WHAT IS THIS EPISODE ABOUT?
In this episode, as we celebrate 100 episodes of the podcast, I welcome Brad Gibb, a former Goldman Sachs money manager and the co-founder of Cashflow Tactics.
Make sure to head over to joshforti.com/100 and get our free download, “The 5 Tried & True Pillars Of Financial And Business Success”
WHY SHOULD I LISTEN?
We have a 2 hour long interview where we talk about:
- What is money?
- Why printing money is a bad thing.
- Inflation and interest rates.
- Why investing in the stock market is for suckers.
- What Warren Buffet does differently.
- The Berkshire Hathaway effect.
- When the economy will crash next.
- The core 4 and 4 Pillars of wealth creation.
- Where to invest your money.
- How anyone can become financially free in 10 years, and so much more.
This is an episode you won’t wanna miss.
Here are the key topics discussed in this episode:
- 50,000+ downloads without paid advertising (02:02)
- The greatest personal development (05:13)
- Noone will care about your money more than you (12:03)
- From a super nerdy college lifestyle to Goldman Sachs (14:41)
- The important role of investment banks (19:43)
- Money today is worth more than money tomorrow (29:24)
- Why the stock market is dumb (38:22)
- The real meaning of investing (48:36)
- Financial leverage is the heart of getting wealthy from investing (52:04)
- Making a decision with investing (01:02:42)
- Whole life insurance and why it’s a great investment (01:16:46)
- Passive income is a lie. It’s just leveraged income (01:27:23)
- The real definition of cryptocurrency (01:35:58)
- Creating wealth is about focusing on a game you can win (01:42:12)
- Being stubbornly principled (01:51:00)
- Where to start towards becoming financially free (01:58:16)
WHERE CAN I LEARN MORE?
Be sure to follow me on the below platforms:
WHEN DID IT AIR?
August 2nd, 2019
Make sure to head over to joshforti.com/100 and get our free download, “The 5 Tried & True Pillars Of Financial And Business Success”
- Check Out This Cool Thing We’re Doing
- Principles By Ray Dalio
- Cashflow Game By Robert Kiyosaki
- Cashflow Tactics
- Cashflow Tactics on YouTube
Be sure to follow me on Instagram @joshforti
You can find the transcripts and more at www.thinkdifferenttheory.com/100
You can find this episode plus all the previous episode here.
Be sure to grab a copy of The Mindshift Playbook here
If you haven’t already, please rate and review the podcast on Apple Podcasts!
Disclaimer: The Transcript Is Auto-Generated And May Contain Spelling And Grammar Errors
00:00:00 Money is the measuring stick that you and I use to make decisions, right? It’s the thing that tells us, do I save money? Do I spend money? Do I invest? Do I hire somebody? Do I run this ad? Money is just a measuring stick to say…like I said, to help us to take action. Right?
00:00:17 Yeah, kind of like a science of value. It gives us the ability to know whether or not to make a decision. It gives us the… whether or does that make a good decision yet.
00:00:27 Yeah, how we’re keeping score.
00:00:30 You are now entering a new paradigm. So, here’s my issue. I wanted to find the answers to life’s biggest questions. Things like, how do I become happy and live with purpose? How do I make more money doing what I love, and what does it mean to be truly successful in all areas of life? My name is Josh Forti, @JoshForti on Instagram, and I ask life’s biggest questions and share the answers with you. My goal is to help you find purpose, happiness, and open your mind to new realms of possibility by helping you think differently about everything you do, know, and understand. On this podcast, we think different, we dream bigger, and we live in a world without limits. This is a new paradigm. Welcome to The Think Different Theory.
00:01:14 What’s up guys? Welcome back to another episode of The Think Different Theory. My name is Josh Forti and we did it. We made it to a hundred episodes. Welcome back to episode number 100. If you are new to the program, thank you for being here. I feel like I should have like some confetti streamer things that I can like, go and shoot off, and be like, “Yay!” Or, at least a button I can push to make things clap, but guys, we did it, super exciting. Episode Number 100. And, I will say that we have officially crossed over, which is super big, because… crossed over, I’m gonna tell you the number here of downloads in just a second, but when we first started the podcast, of course, you launch, it blows up, you get also all sorts of awesome, cool downloads, cause there’s all sorts of hype around it, and it goes… takes kind of a dip, and you’ve got to kind of crawl your way back up.
00:02:02 But we’re on an upward projectory. It’s been amazing. We have officially crossed over 50,000 downloads without paid advertising. And now we have advertising starting for The MindShift Playbook. We have thousands of people on the daily podcast update list now since… ever since The MindShift Playbook launched. So we are on the uphill projectory. It has been awesome and we’re getting… getting just tons of cool people in here. So guys, thank you so much. We do have some cool super cool stuff. If you want to head over to… I had to do it off of my own URL, but if you go to JoshForti.com/100, there’s a super little surprise, little page for you guys there with a super cool thing that we’re doing. So anyway, make sure to go check that out, JoshForti.com/100. And, I’m super excited for today, because, not only is it episode 100, which is so super cool, we also have, probably… the guest that I’m most excited to interview, I bet I’ve ever done.
00:02:59 Now, I want to say I’ve done some really cool interviews, and I’ve loved every single one of them, but I have a unique reason for loving and being excited about this interview. Our next guest, I’ve actually talked to before. I’ve met… and I’ve sat down with him and had… gosh, it was a couple hour… a couple of hour long conversation over dinner with him, and he absolutely just blew my mind. If you guys know anything about me, I’m obsessed with learning about money, and how money moves, and how money works. Also the economy and just wealth creation in general, and educating people on that. And my next guest is someone who is one of the smartest, if not… he’s probably the smartest person I’ve ever met when it comes to this type of stuff.
00:03:42 He used to work for Goldman Sachs and managed hundreds of millions of dollars for them. He quit to come and help the little guy, if you want to say that, help the entrepreneur out there to go and create financial freedom, do smart investing, has been absolutely just… done an absolutely amazing, amazing things, helped thousands and thousands of people. He advises and does wealth… wealth assessment or wealth management for a lot of people in like, the inner circle and people like…. I don’t want to speak to this without verification, so he’ll have to correct me on this. I think for Russell Brunson and people like that, and he’s just an amazing, amazing human, and I’ve been very blessed to get to know him. I want to welcome to the program, Mr Brad Gibb, the founder or co-founder of Cashflow Tactics. Brad, welcome to the program, dude.
00:04:27 That’s a huge honor man. I really appreciate it. Everything you said, this is the having on the hundredth episode and the things you just said. I looked back like I listened to a bunch of your podcasts. I scrolled okay. Brew and you got some big names on there. So I, yeah, that’s a huge honor for me. I’m excited to be here.
00:04:40 Thank you so much man. I appreciate that. And we have, we’ve had some amazing people on the podcast. I’m super excited to add you to that list and not to downplay any of them at all cause they were all amazing. This just happens to be a topic I’m super passionate about. And um, I think for me more than anything, our conversation in Boise just, it was a conversation, I feel like every single human being ever needs to understand at least if you live in America and want to be wealthy of any sort. Um, and so I can’t wait to dive into that. But actually let’s, let’s just start off. Let’s back up and dude, it’s been, what, two or three months since I saw you?
00:05:13 Yeah, we blamed and then my three months went by, so I’m, yeah, I’m just in that stage a that every entrepreneur I think finds themselves in time to time. Like, it depends on like what hour of the day you ask me. And it’s like, it’s amazing. It’s terrible. It’s amazing, it’s terrible. It’s just that it’s trying to grow through the shifts we’re going through. So when I stepped back and everything is incredible, we built some amazing things, had some amazing breaks and taken advantage of some amazing opportunities. And, and we’re doing, I mean, living the life I love, um, but as every entrepreneur knows, um, growing a business next to being married and having kids is probably like the most spiritually personality, like personal development wise demanding thing I’ve ever done.
00:05:57 And it just repeatedly crushes me and gives me the chance to, to grow and reinvent myself. So,
00:06:03 yeah, no, I love that. I love, I mean, you know, Steve Larson obviously, I mean, he has, you know, entrepreneurship is the greatest personal development you never signed up for.
00:06:12 Um, and cause you’re faced with reality every day around it and it’s the, you can’t fake it. You can’t hide it. Everything catches up with you. And so you’re forced to level up. It’s fun.
00:06:25 It’s fun, it’s fun. Let’s dive into who you are though. I think this is really important to set the tone because I just want to have, like I’m treating this conversation is like another conversation that you and I are having because I just think that if I go in and I try to do too much interview style, right? You just lose the authenticity of like the conversation. But I do think it’s very important to set the tone and set the context for who you are and what you’ve done and kind of your background. Because whenever you talk about money and you talk about, you know, wealth creation and laws and strategies, I think credibility, especially in today’s market, really does play a role. So I want you to boast on yourself. I know that’s not your style, right? But like I want you to, to kind of give us some context of what you’ve done and who you are so that people just understand that.
00:07:12 Yeah, absolutely. So it’s kind of like we’ll rewind the clock even before, um, my stint with the evil empire, Goldman Sachs, well, we’ll even back up before that. So I always just was fascinated with processes, with fascinated with, with a model of thinking through getting an outcome. And so when I, uh, when I went to college, I had it, it’s interesting cause I was like this, I hit the entrepreneur in me for a long time. I grew up on a family farm in eastern Washington, which is probably like the most entrepreneurial setting you could ever imagine. There is no rule book. If you don’t get up in the morning morning to go do your thing, you know, things die. So it’s like your feelings don’t matter. It’s just did you get your work done or not? Um, but then I left that to go to college and was told that I needed to get good grades. I needed a good degree, I needed to follow all the rules. And so, um, I was always a really good, you get students. So I jumped in, I did that and I thought, well if one degree is good, why don’t I get three instead? Actually four. And so I got, I got an Undergrad in accounting, got a master’s degree in accounting. Um, and then I went to summer school. Not to finish faster, but to get other degrees that I wanted to do when I was having, when I was getting my accounting degree. So I’ve got an economics degree and a statistics degree.
00:08:27 I want to continue with your story. I really do. But I have to stop you right there. Are you like, are you like super smart?
00:08:34 I did really well in college. Yes. I I liked, I enjoyed studying. I was the one that I read every word of the assigned textbook chapter. I highlighted everything. I would go back if I didn’t understand. Like I really wanted to ensure that I understood to a deep level what it is that I was studying. I, and I was fortunate to fall into something that I really, really liked. I liked accounting, I liked economics.
00:09:00 Um, so you’re a super nerd and super sincere. And how much has that played into your success by like just being a detail oriented? Is that the word?
00:09:16 And, and it’s interesting, it’s less detail oriented, but I have to understand the entire picture of what I’m dealing with.
00:09:24 And when you get into a conversation with me, you’ll, you’ll notice that. And I think we had this going on at our conversation before, which was anytime you’re asking me a question, I was backing up and trying to get a frame like, okay, what are we really talking about? What are we really trying to get our hands around here? And then we can break it down in my mind just always worked in frameworks. I always wanted to, to figure out what the cheat code is or what the framework or what the, what the process would be before I ever tried to take any action and not hurt. Sometimes. Sometimes it makes me move slow at times, but I think that’s what led into really diving in and having to understand it. And then once you have a framework, it actually allows you, you gotta think much faster.
00:10:08 I’m think much reliably and, and now I don’t have to have all the data anymore cause I’ve got the framework and if I could just plug the question into the framework, I get the right answer.
00:10:18 Yeah. And, and I, that’s something I noticed about you right away. I remember you, we were talking about the marketing aspect of what you do and how to market things. And one of the things that you said to me was like everybody in the financial space or maybe not, I don’t know if you use the word everyone. A lot of people in the financial space try to just present a quick solution that sounds good. And they don’t bring into context the whole picture. They don’t explain to you what really is going on because most of the time they don’t know it as well. And, um, I really appreciated that about you. And the other thing that, you know, you mentioned there about the frameworks. Uh, have you ever read the Book Principles by Ray Dalio?
00:11:00 I’ve got it on my desk. Our team, our executive team is reading it right now. It is such a good book.
00:11:05 I’m so happy to hear that. And he talks so much about that. For those of you guys that don’t know that book, it’s Ray. Dahlia is a financial, well, I mean, first enemy’s a billion billionaire manages billions and billions of dollars. Yeah. That book, I got it right here as well. Um, but he talks about that he, how he basically creates, he calls it, you know, algorithms you have to show computer algorithms around everything so that he can just plug in the data and he’s found that, you know, takes out the, it takes out human error. And he’s like, yeah, I still obviously use my gut and I still obviously use my brain, but he goes for a lot of things, I can get to 80 or 90% of the conclusion by just putting it in there.
00:11:42 So I really appreciate that about you and what you do when it comes to the financial sector because man, everybody has an advice on how people should spend their money. And it’s not even the person’s like, it’s like, ah, you have a million, you’ve got $100,000. Here’s how you should spend the money. That’s definitely not mine. Right. Uh,
00:11:58 I didn’t work for that. I didn’t sweat for that. I didn’t take risk for it.
00:12:01 Right. Right, right.
00:12:03 And if and if, if I had a chance to answer just what, like the, the one piece of advice I give anybody about money is that point right there. And this leads into how I approach money, how we work with clients, everything that we do. And I think it also exposes, um, everything that, like, the reason I’m still growing a business and doing all of this is no one will care more about your money than you.
00:12:28 No one ever. How did you, okay, so let’s go back, cause I don’t even know this part of this story. How’d you get to Goldman?
00:12:35 So back to being a super nerd for just a second. So I gotta I gotta make,
00:12:39 yeah, sorry. Let’s go back to that. Sorry,
00:12:41 I can’t, I, I’m like talking about how they given her, I am so, so I got those degrees in the, in the summer, right? Economics and statistics because there were things in accounting that I, I, I was just told, well that’s just the way it is because of statistics. And I was like, well, okay, I guess I better go study that cause you gotta figure it out. Right. Um, and then I wanted to know, well accounting is neat, but what does it plug into? So I needed to go up a level and study economics and say, okay, now I get the, I get the connection between accounting, which is very, very tactical in like the broader economy. Um, but then after graduation, did you know that all of Stanford and Harvards and Mike, all of their courses are online and you can just listen to them? All of them?
