conditions that would devastate a withdrawal-based approach.

The result has been exactly what I was hoping for. The payments from my income assets have come in steadily and grown each year regardless of what has been happening in the markets. We pay our bills, go out to nice family dinners, and there’s something left over to reinvest. The anxiety of watching a portfolio value fluctuate while wondering if it will last has been replaced by watching an income line that keeps growing.

The market can do whatever it wants. The income arrives anyway.

Focusing on a career I enjoyed

I want to be careful about how I frame this one because it can easily sound like the kind of thing people say when they’ve been lucky.

But here’s what I actually observed over nearly two decades in the corporate world.

I genuinely liked what I did. Analyzing the problems facing large companies and then solving them through data, creativity, and technology. There was a lot of intellectual variety. Every client was in a different industry, every problem had a different shape. I also liked the people I worked with. I liked getting better at my job.

That enjoyment had a specific and compounding effect on my timeline to financial independence that went beyond just earning a higher salary.

When you enjoy your work you do more of it voluntarily. You read about it, think about it, get curious about adjacent problems. You develop genuine expertise rather than adequate competence.

That expertise compounds into career opportunities that going through the motions doesn’t produce. This difference may be small at first but grows dramatically over a decade in terms of compensation and fond memories.

I think if I had been doing work I didn’t enjoy the entire time I would have burned out or plateaued in middle management. Either outcome would have added years to my timelines.

Work you enjoy is one of the most underrated variables in how quickly you can reach financial independence. Not because of the salary but because of what sustained engagement does to your trajectory over time.

Choosing career paths with asymmetric upside

I mentioned a liquidity event earlier. Here’s more detail on how I got there and how it impacted my journey to financial independence.

It was 2012. I had spent the past four years in consulting and I was ready for something different. I was being recruited for a couple different Director level jobs.

One was a role with a Fortune 500 company. Great name, slightly higher compensation, perfect resume builder, but no significant upside potential. The work would be routine and bureaucratic. This was the safe option on paper and the one that would pay $10-20k a year more in salary. 

The other was where I went. An advertising agency that just started going two months earlier that no one had heard of where I would have less pay and less “prestige”. But, I would have a very interesting role. I would be part of the management team and have a more direct impact on the direction of the firm. And I’d get a modest amount of equity that could be worth something one day.

I remember thinking the worst case was if the agency didn’t work then I would have spent a few years doing something I enjoyed doing anyway. My bank account might have $40-50k less in savings than if I had chosen the big name company. But the best case was we would knock it out of the park and the equity would be worth something one day. The downside was capped, the upside was significant. 

We sold the company six years after I joined.

Now, luck undoubtedly played a role in all this. Most small businesses fail. When I made my decision to join the advertising company, there was no way to tell how successful we would be.

But the important thing was that the potential was there, along with the equity that would mean more direct participation in that success. There was no potential for that kind of asymmetric payoff in the Fortune 500 company.

This liquidity event impacted my financial independence journey in two unexpected ways. 

The first is that it pulled up my original timeline to financial independence by about five years. The spreadsheet and targets I had been tracking against didn’t assume a liquidity event. I don’t like to include positive outlier events in my baseline forecasting. If they happen, great. If not, my original strategies that are more firmly in my control are still on track.

Second, I was still enjoying my role with the company when this happened and felt I hadn’t accomplished the things I wanted to yet within my first career. So instead of leaving my job years ahead of schedule, the impact of the acquisition was more an unexpected improvement to the quality of life I had been modeling. The portfolio we were building would now be able to support a slightly nicer home and a couple more family vacations each year.

The point isn’t to bet on startups. It’s to make sure that when you’re choosing between two paths, at least one of them has genuine upside worth reaching for. 

Building a shared life 

This last piece is the most important one.

When I first started working towards financial independence it was just me. I hadn’t met Sheila yet. I didn’t have kids. My spreadsheet hadn’t accounted for how life would (positively) evolve over the years.

As we started planning for kids, Sheila wanted to prioritize raising our children over continuing her career in advertising. That meant I would need to work a couple more years than I was planning to so the portfolio could cover her lost income.

We both knew what we were trading. I would spend a bit more time in a corporate job in exchange for something we both wanted more, the ability to show up for each other and our kids during all of life’s key moments.

We agreed early on to work towards financial independence first and improve our lifestyle after. So we kept our spending in check through those final years. We’re not miserly — we like nice things. But the Porsche in my garage right now looks a lot more like a 2015 Jeep Wrangler. We AirBnB our beach vacations rather than owning a beach house.

The steadily growing income from the way our portfolios are designed will cover these things in the years to come. In exchange, the joy and closeness we’ve had as a family fortunate enough to spend so much intentional time together were more than worth it.

So, was it worth it?

As I reflect on the years spent working towards and then achieving financial independence, I’ve come to realize something that surprised me.

Financial independence is not a destination. It’s a transition point.

I had spent years focused on what I didn’t want anymore. The compromises that come with a corporate career. The clients you work with because you have to rather than because you want to. The slow accumulation of days that no longer feel like yours.

