Tag: Mindset

Backward Engineering Happiness

How much useful/engaged time I have left…

Days Hours Minutes Seconds

Life is funny, about the time you achieve something you realize that there is something else to go after.

“Obviously I’m a few years older than you but the writing is absolutely on the wall, I was at work last night and had a critical care where I was having to intubate and put central lines in anyhow my aunt was actively having a stroke at the same time and my cousins were asking for guidance on what to do and how far to push the limits, I made the right decision cutting back no question, family first” – Hui Member

When I was going after that magic number “10” single family homes I was all consumed by the chase. Then when I got there the next goal was 1,000 units. Got there and it was the same result. Taking a step back I realized that happiness was not about getting to a magic number or properties or money (although it is a great way to keep score).

I wanted to get back home to Hawaii after 14 years of living in Seattle. Done! (And you can see why by visiting)

For a long time, I have written down my “I would be happy when…” or IWBHW’s and they always change and I am always chasing the next thing. Not until recently did I realize that it was not about the chase to the next goal but embracing and enjoying or the Journey… Follow along on mine.

We all have heard about the Gallup article that said that once someone has $75,000 of income a year their happiness does not grow by leaps and bounds. I’m not here to debunk it but to ask why and more importantly how can I apply it? [I personally thing 75/k a year does not cut it in Hawaii/California/Seattle – most of us are shooting to that magic critical mass number of 4.5M net worth because at that point you can pass the trust off to clueless offspring and it can still grow]

After quitting my job in 2019, and transitioning to a life of working on what I want to instead of working for someone else (obligation) I discovered that everyone will always work. If you think retirement is just golfing… well that’s fine but many people SPC investors find that their life energy is better served to go into something bigger. But it does not have to be a structured 40-80 hour work week. As little as 8 hours a week is all this study says we need to achieve autonomy. However I find I still work 10 hours everyday on building the SPC community and adding more content.

I have built up a large network of other investors who have enough “simple passive cashflow” and the common thought pattern switches from making money to getting back time and living a more fulfilled life.

Unfortunately, happiness is not as easy as in a video game

These days I ponder… how I can hack happiness? After all, more money won’t make that much difference. (Although I would like a Mercedes Tesla Convertible Porshe/Corvette since its safer than my electric bike.

I tried using Maslow’s hierarchy as a framework to dissect happiness but I have found it to be a little too bit “basic” as it applies more to those in third world countries and people with real problems in life. I don’t want to sound basic I mostly have “first world problems” which I am very grateful for.

In 2016, I went down to Texas to attend a Tony Robbins seminar and discovered my current framework to backward engineer happiness.

Mr. Robbins outlines six human needs:

1)         Growth

2)         Contribution

3)         Significance

4)         Uncertainty

5)         Certainty

6)         Love and Connection

The lowest on the spectrum of human needs is to be Loved/Connection. I talk to so many people in my free investor calls and it is very apparent who are givers and who are takers. Why do people act so selfishly and so seriously? Perhaps it takes an old soul to realize it but in the end relationship that we build on the journey are what really matter and what we will cherish. (per Ray Dalio)

Action item: How can I get more Love/Connection? Schedule it? Attract more people of that nature? Create a podcast and network of other like-minded investors.

This $6.2M home in Hawaii looks pretty lame when you focus on the fact that is not filled with people and without meaningful relationships.

Certainty and Uncertainty are complete opposites. Certainty is having a reliable and safe life but at some point, we thirst for spontaneity.

Action item: How can I get more Certainty/Uncertainty? How do I build a routine? How do I put myself in places to get lucky? How do I free myself to go on more controlled impulses?

Significance is about feeling special.

Action item: What do I do that is my competitive advantage? Where can I get praise?

Contribution is about aligning your life’s work for the benefit of others. A mission. Apparently, Mr. Robbins did not endorse the mission of sitting on a beach with an unlimited supply of piña coladas and taking food porn pictures while gallivanting the world as a tourist. Nor did he support playing it safe with a bunch of passive investments.