00:13:25 No. So I don’t have to buy them or just they’re just there.
00:13:28 They’re just there and they, at least they were 10 years ago when I was doing all this stuff for a little longer than that. But at the time anyway, you could, you could listen to it all the economics lectures from Stanford and Harvard, so that of podcasts and audio books or instead of, I don’t know if Netflix was around back then, maybe it was blockbuster or whatever. But I, I listened in my car driving to and from work, Stanford and Harvard Economics lectures cause I just, I didn’t get enough and I wanted to just keep going deeper and deeper and deeper.
00:13:59 So that’s how much, where’d you going to
00:14:02 Brigham Young University?
00:14:03 Sorry? Where?
00:14:04 Brigham Young University. NYU? Yeah.
00:14:08 In Boise.
00:14:09 Nope, in, in Provo, Utah probe, I’m sorry. Yeah, Provo, Utah.
00:14:13 I have two different, three different friends that have gone there. I feel like that’s interesting. That’s okay. All right, so your super nerd, you study, you study stuff that the normal human being would have no interest in whatsoever. Which by the way, I’m a super nerd, not for this stuff. I mean I’m fascinated by this stuff, but my super nerd is philosophy and psychology and quantum theory. But you know, same type of CP nearness. I get it. So, so how does that lead to Goldman Sachs?
00:14:41 So how will they to Goldman Sachs was in college. I was, I was heavily considered getting a phd because I liked studying so much. But I right at the end, right after getting accepted to a couple of programs, I signed not to do that. Um, and I, I took this huge leap of faith, which was made, it was, it was leading into 2006 into the end of 2007. Um, the economy was, was already starting to be in upheaval and I decided to graduate without a job to figure out what it is that I wanted to do instead of just go, like, I had a nice safe, secure path into the phd program. Um, I had done internships with some of the big accounting firms like Deloitte Touche. And I had offers from them and it just wasn’t, it wasn’t the right fit. So I graduated, um, much to the disdain of my program cause they love to boast their job placement rates. And I was like one of the two guys who didn’t have a job for sure, but it was meant to, to figure that out. And so the, to get with Goldman Sachs, it was just one of those hustle opportunities.
00:15:46 I looked up, um, who was around, I had interviewed with them, I interviewed with Bain capital, I interviewed with Blackrock, I interviewed with, um, I had just decided that the world investment banking’s where I needed to be. And so it was just one of those hustle and grind and connect and have interviews and, and talk to people and get referred over. Um, and then right in the beginning of 2008, um, I landed the job, flew to New York and was off to the races.
00:16:11 So Goldman Sachs like big money, right. That’s evil in most people’s eyes, right?
00:16:19 Yes. Now I did mention that I believe kind of Goldman Sachs is evil empire, but has nothing to do with how much money they have.
00:16:24 Well, right. It has nothing to do with how much money that they have, but they are big money. Absolutely. So, so there’s definitely a negative stigma, which was interesting for me because like the bigger, like the more I learn about money, the less I, the less I dislike someone like Goldman Sachs. The more I should say, the more I understand them and the more I dislike maybe how they act, but like I understand why they’re doing what they’re doing. I don’t like how they go about doing it. Maybe
00:16:52 the thing that frustrates me about it is less, it’s less than money thing. It’s, it’s, it’s how influence is wielded. Right? And they sit in this really unique place where they literally create markets to where they’re on both sides of transactions. Um, they’re, they’re regulated and sold to us in such a way that their fiduciaries and they have our best interests are in the consumer side. And like if you understand the connection between the Federal Reserve, Goldman Sachs and just the finance arm of the United States government in general, like it’s just a revolving door where they go to an investment bank, like Goldman Sachs and then their head of the Federal Reserve and then they come back.
00:17:28 So it’s all so interwoven and connected that there’s, it’s impossible for anybody to look at it very long and not understand that there are favors and handouts and, and back rubs and the backscratching and the whole thing. And so just because of the influence that can be wielded, that’s what I don’t, that’s, that’s what I had the most issue with, with seeing that from the inside.
00:17:47 And I want to touch on that a little bit more and a little bit more detail here because I think this is an important topic that a lot of people don’t get. And I want to know your opinion. What’s the, what’s the equivalent, what other banks are out there or investment banks are out there that are equivalent to Goldman?
00:18:01 I mean, Goldman is now kind of the top, top kids. Lehman a was one, but they went, they went down the large, uh, ivy. I mean blackrock is getting to be quite large as well. Yeah. And then every major bank, like bank of America and Wells Fargo, they all have an invested in chase, right. And Chase yet. So they’ve all got investment banking divisions within them.
00:18:25 Okay, so, so, so you talk about the relationship,
00:18:29 Goldman is that topped on with those relationships?
00:18:32 Goldman is the big dog, so, so with the relationship between Goldman and the financial arm and the Federal Reserve and all that, a lot of people hate on big money, big banks, big whatever. And, and I get it right? Like I understand why they hate on them, but I want to know because it seems to me that like, yeah, a lot of people hate on the investment banks, which I get, but also the reason that we’re able to have the economy and the world that we have today, I feel like plays a big role into how the banking is designed. Like the convenience, the access to the money, the, I look at Facebook and I look at Google and I look at Amazon, totally different sector. Let’s look at tech real quick. People can complain about Facebook all they want and they hate on Facebook. It’s, it’s a fun thing to do, but let’s be real. You take away Facebook or you take away Google, you take away Amazon or whatever, like the world changes, right? Like the convenience goes away. Is that how it is in the, in the investment sector? Like is it like, yeah, it sucks that it is the way that it is, but you have to understand if you want to keep the way we have things now, that’s how it has to be. Is that how it is
00:19:43 100%. So our are is what it is because we have deep financial markets, right? Yeah. And that’s why, that’s why so much innovation can happen here. So much can be produced and just so much can happen because of we, we have, we have a bond market, we have a stock market, we have capital in lending markets and regulations. So to hate on big banks, you’re right, is, is, is a pretty narrow view, right? Um, to say, well, I want, I want one hand without the other. What I don’t think is required though is the, the connection between like the amount of control that we give them, um, the amount of favors that are given, bailing out that kind of stuff like that. We don’t have to accept that part. Okay. So there is a part of it we can get rid of. Yeah. Like I don’t care how big your company gets as long as I get there on the back of a free market.
00:20:38 And, and, and, and that’s, that’s what capitalism and that. So that’s what makes everything great. We want people beat up on standard oil back in the day at the turn of the century with Rockefeller and rhinos and those types of people. But what people don’t realize is he dropped the price of, of heating oil by over 90%.
00:20:58 Yeah. And it’s, it’s easy to hate on people that make a lot of money. It just, I mean it is, and people want to do it because you know, privileged class and I don’t want to get into a debate on that, but I think it is an important uh, point to make that it’s oftentimes easy to hate on things when you don’t understand the full picture of them.
00:21:18 Yup. For sure.
00:21:20 Yeah. So how, so let’s talk a little bit more now about like the financial markets and how money moves and economics and things because like, I mean, the big questions, you know, and we’ll get into questions from people that left them on Facebook and Instagram, you know, later on. But I think the big question for everyone is like this American economy is doing really well, but you also know that there’s room for a correction and I kind of want to go down this rabbit hole of the stock market, the economy, things of that. Because I know that you’re going to have to bring context around it and I just know that this is the thing in there, I guess from a, from a a standpoint of, okay, you’ve got these huge, massive banks that just keep making more and more and more money. And as long as the economy keeps doing well, right, they’re going to keep making more and more and more money. How much longer can it last? I mean what the doubt just closed over what, 27,000 the other day. Miss Stupid. So like how, how much, how much do banks play into this and what happens when the economy corrects?
00:22:28 Yeah. So, and this is where I get to bring, I feel like this, this is what I wanted to study, wanting to get my hands around because I went into investing personal finance, making money. Because if you can’t understand the game that you’re playing, you’re going to lose. Like if you don’t understand the rules and lose. Right? Yeah. So the thing to understand is economic crashes have very, very little to do with, um, what the, what the underlying consumer is doing. It has mo, at least from my vantage point, um, the economic theory that I espouse is it has everything to do with money. We what has everything to do with money. The economic cycles in our country has everything to do with money. Okay. And under understanding fundamentally what money is today, not, not what it should be, but what it is and how it functions and how it plays into things like the stock market, the real estate market, uh, and the light. Okay. So the PR like what I’m looking at when, when somebody asks me what’s going to happen next to me economy, I’m going back to the model of, um, a correction. The challenge with that with the mark, I’m trying to like figure where to start into this. Like big, huge, scary opened up, right? Um, my vantage point on it is money is, is the measuring stick that you and I use to make decisions, right? It’s the thing that tells us, do I, do I save money? Do I spend money, do I invest, do I hire somebody? Do I run this ad money? It is just a measuring stick to say, uh, like I said to, to help us to take action. Right?
00:24:14 They kind of like a science value and it’s something that we can, or I shouldn’t say asides value, it assigns, it gives us the ability to, to know whether or not, yeah. To make a decision. It gives us is whether or not as I make a good decision
00:24:27 yet that’s how we’re keeping score. Right? Yeah. And so, but imagine if, if I’m going to go in and, and invest a bunch of capital and make a bunch of decisions and, and lay out future projects, but then somebody behind me comes in and changes the measuring stick.
00:24:44 Yeah, that’d be pretty bad.
00:24:46 That would totally completely shift and change what I was in the middle of. Right. And it’s very unrealistic to think cause a market correction, like a whole bunch of businesses make bad decisions all at the same time. Like does it really make logical sense that 40% of the businesses United States made a bad decision all at the same time? Like clearly that’s not really very probably, you know, very probable. So we have to say, well why would it be that the market would ever drop by 40% and we have to start looking at, at the driver of that, of, of what drives our decisions. And it’s, it’s literally, it is mine. And so what I’m very concerned about is the economic boom that we’re in the middle of really doesn’t have a lot of underlying economic reality to it. It’s, it’s not, it’s driven again by we can only print an, inflate a bubble for so long and then what goes up must come down.
00:25:43 So, so what do you mean, what do you mean by not a lot of economic reality behind it?
00:25:50 So would, I don’t think anybody would disagree that the, the production of like, what our economy actually does is getting better. Right? Jobs are going overseas, we’re losing production, we’re losing innovation, we’re losing talent. Like what, what, what is any different than 10 years ago to now that would say we’ve, we’re, we’ve created just this, this huge, massive increase in value in the world.
00:26:18 Well, and you would know better than I. Yeah. So I’m going to push back on you. You one could say, I mean, let’s go back 10 years, 10 maybe 15 years. I want to pull back that far. Like Facebook, Google, Instagram, uh, Amazon, like these were not things not like they were just forming. You know what I mean? We’re talking like test site cars, those types of things. Right? So, so one could say like, maybe jobs aren’t there and you know, you get Trump on the show and he’d argue that he’s bringing all the jobs back, but you know, reality. Um, so like, but like America I feel like has done a pretty darn good job of producing, maybe not jobs but certainly value have they not
00:27:06 for sure. And, and, and you’re right, I’m probably painting a broad brush to make a point. Yeah. Okay. We’ve got to understand what most people are not asking questions and I should’ve looked the state up. It would have been fun to look it up before we got on. But the questions people aren’t asking is, well, how much money is, is the, is being printed by the right, um, what’s going on with interest rates, right. And, and how is this measuring stick of the economy being pushed around and manipulated and adjusted? What I look at, I look a lot less at where is the Dow right now? Or where is the s and p 500 right now? And I look more at what’s going on policy wise and what levers have been pulled and how long can that be sustained to say what’s going to happen in the economy next? Why is printing money bad? Okay, good question. So let’s back up and understand a little bit about what money is, right? It’s, it’s R.
00:28:08 Oh, hold on. Real quick, before I go down this rabbit hole, I want to kind of, because I want to tie this back into the previous question, but I want to really go down this rabbit hole because I feel like this is a big thing that will help us tie in recapping what you’ve said so far. Basically what you’re saying is right now people like to look at the stock market as a general. I’m going to generalize here. They like to look at the stock market as an indicator for how the economy is doing. That’s a sexy thing to do and what you’re saying is, is that there are things happening behind the scenes, including the printing of money, which we were about to talk about a that are better indicators of what’s actually gonna happen because in reality, the stock market is highly manipulated by other factors that not grounded in reality, but based on what the governments who, once again, generalized terminology wants you to believe or think. Correct.
00:28:59 Okay. So let’s talk about money now. Money being printed.
00:29:03 Yeah, so I’m going to see if I can, if I can draw some analogies here off the top of my head. Sometimes it’s difficult to do, but yeah, so there’s money is is the price of of capital k? Well, interest rates are the price of capital. Okay.
00:29:17 And interest rates very simply put for those with people that are not familiar are what is the it,
00:29:24 it literally is the price of monies. So if I want to borrow money from you, so interest rates are, are baked into this principle, that money today is worth more than money tomorrow if I have. And that’s just simply time value of money. It has nothing to do with inflation or any of those things. Just think about an apple or think about anything. You would rather have it today. Then tomorrow. That’s actually a super good book. Okay. That’s all. That’s all that interest rates. The reason why interest rates exists is to value things that are in my hand today versus something that might happen in the future.
00:29:58 So what you’re basically saying is, is that an interest rate is essentially a prediction of what is going to be in the future and to correct it accordingly, or no,
00:30:06 less a prediction, but more a, it helps us put a value on capital today versus capital tomorrow or five years or 10 years from now. So if I’m going to forego, like if I have $10 and you want it from me instead by me for going it, when you give it back to me, I need the $10 plus be compensated for me not having it right now.
00:30:29 Right. And so basically the federal government, when they assign an interest rate or whoever part of the government decides the interest rate, right? They basically are saying, hey, look, if you borrow $1,000 today and you pay it back in one month, it’s going to be worth x and that percent or that interest rate is what assigns that value.
00:30:50 Yeah. As as the value of the time. Right. Compensated. And just stop for a second right there and think how. So if the interest rate is how much I value my time right before going use of capital. How silly is it that some dude in Washington d C is deciding what that number is?
00:31:06 Yeah, that’s pretty ridiculous.