What I hadn’t fully anticipated was what the transition point would open up.

The best way I can put it is that financial independence is that it allows me to think about the world the way I did when I was a senior in high school. Suddenly the possibilities seem endless again.

In a follow-up post I’ll share the seven things that kept me from getting here faster and the things I wish someone had told me earlier.

If any of this resonated with your own situation, I’d genuinely love to hear about it.

Nathan
Founder, Kangpan & Co.

Kangpan & Co. is a fee-only, registered investment advisor specializing in helping people live off diversified portfolio income.

This content is for educational purposes only and is not investment, tax, or legal advice. No post is an endorsement of any particular strategy or security. We do not receive any direct payments or commissions for securities discussed in our posts. Private funds are generally available only to ‘Accredited Investors’ as defined by the SEC. The Personal Endowment is a conceptual investment framework customized to each client and does not represent a specific fund or guaranteed outcome. Employees and clients of Kangpan & Co. may hold positions in securities discussed in posts. Speak with a licensed tax, legal, or financial advisor before making any changes to your investments or financial strategies. Past performance is no guarantee of future returns. Investing involves risk including the loss of capital.

Dear Friends,

When we were looking for our family home during late 2020, our realtor tried to convince us to look for homes $300k above the price point we were shopping for because mortgage rates were so low. His logic was that the extra $1,000-$1,500 a month weren’t meaningful in the context of a C-level career.

That would be the case if I were thinking just about the income I was making from my job. But I was already thinking about everything in terms of portfolio income tradeoffs in 2020.

Sheila had already left her job in advertising to focus on raising our children. So the calculation for how we would make this work if we were going to be fully living off income from a portfolio went like this:

• $1,000 a month is $12,000 a year in additional yearly mortgage payments (before corresponding property tax, insurance, and maintenance increases)
• $12,000 a year means another $300,000 I would need to build up in my portfolio if I was going to live off 4% a year in income distributions
• Saving up an $300,000 could mean an additional year of working

We decided not to go for the homes that cost an extra $300k.

Now, we have what we think is a very nice home but Ryan Serhant isn’t about to come knocking on our door to do a video tour. I would call it reasonable luxury, not egregious ostentation. 

If you’re trying to become financially independent, you don’t have to be Spartan about everything in life but you do need to be intentional with the big decisions. 

The nondiscretionary expenses are what really matter. Housing, cars, education, etc. These fixed costs are the baseline for what your portfolio income needs to cover.  

If you’re trying to become financially independent, it’s critical to think about these major expenses in terms of what size portfolio can support the incremental costs and how long it will take you to build that portfolio. 

Housing is the biggest fixed cost most families carry. But it’s not the only one that can have a significant impact on portfolio income calculations. Let’s talk about education. Specifically K-12 education. 

Like many of you, education is important to us. We specifically picked a school district that had a very strong K-12 public school system. There were two layers of decisions that went into this.

• First, we both went to public schools growing up and we wanted our kids to have a similar experience
• Second, we also knew private school was not something we wanted to have to pay for

We didn’t have kids in 2020, but knew we wanted to end up with at least two (which is exactly where we’ve landed since). 

In a good public school system, we could expect to pay somewhere around $5-10k a year in school taxes which would cover K-12 for our children.

If the school system was lacking and we had to go to private school, that could easily end up being $60k+ for two kids.

That $50k-55k difference translates to at least an incremental portfolio of $1.25M assuming a 4% rate of income distributions. This could mean another 3-4 years of work to build up. I love my children and would gladly work any job as long as I needed to in order to support them and make sure they got a good education.

But why do it if I don’t have to? It’s much easier to land in a good public school district in the first place. 

This is just how we thought about education for our family. Education is a deeply personal thing and there may be other reasons such as religion, specific values, etc. for why you want to send your children to private school. 

Affording private school is one of the most common issues I discuss with mid-career professionals and an important component of how quickly someone can reach financial independence.

These kinds of life vs. portfolio tradeoffs and income planning scenarios are a core part of the Personal Endowment strategy I work on with clients. The income-centric portfolio is just the fuel that supports the intentional life that we design together. 

If you’re in the middle of decisions like these and haven’t mapped what they mean for your transition timeline, that’s exactly the conversation I have with clients. I’m happy to run high level numbers with you.  Feel free to reach out for a complimentary 30-minute consultation if you’re thinking about these things.

Food for Thought

• Your Money or Your Life by Vicki Robin: The foundational book on understanding the real cost of major life decisions — not in dollars but in the hours of your life required to earn them. Most contemporary thinking on intentional living and financial independence traces back to this.
• How Financial Independence Can Quietly Shrink Your World by Jordan Grumet: Jordan is an MD who achieved financial independence and writes about the philosophical dimensions of this lifestyle on his Substack, The Purpose Code. This is a piece about the perils of focusing too much on trying to reduce costs to reach financial independence rather than being intentional about the life your portfolio is meant to fund.

Thank you for being part of our community – whether you’re a client, a reader, or somewhere in between. If this letter resonated with your own situation, I’d genuinely enjoy hearing about it.