Action item: What has been your biggest pain point growing up and maybe you can help others? What pisses you off most in this world? Realize that you might have to take a bit of monetary risk here to make a bigger impact.

Why do you think I accept non-accredited investors into my projects? Not because I love being super careful to follow SEC regulations. Certainly not because I have to expend so much energy to educate non-accredited investor and they invest all their money in just a couple deals. I do it because the middle-class non-accredited investors who go to work every day need these types of investments the most and damn it, I’m going to do that because it’s the right thing to do.

And the final need is Growth. Improving as a person.

Action item: Think about the different aspects of you life (physical, relationships, money, spiritual, to name a few), which ones need work? Many call this the wheel. I call it a stool (four pillars: health, relationships, spiritual, money/business) because I try to make things simple.

Tony Robbins six needs is a great starting point to see how we can increase our happiness. If you really think about these are the things that really make us happy. Lets us put focus on what makes us happy because in the end, that is what really matters. And the score of the game 😉

In another study, researchers asked 10,000 people to list 10 happy moments. This generated a corpus of 100,000 happy moments called HappyDB.

Here are the patterns that came up.

Here is where the team/comradary componet came into play…

Complete study write up.

Too often passive cashflow is associated with scammy multi-level marketing ploys to get people who don’t have the money in the first place to buy into expensive education systems. If the goal was to just make money and not to create value there are many things you could do such as sell drugs or sell a testicle.

“Hey man… let me tell you about passive cashflow and how you can get rich with little to no effort… do you feel that… its called entropy man!” (In a sleazy tone)

As mentioned before SPC-1.0 is getting into the rental property game and getting your mindset out of the Dave Ramsey/Millionaire Next Door lizard brain where you are just focused on putting food on the table and making ends meet. As you build up your cashflow you move from more scarcity mindset to abundance mindset.

“It is unlikely for someone to transform from a scarcity mindset to an abundance mindset (without a life altering experience ie. life-death experience, LSD, tribal drugs, or passing of loved one) without reaching or getting on the path to financial freedom. On my journey to financial freedom, I was cheap with my money and time. Somewhere along the way my outlooked changed but it is a process… you cannot just meditate or recite mantras to and obtain an abundant mindset. Perhaps scarcity mindset is the fire under your ass to do something.  And beware of “Cheap Easy Free people” (CEF) along the journey because it typically a sign for a scarce mindset. CEFs are usually 1) not very much fun, 2) have lame relationships and friends, 3) looking out for themself first.”

SPC-2.0 is turning into more of a passive investors as I have traded my single family home rentals to more scalable limit partnership positions in syndications, and now after I have cashflow (food on the table) I can take some risks and go after SPC-3.0 which is Simple Passion Income.

Being a working W2 professional I have a soft spot for those in my position… It makes no sense for a computer engineer who has a family and working 50 hours a week at a $200K W2 job to do what is required to become an operational lead on an apartment deal. Doing such would require 12-18 months of relentless work without monetary gain and little success to build relationships with brokers, travel to the markets.. and put up hard money to close the deal.. I have tried to make a team atmosphere where talented professionals can dip their toes in to “scratch their entrepreneur itch” yet keep their regular salaries.

“Entrepreneurship is all about you! A job is more about sucking up and politics.”

All too often the entrepreneurs out there reaching success are not those who possess the skillsets but they just went after it and got lucky. Don’t get me wrong they deserve it because of all the sacrifices but imagine if you combined that grit with talent?

Ikigai is the alignment of doing something that is 1) you passion, 2) makes money, 3) you are good at and 4) good for the world. When you get this it is like arranging the Infinity Stones on the gauntlet and a higher level of achievement and happiness.

What is SPC-4.0? Maybe mentoring the next generation but at that point, we are playing with house money!