00:31:08 It’s kind of ridiculous, right? But so this balance between, so if interest rates are really high, then I’m going to save money because there’s an incentive for me to have it later on and to invest and, and, and save that capital and get the interest. But if Internet is a really, really low, I have very little incentives, I just get rid of it. Right? The whole, I should just spend it or, or be doing things with it. So this is where, this is where interest rate theory is designed to try to manipulate the economy. And you can think of that as a bad thing or a good thing. It doesn’t really matter. But that’s interesting why the government would want to be changing interest rates just to try to tip this balance between investing in consumption.
00:31:49 Makes Sense.
00:31:50 And so, so that’s, and this to me is what leads to two over investment, right? If, if, if interest rates are really, really low and I need more capital in my life, I’m now incentivize to go find ways to take more and more risk to generate my returns.
00:32:09 Right? Because right now it’s super easy to get money, right.
00:32:12 Well, and sitting in a bank account, it’s not doing enough for me. Right. Whereas if interest rates were 10% why would I put my money in the stock market? I just put it in a bank and let it sit there. Right, right, right. And this is why interest rates have been progressively lowered and held very, very low, is to stimulate, oh man, I can’t get any yield in my bank account. I guess I now have to go where I got to go, put it somewhere that’s going to make me money. Yup. To the stock market. Right. Or two real estate or putting it out to work in the economy. Right. So, so that’s, that’s what I’m looking at and saying is the, is the uptick in the stock market have to do with actual value creation or is it because I can’t get any money anywhere else, any return anywhere else and I’m just flooding fake money or this into the economy because the cops are just supplying demand.
00:33:04 Yep. Yeah.
00:33:04 That’s all it is. Right. And if there’s more money or more incentive to push in there, then then stock prices are gonna go up.
00:33:12 Everybody’s got all this money. Interest rates are super low. So it’s like, Yo, I’ve got to get out. Like I’ve got to put it somewhere because I want it to make money. It’s not going to make 0.01% my bank accounts not doing me squat. So let me go put it into the stock market because that’s at least going to make me some money. And that’s where most people think of as investing. So they pick their favorite company, they’d dump in some money and they have higher financial advisor or whatever. But yet when everybody does this, it all goes way up.
00:33:37 Yeah. So that’s what I say. Is this the reality of added value to the world or is it the result? It’s this course companies are doing great things, but right. Does it match or are there other things moving? Right. And, and this is, it’s interesting to follow bubbles, right? If you look at like 1996 to 1999 talk tech stocks were exciting and fun and everybody’s money was there, then it crashed in 2001 and then that money left. And where did it go? I went to real estate. Right? And then it repeated the same mistake in real estate from 2002 to 2006 real estate was where everybody wanted their money to be. And then 2008 happened. Right
00:34:16 now it’s all back in tech, right?
00:34:18 A lot of it’s back in tech. Right? But a lot of it’s back in me. It’s interesting, the big bubble that’s blowing up right now, and we won’t go down this whole rabbit hole, but where, where a lot of the money right now is in, um, there’s a huge bubble in bonds right now. Safe money is a cause. Think about, think about the demographics of where the real money is, right? Most of the retirement money, uh, most of of the savings is in the hands of baby boomers that are going into retirement. Yeah. And risky things. They want to be in safe and secure things
00:34:48 and bonds are have the perception of being that.
00:34:51 Yup. And then because interest rates have been coming down, that pushes up the value of bonds and that’s all economic stuff. But there’s so, so to really actually understand what’s going on in the economy, we’ve got to study economics, not try to be a day trader and look at, look at stock prices.
00:35:06 So let’s go back to why printing money’s bad.
00:35:09 Okay. So printing money is bad because it changes the measuring stick. But that’s as simple as I can say it because,
00:35:19 but it’s being printed.
00:35:22 Well it since 1971 it has been, right. So like doesn’t that mean the measuring stick is constantly changed? Cause that’s like 1971 was still at 40 some years ago. Right. Like 48 years ago. That’s a long freaking time to be printing money. Yep. And that’s, and that’s the argument of, well it hasn’t broken yet, so we’ll just keep doing it.
00:35:43 That’s a great argument. Right.
00:35:46 But it’s bad because it makes it very difficult to make decisions. Yeah. It’s really where it comes down to. Now there’s other bad things because no matter how genuine a person you are, if you have a printing press, you’re going to give it to your friends and family. Right? Or you’re going to give it to people. So it’s not going to be, it can never be a fair distribution of where that money actually goes. Because we’re human beings. No matter how good we are, it has to go to somebody. Right. So there’s all kinds of that stuff going on. But even basic beyond that, it just stores the signals for businesses to be able to consistently, reliably grow and expand.
00:36:21 So I don’t, if you have more to touch on on that, I want to give you an opportunity.
00:36:27 We’re getting now, we’re getting so deep into economic status probably.
00:36:30 Okay. Okay. So I want to, I want to move to the next point then for sure, which, which is where people are really going to start getting interested in this. And this is a question I just straight up asked you at in Boise, which by the way, quick rabbit hole we met in Boise at Ruth Chris Steakhouse. You know we were there for like what three hours? I feel like they’re like kick us out like all the other tables they had the tours. Yeah, one or two was us and one other table. It was like a couple and then there’s like 12 of us all gather and that was hilarious. A great food by the way. Anyway, so I asked you this there, it seems based on like just based on what you said now this is before we didn’t even have this conversation, but it seems like even before this, because I want to think that I’m like at least relatively informed at a basic level of money, right?
00:37:17 Like I’m by no means an expert, but I know how to use logical thinking. To me, the stock market just seems like a stupid idea to place money in. And then you tell me this and you go, hey, if the government goes and says, hey, interest rates are suddenly super high, that could jack everything. And like overnight the economy or the stock market could drop 40% and I lose 40% of my money. So like is this, is the stock market ever a good idea to invest in or is it like just dumb?
00:37:47 I, I don’t see its purpose as it’s been stated and held up and taught to, you know, I, you don’t need this stock market for your savings or for your investment.
00:37:58 Do you have money in the stock market?
00:38:00 $0 million do I have in stock market?
00:38:02 All right, I want you to repeat that one more time. How much money is
00:38:06 $0 million
00:38:07 $0 million stop market? I know the next logical question that people are going to ask you is where is your money? I don’t want to go into that yet, but for those of you that are listening, we will get there. Cause I have the same question. Um, but okay, stock market, talk to me about it. Why is it dumb?
00:38:22 So, so because the stock market is not where wealth is created. So quick story. So in the law, Aye in my neighborhood, a couple couple houses up is a great guy. I use kind of a traditional money manager actually very, very successful in the money management space. And He, when I moved into the neighborhood, um, I don’t, I don’t just go around telling everybody what I do. I’m kind of reserved and shy. I work out of my home and it’s just kind of,
00:38:49 I can’t imagine that Brad, you don’t want to flaunt the fact that you money manager, how dare you.
00:38:56 And, and so, but he, he kept coming up and we haven’t conversations and he was dropping him basically saying I should manage your money. And when I didn’t buy it on any of those, um, he started dropping, you know, all the acronyms after his name, which I’m led to believe is how smart he is. And then what I did on any of those, he then would start dropping names of all the people that he’s money managing money for and what I didn’t bite on any of those comments. He finally cornered me and said, look man, we got to talk like I really should be managing your money. It sounds like you’re doing well. You’re a business owner like the year. Hi, I’m sorry. As I said, okay, look, if you can answer this one question for me, then I will give you all of my money to manage. Here’s the question. Don’t tell me what your clients are doing with their money now. If you can tell me what your clients did to create the money in the first place and then show me how to do that, I will give you all of my mind. How do you think, how do you think is responsible?
00:39:49 Uh, I’m guessing he didn’t know if you
00:39:52 looked at his shoes and walked away. He had no response for it so that it’s, it’s not logical. What we’re told is there’s rich people and they have their money in the stock market. Therefore, I should have my money in the stock market. It’s a huge gap in logic. We need to ask what did the rich people do to create their money in the first place before they wanted to then store it and grow it in the stock market. I am not about managing money. I’m not about about mirroring what other people are doing. I am trying to help people literally create the wealth in the first place. Those are the only vehicles that I care about.
00:40:25 So I, I think my next question is a perfect segue into either the economy or like how the stock market works or why it’s a bad idea. And the only reason I say that is because I’ve asked you this question specifically and it’s such a good question. I want to hear it again. Okay. So what about Warren Buffett and what about all the rich people that manage things in the stock market, the Charlie mungers and the, you know, all the people that have billions of dollars literally in the stock market and control huge stakes. You’re saying that, hey, you’re smarter than them.
00:41:01 I’m saying that we’re not asking the right questions.
00:41:04 All right, so what questions should we be asking?
00:41:07 I would ask, I would ask. And so let’s, let’s look at Warren Buffet. Where does Warren Buffett’s net worth come from?
00:41:15 Are you asking me? I actually, I actually don’t know. I mean,
00:41:19 you said it was in the stock market.
00:41:21 I would, I would imagine I would, I would imagine that, uh, his wealth comes from his businesses that he owns. But I also know that he manages a crap ton in the stock market, and that’s where he puts his money after the fact. Well, that’s what my assumption was before I talked to you.
00:41:36 Aha. See, that’s what we’re talking about. So Warren Buffett’s wealth is in the business that he owns and in the valuation of that business, okay? Warren buffet is not investing his own money into the stock market. Okay. He created his wealth by creating a company that then did things. Okay. And it doesn’t matter what those things are. Every wealthy person didn’t start with a w two job, saving 7% of their income into their 401k and investing in other people’s companies. And then when Warren Buffet does invest, so even if we could look at Warren Buffett’s personal portfolio and try to match it, we would not get the same outcomes. Or even if we looked at at Berkshire Hathaway and said they invest into public companies. So I’m gonna Mirror every move that, and there is actually a eight doc. It’s a documented fact that when, when Berkshire Hathaway makes an investment in a company, the company valuation goes up like statistically significant and it’s called the Berkshire Hathaway effect. Um, but so even if I was going to do that, your, the, the news flash is, is you’re not going to get the same result that Berkshire Hathaway got.
00:42:51 So it’s because the, it’s not what Warren Buffet did. It’s how he did it.
00:42:59 So you’re saying, if I understand you correctly, you’re saying that Warren Buffet for the most part, I mean, one could argue, you know, at the beginning, oh, when he was 12 and bought his first doc. Yes. Obviously he was using his money. But you’re saying that a large majority of the money that he is invested in the stock market is not his money.
00:43:18 It is not his money. Right.
00:43:19 He just, he just goes in and is like, Hey, all you suckers that want to think that it’s smart to put it, you know, your money in the stock market, you should all give me all your money and he braises a hundred million dollar fund or whatever it is and then takes that he invested into it because he’s in theory smarter than you are. And then he gives you a percentage of the return. But he doesn’t tell you that he’s also making bank cause he’s not giving you the full return.
00:43:47 It’s, it’s not bad of him to not. Right. Right.
00:43:50 And I understand that, but I’m just saying it
00:43:52 exactly. He’s not following the same rules that you’re following when you buy, when you buy shares of Coca Cola, you can’t go into the shareholder meeting and then like make this decisions for the company. Right. But when can, when Warren Buffet does, they buy controlling interest in companies. Right. And they go raise money from, they go raise money from the public, they raise money in the bond markets, they raise money externally and then they go make these moves. So again, it’s not, and then, and then they keep all of the profit that they amass on it. So they’re investing in a fundamentally different way than you and I are because
00:44:27 so you’re, so you’re saying, because the way you explained it here and how we were talking in Boise in here, and I want to make sure the listeners are understanding this because this is something that fascinated me too. You’re saying that for the average person, more or less, excuse the terminology if it’s not correct, but like we’re suckers, if you’re investing in the stock market right now, because basically what you’re doing, if you are the average person, let’s say I have $100,000 that I want to invest into something and I go, I’m going to go invest $100,000 in the stock market. I have no control over what that company does. I have no voting rights. I have very little information. I really don’t control what happens in that stark market market or whatever. There’s way better investments that I could be making with my money, but because it’s the sexy thing that we think rich people do, I’m going to put my money in that stock market. Warren Buffet, on the other hand, looks at the stock market and goes, Huh, I have $100,000 that I can invest into the stock market.
00:45:24 But you know what? I could also do? I could go find a thousand other people that have $100,000 to invest in the stock market, take their $10 million collectively or $100 million collectively or whatever, and all of a sudden now, since they’re giving me all their money and I’ve got this hundred million dollars, I can buy voting rights essentially to these or managing percentage to these companies now go in, do exactly what I want with it. Make 30 or 40% returns or whatever that number is a higher percentage of returns and say, Hey, I’m going to give you your 8% your 10% which you’re happy with. Nothing wrong with that. And I’m going to keep the 20 in the 30% or the remaining balance or whatever that is for myself as a managing fee. And for the one that’s actually taking the risk and doing all the work. So because of that I have all the power, very little risk and if it blows up and goes negative, whatever, it’s not my money that I lost. It’s everybody else’s money that I lost. I just control it.
00:46:18 So let, let’s break. Yes dude. Very eloquent. Clap. Where’s your little clap button? Oh yeah, my little hot button. Yeah. So here let’s break down a couple of concepts there.
00:46:29 Okay. That is, that is essentially correct.
00:46:32 Correct. That’s the way, that’s the way I view the world. 100%. So let’s, let’s break down a couple of concepts cause there was a lot in there. Let’s first break down concept. You keep using the word investing. Uh Huh. And, and the the line, I don’t know if this dates me, but um, I grew up watching the movie, the princess bride and when he keeps saying love that, but he keeps saying, I you keep using that word. I don’t think it means what you think it means. Like investing is a word we all use, but we don’t really understand what it means when we’re, what everyone else says. Investing is as I buy something here down here and I sell it later for up here, right? And the thing I’m buying will go up in value. This is why we’re trying to find the next apple or the next Microsoft or the next right so that it will go up in value and they, and that mindset is not even, I’m only focused on stocks. People buy real estate the same way. They want to find the next emerging place that’s going to appreciate and go up. If once I buy something, how much control do I have over what it’s worth in the future?
00:47:32 Well, if it’s a stock mar of his dock, then nothing. Nothing. I don’t even have control over what a piece of real estate is worth, right? Because valuation is just someone else’s opinion of what another person at some point is going to come along and pay for it. Pay, you don’t know what it’s worth until somebody actually gives you cash in exchange for it. Right? So if, if the only way you may money and the thing that you quote unquote call an investment is that it goes up in value. You’re not actually investing. You are speculating 100% because it’s you’re saying, you’re saying that investing in the terminology that we use it in the stock market.
