Stepan ParunashviliTwitterInstantBooksFitness

My strategy for wealth and personal finance

A few friends recently asked me for personal finance advice. I ended up creating a list of principles, and thought I would share it with you here.

Before you get started, a few notes;

  • a. These principles assume you want to create a significant amount of wealth (> 15MM), at a relatively young age (\< 40 ).

  • b. I’m not a multi-millionaire yet, so this is all a work in progress too :}

  • c. If you are just starting out your career, read this instead

Without further ado…let’s get into it!

Main Principles

A) Wealth creation is non-linear

Most people think you become rich linearly: by increasing a salary for example. But, wealth is highly non-linear: 1 year nothing, 2nd year a million

This means we need to think about creating wealth differently.

B) To create wealth, you need to take high-upside, high-leverage bets with people you respect

Most people think the way to create wealth is with personal finance: making investments, managing savings, etc.

But, unless you have a lot of money already, those are lower leverage. The best bet is to learn high-leverage skills, then use them on high-upside bets, with people you love. See Naval’s tweet for the best strategy about this.

Does that mean that we should just spend all our money though, hoping for the big pay day?

No, because:

C) To take high upside bets, you need money

Money in the bank increases the chance you have of seeing and taking these bets. For example, by having money in the bank:

  • You can make angel investments, or
  • invest in your friends, or
  • buy something that makes you much more productive, or
  • take time to work on a project that could turn into a company or
  • take your time negotiating your job offers or
  • outsource tasks to focus your creative energy

These all have high upsides, and can contribute to the step functions that will help you reach your goal.

This means that both the “entrepreneur, f** it until I make 30MM” and the “salary worker, just max the 401k” strategies are wrong.

Both of them are needed: because as you save, you start seeing more and more opportunities. But,

D) You need to be ready to spend to take those opportunities.

Most people, when they start saving, start feeling guilty about spending. This loses the leverage they have with their wealth. You saved, so you could take big opportunities and live your dream life.

So, how do we save?

Personal Finance Principles

E) Willpower is valuable and rare

Willpower is highly valuable, and we have very little of it. Most people spend it worrying about what to spend. But they’re in a losing game, because

F) People can’t control their spending and saving with willpower

If you feel guilty about what you spend, this will prevent you from taking those big opportunities. But if you spend too much, you won’t have the chance to take them.

It’s not worth spending willpower on figuring this out minute by minute.


G) Build systems, so you can save the way you want, and spend the way you want

Note: I learned this as a teenager, scouring the blog of the great Ramit Sethi of There’s gold there, check it out!

Create goals for yourself. Whatever you want in your life: don’t tell yourself no

Want to take a long sabbatical? Create a sabbatical fund. Want to take care of your mom and dad? Family fund. But how can you do those if you want to start a company? Startup fund

Set up the systems you need to move towards this. The simplest thing to create automatic transfers to those funds (more detail in Tools)

When you do this, you can save and spend with intent. If you want to ski, you want to start a startup, you want to live a rich life, it’s all possible.

Now, there’s a tricky part here:

H) As you make more money, lean into your system

As you make more money, it’s easy to ratchet up your lifestyle thoughtlessly. This can be dangerous, because it can take away your freedom to make big bets, which is the whole point of this.

To solve this, lean into your system. Increase your automatic transfers, and you’re good to go. Then, spend lavishly on what you value, with the confidence that you are on your way to your goals.

Once you do this, soon you’ll have a sizable amount saved up.

You’ll enter the next tricky part: losing all your money. You may think overspending is what will make you lose the money, but you’d be wrong:

I) People don’t lose all their money spending, they lose all their money by making bad investments

Note: I learned this lesson from one of Paul Graham’s essays. I’ve read them all many times, I highly recommend you do too

It’s not easy to spend a lot of money. But it’s easy to invest a lot of money, and have that disappear.

This is why it’s important for you to

J) Store the majority of your personal finance in highly-safe investments

This wealth is meant for you to take those big chances, so they should be available. Don’t go for the “10%” return options thing, which could end up wiping you out. Instead, buy index funds, buy bonds, buy property, gold — things that don’t disappear into thin air.

Now, you may ask: “what about the angel investing, crazy opps that require money?”

Create a fund for that. The majority should be in safe investments, so if in the rare case you really really need to make that investment, or take that startup opportunity, you can.


As one more mentor, Nassim Taleb says — nothing without skin in the game. What do I actually do, tactically?


I use Personal Capital, to keep an overview of my net worth, and how all the investments have been doing. I check this rarely — like once a month

Even more rarely (like once a year) I use Google Sheets, to manually go over investments. The goal is to make sure that I am invested in the things I value, and the allocations are right.


All payments initially land in Schwab Checking. Some amount goes to Fidelity to max the 401k.

Every 2 weeks, automatic transfers leave Schwab and get sent to Betterment. These go into conservative index fund combo accounts ~(70% stock, 30% bond). Some examples: Safety Net, Startup, Investment Opp, Parent Dreams, Real Estate, Extended Travel.

I also use Schwab Brokerage, and have a few specific investments (gold index fund, commodity index fund, AAPL, TSLA)


Here’s my general allocation:

  • small amounts of: angel investing, to take high-upside bets
  • small amounts of: gold, commodities, to offset some worries i had about the market
  • small amounts of: AAPL, TSLA — bought them on dips, and believe in the companies long term
  • bit bigger amount of: Georgian Property. I want to stay connected to Georgia and fam there
  • majority in: 70/30% index fund accounts with names on em. These are highly-available assets, with the purpose of using them for startup / opp if ever needed


And with that, we reach the end. If you get only 3 things from this, I hope they’d be:

  1. Money gets made by taking high-upside bets
  2. To do that, you need to have some money, which means you need to be good at personal finance

  3. To be good at personal finance, you need to build a system, which lets you save, and just as importantly, spend, on taking big bets and living your rich life

Special thanks to Jacky Wang, Joe Averbukh, Lin Wang, Alex Reichert, Giff Huang, Luke Shackelford for reviewing this

Thoughts? Reach out to me via twitter or email : )