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Profile
Name: Michael Reed
Age: 38
Location: Denver, Colorado
Occupation: Senior Software Engineer
Income: $155,000/year
Household: Married, one child (age 5)
Current Savings:
- 401(k): $92,000
- Brokerage: $48,000
- Savings Account: $26,000
- ESPP + RSUs: 22% of his total net worth
The Situation
Michael earns well, invests regularly, and believes he’s “doing enough.”
But he has no clear goals, no timeline, and no written plan. His investments were built on whatever seemed “smart at the time” a mix of index funds, a few high-growth tech stocks, and some unused RSUs sitting untouched.
When asked why he invests, he says:
“I mean… retirement, I guess. And maybe college for my daughter. But I haven’t really calculated anything.”
This is extremely common for high-earning U.S. professionals who invest by instinct.
The Problems That Emerged
1. Misaligned Risk Exposure
Michael had 85% of his portfolio in equities — not because he chose that intentionally, but because he never checked.
His real risk tolerance was moderate, but market volatility made him anxious and reactive.
2. No Real Retirement Target
He never calculated how much he actually needs to retire comfortably in Colorado, where healthcare costs and inflation are rising faster than his savings.
When we ran his numbers, he was on track for a $600,000 shortfall by age 67.
3. College Planning Was an Afterthought
He assumed “he’ll handle it later.”
But the cost of a four-year college education is projected to cross $220,000 by the time his daughter turns 18.
He was saving zero dollars toward it.
4. RSUs and ESPP Dominated 22% of His Net Worth
This created company-specific risk, leaving his finances too dependent on one stock.
5. No Tax Strategy
Without a defined plan, Michael paid unnecessary capital gains taxes by selling randomly whenever he felt the market was “too high.”
How a Clear Plan Changed Everything
Once we created a structured investment roadmap, based on his life and timelines, Michael finally started using his money with purpose rather than impulse.
Step 1: Define Specific, Measurable Goals
- Retirement: $2.1M target by age 67
- Daughter’s College: $220,000 by age 18 (12 years left)
- Home Upgrade: $150,000 needed in 7 years
- Emergency Fund: 6-month runway
Step 2: Align Each Goal With the Right Investment Vehicle
- Retirement → 401(k), Roth IRA
- College → 529 Plan
- Home down payment → Low-volatility portfolio
- Wealth growth → Tax-efficient index fund strategy
- RSUs → Structured sell schedule to reduce concentration risk
Step 3: Rebuild His Portfolio Based on Timeline & Risk
- Long-term (20+ years): 75% equity
- Medium-term (5–10 years): 40–60% equity
- Short-term (1–3 years): Keep mostly in bonds/treasuries
Step 4: Optimize Taxes
- Tax-loss harvesting
- Roth conversions when income fluctuates
- Automated rebalancing
- RSU liquidation timed with yearly tax planning
Step 5: Written Financial Plan + Annual Review
Michael now has:
- A documented investment roadmap
- Yearly benchmarks
- Rebalancing rules
- Tax strategy
- Updated allocation model
His investment life finally has direction.
Outcome After 12 Months
- Portfolio volatility dropped
- Taxes reduced
- Set up a 529 with automated monthly contributions
- Sold down some RSU
- Increased retirement readiness from “behind” to “on track”
- Most importantly: he finally knows why he’s investing
Key Lesson
High income doesn’t automatically translate to financial clarity.
Without specific goals and a written plan, even successful investors drift into misallocation, unnecessary taxes, and future shortfalls.
A clear plan transforms random investing into purpose-driven wealth building.
You do not need more products. You need a plan that tells your money where to go and what to build. If you want a written, goal-aligned investment strategy, schedule an initial free 30-minute call with Aris Alpha.
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