SPC followers are typically younger than 30 or older than 35. My observation is that when people have kids, that takes all precedence.

“What do I love to do and get paid to do it” Russell Grey or the Real Estate Guys Radio show.

The pursuit of an entrepreneur dream is not for everyone.

It requires an investment in time and money. And whenever you make an investment, you take on risk. In this case its taking time and energy away from a day job that already makes a lot of money.

In order to get enough critical mass behind an idea to turn into a thriving business, you must devote time, often many years. There are no guarantees that your efforts will be rewarded a lot of time luck is required. This Time Risk is that all of your time will be for nothing.

The saying “good is the enemy of great” comes to mind here. For many high paid working professional, you make enough money to be happy but part of what we are going for is not the extra wealth but “passion income.” Feeding that entrepreneur itch or as Buck Joffrey says that primal to our core instincts.

Below are some money ideas that I have come to adopt. If there are any that do not make sense to you please feel free to reach out.

1) Money is not everything… but it sure makes life easier

2) Define the Rules of the Game

On my calls with people, I often talk about defining the monthly cashflow goal (5k-20k for most) where they will create the lifestyle that they want. Only fools work past that point. The exception is unless they find that the act of creating value as sport and fun.

3) Time is interchangeable with Money. You can trade your time for money all day. But you cannot buy time! But you can buy freedom!

4) Experiences are the currency of Happiness, Social capital trumps monetary capital

5) Unproportionate wealth comes to those who create value. Trading things buy low sell high is a gimmick.

Ben-Shahar shares four archetypes in his book called Happier outlines how we fall into these four “the happiness archetypes”:

  1. Rat Racer – enjoy the idea of a future destination, but neglect the present
  2. Hedonist – enjoy the journey (right now), but neglect the future
  3. Nihilist – enjoy reliving the past, but neglect the present & future (because it’s hopeless)
  4. Happiness – enjoy the experience of climbing toward the peak

The happiness archetype is the ideal.

Except from the 12+ Time Best Selling Book:

The One Thing That Changed Everything: The Engineer Who Escaped the Rat Race and Achieved Escape Velocity

I walked the linear path for much of my life. Raised as part of the disappearing “middle-class” programmed me to study hard in school, checking the boxes on extracurricular activities, cramming for the SATs, and getting a high GPA to get into college, all to live a “practical” life.

Growing up, we were told to “waste nothing” and turn off the lights every time you leave a room. I still feel guilty to order a soft drink at a restaurant as opposed to tap water.

In college, while other cohorts were playing Frisbee in the quad, I was stuck in the basement of the industrial engineering lab. Why was I not playing the sun? Because Google told me what the highest paid undergraduate professions were. Driving on autopilot for much of my early twenties, I went for a higher-level master’s degree and tested to become professionally licensed as an engineer for the job security.

Upon entering corporate America, I spent my first five years of my career working for a for-profit, private company as a construction supervisor managing a bunch of entitled journeymen who were older than my parents. Facing the rigors of junior level employment, I played my role as the young guy, traveling 100% of the time for my company, sacrificing quality of life, as I navigated the operational clusters, toxic management, and other backstabbing pawns in the company.

I have a lot of scar tissue from that decade of working for the man not to mention building someone else’s dream. You tell me how engaged you would be if meeting protocol was to sit next to your superior and not speak unless directly instructed to or if you were asked to address a director two levels up by mister or misses!

One day an internal company email went out notifying of a friend/ex-direct report had died in a work accident. My boss was uncompassionate about the situation, looking out for the big bad machine first (mostly his annual bonus and agenda). This really put things into perspective for me.

As a corporate road warrior, it was novel being on company expenses all the time and maxing out on airline and hotel points, but you can only have steak and lobster so many times… The only people who cared about my platinum status were the other suckers in first class who were working for the paycheck or an acceptable quarterly review. Although I am grateful that I had a well-paying job post-2008 recession, I traded the most important resource, time, for money.