00:48:14 So if you put money into the stock market, you’re not, you’re not investing, you are speculating,
00:48:20 you are speculating, you’re making educated guesses about what might happen in the future with no influence or control over that outcome.
00:48:28 So, so investing strictly put means that you have some control over.
00:48:36 Yup. So investing is comprised of four components in every investment. There are four ways to make money and this is where you pull out your pen and start writing things down. Because the first 30 minutes do just got us warmed up. Now where I can write four ways that we make money, one of them is appreciation and I love appreciation. It’s wonderful, but it’s icing on the cake behind appreciation. There are three other ways, and this is what I would tell you, that the wealthy, this is what the wealthy know. They carve out the three that are the most valuable that they want to keep, and they hand you the icing on the cake. The appreciation, okay? So if you really want to know why Warren Buffett is different as he understands these other three components, the other ways I can make money is I can create cashflow. Okay? So an investment not only could go up or down in value, but whatever is happening on it’s value. It every month puts every month or day or week or year puts money into my pocket.
00:49:34 So just just to once again, analogy or example, just for those people that are following along cause audio, this would be like, Hey, I buy a house and I rented out and I rented for $1,000 a month. Every month. My cost is $500 a month every month and it pays me $500 a month. Now I have a cash flow of $1,000 with a profit of 500
00:49:55 and that $500 doesn’t impact the valuation of the hops. Right?
00:50:01 And whether the house goes up or down, if I buy it for $100,000 and it drops to a $60,000 value, I still make my 500 bucks. If it goes up to $200,000 value, I still make my 500 bucks.
00:50:10 Those two returns are are non-correlated. They’re not directly related to each other. Right? I dividend paying stock could be the same thing. If I buy a share of apple and it pays a dividend every quarter, I can receive the dividend no matter what the share price is, what’s going on with the share price. Okay. If it’s a per share dividend, right? Right, right. It’s 25 cents per share than however many shares I have multiplied by 25 I get that amount of money independent of whatever the market value of the shares. Yup. Right? So now I’m making money two different ways. Okay. The third way I can make money is I can not pay taxes. Right? Because if, if, if an investment, if two different investments put a dollar in my pocket and I have to pay tax on one of them and not on the other one, they’re not the same return. Right. Okay.
00:50:57 So would you consider that making money or just keeping money?
00:51:01 Well, it’s all tied together. Okay.
00:51:03 Okay. Okay.
00:51:05 I had all together, it’s on the investment side. It’s all tied together. So, okay. So how I am taxed matters. Right. And then the last way that I can make money is I can make money strictly on what I, what we call leverage. Okay. And this can be financial leverage, but it can also be human leverage. It can be technology leverage, it can be time leverage.
00:51:25 So this would be like the Berkshire Hathaway effect.
00:51:27 This would be a Berkshire Hathaway effect or, yeah, so this would be Warren Buffett borrowing from the bond market at 3% and making an investment at 6% his return is technically infinite because he has no money into it and he keeps 3% of the 10 million in bonds you raised and he gives 3% back to the other people. He literally creates it utilizing the leverage and in a piece of real estate, it’s pretty amazing. Um, this is why I love real estate so much by can buy $100,000 house, right? If I paid cash for it. I want to illustrate this because most people can’t comprehend ever been exposed to leverage.
00:52:03 Yeah, Yep, Yep. Okay.
00:52:04 It’s never been exposed to it. This is the impact of financial leverage and this is why this is really a part of how to get wealthy investing lies inside of leverage and simple. That’s the, it is the most, excuse me. That is the most powerful pillar to making money.
00:52:24 Okay. I want you repeat that guys. There’s four pillars of wealth. Are there four fourth ways to make money? One is appreciation, two is cashflow, three is not paying taxes, and four is leverage and the most important and number one key to making money or generating and creating wealth is leverage, right?
00:52:44 So let me tighten the screws on that a little bit. The most important pillar is cashflow. Most important is cashflow. The most powerful is leverage. Cash flow is our permission slip, okay? It’s the one that gives us the most security, but then leverage is the most powerful, but leverage by itself can’t make us our return. Leverage just impacts the other ones. It amplifies and unfortunately it can amplify them the wrong direction. Just ask most people that were investing in real estate 2008 right? So it can, it can impact it the wrong direction. All it does is amplify. That’s why we need cash flow to make sure it amplifies it and it positive direction. Okay, but here’s how leverage works. I can buy $100 piece of real estate and let’s say it just goes up with inflation, so nothing really happens just because of inflation. Our price of it goes up from a hundred thousand to 103,000 right? If I paid $100,000 cash for the property, I just made $3,000 or a 3% return. Yeah, 3000 divided by 100,000 right?
00:53:46 It’s appreciation.
00:53:47 Okay, that’s appreciation, right? And it’s a 3% return. But if I want to buy $100,000 property, do I need $100,000 in my bank account?
00:53:56 No. No.
00:53:57 I can go make a down payment and then go borrow the other money from a bank. Right?
00:54:02 Put 20,000 down.
00:54:03 So I put $1,000 down on $100,000 property, and when it goes to 103,000 how much of the $3,000 increase do I get to keep all of it? All of it. So now my return is 3000 on a $20,000 investment. What’s that? What’s that rate of return?
00:54:24 [inaudible] the be what types of times? Five 15% 12 that’s a three.
00:54:28 Yeah, three divided by 20 is a 15% return. 15% so leverage just leveraged my return from 3% to 15% and the leverage for those, you know,
00:54:40 once again on a very simplistic level, the leverage is using someone else’s, in this case, the banks money. Money.
00:54:49 Yep. So financial leverage is, is OPM. Other people’s money is somebody else’s capital. Yeah. But could one argue, and this is where you know, you know,
00:54:57 because I know I growing up in a very non understanding of money environment could not argue to say, well yeah, great, you took 80,000 but you still borrowed $80,000 and you’ve got the interest on an $80,000 loan, right? So you’re paying interest. So Yeah, you put $20,000 down, you made 15% of that 20,000 but guess what? You’re going to pay over $3,000 in interest while paying it back. So you didn’t really make 3000
00:55:24 okay? So this is where, again, starting to understand what money is [inaudible] becomes important. Money. Interest rates are just the price of money. So if I can, if I can earn 15% what do I pay on a mortgage? 5% how am I doing? But, but you’re not wanting to earn 15 and pay five bucks,
00:55:45 but you’re paying 5% on 80 grand on a, on a bigger number. Right? Right.
00:55:51 this is why we’ve got to understand all four pillars and bring in the cashflow perspective. Okay. The way I look at real estate is if I can borrow the money but I don’t have to pay the interest, then I’m in a pretty good spot. This is why cash flow is the most important pillar. Yeah. If you don’t have to pay the interest in freaking pays the interest. Who pays my interest on the mortgage?
00:56:12 In this particular case, on an investment rental price, you’re talking about a rental property. The person who rental Dynatrace, your saying is the tenant.
00:56:23 Yup. So I can buy a property that after somebody services my mortgage for me, they still put cashflow in my pocket and I get the leverage of the appreciation pillar. And because of the way real estate is taxed, I don’t have to pay tax on any of it. Now I’ve, I’m stacking my returns.
00:56:39 You don’t, you don’t pay tax on the tenant money.
00:56:43 So now, now we’re starting to chase rabbits. Okay. Cause I think the conversation we were trying to answer was this. How does Warren Buffett make money in the sky? Yes. Sorry, sorry. Finish that. Cause we’ll go there. But so with, so what I’m saying is is we’ve got to understand to invest we have to make money at least two ways. At a bare minimum, bare minimum more ways we can make money. The better off we are. Because what if appreciation doesn’t work out well? That’s cool cause I slept cashflow, tax benefits and leverage. What if my cashflow, it has worked out exactly as I want. Who I still have the other three pillars. Okay. So if we want to really understand investing, we have to start with the term investing itself and get out of the world of speculation and get into the world of actually investing.
00:57:28 And I just want to clarify just one quick point. Just a simple yes or no answer your, you’re saying that real estate because of tax benefits like has specific tax benefits for owning real estate. That is why real estate is a good investment in this case, for that purpose,
00:57:42 that that adds to the case that as the kid is going to invest Maddie, okay, okay. Specifically for that. But even stocks are taxed in an in a very particular way that can make them beneficial as well. Okay. But we want to look and understand and make our decisions in such a way that aligns with that. So I can’t tax code, I can only align myself with it or not.
00:58:02 Right. So Warren Buffet,
00:58:04 he invests, he makes money for different ways and his big lever that he pulled with Berkshire Hathaway was leverage. Okay. Not Appreciation. You can’t look at his track record. You can say with, it had nothing to do with appreciation. It had everything to do with the fact that he was running a business, that he had cashflow, leverage and tax benefits. That’s the difference. So I would want everyone to upgrade their thinking and and understand that when they’re buying a stock they’re speculating and they need to start studying and learning the principles of true investing.
00:58:37 Because because you have number one, you have no control of any of those four pillars when you buy a stock. Right?
00:58:44 Yeah. You only get one
00:58:45 you get which is which is appreciation tax benefits. Okay. So you get appreciation, which once again is the riskiest essentially of the mall because you don’t control it.
00:58:57 Yup. So I want to unpack more of this conversation about Warren Buffett. So first off you Warren Buffet is investing in the stock market that you are not your speculating it number one point number two be it because?
00:59:10 Because he’s investing as much as he is
00:59:12 cause no cause he’s using the four pillars. Okay. Cause he’s using, he’s he’s making money more than just on the appreciation of the thing that he’s buying. Okay. Okay. And he’s utilizing letter. Second piece of this conversation is when you buy common stock, you are in the riskiest position. You are last in line to get paid all the way down here at the end. Just think about a company. If a company brings in a dollar, who gets the first, like if a company brings in $10,000 who gets the very first dollar that comes in
00:59:44 the investor? Oh No. The employees. The employees.
00:59:47 They’re employees. Right? If they don’t pay their employees, they’re in trouble. Right? Who? After that, there are vendors, right? They bought supplies from their, their landlord. If they’re renting, they’re building, whatever that might be. Right? They’re vendors. I can put my vendors off a little bit. I can, I can have payables 30 days, 45 days, 90 days. Right. My employees got to get paid every two weeks. They have to get sometimes every week. Right. Then I got vendors after that. Then who gets paid?
01:00:12 I don’t know where you’re coming from with the whole thing. I’ll just keep the, I’m guessing
01:00:17 Sam gets paid. That was going, I was going to say I’d have to be the government. Right. I got, I got to pay my taxes right. Then again, in these larger core [inaudible], the next person that gets paid is, are the lenders. Yeah. Yeah. The big shirt borrowed money from a bank. If I have a mortgage, I have to pay them. Right, but I’m going to pay my employees first. I’m going to pay my vendors second, I’m going to pimp. Well, Sam and then if I still have money, I’m going to pay my lenders. Then who gets paid? Well, I’m then there’s a whole class of preferred shareholders. They get paid that have guaranteed payments that get made as long as there’s money left after all those people in front of them. Now, if there’s any money left over at that point, now who gets paid?
01:00:56 The stock holder? The common shareholders.
01:00:58 Yeah. All the way at the end of the line, they’ve put you at the end of the line promising you appreciation, which they cannot guarantee you. They cannot make any any delivery on and they’re, they’re insuring all of their cash flow and all of that. The real money that the company is making is going to someone else first. Even a company that pays a dividend, it’s only with money left over, you’re last in line and tube
01:01:22 and like, wow. They have taken it to extremes of screwing people over at times. I think it’s important to make the point that also the reason that you’re last in line is because you’ve also contributed the least. You know what I mean?
01:01:38 For sure.
01:01:38 Like, like there’s, you don’t have any education that went involved. You have very little risk and you’re contributing most of the time, a fraction of a fraction of a fraction of a percentage of what’s actually running their company. So 100% it’s not on, it’s there. It’s not an unfair system. People take advantage of it and screw people over. But in theory it works well and
01:01:58 it’s not even screwing people over. You’re right, you added the least. You’re last in line, right? But we’re, we are believing that the stock market is the secure investment, the right understand and, and it’s, it’s what everybody should be doing. Well, most people have no business in investing in the stock market because they don’t really know what’s going on. And then they’re last in line and they’re taking their money. They’re taking that they’ve worked, they’ve worked blood, sweat and tears and saved and they’re relying on this money and they’re giving it to the stock market and then standing last in line hoping that there’s still something left at the end of the day.
01:02:33 Hmm. Okay. So going back to the Warren Buffet thing, have we finished that? How were you finished your thoughts there on that?
01:02:42 I think those were the main, I mean we covered, we’ve been covered investing versus speculating core four, the four pillars, k and then, and then the last thing I’d wrap it up with is people say, well, how do I, how do I make a decision with investing? Um, and it’s, so we, we talk about the two lenses that I look at investing through four pillars as one of them. The other one is the one I call core fourK and this we learned from Warren Buffet as well. Warren Buffett’s number one rule of investing. Well before I say that, if you go to a traditional financial advisor who is going to show you how to be a really good speculator and stand last in line in the marketplace, he’s going to tell you if you want more return, you have to be willing to take more risks. Risk. Right? Okay, so let’s compare that advice since we’re using Warren Buffett as an example. Warren Buffet’s first rule, we’ll have money and this is publicized everywhere. I’m not making any of this up. He says his first rule of money is don’t lose money. Yeah, 100% it’s everywhere. And his second rule of investing is never forget rule number one.