Nathan
Founder & Lead Advisor

Sign up for our letters: Our twice-monthly letters break down strategies we develop for our clients who are generally mid-career professionals with $1M to $20M in assets that have outgrown standard retail advice. See how we’re engineering our HNW clients’ capital to match the lifestyles they want.
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Disclosures: This content is for educational purposes only and is not investment, tax, or legal advice. No post is an endorsement of any particular strategy or security. We do not receive any direct payments or commissions for securities discussed in our posts. The Personal Endowment is a conceptual investment framework customized to each client and does not represent a specific fund or guaranteed outcome. Employees and clients of Kangpan & Co. may hold positions in securities discussed in posts. Speak with a licensed tax, legal, or financial advisor before making any changes to your investments or financial strategies. Past performance is no guarantee of future returns. Investing involves risk including the loss of capital.

Private real estate investments, when high earners don’t know if they can afford private school, a primer on infrastructure investing, Hu Anyan’s I Deliver Parcels in Beijing

Dear Friends,

The most common financial anxiety I encounter has nothing to do with how much someone earns.

Whether a family is making $300,000 a year or clearing seven figures, the worry is almost always the same: can we afford the life we want without quietly trading away the future we’re building toward?

One question that keeps surfacing — especially among families with school-age children — is whether private K-12 education can realistically fit into the budget without compromising long term goals. That’s what today’s deep dive addresses.

But first, a quick update on how we’re incorporating private investments into client portfolios.

Firm Updates

Investing: Private Real Estate

We’ve started incorporating private real estate funds into client portfolios. As I mentioned in Client Letter #5, we have developed a partnership with a leading private fund platform that works with independent wealth managers to provide access to the same institutional private equity, real estate, infrastructure, and credit funds as the largest banks and brokerages.

The difference is they bring a level of fees, investment minimums, transparency, and operational processes that I feel good about using for my own family’s private fund needs – which means I feel good about bringing them to clients.

I have been impressed with what I have seen from them so far and will be sharing my findings and recommendations with those of you who are accredited investors during our upcoming quarterly reviews.

As a reminder, unlike many other advisory firms, we are a fee-only fiduciary. We do not accept third party commissions or payments for the services or investments we recommend. We want our clients to feel confident when we recommend a strategy or fund that we have no hidden incentives in doing so.

Deep Dive

Making K-12 Private School Work

These middle years can be tough. You need to balance your career with the demands of caring for young children, and in many cases, for aging parents.

You’ve had a lot of professional success but costs are adding up and you’re not sure if your mid to high six-figure family income is enough to provide the life you want for your family today while still making sure you’re not robbing yourself of your future goals.

We have two young children and I’ll be 40 in two months so I’m intimately familiar with what many of you are going through.

One item that has come up repeatedly in conversations with mid-career professionals is the enormous cost of private school for the K-12 years. Even C-Level executives at mid-sized firms and doctors are struggling to come up with the $100,000+ per year it takes to put three kids through private school while also paying for the mortgage, family vacations, and day-to-day life in a high cost-of-living city.

Figuring out how to make the yearly budget accommodate school tuition is a painful but relatively straight-forward exercise for this group. However, the most common question I get is whether paying for school now is going to significantly impact retirement in the future.

How Much Will Spending Tens of Thousands on Private School for the Next Decade Impact My Retirement?

The wealth management industry has done a good job educating people on the need to aggressively contribute funds to retirement throughout their entire career. This is sound advice for the average household making the median income throughout their lives.

But some of this is manufactured fear created by an industry that makes money off of how much people keep in their accounts – not when people choose to spend their money intentionally on the things that are important to them.

Many of our clients have been aggressive both in their careers and in putting excess funds towards retirement and other investments. They are lucky enough to already have seven figures saved up by the time they come to the end of their 30s. Our financial planning algorithms show that for these people, putting more money towards retirement is a nice to have, not a necessity, to live the retired life they want in the future.

Here’s an example.

• You and your spouse have both worked high paying jobs since graduating.

• You’re both around 40 years old and already have $2,000,000 saved up across your retirement and investment accounts.
• You have three kids you want to put in private school but that would mean not being able to contribute nearly as much to your savings and investments as you have been.

Even if you never contributed to these funds again, your nest egg could be worth just a bit over $13.6 million by the time you retire at 65 (assuming a moderately aggressive allocation that returns 8.0% a year).

Whether $13.6 million is enough to retire on depends on your ultimate goals and what you want your lifestyle to be. But using the simplified 4% rule of retirement, those assets could support a yearly retirement spend of $544,000.

In this situation, you can likely focus on providing the education and lifestyle you want for your family now while knowing time is going to do a lot of heavy lifting on the assets you’ve already built.

This is where having a solid idea of what you want your future lifestyle to be can better define the tradeoffs you might be making today.

