3 Big Wins For High Income Earners: Taxes, Expense Ratios, Time

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Unlike lower income earners, high income earners don’t need to worry so much about the 3 largest spending categories of most budgets: housing, transportation, and food.

As a HENRY or One Percenter, your time and energy is much better focused on the 3 biggest wins for high income earners:

  • Taxes
  • Investment expenses
  • Time

Focusing on these 3 areas will help you actually move the needle in your finances at the high-income earners level. Clipping coupons or living on rice and beans is not going to help you achieve your financial goals faster or live a better quality of life.

Tax Savings For High Income Earners

Unfortunately for W-2 employees, there are not many tax breaks available anymore. Donating to a charity or Donor Advised Fund (DAF) can be one way to help causes you support and reduce your tax bill.

Contributing to a 401k or similar retirement plan can also reduce your taxable income while building your retirement savings.

For business owners, there are strategies like S-Corporation election for LLCs to reduce your tax bill somewhat.

Unfortunately, even the best tax strategies cannot overcome our American progressive tax system. If you make a lot, expect to pay a lot in taxes.

Investment Expense Ratios

When your investment portfolio exceeds $1 million per year, a 1% annual assets under management (AUM) fee means $10,000 per year spent in just fees.

If you have a $10 million portfolio, 1% per year fee is $100,000. That’s almost the full time salary of an asset manager. What are you getting for that cost? Is it worth paying $1 million or more over the next 10 years to have someone manage your money?

Simply by moving to a lower cost asset manager, like Vanguard Personal Advisor Service (PAS), you can save hundreds of thousands. Vanguard charges 0.30% (30 basis points) for hands on asset management. That means a $10,000,000 portfolio will pay $30,000 per year in fees, saving you $70,000.

If you’re drawing down the standard 4% rule in retirement, adding an extra $70,000 to your available annual cash flow can mean a huge difference in quality of life.

And you’ll pay this fee no matter the performance of the fund. If you’re in a hedge fund, you might pay a 2% annual fee and 20% of any profits earned as well.

These asset fees kill returns and are a great place to focus on to reduce your expenses.


Time is the one resource all of us are granted equally every day. No matter how wealthy you are, you cannot buy more time. You can outsource or delegate many time sucking tasks though, which can return more time to you.

Focusing on how you spend your time and what you can outsource when you’re

What’s your hourly rate? If you make $1 million per year, it’s probably $500 per hour or more. If you can outsource a task you don’t derive pleasure from, such as cleaning the bathroom, mowing the lawn, or driving yourself to the airport: outsource it. Let someone else share in your wealth and hire them to help you.

It’s as simple as getting an Uber to the airport that drops you off curbside, rather than park in the economy lot and take a bus to the airport. That could save you 30-60 minutes, depending on the size of the airport, plus reduce your stress.

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