01:03:48 Yet we are told to make more money to do what again, take more risk. Did those seem like opposite ideas? Yeah. All right, so now we’re starting to shed more light on this idea that Warren Buffett is something different than we are
01:04:02 and I want to, I want to just draw this distinction once again, we’re talking specifically guys in the context of investing, right? Like when you’re doing, when you’re talking about business grow the business development and things of that nature, obviously you’ve got to take risks, right? I mean that’s true. Um, but in specifically the context of investing,
01:04:19 I want to come back to that cause I disagree. Okay. Back to it. But let’s finish this conversation. So yeah, buffet says his first rule of money is not to lose money and then he never forgets the world, number one. Well, what does he do? Okay, so we, we teach this as what we call the core four, but this is the other lens that is we’re analyzing whether we should or shouldn’t do something. It has nothing to do with the potential return. It has to do with the underlying what’s going on inside the investment. So, um, my first off, whatever I do has to be worth my attention. Okay? So I have to make a high return. I want a higher return just like everybody else does. Okay? So I want to increase my return, but rather than taking more risks, I follow Warren Buffett’s advice and I need to look and understand how much control I have. So I want to increase my returns through increasing my control. I want to decrease the amount of risk I have to take. And then taxes, since it’s the number one destroyer of wealth, I want to be minimizing my tax.
01:05:16 So as I look at an investment, I want to understand what’s my return, how much control do I have, how much risk do I have to take, and what do I have to pay in taxes. That formula will help us avoid the problem of what we call becoming an excel millionaire. That there are so many investments. You look out there that with this beautiful straight line production from the lower left hand corner to the upper right hand corner, after so much time, I’m going to be a millionaire, right? But if I can’t describe the amount of control I have and the amount of risk I have to take and what I have to pay in taxes, that return is fantasy land. Okay? Yeah. And core four and four pillars. Right? The how I decreased my control or sorry, increase my control and decrease my risk is through ensuring that I’m making money more than one way. The more pillars I have, the more control I have, the more pillars I have, the less risk I’m taking.
01:06:09 Yeah, that’s a great point. Huh. Interesting. Ah, financial education. So important.
01:06:15 Okay. So that is how we can tell what we should be doing, not how many initials our financial advisor has after his name. Now what college he went to, not who’s bony, he’s managing but can’t. Did we win? And this is, this comes back to the very first thing we said at the beginning, Josh was no one cares about your money more than you do. Yep. Yep. Yep. So you have to get yourself educated enough to be able to, I don’t have to know how to do any of that. Right. When I get, I had to do a lot of real estate. But if I get into in a room of like people who are day to day doing real estate, my ignorance has exposed.
01:06:47 I don’t, I don’t know the specifics of real estate, but I know how to put it through the core form four pillars to get outcome. Yup. So that Breaks Down the Warren Buffet Myth to me of, Oh, I should just do what Warren Buffett’s doing or what Ray Dalio does or what any of those people do. They already have their money or how they created it was core four, four pillars. Yeah.
01:07:07 And it was just so interesting to me that people don’t realize that there’s so many different vehicles to make money. Um, and that like, you know, there’s, you look at someone like Warren Buffet and you’re like, man, I’m going to follow Warren Buffett’s advice. Okay. Well, warm, rough. It was also lived pretty poor for a while. You know what I mean? Like, like it stuff was like [inaudible] and then let you know straight line up that towards the end. And so the compound interest effect, which I’m not going to go into, but that, you know, that that effect of like understanding yeah, he put himself in the position, but not everybody can do that. Everybody could go take that route or anyone could go take that route. I should say if you’re willing to, but most people are not willing to and therefore they will never have the opportunities that they have. So now the question now becomes, and I promised everybody we would get to this. Okay Brad, since you’re so Mr Smart Guy over there, got Warren buffet all figured out, where do I put my money and where like, okay, real estate sounds like a great option. Real estate is the answer to everything, right? Exactly. So where do I go? Right? Where do I go with my money though to create true wealth? Because I mean, okay, I will say this and I would, I’m going to go on a limb here, but I’m going to say it’s probably not too far of a limb to say. Most people would probably be under this assumption as well. Real estate sounds all fine and dandy. Great. However, you also hear the horror stories of 2008 when everybody owns real estate. Yup. Market goes under and you’ve got even grant Cardo and talking about the most stressful times of his life, 2008, 2009, when banks called them up and they’re like, Yo, you owe us $50 million and you owe us it now. Right? And he’s like, I don’t have it. Right. Um, so, so where do you put your money? Where do you recommend putting your money? Where are we?
01:08:53 Okay. So couple of things I want to hit on, uh, before I answer that. Um, first off, um, and this isn’t a legal disclaimer, this is back to nobody cares about your money more than you do. And if you’re listening to a radio or a podcast like this, and then you go take action on it, like, understand this prescription without diagnosis is malpractice. Okay? So I’m gonna, I’m gonna make a prescription here, but I don’t know you and I don’t know where you, what you have and what you have in place and what your next step should be. Okay. I’m going to give you the principles to follow and now some some application behind it, but there’s gotta be some prescription involved. First of what should your first step. Is that fair?
01:09:36 Okay. All right.
01:09:38 Um, so basically what you’re saying is I shouldn’t just like listen to you on the podcast and go, well, Brad said so.
01:09:44 So I’m, I’m going to go do that and then we’ve got to continue. I’m going to continue to harp on this. The vehicle is irrelevant. It’s the how that matters. How are we going? So real estate’s amazing, but how do we do real estate? Yeah, that’s what I want to talk about. So for me, there’s only three places that I put my money because again, Josh, I’m not interested in managing the money for multimillionaires. They already made their money. I’m in the game of helping people go from wherever they’re at to becoming financially free after financial freedom. The rules of the game change. If you’ve ever played Robert Kiyosaki’s game cashflow, you understand that when you get out of the rat race, the, he literally changes the rules of the board game. And that’s to represent the reality that when you are financially free, the rules of the game are completely different.
01:10:34 Sounds. It sounds so messed up, but it’s not like when you understand how it is and I’ve done more studying, you know this, it’s not unfair. It’s literally how it works.
01:10:46 It’s your, your literally playing a different game, literally a different game. Any different worlds. So what I’m sharing with you are the rules of that you should follow until you are financially free. Okay? I particularly like these rules. So even though I’m financially free, which I’m not going to say that to brag, but I’m going to say that again. I am personally financially free. That’s it.
01:11:07 You should hope so. That’s it.
01:11:10 Why should you hope so, Josh?
01:11:12 Because of that, you know now. So stop though and ask yourself a question. The person giving you money advice, you better ask them, how are you doing financially well and this is okay. And let’s talk about this real quick. Let’s have a, uh, take a pause here about the, the, the deep conversation of, of what we’ve been talking about. Cause it’s a med. Amazing. But this is the biggest problem that I had even when I was like 14, 15, 16 years old. And then when I first got out, I remember one of my first jobs that I got, I, uh, you know, was told you should go to the bank and you should talk to them about managing your money, Yada, Yada, Yada, whatever. I mean, I was making like 12, $14 an hour, right? Yeah. And I sat down with this advisor person and I went and I talked to them and they told me all this stuff and they’re like, this is what’s going to happen. You’re going to do this and you’re going to do this and know this. And I’m just like sitting there thinking I’m like your sitting in a cubicle you don’t like, I can just tell by the excitement of what you’re doing right now, you’re not thrilled with what you’re talking about, right?
01:12:07 Like this is not clearly what you’re passionate about. You don’t, you’re not financially free. You’re making $35,000 or whatever it is as this financial advisor person doesn’t make you a bad person. But why on earth would I listen to you? And what blows my mind is is that we think and, and I think maybe this perspective of a business owner and like how much systems play into it has shifted my mindset. So I understand is even better, but like to think that just because somebody works at Wells Fargo makes them a good financial advisor. You do understand that they could quit tomorrow and they’d have to fill that position. You know, and it just, it boggles my mind because they’re just following a script more or less.
01:12:47 And it’s, what’s even crazier about it is the training that your financial advisors from Wells Fargo get is not financial or investment training. It’s sales training to follow the script that you’re talking about. They are salesman. Not that that makes them bad or good, every right gold in this world, but understand they have no knowledge of what vehicle they’re actually putting you into. They are trained to be salesman.
01:13:14 It’s just mind boggling to me. And people need to, I mean, it’s not just true in the financial market, it’s true in so many markets, but then
01:13:19 everything, so like, Ugh, we have a term for this, we call goldfish advisors. Okay? Most of the financial advice out there is, is, is doled out by goldfish advisors. Okay. And how do you know a goldfish advisor? You’re already describing them, right? They are stuck in the same game you’re stuck in, okay? They, they’re not financially free themselves. And, and by the way, the game that I’m trying to help people solve is not, I don’t, I’m not helping people have more money at age 65 retirement is an idea that I do not buy into. Okay? So I’m not helping you retire. I’m helping you to be financially free and I’m helping following the rules that I’ve been sharing with you today. Anybody can be financially free in 10 years or less. That’s just the facts of the way the game is.
01:14:04 I, I wanna, I wanna make sure that, that I understand that anyone, so if I have a yeah, if I’m 57 years old, I have no retirement. Right? And I’m like, Hey, I’m living paycheck to paycheck right now. More or less, right. If I follow what you’re saying and obviously I’m going to have to make changes to my life and my cash flow and things of that nature. Like I understand that, but it is realistically possible and that if I’m 57 years old by 67 or 69 years old, I can be financially free.
01:14:36 We’ve done it many, many times. All right. Yes. So 10 years or so. Again, I’m so I’m playing a different game. My rules don’t apply in the game of I want more in a retirement account. In the 65 you’re playing a different game. Yeah. So I want financial freedom in the next 10 years. That’s the game we’re playing.
01:14:54 Okay. So let’s go back to you investing your money. You put it in three places, three places.
01:15:00 Okay. So the only three places I’m willing to put it are things that have that checkoff all the core four and all the four pillars. Okay. I have to have high control, low risk and I have to make money through appreciation, cash flow, tax benefits. And Leverage, right? There are only three assets to do that. Okay. One of them is my own business. So whatever I do actively to generate income has off checked both of those checklists.
01:15:29 And that’s, and that’s active cash though. Like you’re actively working for it more or less. I mean like,
01:15:35 yes, I’m, I’m actively involved but I want to expose, well, after I get there I’ll come back and expose something here in a second. So my own business, Yep. That’s one investment real estate, that’s two and whole life insurance, whole life insurance, whole lot, plain boring, stupid whole life insurance. Those are the only three vehicles on the planet that have all four fillers.
01:15:59 Okay. So I want to just, I want you to give me a, a basic breakdown of whole life insurance because I know we still have plenty of time left, but there’s still other topics that I want to get to. Um, give me a basic understanding because when most people think of whole life insurance, they think, oh, I pay someone money every month until the day that I die. And if I die anytime between now and then I get a check for half a million bucks.
01:16:26 Right. So that’s not the insurance that I recommend of where you store your capital. Okay. So
01:16:32 cause in my head or well at pre talking to you in most people’s heads you go and you go, what? That’s not storing money. That’s just paying someone for a policy that I get when I die.
01:16:45 So what is whole life insurance?
01:16:46 So the quickest, cause I want to get into other topics and not stray off into this too much. Okay. Okay. Where what to under the thing you’ve got to understand is overview. Yeah. All Life Insurance is the original investment vehicle that capitalism in the United States was created on. It is where savings the stored, it was created and designed for what you think your 401k does now. Okay. And up until the sixties and seventies that was the primary vehicle to store and preserve and protect and grow capital.
01:17:17 So are fairly young for a hundred years. It’ll go ahead
01:17:21 and that’s the thing that you got to realize 401ks are only mean. They were in, they were invented in 1970s became popular. 1980s are not that old are they’re garbage. Completely, completely garbage. Well, I’m going to qualify that. No, you will have. I’m really confident that virtually everybody will have more money in their 401k than they contribute. So are they good vehicles? Will sure they make you money, but they’re not. If you want to be financially free in 10 years or less, they are not the vehicles for that. Okay. It will prevent that outcome, that outcome. Oh, so whole life insurance is the way that we do it is a very specifically designed policy. We call it investment grade life insurance. It’s not the retail stuff you’re going to buy from your brother-in-law who got his life insurance license.
01:18:05 Self-Insight it’s not that. It’s also cash value. Life Insurance. Okay. It’s focused on capital accumulation. Liquidity, not the death benefit. Okay. This is the same vehicle. Like I go back to the super nerd thing, right? Like I read the financial statements of the large banks. They all have this vehicle. I read the, I’m the only thing that gets me excited about the upcoming election is all of the politicians are going to disclose their tax returns. And I do two things. I look at their tax returns because I’m a super nerd. I look at their effective tax rate, which for most of them is below 20% which is fascinating. I want mine to be lower than that. And they all have a cash value life insurance. Okay. Warren Buffett and the other billionaires of the world, they all have all the, all the old money. And the reason why we’ve never been exposed to this is very few of us have spent very much time hanging around old, old money.
01:18:59 Here I have to ask like super yes or no answer. Do you think Donald Trump’s going to expose the tax returns?
01:19:04 Okay, cool. All right.
01:19:05 I’m moving on. Yup. Okay. So that’s why we use it. Okay. Because not because I like it, not because I sell it, not for any of those reasons. It’s because it passes the core four, four pillars. Yes. Appreciation, tax, benefits, cashflow and, and, and I would just say, guys, we don’t have we explored that topic of why that makes a lot of sense way deeper. And Boise, it’s not the time for it on this podcast because there’s too much to cover, but understand that that singular concept of whole life insurance and after of course after Boise you got my head rolling. So when I do I went and searched you know, study date of course, but like that concept of that and the one point, well let me finish that thought, that concept of whole life insurance absolutely fundamentally blew my mind and I think everybody needs to study it.
01:19:52 So talk to Brad afterwards or study that more really quick though like three minute, two minutes summary explained to me how the insurance thing works. I know it’s going to be hard to do in two or three minutes, but like I want specifically you talk about storing liquid cash. Yes. Most people are under this assumption. I have found and I was doing until I talked to you that insurance companies take their money, you know that you’re paying them and they put it into investments like the stock market. And my thought process is if stock market crashed investment, I mean insurance companies also then fail. And you’re saying that’s not correct.
01:20:29 It’s not correct. So the, the policies that we utilize are ones again that hold cash inside of them. So what’s happening is you’re actually, you’re putting money into the vehicle. The money remains liquid. Yes, it comes with a death benefit and all we want for that is we want the wrapper and the tax benefits of life insurance. So we bring the death benefit and get the wrapper. Okay. Of the tax benefits. And then inside of that vehicle, the life insurance company gives you a guarantee that the, that protects the principles. So it never goes down. On top of that, they give you a guaranteed return and then they give you a dividend based on the performance of the insurance company because the insurance company for all the other policies that are sold, all the retail stuff that’s sold, they sit on immense amounts of cash and if you want to talk about the depth of the economy, the reason why our economy is so robust and actually so it has to do with life insurance companies, they are the ones they, a bunch of my study of putting together these investment principles.