Making Private School Payments Slightly Less Painful

There are a few ways to reduce out-of-pocket private school costs for high-earners. Note, these can vary significantly based on state and school policies:

• Using a 529 as a tax-advantaged K-12 private tuition payment account
• Paying tuition upfront
• SBLOCs or other specialized loan vehicles

I. Using 529 as a tax-advantaged payment account

As of January 1st 2026, parents can now use up to $20,000 a year per student in 529 Plan funds to pay for K-12 tuition expenses without Federal penalties.

But the real benefits come at the state level due to state tax deductions. Because there are generally no time restrictions on how long funds need to be in a 529 before being used for qualified expenses, you can effectively use your 529 Plan as a state tax deductible payment account for your K-12 tuition.

Each state has different rules but let’s look at Pennsylvania as an example. In PA, a married couple can contribute up to $38,000 a year per beneficiary per 529 plan. PA has a flat state income tax rate of 3.07%.

Let’s say you have two kids in private school and you’re paying $30k a year for each of them. Here’s how your 529 Plan could generate up to $1,228 in yearly “savings” on your tuition payments:

• Contribute Tuition Funds to the 529: Instead of paying your tuition out of your bank account, first contribute up to $20k each school year into each child’s 529 Plan. Remember, $20k is the federal limit for using 529 funds for K-12 expenses without penalties.
• Pay the Tuition Out of the 529: Pay the tuition out of your 529 Plan.
• Get you state tax deduction: Since the $20k contribution to the 529 is state tax deductible, you will get a state tax deduction worth $614 ($20k * 3.07% PA state tax rate) for a combined $1,228 between your two children.

This isn’t life changing by any means, but every bit helps when you’re in the squeeze years of trying to pay for school, your mortgage(s), and day-to-day living expenses. You are saving $1,228 by paying tuition that you would have paid anyway.

If you’re a client using our managed services, we will handle most of these steps for you, including letting your accountant know to properly file each of these items.

If you’re doing this on your own, make sure you coordinate with your accountant or other tax advisor on all of these steps and check your state tax code. Every state has different rules for how / if 529 funds can be used for K-12 expenses.

II. Paying Tuition Upfront

Some schools offer small discounts for paying tuition upfront vs. paying throughout the year. This is typically 2-3% but depends on your school’s specific policies. In some cases you need to specifically ask for or negotiate a discount for upfront payment.

Some people may see the 2-3% as being lower than what you could get in a high yield savings account or money market fund at this time and be tempted to try and squeeze out an extra percentage or two.

For example, if your tuition is $30,000 you might look at something like this:

• 2.5% discount on $30,000 paid now = $750 in tuition savings
• $30,000 invested at 3.5% in a High Yield Savings Account = $1,050 in potential yearly interest if I pay tuition throughout the year

If you’re doing a calculation like this, you need to keep in mind the after-tax impact of your strategies.

In the first scenario, your $750 in tuition savings goes straight to your bottom line.

If you’re a high earner (which you likely are if you have kids in $30k / yr private school), then your $1,050 could be subject to federal, state, and local taxes which could add up to well over 45%. Your $1,050 in interest ends up being $567 after 45% taxes.

III. SBLOCs or Other Specialized Loan Vehicles

Depending on current rates and your broader personal risk tolerance, net worth, and cashflow profile, you may be able to fund your private school needs through various loans with favorable rates relative to the rest of your financial assets. Higher net worth families have options available to them that go beyond educational loans such as borrowing against investment accounts, home equity, etc.

This is a nuanced, complex topic that we won’t be able to fully cover in a newsletter. We can work with any of you who are interested in this to understand the tradeoffs and how it may impact your broader financial plans.

Private Consultation: We advise our clients on education strategies as part of their broader financial planning. If you’re not a client but would like someone to help you understand the short and long-term financial tradeoffs of sending your kids to private school, you can schedule a complimentary 30-minute session with me. We waive fees for newsletter subscribers for any initial consultations.
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Food for Thought

A collection of articles or books I’ve read that might be interesting to many of you.

• Assessing Private Infrastructure via CAIS: We’ve started incorporating private real assets into client portfolios and came across this piece during our research into the risks and potential benefits of private infrastructure funds. As CAIS notes:

“Private infrastructure funds, in aggregate, have demonstrated a low correlation to public equities and fixed income, while maintaining a moderate correlation to private real estate. They also had smaller drawdowns than public equities, perhaps most significantly following the 2022 Fed rate hikes.”

• I Deliver Parcels in Beijing by Anyan Hu: I kept coming across this book in various “Best of 2025” lists from the Financial Times, Economist, etc. I agree with the sentiment, it’s one of the best books I’ve read in the past year. It’s a first person account of what it’s been like working in China over the past 10-15 years as a cog in the vast machinery of the platform companies. It’s both an informative look at how Chinese companies operate and an interesting meditation on the purpose and meaning of work in one’s life.

Thank you for the continued partnership and for the opportunity to help steer your family’s capital toward what matters most.