The linear path instilled delayed gratification, living below my means, and an overall scarcity mentality of saving money instead of earning more, being more. I was entranced by the pervasive Wall Street marketing to blindly put money into a company sponsored 401K plan only to “hope and pray” that compound interest would carry me to a secure retirement.

Let’s not even talk about the student loans I had…

I knew where this path was going…I mean I did the math and it told me so. This is my story of how I freed myself financially, how I took ownership of my life’s direction, and the series of events that allowed me to find my calling.

 

Seeing the (Economic) Matrix

A steady diet of ramen noodles and a free birthday latte per year made it possible in 2009 to purchase my own home to live in. Being a bachelor who was only home on the weekends, I realized that having this large home was a waste of money. I made a decision to rent it out and became a real real estate investor. You might be thinking that this was the big change, but at the time it was simply a lot of beer money after collecting the rents and paying the mortgage.

I don’t know if it was the beer or being love drunk with cash flow, but I opted out of the linear path in my early twenties.

From that point on I devoured podcasts, books, and online forums on every keyword iteration of passive real estate investing. At a few hundred dollars of passive cash flow per home, the process was simple, buy a rental property where the income exceeded the expenses and mortgage, then rinse, wash, and repeat. Like a space shuttle that accelerates through gravity and escapes the atmosphere into Zero-G, this was my way to financial freedom. Up to that point, the biggest breakthrough in my life was discovering the .MP3 format that compressed and played music digitally in my teens. Using this intellectual technology, I progressed intentionally to eleven rentals in 2016.

At that time, a few of my friends wondered why my ramen noodle diet was being replaced by Starbucks coffee and yummy double bacon and egg breakfast sandwiches. They wanted a piece of the action too. Duh, it was about time seven years later, said the little red hen who did all the work by herself…. As much as I liked helping people, I got tired of answering the same questions. So what does any other late Gen-X/Millennial do but start a blog? Unfortunately, the words I write, even if spelled correctly do not usually make proper statements in English, so I uploaded my Simple Passive Cashflow podcast to iTunes where I could ramble and honestly talk about what I was going through as an investor.

I began living more consciously, opting into more meaningful engagements with people and projects, and searching for meaning and purpose. I was beginning to ask myself, “after sitting on a beach with my unlimited supply of piña coladas and time…then what!?” Needless to say, my motivation for working in the hostile work environment that I once tolerated dwindled, so I switched to work in the non-profit public sector. I started to see the economic “matrix” where people essentially trade time for money and the rich let others build their dreams.

Being an introvert, it was paradoxically energizing to see my audience grow as I began in-person meetings and online groups I sponsored. I provided hundreds of free coaching sessions to guide newbie investors. With my engineering background and a little “bro-science,” I saw patterns arise in the stories from well-paid professionals who were led into an unfulfilling lifestyle unaligned with their passions. Abolitionist Henry David Thoreau said, “The mass of men lead lives of quiet desperation and go to the grave with the song still in them.” People do not have any time to look inwards and are constantly living with anxiety and self-doubts because they are working like machines in order to meet their basic needs without the freedom to find their true passion.

Why did so much hard-work lead to financial scarcity and lack of fulfillment?

This self-selecting group of hard-working professionals searching for more all had a common thread. A moment that pushed them over the edge and made them realize that the path they were on was unacceptable.