01:21:29 Actually it was a lot in in things like Warren Buffet, but it was also in life insurance because I was exposed to the idea a number of years ago that life insurance companies, there are a special subset of life insurance companies that in over 150 years have never her last the dollar of principal. They’ve never missed a guaranteed payment and they’ve never not paid a dividend in 150 straight years. That led me to start questioning, well, how do they invest? As they say, they span bank runs in the, in the 18 hundreds they spanned the great depression, two world wars stagflation, the s the.com bubble in the real estate bubble. Like how in the world? Well guess what principles they follow when they invest stock and they, and they follow the core four and four pillars. So we put our capital there and we get all of those benefits and then we still get the leverage cause we can use our capital anytime and we want the idea behind.
01:22:22 Okay. So the three places you’re putting your money are your own business. Yup. Um, and real estate investment, real estate specifically. What real quick, what’s your favorite type of, uh, investment?
01:22:37 Real estate, commercial residential apartment. Quick overview. Super Boring. Three bedroom, two bath houses in rural St Louis. So we’re an equivalent, that’s it. Or an equivalent.
01:22:51 Okay. So the grant Cardone model or method or ideology or thinking of, uh, let’s buy multifamily units. Let’s get a hundred, you know, a hundred people under wraps in one go, or 60 people under wraps in one go. Because the fact that hey, you buy if you’re buying four or you might as well buy 60 right? What’s, why not that?
01:23:11 So again, going back to core four, four pillars, if you invest with grant Cardone and his team, grant’s a smart dude. He has a business.
01:23:18 Well I’m not, I’m not talking investing with him. I’m talking about investing a like him, like in an apartment complex specifically.
01:23:25 Okay. So again, it comes back to the question of what is grant Cardone doing next out and what did he do to create as wealth in the first place? He didn’t walk out into the market and buy a 30 unit apartment complex, but he’s, he recommends that though right at the beginning, except if you follow his value ladder down, it is impossible, Josh, for you to go out and go buy a 30 unit apartment building tomorrow. So, so he tells you all of this stuff and then the investment he sells you as well. You can’t do it all on your own. So why don’t you and 60 other people get together and I’m going to put the deal together for you.
01:23:59 So he, he’s going, cause I remember when he was pushing this really hard, it’s actually super interesting when he was pushing this really hard, he was actually in the process of, cause he doesn’t talk about as much anymore, but he um, he was in the process of doing the non uncredited five thousand ten thousand fifty thousand dollar funds. And so he would, he would give all this advice to people and the people that would call in this show would have liquid of a million bucks liquid of 500,000 liquid of whatever. And then he would tell right after the phone call, I’d be like, but if you don’t have that much money where to open it up and on a grip but not accredited investment account, which I can’t.
01:24:27 So the education was meant to drive the product that he’s trying to sell you. There were no principles, there were no fundamentals, there was no the, all the stuff, all the super boring stuff that nobody wants to listen to. And we’ve been talking to about for the last hour. You didn’t say any of that stuff cited about a product. And then puts you into his model and guess who makes, not again, not incorrectly, just like a common shareholder, your opinion, the amount of value by putting your money into that deal and grant’s making the cashflow grants making but leverage and grants faking the tax benefits, which ought to be appreciated.
01:25:00 Yeah. And to be, you know, be fair. You can say what you want about grant Cardone listeners here. I mean, I think grant Cardone did incredibly smarter duty. I don’t think he’s out to screw anybody over, but he wants everybody to win and he, I mean, he’s made money on all of his deals, so like he’s a safe bet, but also he’s a slow bet
01:25:16 and he’s not a bet of saying if you invest with grants, you’ll never be grant. Yeah. You’ll have to do what grant did to become grants in the first place. Yep, Yep, Yep. That’s what I’m trying to say. Okay. So no, those are not the investments that will, if you want the long 40 year path, those are better than the stock market.
01:25:34 But, but let me, let me ask you this though. Hypothetically. Okay. Let’s say for like me for example, right? Let’s say I’ve got $500,000 sitting in a bank account right now. Okay. Liquid free, clear tax, free money. Like I mean it was just ready to rock and roll. I can invest in anywhere I want. I could in theory go out and put $500,000 down on a $5 million deal. Right. And get an apartment complex. And your saying that is a less smart idea than a three bedroom two bath.
01:26:02 And I remember said it, but I love the quote of in theory there’s no difference to me theory in practice, but in practice there is,
01:26:08 well Sam Ovens, he’s the one that said it all the time. I don’t know if he originated it, but he goes, yeah, the theory, it works great in theory, but theory and work are very different things.
01:26:16 Yes. So I want to come back. I’m going to, I’m going to hold that thought for just a second and answer it coming back to the third piece that we’ve not discussed, which is your own business. Yeah. But most people don’t understand is because people will challenge me this all the time. Oh No, Brad, I know guy making all this money trading options. Like, cool, that guy is not investing. He’s busy, he’s in a business. He is running a business because a business requires time. Um, specialized knowledge and attention. He’s doing it actively. The day that dude stops trading options, his money stops. Right? Hey My, would I make the argument that if you’re, if you had a half a million dollars cash and you went to look for an apartment building, it would become a job, not an investment because you would have to go out and get all the specialized knowledge, make all the contacts, spend the time doing it. And if you’re doing that, you’re not making money in your business and you would make less money trying to do that than running your business.
01:27:14 But what? Okay. Okay. And the, the, the thought process would be like, well, yeah, but I’ll just hire a manager. But you’re still going through the whole process. It now becomes a business.
01:27:23 So, and most people who are quote unquote real estate investors are not actually real estate investors. They have a job in real estate, people flipping houses or not real estate investors buying, rehabbing, and selling real estate, right? So understand, and that same thing, most people in the stock market own a small business and a small business is the worst place to be by the way, it’s so grinding. But you own a small business buying and selling stocks. You’re not an investor to become an investor. You do the core four and four pillars without significant time investment. Now, passive income is a lie. It doesn’t exist. It is impossible to get the laws of nature to make money for no input, okay?
01:28:07 We call it leveraged income, okay? And the reality is, is your income, all income is created on the back of hyperactive activity, okay? But it doesn’t have to be your activity. So if you’re asking, you meet what is the quickest path? And again, I want to frame this in the right question. If you’re asking me what the fastest path to becoming financially free is, it’s not waiting until you have $500,000 saved up and then trying to go put it into a commercial real estate project. The best thing to do is save up $25,000 instead, go use the cheapest, most Securus leverage on the planet we call it. This is the only chance you have to get a government back, middle-class welfare payment check, which is a 30 year mortgage. We’ll get to that another time, but that’s interesting. $25,000 down payment and buy $100,000 house in rural St Louis because that’s the only way we can do it in a and and attain all the leverage that’s available to us.
01:29:08 Here’s, here’s the point, okay. There are, there are businesses out there like mine. I’ll be totally open. This is what we do. Okay, but that should actually make you trust me more if I’m not, but if you take St Louis, right? How many single family houses are there relative to 60 unit apartment buildings?
01:29:27 A lot.
01:29:28 Like a thousand to one or probably probably 10,000 to one right. So if I want somebody else’s activity to pay my income, it’s very difficult to start a business, acquire, airing, rehabbing, and then selling to an investor in a way that can get all core, all core four and four pillars. There just isn’t enough inventory. Okay. Which is why cardon has to raise capital. The way doesn’t structure the deal the way he does, but there’s plenty of single family homes, so I can find somebody who their, their sole occupation on this planet is finding, rehabbing and selling single family homes.
01:30:02 It’s just an in, but this is a business thing. It’s an inventory thing. It’s the, it’s the path of least resistance for me to get all four pillars and off all core four in my life. As quickly as you just find them and say, all right, I want, I want a house and they’re like, sweet, sounds good. And you go, okay, here’s $25,000 down and sign the paperwork for the loan. Done deal.
01:30:24 How do you find the tenants or why are you buying houses that already have tenants in them?
01:30:28 See, I don’t want to buy a house. I don’t want to take any risks. Remember low risk, so I won’t buy a house that’s not fully rehabbed, already rented out, and I can look at the, at the financials and say, this is cashflow positive in the day that I buy it.
01:30:39 Why the heck would someone sell that?
01:30:42 Because they can’t own all of the real estate in the United States. They still need a business, right? Everybody on the planet needs to, how they make their active income and then they can generate their investments as well. So you’re buying it from someone whose literal job is to, is to sell like they buy gut or a revamp if they have to or whatever, find a tenant, put the tenant in and then sell to you. That’s their actual job. And those people exist. Yes. All over the country. All over the country. And that’s amazing. Now what about the thought process of, okay, let’s say I’ve got, let’s, let’s use this logic again. Go ahead. Yeah. Yeah. Yeah. The reason why I pay, there’s only three ways I ever do real estate. The main one is no single family homes. Cause it’s the way I can get as many of the levers as I can with the least amount of effort.
01:31:32 So I don’t do commercial, I don’t do raw land. I don’t developments, I don’t flip. I don’t do any of that stuff because I’m better at my job than I am at that. So I’m going to do my job, make my money, and then I’m going to, I’m going to invest in a leveraged fashion. Right. Not Passively, cause that doesn’t exist, but I’m gonna Create autopilot income or leveraged income off of, off of those elements. And that’s it. So that’s the fastest path. If you want to come financially free in 10 years or less. Hmm.
01:31:58 So your job is buying, I’m buying these real estate. Is that, is that what your job is? Is what you’re saying?
01:32:05 So I’m an owner in a company where that’s what we do. So part of casual tactics, that was what you do. That’s right. I mean it’s much more than that. We raise capital because I don’t have all the money that, I mean we do 300 of these a year. I don’t have the capital to be able to do that. Right. So I raised the money.
01:32:19 You raise it from banks or do you raise it from independent investors? Uh, we raised it from three main forces, banks, independent investors and hedge funds.
01:32:27 So I guess just like Warren Buffet, you can’t look at me and say, Oh, I’m going to go do what Brad does. Like, okay, cool, but you can do that. I’m going to go deep. I’m going to go do it. You Do, dude, I’m going to be coming to you. But most people are really bad. Real estate investors be included. That’s why I partnered with Jimmy who he’s really good at real estate. Right? That’s his unique ability and he’s really good at it. I don’t want it to be
01:32:47 what’s your, what’s your superpower?
01:32:50 What we’re doing right now, man, that marketing, connecting, connecting the dots in, no, I paid other people a lot of money to help me market. So that’s the same to your relationship? Did I’m, I have, I mean, I guess I’m kind of charismatic and I can have relationships, but Kinda I, my superpower is, is connecting all these dots. Like I geeked out and studied money and finance stuff. I got it. Yeah, that makes sense. It’s teaching financial strategy. It’s teaching these elements to it. It’s not the products, right? It’s this strategy behind it. Okay. I want to totally shift gears on what we’re talking about here. Here. Here’s the 40 minute run down man. That 40 minute run you man, we’ve been going for an hour and a half man. But that 40 minute that, that, that segment.
01:33:35 Okay. So I wanna I’ll, there’s, there’s two more things that I want to get to. We always end with rapid fire questions. And so right before the rapid fire questions, I want to go into Q and a from comments on social media. But before I do that, I want to go into a fascinating world when it comes to money or whatever that a lot of people did ask on social media. A lot of people do you have me about, I want to talk about cryptocurrency. Huh? Are you at all versed in that? I mean, I know you’re more versed than the average person, but on a scale from one to 10 how well do you think you know cryptocurrency? Two. Okay. So you’re going to play dumb because you are dumb in the grand scheme of things, but you’re also smarter than a lot of us. So let’s dive into this. Yep. What the heck and why is it so fascinating?
01:34:25 It’s fascinating cause it’s the latest shiny object that everybody is paying attention to. I mean you are, but I get that. But also Facebook just announced they’re coming out with a cryptocurrency. So it’s isn’t it around from the [inaudible] standpoint is revolution. It’s incredible, right? Crypto currency isn’t the exciting part. The technology that runs on blockchain, that’s amazing and incredible. That’s, that’s the real value add to the economy is that,
01:34:52 so, and I don’t want to spend too terribly much time on this, but, but I do want to, I think it’s an important topic to talk about and that is like different countries have different currencies. This basically says, I mean, yeah, there’s a ton of different type of crypto currency, you know, bitcoin, ethereum, ripple, whatever, you know, whatever it is. But like essentially it is not a government specific or a country specific currency and there’s no exchange rate. I can s or there’s no, you know, like I can send bitcoin to someone instantaneously across the world and they just get it and there’s no traction or tracking of it. You know, there, I don’t have to go through a financial, you know, like banking or anything like that. And it’s a currency. Now I don’t know if it’s, I have viewed as a currency by the u s government. I don’t know what about it, but why is the u s government freaking out about it? Because they’re freaking out. Right. And why is this as big hype? Is this something that’s actually going to be in the future? Is this going to replace the dollar? Like what are what, what like give us an overview of what we need to be looking at here.
01:35:58 Oh man, there’s a lot of, lot of, lot of questions there. Okay. So it’s not a currency because the, I mean, where I would define currency would be currencies are, are backed by governments, right? It’s created and legalized money, right? Right, right. It is money because it’s a medium of exchange, right? I can buy, I can, I can receive goods or services from you in exchange for bitcoin. So it functions, it’s playing a role of money, right? Um, will it replace the dollar and like only if, only if the US government adopts it and then backs it, right? Because that’s is whatever the government that, that you are currently under has has sanctioned. Here’s, here’s the true definition of currency. Whatever you’re allowed to pay income taxes. Literally. Like that’s why the dollar is so valuable is it’s the only thing you can pay your income taxes with.
01:36:53 That’s the only thing that defines currency. Okay. But let’s play a speculation here, which I know you mean it might not be a huge fan of, but I am sometimes. So let’s play speculation here. Facebook comes out with a currency. Facebook’s got 2 billion with a B people on them, right? They’re global. They’re, I mean, that’s bigger than any country ever, right? Even China has only got a billion, right, or whatever it is. So all of a sudden, every user on Facebook is, no, I’m changing money with you and you’re changing what, you know, like we’re, we’re doing little, you know, buying, selling stuff on the Facebook marketplace, and we’ve got this whole, like, we’ve got this whole economy essentially over here, this whole ecosystem I should say on Facebook with Facebook currency and like, Yep, I got to pull it out in order to pay my income taxes on it.