Nathan
Founder & Lead Advisor

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Disclosures: This content is for educational purposes only and is not investment, tax, or legal advice. No post is an endorsement of any particular strategy or security. We do not receive any direct payments or commissions for securities discussed in our posts. Private funds are illiquid, speculative, and carry higher fees. Private funds are generally available only to ‘Accredited Investors’ as defined by the SEC. Employees and clients of Kangpan & Co. may hold positions in securities discussed in posts. Speak with a licensed tax, legal, or financial advisor before making any changes to your investments or financial strategies. Past performance is no guarantee of future returns. Investing involves risk including the loss of capital.

Developing our own technology solutions, 529 passthroughs, fives issues our Portfolio Efficiency Audit identified in an executive’s portfolio, AI’s impact on careers for college students, will the next recession affect digital advertising?

Dear Friends and Client Partners,

We recently completed a Portfolio Efficiency Audit for an executive that led to them becoming a client. I’ll use today’s deep dive to go through five of the most impactful findings from this audit.

If you’re a client, these will look familiar – we complete these and other audits for you during onboarding as we take over your portfolio and then regularly run new analyses and optimizations on your portfolio that we discuss together during quarterly reviews.

If you’re not a client, these may be a useful reference to check up on your current or strategy. These are common gaps we see across nearly every portfolio we have taken over from other advisors. Depending on severity, these gaps can add up to tens of thousands per year in opportunity costs for multi-million dollar portfolios.

But first, a couple company updates:

Firm Updates

Technology: Two New Analytics Modules

I spent nearly 20 years leading technology and analytics teams before becoming a wealth manager. It should come as no surprise that I’ve started codifying some of Kangpan & Co.’s most common processes and analyses into proprietary technology that we will be using to ensure your family’s wealth is optimally aligned to your long term goals. This technology sits alongside the best-in-class platforms we already use to serve you, filling in gaps that these other platforms have rather than aiming to replace them.

There are two analytics modules that are now being tested on your accounts:

• Tax-Efficient Asset Location: A rebalancing algorithm that monitors your allocations across account types (taxable vs. retirement) to help optimize for after-tax returns on your total portfolio.
• Stagnant Capital: A monitoring system that looks across every account we oversee and flags any cash sitting on the sidelines that should be invested.

The Deep Dive below details what client problems these modules help solve. We built these because we couldn’t find acceptable solutions elsewhere that met the standards with which we want to serve you. We’ll continue adding to our technology going forward.

In Brief: 529 Passthroughs

Based on recent conversations, I’ve realized many people overlook the 529 as a powerful in-year tax management tool, including the expanded $20,000 K–12 limit effective this year.

Even if you didn’t fully pre-fund an account years ago, you can use a 529 as a “tax-advantaged payment account” for tuition or other qualified expenses. By passing these costs through your 529, you capture immediate state tax deductions on dollars that were going to be spent anyway.

If you’re not a client and are currently in the middle of paying educational expenses, let’s ensure you aren’t leaving easy tax savings on the table. Reach out if you’d like to understand any opportunities you may have.

Deep Dive

Five Structural Inefficiencies in an Executive’s $2.9m Core Portfolio

Today’s deep dive is on the longer and more technical side. It is for those of you interested in the details of what we’re doing behind the scenes and how that may differ from what other advisors do.

Note, I’ve provided illustrative examples of the kinds of impact these analyses can have for a $2.9m portfolio rather than the specific numbers we found for this client. This is out of both respect for client privacy and regulatory constraints that limit how much detail I share about a client’s analysis.

That said, this client told us the clarity of our audit and the quantified impact of the findings directly led to them joining Kangpan & Co.

The five analyses from our audit we’ll highlight here are:

• Performance Benchmarking
• Loss Harvesting
• Tax-Efficient Asset Location
• After-Tax Yield Optimization
• Stagnant Capital

I. Performance Benchmarking

The first step of any audit is a cold, hard look at reality. We compare the performance of the current portfolio against an objective benchmark comprised of low-cost, passive ETFs across:

• Global Stocks
• US Stocks
• Bonds

This is a fairly straightforward exercise but we’ve found that most clients have never really sat down to do this. Even clients working with other advisors have rarely seen their portfolio results compared to a simple benchmark portfolio (three guesses why your current advisor may want to obscure this information).

Being an effective multi-asset portfolio manager means understanding where to accept the market return and where active management is more likely to add value to a portfolio.

Certain benchmarks are statistically hard to beat. S&P found 88.3% of active managers underperformed the S&P 500 index over the past 15 years.

However, that same report shows 40.7% of US Muni Managers beat their index over the same 15 year timeframe.

Knowing the benchmarks is important because the costs of underperforming are significant. A $2.9m portfolio moderately underperforming its benchmarks could be losing:

• $14,500 a year if you underperform by 0.5%
• $29,000 a year if you underperform by 1.0%
• $43,500 a year if you underperform by 1.5%

When we add or remove assets from our portfolios we are looking at how that individual asset has performed vs. a set of relevant benchmarks and potential opportunity costs across private and public markets. For example, a Private Real Estate fund will be compared against a broad, low-cost REIT index. But we also look at how incorporating an asset affects the overall portfolio’s structure. Does adding this asset increase overall returns? Does it decrease risks or correlations to economic shocks?

