Ask Mia: Vol. 4
Updated: Oct 24, 2022
This article appeared in the Winter 2021 edition of Petit Mort Magazine.
Mia is an International Companion based in NYC and SF. She’s also a CPA who previously worked in finance for over a decade. She’s always been passionate about promoting financial literacy, especially among women, LGBTQIA+ folks and marginalized communities.
QUESTION
Do you have any resource guides for people who are debt free and in a place to start investing?
ANSWER
This depends on your risk appetite. Unfortunately, there’s no One Source For All that I know of. I really liked the Suze Orman show back when it was running. She took questions from viewers and gave scores on how they were doing (a lot like my column!). To give you a more specific answer, I’d generally recommend a newbie investor allocate at least 50% of the savings that they don’t need for the next 5 years to long term slow growth index funds. Vanguard has the lowest fees in the industry BY FAR. Personally I’m holding VMVAX, VSGAX, VSIAX, among others. These are Vanguard’s Admiral shares, which typically require a $3,000 minimum investment and carry even lower fees than ordinary shares. Index funds on the whole will have the lowest fees, as they’re passively managed, compared to mutual funds which are actively managed.
Why are investment management fees and expenses so important? Because the majority of investment managers do not outperform the market. You’re often paying someone to make less money than you would have if you’d just invest in the S&P, Dow Jones, or Nasdaq. Not a great deal. Risk is positively correlated with returns, so typically, investmenT opportunities that tend to outperform the market are often private placement investments (e.g., private equity, venture capital, other investments open to only accredited investors or high net worth individuals).
What about the other 50%? Well, this depends on how much of it you’re willing to risk losing for better returns. I would allocate whatever portion of your savings you’re comfortable losing entirely to riskier investments, such as a brokerage account where you day trade, crypto currencies, private placement investments, etc. If you’re interested in day trading, a podcast I really like is Pennies: Going in Raw. For crypto, I don’t have a recommendation, as I get my information from industry insiders who are personal and professional contacts from my long career in finance. Private placement investments are where I advise the absolute most caution and honestly I don’t recommend them to ANY newbie investors.
An example of a private placement investment is Unbiased Lending, an alternative mortgage lender that issues mortgages to lendees who do not have social security numbers and are not legally authorized to work in the US.
I have a $50,000 preferred share, which was issued to me as a friends and family fundraising round. The investment opportunity was presented to me by a former college buddy who has spent his entire career in investment management. I can’t disclose much about the company’s performance and financials, as the information is not public, but I can confidently say I have done my due diligence on both the financials and business plan, as well as the founders.
If this sounds risky and mercurial, that’s because all private placement investments are. If your next question is “where can I find an investment opportunity like this,” my answer is: you don’t. Unless you’re working at a private equity or venture capital firm on the investment team, these opportunities are legally not allowed to be publicly marketed. If this sounds like an old rich people club, that’s because it is. Fair or not, that’s the reality.
I give this example because I want to discourage folks from investing in a friend’s business “because you want to help them out” or “because you think it’s a cool idea.” This is a fast way to lose friends and go broke.
If you decide to make a private placement investment, only invest money you can afford to lose completely and never confound investment with donations. I have done a little of Robin Hood and crypto and have both an Acorns account and Ellevest. I started contributing to a Roth IRA through Ellevest and am contributing the maximum amount I can. You should absolutely max out your annual Roth IRA contribution of $6,000 if you can. Roth IRA contributions are made with after tax money but grow tax free until you start taking distributions in your retirement.
This is a GREAT deal if you’re young, because of compound interest, explained as follows: If you invest $6,000 per year (the Roth IRA maximum allowable contribution) for 10 years and earn only 7% per year on these investments (this is considered an average return for retirement funds), you’ll have $88,702 after 10 years. So, you’ve made $28,702 that you’ll NEVER have to pay a penny of taxes on. It’s a great deal.
Q
Should I start thinking about property buying?
A
As an investment in the NYC metro area, I’d say no [as of Winter 2021]. Property values are at all-time highs and inventory and construction has been severely delayed and restricted by COVID driven distribution bottlenecks. Every other day I read news about suppliers paying triple their usual freight costs to get their inventory a week late. These costs are inevitably passed onto buyers. Additionally, fear of contracting COVID plus generous unemployment benefits have contributed to a labor shortage, further driving up home prices. Add to this the fact that many folks are upgrading their homes as people work from home more, and you literally have one of the worst buyers’ markets in history.
Q
Should I move the majority of my cash sitting in my savings account to a high-yield savings account?
A
No, I’d invest it. Interest rates have been at historical lows for years now. You’d be lucky to earn more than inflation with a high yield checking account. And inflation typically climbs as interest rates are held low.
Q
I have cash sitting under my bed and I know that’s so wrong and terrible, but I honestly just don’t know where to put it.
A
It’s actually not a terrible idea to keep some cash on hand as a sex worker. You never know what might happen with accounts being temporarily frozen or closed. That being said, I’d highly recommend a safe or safety deposit box. And I would recommend keeping no more than one month’s worth of expenses (living and discretionary) in cash. This will keep you out of a scarcity mentality in case you have a slow month and serve as an “oh shit” fund just in case you need it.
Q
So much of what I make as a dominatrix is money sent for me to buy gifts, manicures etc. Should I encourage them to buy gifts themselves and then send them to me instead of sending me money? I’m trying to avoid taxes on gifts and know that I have up to 15k until that would become an issue.
A
The 15k limit is for the giver of the gift. The giver can give up to $15,000 to any individual giftee tax free per tax year.
Domme gifts are almost always taxable, since they are given in exchange for services performed. For tax purposes, these are treated the same as tips. For example, many contestants on game shows don’t accept non-cash awards (e.g., an expensive dresser) because they have to pay taxes on the fair market value of those winnings as if they were cash gambling winnings. Gifts are only non-taxable if they are given with no expectation of any services (past or future) being performed in exchange. Calling a tip a gift does not erase your tax liability.
Q & A BY MIA LEE
PHOTO BY PENELOPE DARIO