01:37:36 Right? But essentially, if I start moving money, like us dollar into this, and I started leaving that in, that’s, that is money leaving the, the u s economy or is it, is it not? Because Facebook’s just getting it like what’s,
01:37:51 so that’s why the government is freaking out about it is it’s, it’s accident. It could potentially signal an exodus from, from the dollar. Right. And as, yeah, the utilization of the dollar and the dollar is only valuable. If, if I need it, we’ll use it. Right. Nobody, nobody wants cash. Nobody wants that. I want the thing that it can get for me. I’m willing to take cash because I know I can get it. I can use it for something. Anything else I want right now it would be a threat to any currency would be if you get replaced and you’re not used anymore, then it’s not valuable.
01:38:22 Yes. And I think that, you know, cause obviously there’s been things that have tried in the past to replace the dollar unsuccessful. I mean like habit but, but let’s cut to two. I think where the question would go is when do we need to pay attention to it? Is the dollar, things like that. Yeah. Let me just put a little context behind that. The reason that I look at it and go, well this could really have some big effect is because Facebook is not just a company. It is a massive distribution network. Yes. So, okay. So we don’t need to pay attention to it until it actually becomes a medium of exchange. Like a generally accepted medium of exchange. And here’s what I mean by that. Very, very, very few people are buying like the money that’s in your bank account. You’re not, you’re not saying I’m going to go buy a bunch of dollars so that they go up in value tomorrow, right?
01:39:18 You’re measuring your bank account in mentally and all the things that you can go buy with it. Right? But people are still buying bitcoin, holding it, expecting it to go up in value and then turn it back into dollars. You get the theme that they want. So it’s still a speculation. I say investment, but I caught myself. It’s still what most people would say it is an investment or a speculation, not occurrence. Yeah. So it’s not stable enough to actually replace the way that we’re all transacting. Now some people are using it to transact, but if I’m thinking, if in my head I’m always wondering should I spend this thing or is it going to be worth more tomorrow than it is today and I should hold on to it, it drags down its utilization. That makes sense. So until it stabilizes so much, that’s when it’s then going to become disrupted.
01:40:07 But that’s also when the, the upward appreciation potential is also gone because now that’s all sort of soaked up and it’s, its value has stabilized.
01:40:15 So if you’re a big gambler, a big risk taker, you can play those markets and you know, or you play the exchange I should say and do that. But for right now, you don’t wish to worry about the,
01:40:27 there isn’t, well, there isn’t much to pay attention to because you don’t know which will win over what period of time. And you still need dollars to live your life anyway. So if you’re saying, should I invest in a crypto currency to create wealth, my answer is still no, because it violates the core four, four pillars and it’s the core for four pillars that gets US financial freedom as quickly as possible. Now, do you have a potential to make a whole bunch of money doing that?
01:40:50 Yes, but you have no control. You’re taking all the risk and we have no idea what our time frame is for ha for that to be realized. But people that made money in bitcoin. Um, I did a really interesting, uh, video on this. I don’t remember where it is. I need to go find it cause it was pretty cool. So like I left a dinner party one time where there were three different people. Four of us were talking about crypto currency. And it was interesting because all three of them were sad about their experience in cryptocurrency. And here’s what happened. They were all in, they were all, um, involved in cryptocurrency very, very early. Okay. On guy had, um, what do you call it? He was mining cryptocurrency. Hey Brett, don’t hit the table. Oh, sorry.
01:41:33 So one guy was mining cryptocurrency and he was doing that early on and then it got prohibitively expensive as a, as it got deeper and deeper and got out of it. Right. And then the other guy bought it very, very early. It went up and when it went up by more than you could ever imagine, he sold. Right. And then the third guy never got involved at all. And all three of them were sad about their experience in cryptocurrency. It all had regrets. Okay. There was every one of them had coulda, Shoulda, woulda perception about this. Cause the guy who sold is like, oh, I shouldn’t have selled. I should’ve held onto it. The guy didn’t get, didn’t get into it all was regretful that he didn’t get into it. And the guy who was mining was like, I should’ve kept mining or I should’ve never sold the bitcoins that I had.
01:42:12 Right. They all, and that’s because, again, it’s not an investment. It’s a speculation. All right? And so what we need to understand is you need, if you’re trying to create wealth, you’ve got to focus on, on a game that you can win, okay. On something that’s going to create the value. And the people that made money in crypto currency were the ones that had a business in cryptocurrency that did it actively. Okay. And they got into it and they got out of it and they, and they turned it into wealth that actually benefits and changes their lives today. Okay. Those that bought it and held onto it. And even those that still hold onto their critical currency argue are not wealthy. It’s external to them. It’s still, it’s still not changing their life. It’s, yeah, it’s still all locked up in appreciation. Right? Yeah. So those that have speculated on it didn’t make any money.
01:43:01 Maybe lost a bunch of money, but it’s still, the jury’s out on that and the ones that made money and were actively involved in it. So if you enjoy cryptocurrency, I want to be a super nerd in it and spend all your time geeking out about it. Then maybe cryptocurrencies for you. And there’s a lot of money potentially, but there’s a lot of money in it becoming a super nerd about Facebook ads and starting a business and that, yeah, I love what Russell Brunson said, um, cause you’re in the whole praise of bitcoin going to whatever it was, $18,000 a coin. Russell made a post about it. He’s like, I’m going to get into this whole, you know, thing. I’m going to put some money behind it or whatever. And he did. He put something behind it and made a, I don’t remember what the exact comment was, but basically like, yeah, but I still have funnels, right? And then all of a sudden it tanks and it goes back down to whatever it was, like four or 6,000 or whatever and he, it was some snarky post or by him and he goes, um, like lol at bitcoin. Glad I stuck to funnels or something like that. Right? And it’s like, yes, who was whispering in his ear though?
01:44:00 That’s your mouth because you’re leading people the wrong way. You better be telling them that they still need businesses. Funnels up this Facebook thing. A couple of months ago he’d been posted, Ryan and Brad are the only people we trust with this money. And yet those were the whispers. You and your business partner, for those of you that didn’t catch that Brad and his business partner Ryan were the people behind that. So, okay. So I want to get to around two questions here. Is there any other things that you wanted to touch on as far as the Crypto is concerned? Are we kind of done that? Just if you want it to be a full time thing for you, awesome. If you want to spend time becoming an expert, you just know what you’re getting into. Right. I think like almost anything in this world can become a business.
01:44:40 Right? Yeah. It’s just a matter of there’s a difference between a business and investing. That’s a, and most people don’t. There’s the devastating in business and investing in different thing to be investing in speculating. So three ways to become financially free in 10 years or less. Yup, Yup. Yup. Okay. Okay. I want to get to some, some of the questions of the people asked and then I have a couple of questions for you at the end here too. Um, we kind of touched on this. Let’s do shorter answers on these now that, what I love about this now is we spent an hour and a half creating all the contacts. Yeah. Fire off answers and you have context as to why I’m answering behind that. Yeah. It only took us an hour and 45 minutes to get there, but we did it faster than usual and faster than usual.
01:45:24 Um, when do you think the economy’s going to collapse and why? Um, the, my feeling I’m making a prediction is you can either predict what’s going to happen or when it’s going to happen, but not both. So I believe there’s a crash coming. I’m surprised it’s not already happened. Um, but I’m preparing for it. Do you think it’s going to happen in the next two years? Um, I would, I would be surprised if it doesn’t happen in the next two years. Yes. Okay. Um, do you think, and by the way, all of these time, I’m surprised it’s 2019 and it hasn’t already happened, so, so what are, you know, right. Come on Brad. Um, but there was a, there’s all of these questions are from Instagram and then we’ll get to Facebook questions. Um, do you think Trump’s reelection will play a part on whether or not the economy stays the way it is?
01:46:12 Whether or not he gets reelected or not? 1000%.
01:46:15 So a very interesting thing is a couple of months ago, the market wobbled right? And then for just these mysteriously magical reasons and all of a sudden, um, just went right back to where it was and is normal and birds are quiet and everything is wonderful. That I don’t think that has, I don’t think that’s coincidence that we’re also leading into election time.
01:46:32 Yeah. Yeah. I would agree with that. When is the right time for millennial entrepreneurs to start focusing on investing money? If you’re a young entrepreneur that owns a business, when is the right time to start investing after your business is making s, depending on your profitability after your business is making somewhere between a quarter of a million and a million dollars a year, you shouldn’t, you shouldn’t focus on it. It’s too easy if you’re a millennial entrepreneur. Well first I want to define like if you’re a lifestyle entrepreneur, that’s different, right?
01:47:04 Like build a business. It’s way too easy to make a quarter of $1 million and be profitable enough to then turn your attention. You have to make money, first quarter million profit or quarter million revenue, quarter million revenue. Um, if you’re not, if you’re not taking home, um, $100,000 a year, whether it’s in your job or in your business, then you’re just not making enough money and it’s too easy to make that much money. Okay? So $100,000 take home is roughly when you’re going to start thinking about investing and w how much because people’s lifestyles greatly differ. I live off of like, you know, $3,500 a month and I can live in my mom’s basement too, man.
01:47:46 Um, but that’s my personal expenses that I don’t write off on business, right? My car is a business expense, you know, everything of that nature. But like how much liquid cash should I have saved up before I start thinking about investing? What’s that bare minimum number?
01:47:59 You need your own reserves together. So if you, if you have a job, you just need your personal reserves, you have a business, you need your reserves and business reserves set aside before any dollar should ever be allocated. Uh, we teach, there’s three fundamental pieces that you need place for your foundation before you invest. One is protection, one is liquidity, and one is an adequate hedge. You need those three elements in place. Um, specifically around liquidity. Um, less than three months reserves makes me really, really nervous. Most people want to have around six months of both of those buckets taken care of before a dollar should be put toward investing.
01:48:34 So if I have six months worth of business, I could run my business for six months and I can run my life. I could live for six months above and beyond that. Any cash that I can go and invest, that’s capital that’s now on the table to go invest. And if you asked me where to put that money, I’m going to say, Josh, why aren’t you going your business first, right?
01:48:52 Yup, Yup, Yup. Okay. What’s the most money you’ve ever personally invested at one time?
01:48:59 Um, at one time, I think $150,000. That’s in it, in a single investment. That’s it. Yeah. That’s incredible. What’s the most, sorry, go ahead. Yeah, my personal money. Right, right, right, right. Yeah. Your personal money. Yeah. Yep.
01:49:14 Um, when working for Goldman Sachs, what was the craziest thing you ever did? The craziest thing. Crazy meaning like mind blowing to the average human being.
01:49:27 Uh, I quit. No, like seriously. So I, I was, I was there a very short period of time. Um, and it was, it was the depths of the 2008 economic disaster. And I was in meeting after meeting and seeing what was going on behind the scenes and we were in a, like a general company wide like this, my Jerry McGuire moment, right? So a couple of days before I was walking into work and our building was right next to Lehman brothers and we were walking into work and everybody was filing with cardboard boxes out of the Lehman building. So Lehman had just overnight disappeared versus what’s happening. Right. And I spent the next week or two sitting in the lobby getting zero work done, watching the monitors, wondering if Goldman’s is gonna be next. And it was me and next to me was a guy, been there a year next to me.
01:50:14 It was a guy that had been there five years next to him was guy had been there 10 years. We were all just as scared. Okay. And that’s what I started to realize. Well wait a minute, there’s no security in this. This is all, this is all a bit. Cause the dude that’s been here 10 years is just a scare design. And so that was my German wire moment. There’s like I’m done, I gotta get Outta here and I’m going to leave into like, I’m going to, I’m going to walk away from the contacts of Goldman Sachs, the reputation of Goldman Sachs into the worst economy that has ever hit the United States. Why on earth did you do that? Why wouldn’t you just waited it out a little bit? Because I’m crazy and I love that about you. I’m the same way. So like I are you impulsive?
01:50:56 I’m, I’m not impulsive. I would call it, I am. I am stubbornly principled that once I see a principal being violated, nothing else matters. And you just go like that. Like you, you are a principal person enough to know if, if, if it checks off in your head once you have made a decision, like in your head that this is the right option or this is bad and I need to get away from it. They’re like, it’s just, there’s no other question to be made. You just, there isn’t, there isn’t any on the reality. When I say principal, it’s not, it’s not just like right, wrong, good. Right, right. But if my framework tells me this is the outcome, it doesn’t matter what other noise is being filtered in there, that becomes the right outcome. And that’s what I saw was it fit my framework.
01:51:43 It was the right outcome. And it was only an inevitability that if I just stuck to the principles, I’d get the outcome.
01:51:48 Okay. Next question, and this one’s actually from me specifically on this. What would you say to the person all sign, all, sign a headshot for you and send it to yourself. Oh, thank you so much Brett. I want to hang it on my wall. Um, I actually should start doing that. Taking pictures, pictures of everybody that you guys with anyway. Um, you’re a, I’m a young entrepreneur. Okay. And by, I don’t mean necessarily me, but we could use me if we want to for context or whatever. I’m a little bit different, but like I’m a young entrepreneur, I’m starting out, I’m in, you know, I’m in my business, right? And let’s say I’m making 50, $60,000 a year. I’m making more than that obviously.
01:52:24 But for the executive scenario, I’ve got a dream man. I want to go and I have this really big dream. I want to be a an entertainer or I want to build a thing, different very podcast or I want to build, um, I don’t know, I’m passionate about music or I’m passionate about photography or agency work, whatever, whatever that, that baby, I’m making 50, $60,000 a year. I’ve been smart, my money, right? And I’m at this point now where I’ve, you know, I can kind of go all in, I’ve got maybe 10,000, 20,000, 50,000 saved up, but whatever that number is, right? This person. And they’re like, okay, I don’t really have a real business going, right? Like I kind of do, but like, and I’m making money with it, but I’m at this point where I can go, all right, I can take all of my cash, this 20, 30, $50,000 that I’ve saved up and dump it in and blow it up and go all in.