If we’ve done a quarterly review together, then you know we transparently report out how our multi-asset portfolios perform against passive benchmarks. We think it’s important to remain intellectually honest with you and ourselves so that we have the data to consistently improve our investment strategies and processes.

Private Consultation: If you want to benchmark your current portfolio against performance indexes or identify other tax and fee inefficiencies, you can schedule a 30-minute diagnostic session with me below. We waive the fees on our diagnostics for up to three qualified investors a month.
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II. Loss Harvesting

It’s never fun to look at your portfolio and see losses in your positions. Loss harvesting is the process of strategically making use of these losses to:

• Deduct up to $3,000 a year from your income taxes
• Help rebalance your portfolio while minimizing capital gains taxes
• Reduce the future taxable gains on other positions

It’s easy to quantify how much tax-loss harvesting opportunity may exist in a portfolio at any single point in time. Just look at the total dollar amount of losses you have.

What’s more complicated is figuring out what to do about these losses such as understanding the tradeoffs between:

• How much you should actually harvest
• Whether to offset a winning position or take the tax deduction
• Which winning positions to offset with losing ones
• Whether to move your losses into cash or another type of position

While you can tell how many losses you have on any given day by checking your portfolio, it’s harder to estimate how much benefit tax-loss harvesting might deliver over time.

Research from JP Morgan suggests someone regularly contributing to their portfolio and taking advantage of active tax loss harvesting could harvest up to 1.0% a year in tax benefits.

For a $2.9m portfolio, that means tax-loss harvesting could deliver:

• $0 if all your assets were stable or steadily increasing all year
• $14,500 a year at 0.5% in realized tax-loss harvests
• $29,000 a year at 1.0% in realized tax-loss harvests

Many advisors or self-managed investors will only do tax-loss harvesting just once a year. While that’s better than not doing it at all, we feel more regular tax-loss harvesting throughout the year bring better benefits to clients. This better captures ongoing tax opportunities, maintains target asset allocations, and continuously reduces the cost basis of appreciated positions.

III. Tax-Efficient Asset Location

This analysis checks to make sure assets that are:

• Tax-inefficient, such as bond ETFs that generate substantial taxable dividends, are placed in tax-advantaged accounts such as 401ks, IRAs, and Roths
• Tax-efficient, such as large cap growth stocks that typically pay very low dividends, are placed in taxable accounts

There are two primary benefits to doing this. First, the dividends / distributions from assets that create significant taxable payments like bond funds are no longer taxed. Second, we can rebalance assets without incurring capital gains taxes.

Let’s look at the math behind shielding dividends from taxes.

Like many of you who subscribe to this letter, let’s say your family’s income is in the high six figures and you live in a high-tax state. Your federal tax rate is 35% and your state tax rate might be something like 7.5%.

If you put $1,000,000 into a bond ETF with a 4.0% yield, you would get $40,000 in dividends over the course of the year.

• If you hold this position in a taxable investment account you could end up paying $17,000 in taxes ($40,000 * combined tax rate of 42.5%) which means you’ll only keep $23,000
• If you hold this position in a tax-advantaged account you would pay $0 in taxes on these dividends and keep the full $40,000

The benefits to making use of tax-efficient asset location can be significant.

However, many portfolios we’ve reviewed from clients working with other advisors don’t do this. There are various reasons we can think of for why this may be… but none have to do with what is in the best interest of clients.

The primary challenge is that it is more analytically and operationally complex to manage portfolios this way and many automated trading tools available to advisors are not able to handle portfolio structures like this. Most firms avoid this level of detail because it is hard to scale. We lean into it because we embrace complexity since that’s where value is found for our clients.

Unless there’s a reason to do otherwise, we take advantage of Tax-Efficient Asset Location when managing our clients assets and will go through the work it takes to migrate portfolios to this kind of approach.

IV. After-Tax Cash Yield Optimization

As we mentioned in Client Letter #3: Leaving a C-Level Corporate Career, we regularly optimize the yield of our client’s cash positions.

We model more than a dozen different vehicles to find the optimal one for each client based on their unique tax situation. But we don’t just look at the topline yield number. The after-tax yields on these assets can vary significantly.

Each of these vehicles has a different tax treatment – for example, high yield savings accounts are generally taxed at both the federal and state level while short term treasuries are primarily taxed at the federal level but often exempt from state taxes.

Many of our clients’ cash strategies allocate between $100 to $250k to meet short term liquidity needs.

For someone with $250k in cash, the incremental yield you could get from optimizing for after-tax returns are:

• $2,500 a year if you get an extra 1.0% in after-tax yield
• $5,000 a year if you get an extra 2.0% in after-tax yield
• $7,500 a year if you get an extra 3.0% in after-tax yield

It’s worth noting, we typically find a high yield savings account is not the best vehicle for optimizing after-tax yields.

V. Stagnant Capital

This is when you have cash that has unintentionally built up in your portfolio which is not being invested into higher returning assets. This tends to happen when dividends aren’t being reinvested or when you have retirement accounts from old jobs you’ve forgotten about over the years that haven’t been checked in awhile.