01:53:11 Right? Or I can go and I can, you know, big risks, but I’m chasing my dream. I’m all in, I’m good at this. I’m passionate about this. Or I can take a much more conservative route and be smart, go a whole lot slower, maybe make a little bit less money. Um, and maybe play the smart game financially per se to where I’m not risking my 50, $60,000 in cash. But I mean, let’s take me example, and obviously the number for me would be a little bit higher. But if I wanted to do this and I’m like, I have a dream over here, I’m gonna dump all my money into, what’s your advice? Are you are you of the mindset that says, you know what, you can make that $50,000 risk, but the smarter thing to do would be to take that $50,000 and to start buying income, producing assets.
01:53:55 Take the slower route, put your dream not on hold, but like slow it down. Or are you the type of person’s like, dude, if that’s your dream, just go for it. Uh, okay.
01:54:02 So yeah, two answers. Uh, investing always comes after, um, following your dream of whatever’s going to create income. So you are your greatest investment. Your business is your, your greatest asset, your businesses, your based investments. So that always comes before investing. I love that. Things always secondary. Um, but point number two is I don’t believe the risk trade off that you’re talking about. Um, I think the reality behind where we see, like the risks I took on the outside perceive to be really large. But on the inside we’re very methodically organized. And most people that jump it looks, it’s all, it was still scary for me, right? But it wasn’t a blind leap of faith.
01:54:43 And most people’s jump isn’t a blind leap of faith. I would say before you take a leap of faith, like you get paid, whether it’s in investing or in business in proportion to the amount of risk you can eliminate. Okay, so my company right now, we spend between 20 and $30,000 a month on Facebook. If I didn’t have a team behind me and three years of experience and everything that I’m doing, that would be an inquiry for the average person to just wake up in the morning having never run a Facebook ad to drop 30 grand in Facebook, it would be incredibly risky. Right? But I have data, I have processes, I have teams, and I can spend that with virtually zero risk. Yeah, that makes sense. Yeah, I would. What I would do is understand that we need to systematically eliminate risk, and I only take a risk when I have a disproportionate positive payoff to my negative outcome.
01:55:34 So let’s take you, I know this is a human to make funny for just a little second. If I had 20 grand and was living in my mom’s basement and could go back and get a job at any time and I had other obligations than that choice has, has a, a disproportionate high payoff. And if you lose it all, you just go back to making, just go make a little bit more in your life isn’t all that different. Right. Again, right. For me who I’m married, I have a mortgage, I have five kids at home and I’m, I’m in my mid thirties for me to take all of my capital and make a decision that the downside payoff is disproportionately high to what I would get out of it would be a dumb decision. So set up your decisions for a disproportionately high payoff and limit your downside. And then so, so what you’re telling me is I should go move back into my parents’ basement and, and yeah, that’s okay.
01:56:27 That makes sense. What is your downside relative to your realistic, like fact-based upside? And if the upside is proportionally larger than in downside, you can go for it. Cool. Cool. Okay. Um, last question before we get to rapid fire questions. For the average person that is just starting out and let’s assume that, because I know my audience pretty well, but I also know based on data that my audience, there’s a good chunk of my audience that’s in their late twenties early thirties that does have a family, right? Like they are married and or have a family of some sort and some of them work jobs or they work in a job like setting, meaning they’re an entrepreneur entrepreneur, but it’s really more like a freelancer position, right? Like they go, they work with the client, they get paid whatever, right? And so they’re making 60 to $85,000 a year.
01:57:19 They have families. So you know, overhead blown mortgage, like your car payment, Yada Yada. They’re not taken home that much. I mean for, for definition based purposes it’s just above paycheck to paycheck. Okay. Yup. So for the person like them that is maybe in their mid thirties or even, you know, sick for example. And, and I think it’s okay for me to say this about my parents. Like my parents are in their mid fifties right. And they made poor financial decisions. Right. And doesn’t make them bad people. I love him to death. They taught me more than anything. But like you know, they made poor financial decisions and so their question is, hey, we’re in our mid fifties we have no retirement. Right. And you know these people that are in their mid thirties maybe even late thirties that have no retirement because they weren’t taught about it. Yeah, something went bad.
01:58:07 Where does, where does one start? Where does one start and where does one start like to, to, to become, to have enough for retirement even or to have enough to become financially free. I know you’re against the anti or you’re anti retirement, which I love, but like I want to be financially free in 10 years. I don’t have a ton of excess cash. I don’t have a ton of savings. I don’t have a 401k like where do I go? And for all intents and purposes, I’m in a job like setting maybe out on turnover, but nobody cares more about your money than you. If you’re asking the question, it’s exposing a liability in your financial IQ so you have to raise your financial IQ first. The reason why you don’t have money is you don’t understand money. The reason why you don’t have enough income as you don’t understand value, you have to.
01:58:55 You have to raise those first and then the dollars will follow, the outcome will fall. So I strongly believe we get really good at analyzing our asset balance sheet, like what assets we have, what liabilities we have, what are, what our net worth is. We’re really, really bad at analyzing mirroring. Everybody’s property value balance sheet is what I call your human life value balance sheet. Okay? Any assets on your property value balance sheet is mirrored by an asset on your human life value balance sheet. Anything you, any liability you have on your property value balance sheet is mirrored by a liability on your human life value balance sheet. So anything that you don’t have that hasn’t manifested itself in its physical form, it’s because you have a liability on your human life value balance sheet that’s holding you back. So it’s figuring out what that is and converting that to an asset so that it’s like everything in this world was first created spiritually or conceptually, right.
01:59:51 However you want to look at it like it started as an idea and then became form money. My Dad is the same exact thing, which is why we are like spirited animals of each other. Cause like your thing, different podcast thing, different theory. This whole idea is it has to start there. It has started. The mind has to any, if anybody gives you a different answer, they’re trying to sucker you into something. There isn’t a solution. It starts there. So it would be invest in yourself wherever that deficit. I’ve take a good long look at your human life value balance sheet, identify the issue and invest there. I liked that. I liked that. How much, I mean I would say that gotta be step one or step one. Obviously we just covered step one, but I got, I would imagine that early on in the beginning, increasing cashflow has gotta be a step in there.
02:00:40 Yeah. Yep. Uh, the four tenants of cashflow tactics is produce, protect, profit, prosper. Money goes in that order. Produce production comes first. Protect what we make then we can actually invest for. Okay. Okay. All right. Um, let’s go to rapid fire questions now. We’ll wrap it up. This has been amazing by the way. Amazing rapid fire questions. What is, uh, what’s the single thing, piece of financial advice that you would give your younger self? 18 year old self dollars. Follow value, dollars follow value. I like that. Okay. Single biggest single greatest regret or mistake that you have made in your life. But I went so long into my life not investing in myself, believing that that other people cared more than I needed to follow the right system, not giving myself permission. You know, it wasn’t until I was in my early thirties that I really got serious about investing in the greatest asset, which is me and doubling down on who I am and what I can do rather than thinking that investing was external to me, that I had to give my money to somebody else or it would be irresponsible to invest in myself.
02:01:57 Investing in yourself, meaning educational. Yeah, health related. Yeah. I kind of break it into three categories. Mindset, skillsets or networks. Right. That’s amazing. And any of those three categories. I love that because that’s a big one. Like the first massive check I wrote was to Russell Brunson’s inner circle, which was what it was 25 grand or something at the time. Right. It’s more now. That’s a big check. Um, okay. Uh, which actually leads me to my next question. How much, how important on a scale from one to 10, has your network played into your success? I mean 11. I mean it, it, but, but it goes in that it goes in that order. Mindset starts first. Like you’re only valuable to a network if you have something to add to that network. So you know, line sets and you need skill sets and then it’s the network that gives your skillset a place to go.
02:02:48 I love that. People needed an understand that more you only, yeah, you got any skillsets first? Okay, I like that. Yup. Alright. Uh, favorite airline to fly delta.
02:02:57 I Love Delta.
02:02:58 Yeah. You have any American Express platinum card or black card, don’t you? I don’t have a black card. Yeah, you’re not that cool yet. No, I’m telling you to start a podcast and start producing content. You’d probably be there. Some really smart guy told me the other day,
02:03:13 um, favorite food.
02:03:15 Oh, here’s the really interesting about me. I actually don’t like food. That’s a really hard answer. I don’t. You saw me a Ruth. Chris. How much did I finish to my play? You did. And I most of your asparagus. I don’t, I don’t actually get that much of John Madison. Man. That’s a bummer. Um, you told me that a conversation that we had one time that quote, your business partner drives a shopping cart.
02:03:38 You like to drive horsepower. What is your car of choice? My BMW m three is my current car of choice accompanied very closely by my, uh, Ford Raptor by if ou four rappers are fricking nice. Yeah. Do you have a dream car that you don’t have yet? A, the next car on the docket is a Porsche nine 11. Ah, do you know Taylor Welsh? I don’t know. Do you know of him but not enough? He a cofounder of traffic and funnels and he just bought a Porsche nine 11 and I think there’s an an 11.9 11 turbo, I’m pretty sure, or spider or something. I don’t know. It was a porch and he said it is seriously the sickest car he’s ever driven and he’s owned McLaren’s and all sorts of crazy stuff. He’s like, it’s comfortable and it’s Sporty, so I can’t wait to, I’ll to come out and visit.
02:04:24 You can drive it around. Um, and then, uh, last question that I have for you then is oh, bucket list thing that you want to accomplish in your life.
02:04:33 Uh, the next one that I’m teeing up is I’m going out. So snowmobiles are kind of my hobby that I’ve loved ever since I was a kid and I do pretty aggressive back country stuff. There’s a group that rock that you can buy and go in August to Chile and ride snowmobiles in the mounts of Chili cause it’s winter down there when it’s summer up here. So with Chris, Brian and his team, I’m going to go ride. That’s my next bucket of assignments. The ride saddle Chilean August. That’s amazing. Have so much fun dude. Yeah. Make sure you bring a camera. No, I will. I’ll have a go pro. Good, good, good. All right
02:05:06 , last question that I have for you.
02:05:08 We always end every single podcast with this question. Every interview that we’ve done ever, you’re at the end of your life. Fast forward, you’re on your death bed right now and everything that you’ve done, every person that you’ve touched indirectly or directly or whatever, every one of your accomplishments is gone. However, every single person that you have touched in influence, whether it be directly or indirectly, you get to leave them with one final message. One word of wisdom. What is that piece of advice that you leave them?
02:05:37 Oh my gosh, it’s not, it’s not, it’s not a very deep question. Pretty easy. Really like quick, what am I, what car do I like? Like for me, the, the core of who I am and why I am is my belief that I’m a son of God. And so if I would, I would instill that everybody has a son or daughter of God and that’s where I get my intrinsic value that is independent of who I’ve touched or what I’ve influenced or what I’ve accomplished because all of those are gone.
02:06:05 That is what is what then blossoms into lay like. That’s like the kernel of all my knowledge and wisdom and belief and, and outcomes and actions and everything centers on. I’m a son of God. That’s amazing. And I would align very much with you there. My mom, I asked my mom that question and her response was a love God. Keep his commandments. That’s the vital thing. So I love that Brad. Thank you. Oh my gosh, this was amazing. Episode 100 of being different dairy podcasts. Guys, give it up for, I need my button. Round of applause for Brad. Brad. Yay Brad. Seriously iron man. This is a lot of fun. This was so good. Thank you so much guys. If you want to find out more about Brad, Brad, where can they find you? Pitch yourself here. So Castile tactics is where we have a website there.
02:06:58 Um, our youtube channel is where like if you want to, we break down a lot of these concepts. So our youtube channels a great place to follow us. And then on all like, I don’t, I know we haven’t said channel thing like insta faces and whatever that is, but I’m sure you can find us on Facebook hashtag tactics. Okay. Instagram, I want to, I want a buddy in here, guys. A recently I had to call Brad and Brad goes, yeah, I don’t know how to do that institute. And I’m just like, ah, no. They kept doing it because he could just see my face every time I did it. Brad is about to come out and I’m going to put you on the spot here. Can I get a from you? You’re about to launch a podcast. As long as my business partners don’t shut me down. September’s when our podcast is coming out.
02:07:41 Okay. You heard it here September his podcast, he’s going to have an awesome youtube channel. It already is awesome, but it’s gonna be even more awesome. Instagram is going to blow up. I’m pushing them in the right direction guys, because I, I believe that this needs to get out in the world and so we’re working with them on that. Brad, thank you so much guys. Go to cashflow tactics.com or their youtube channel. Look up Brad on Facebook. He’s kind of boring on Facebook, so maybe go to cashflow tactics.com but that’ll change. Um, Brad, thank you so much, man. I appreciate your time. I know it is valuable. Two straight hours. That’s hard to do for anyone, much less someone like you. So thank you man. I appreciate it and it was honored. Absolutely guys, this has been episode number 100 I think, different theory podcast.
02:08:20 Thank you so much for your support. Thank you so much for the downloads. Make sure to share this with a friend. There is not a single one of you listening right now that does not have at least one or two or 300 people that you know in your life that could not benefit from this episode. So please feel free to share this out. Go Visit Brad. Follow him everywhere. Thank you. Thank you. Thank you guys so much for your support with podcast. As always, hustle, hustle, God bless. Do not be afraid to think different because those of us that think different are going to be the ones that changed the world even if that world is just your own. And that has been proved here today with today’s episode and every single one of the 100 episodes that we have had. I love you all and I will see you on the next episode. Take it easy, fam. Peace.
02:08:58 Yo, what’s up guys? You’ve been listening to The Think Different Theory with myself, Josh Forti, which I like to call, “A new paradigm of thinking”, and real quick, I got a question for you. Did you like this episode? If you did, I want to ask a huge favor. See, the biggest thing that helps this podcast grow, and that will spread this message of positivity and making the world a better place, is if you leave a review, a rating and subscribe to the podcast. What that does is, it basically tells the platforms that this is out on, that you like my stuff, and that I’m doing something right. So if you could take like three seconds out of your day and subscribe, leave a rating, and a review, I would be forever grateful for you. Also, I want to hear from you. I want to know your feedback, your ideas, and your questions for future episodes. So be sure to hit me up on Instagram in the DM @JoshForti or via email contact@ThinkDifferentTheory.com.