It’s not surprising to see Stagnant Capital in portfolios that our clients were previously managing themselves – they’re busy executives that aren’t constantly thinking about their portfolios. What has been surprising is seeing how many portfolios we take over from other advisors and institutions that have significant amounts sitting in cash.

We don’t just consider this “idle money,” but a significant opportunity cost in terms of reaching your long term goals.

For every $100,000 in Dead Cash, you could be actively losing:

• $3,000 a year in interest if you just moved it to a high yield savings account with 3.0% interest
• $4,500 a year in distributions if you have an income-centric portfolio strategy targeting 4.5% in yearly yield
• $9,000 a year if you have a more growth-centric strategy targeting 9.0% yearly total returns

At Kangpan & Co., we don’t rely on manual oversight or ‘occasional’ checks. We’ve built a systematic cash-monitoring algorithm across our entire firm. This ensures that Stagnant Capital is regularly identified and re-deployed, maintaining the structural efficiency of the portfolio regardless of how busy our clients’ lives become.

After the Audit

These are just some of the highest level optimizations we identified for this executive’s portoflio before we started officially working together.

Since onboarding this client, we:

• Fixed most of the gaps that our audit identified
• Developed a new portfolio strategy that incorporates alternative assets to help improve the diversification and resilience of the portfolio to different economic shocks
• Realigned and rebalanced hundreds of thousands of dollars in assets across our client’s portfolio while incurring nearly zero capital gains taxes in the process
• Are exploring integrating private assets to further align the risk / return profile of the portfolio to our client’s long term goals

If you’re not a client and you suspect your portfolio may have performance or efficiency gaps, feel free to email us to request an audit.

If we feel we can add value to your portfolio, we’ll run the same Portfolio Efficiency Audit we used for this executive. We’re currently waiving fees on this audit as we build up our proprietary benchmarking dataset. The analysis takes about an hour of your time in total. Even if we don’t work together afterwards, you’ll know exactly where your portfolio needs to be optimized.

Food for Thought

A collection of articles or books I’ve read that might be interesting to many of you.

• AI job disruption may be good for children via the FT: A number of you with kids in or nearing college and expressed to me some concerns they may be picking career paths for prestige and money rather than what they may ultimately enjoy or be good at in the long run. I’ll be writing more about this topic in a future deep dive and this was a thought-provoking article in the meantime. As the FT writes:

“We have legions of young people who have worked out how to get into great universities, get good grades and land prestigious internships. But when you ask them what they are passionate about, their faces go blank.”

• Are Meta and Google ads really recession proof? via the Economist: A significant portion of subscribers are in the advertising or marketing industry. I’d be curious to get your take on whether digital ad budgets are likely to be cut during the next recession. Reach out if you want to chat about this. As the Economist notes:

“The recessions of 2008-10 and 2020 are also an imperfect sample from which to extrapolate the future of digital ads. It is true that in both those cases online advertising held up even as offline varieties fell off a cliff. Yet in 2007-09 digital ads were climbing from a tiny base, so migration of advertising from print and television to the internet offset cyclical weakness. Now that digital advertising is so dominant, there is less offline share to snaffle.” 

Thank you for the continued partnership and for the opportunity to help steer your family’s capital toward what matters most.

Nathan
Founder & Lead Advisor

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Disclosures: This content is for educational purposes only and is not investment, tax, or legal advice. No post is an endorsement of any particular strategy or security. We do not receive any direct payments or commissions for securities discussed in our posts. Employees and clients of Kangpan & Co. may hold positions in securities discussed in posts. Speak with a licensed tax, legal, or financial advisor before making any changes to your investments or financial strategies. Past performance is no guarantee of future returns. Investing involves risk including the loss of capital.

Optimizing after-tax cash yields, the $5m nightmare, stock market concentration, The Pathless Path

Dear Friends and Client Partners,

A number of you have expressed a desire in our financial planning discussions to leave the corporate world and pursue a second act within the next few years so I figured I’d make that the topic of today’s Deep Dive.

But first, a quick update on some optimizations we’ve made to your wealth strategies.

Systematic Upgrades

Focus: After-Tax Cash Yield Optimization

We have updated our cash algorithms to maximize your individual after-tax yield across more than a dozen ultra-short-term vehicles—ranging from state-exempt Treasuries to Municipal MMFs. For clients who have granted us discretionary authority, we have already executed the shift to the highest-yielding instrument based on your specific tax bracket.

If you aren’t a client, check your cash yield today; your advisor may be leaving your capital idle. Our algorithms found no instance where a default ‘sweep’ or standard money market position outperformed our client-recommended solutions.

Deep Dive

Leaving a C-Level Corporate Career

I was having a conversation with a good friend (who is also a client) recently about the corporate climb and how the desire to continue up that ladder has become inversely proportional to net worth.

Like me, my friend is a former C-level executive who has transitioned out of the corporate world. We laughed about the scene in Succession when Connor and Tom are advising Cousin Greg on the perils of a $5m net worth:

“You can’t do anything with five, Greg. Five is a nightmare. Can’t retire. Not worth it to work. Poorest rich person person in America… The weakest strong man at the circus.”

We put aside the question of whether five million is enough to retire on. It really depends on your lifestyle.

The “Not worth it to work” part is what we talked about. This mid-million net worth is when many people suddenly have enough saved up to viably walk away from a corporate salary.

And when you have enough to walk away from the corporate climb you start asking yourself a lot of questions once the kids are down and you’ve caught up on Slow Horses.

It’s not just about running the numbers again and again to see if you have enough to step away and start that boutique consultancy or live your dream of running your own coffee shop plus wine bar.

The biggest questions that confront you are those relating to your identity.

If you’ve spent nearly two decades climbing a specific career ladder, it will look like an awfully long way back down when you’re ready get off. Whether you have $5m or $50m, you’ve merged a massive part of your identity with your career.

Questions like, Who am I if I’m not the “Global Chief Information Officer” of a respected advertising agency? What if I become the person important people used to call, but no longer do? What if these are the golden years of my career and I regret stepping away when I was at the top?

It’s these questions that prevent many people from making that much anticipated jump off the ladder.

Instead of confronting these questions head on, you delay by telling yourself “just one more year” or “just another $200k” to be extra sure I have what I need to support my post-corporate lifestyle.

I encountered all of these questions when I left my C-level position.

Running the numbers over and over again was really just a proxy for the bigger questions that face anyone leaving the corporate track to start a second act.

At the end of the day, the numbers in a spreadsheet are just a part of the decision to leave a corporate career. The real fears tie to who you are without the title. It’s the fear of the silence. It’s the realization that when you aren’t the one holding the multi-million dollar budget, the phone might stop ringing. That’s a structural shock most advisors aren’t equipped to help you navigate since they’ve never done it.

Here were a few things that I found helpful in giving me the confidence to finally make that leap:

• Something to run towards: If you’ve been entertaining notions of leaving the corporate world for a while, there’s a high probability you’re burnt out. You’ve likely spent years thinking about what you’re running away from—the back-to-back meetings on topics that no longer spark curiosity, the client that always seems to have urgent firedrills, etc. But if you don’t have a clear vision of what you’re running towards, then you’re just jumping into a black abyss.
• Someone to talk to: I found it helpful to talk to other people who had made this decision. Very few people know what it’s like walking away from a C-level title and a yearly salary multiples higher than the average retiree’s nest egg. At Kangpan & Co. we’re not just building your wealth, we’re creating a close-knit community. If you’d like to talk to other former executives and senior leaders who have left the corporate world we can easily arrange that.
• An income-centric financial strategy: When I gave my notice, I didn’t want to rely on spending down a generic 60/40 portfolio that was subject to the whims of the market. I built a specific income-centric strategy designed to replace a steady paycheck. It turned my portfolio from a static number on a screen into a functional cashflow to support my next chapter. Some of you have asked about this income strategy in various conversations so I’ll write more about this in future posts. It is, of course, available to any clients of the firm.

I’m always happy to talk to any of you about the emotional as well as the financial side of making this kind of decision. Most advisors want to talk to you about your ‘Risk Tolerance’ for the stock market. I’d rather talk about your ‘Risk Tolerance’ for staying in a career that no longer fits the person you’ve become.

Food for Thought

A collection of articles or books I’ve read that might be interesting to many of you.

• This Christmas, Raise a Glass to Concentrated Market Returns via the Economist: A reminder that it’s not that unusual for a handful of firms to drive the bulk of the returns in each stock market cycle. That doesn’t mean we shouldn’t be wary of a crash when the concentration increases in each cycle. It’s just about realizing that this has and will always be a feature, not a bug, of capitalism-led stock markets. As the Economist notes:

“Hendrik Bessembinder of Arizona State University notes that among listed American firms from 1925 to 2023, most have negative returns. Less than 3% of stocks account for all the increase in shareholder wealth in that time.”

• The Pathless Path by Paul Millerd: One of the more influential books I read while I was thinking about whether to leave my corporate career. Mostly about the tradeoffs between the predictability of a corporate career vs. the freedom of working in a more independent role. Here’s a great quote:

“We like to think that once we ‘make it’ we can finally be ourselves, but… it was clear that the longer people stay at a company, the higher odds that they become what the company wanted. I realized I didn’t want that to happen to me”

Thank you for the continued partnership and for the opportunity to help steer your family’s capital toward what matters most.

Nathan
Founder & Lead Advisor

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Disclosures: This content is for educational purposes only and is not investment, tax, or legal advice. No post is an endorsement of any particular strategy or security. We do not receive any direct payments or commissions for securities discussed in our posts. Employees and clients of Kangpan & Co. may hold positions in securities discussed in posts. Speak with a licensed tax, legal, or financial advisor before making any changes to your investments or financial strategies. Past performance is no guarantee of future returns. Investing involves risk including the loss of capital.