These are some of those tipping points:

  • Seeing younger, less experienced workers being “red-circled” as future management and advanced through the company “fast-track”
  • Being fired to cover up shortcomings in a budget
  • Internal theft by upper management
  • An affair by a superior lead to bankruptcy of a startup company affecting many innocent employees
  • Chronic drain of working with deadbeats
  • Getting lost in the office politics of getting your objectives completed when they do not align with your boss’ objectives
  • A retirement party for a coworker is catered with crappy Chinese noodles due to the cost control
  • When you don’t get the job because you do not have enough grey hair
  • Because you have too much grey hair
  • Being criticized for not being business savvy from those who live paycheck to paycheck (when you have a personal portfolio of a few hundred rental units)
  • Sitting through endless meetings that should have been sufficed with an email
  • Circle jerk meetings where the boss’ dumb ideas are exalted by their minions
  • When your boss with no technical experience misuses terms like artificial intelligence, big data, machine learning, and deep learning
  • Being enslaved with the “golden handcuffs”
  • Seeing an ambulance come to the office routinely during layoff season
  • Being around the negative W2 worker speak and adopting the prevailing victim mentality
  • The road warrior gets an early quit on Friday only to see the spouse at home with the pool boy
  • Watching your friends receive the Seiko stainless-steel watch retirement gift

If you have found a calling in something you are good at and truly love doing it…clap, clap, good for you. Keep doing what you are doing and consider yourself lucky. If you relate to any of the moments above, read on.

This is ME today January 2023…

https://youtu.be/HThWJmOupCQ

The One Idea

My online journal resulted in many emails of gratitude and acknowledgment because I was empowering people with the “how to” and inspiring them to take a leap of faith to change their financial life forever. I suspect the most effective part of my message was showing people that if little, awkward engineer me could do it, how bad could it be?

I started up-leveling my peer group, and through osmosis, this brought me to a Tony Robbins event where I literally walked on burning coals! There were a multitude of top-down and bottom-up techniques Tony Robbins spoke about during the intensive four-day event. One of those lessons was “things happen for a reason,” and boy, was I glad I did not leave to use the restroom when he outlined the six human needs:

1)         Growth

2)         Contribution

3)         Significance

4)         Uncertainty

5)         Certainty

6)         Love and Connection

Here was the game-changing moment…. Tony Robbins said, “The most important thing is contribution because the secret to living is giving. If you catch onto that, you start realizing that there’s nothing you can get that comes close to what you can give. Life is calling all of us to be more than just about ourselves and that is when we get that spiritual hit.”

Apparently, Mr. Robbins did not endorse the mission of sitting on a beach with an unlimited supply of piña coladas and taking food porn pictures while gallivanting the world as a tourist. Nor did he support playing it safe with a bunch of passive investments.

Later that Easter, I was baptized, and the message there too was “go forth” and help others.

Then another of my mentors, real estate legend Robert Helms, said, “When you are successful you have an obligation to send the elevator back down.” I made it to my penthouse and now I and this elevator are heading back down to get folks!

We all have a finite time on Earth and an empty canvas to create a legacy. This was my one shot! Opting out of the linear path was not about getting financially free and sailing off into the sunset, but it was about standing up for change and creating the greatest impact!

The fan mail all followed a common thread of pain. Many hard-working professionals who are busting their butt on the linear path are being misled down a comfortable life of un-fulfillment. Many of them were enslaved by the “golden handcuffs,” running in the hamster wheel of the day job working for someone else. Some, like doctors, lawyers, dentists, accountants, and engineers make more money to get the big house and nice car, but in the end, they are just a bigger hamster. The dogma of the Wall Street “buy and pray” method is a cover up to insidiously steal investment returns from the people who are doing all the work.

Life is a three-phase screw job:

Phase 1: You enter the workforce with the worst jobs with the lowest pay. Time is abundant.

Phase 2: When marriage and kids enter the picture (and ailing grandparents) this is the time when one should be excelling at their time- consuming career. Money is abundant.

Phase 3: Your teenage kids hate your guts and your health starts to fail. Time is abundant.

The Next Chapter

My mission is to teach and empower good people to realize the powerful wealth-building effects of real estate so they can spend their time on more important ventures and passions instead of working long hours and worrying about their financial troubles.

https://youtu.be/azOtb5zY7J4

For the parents and the next generation: Sports help children (and people in general) to have a healthy lifestyle early on. Not only that, sports teach them discipline, grit, confidence, persistence, and teamwork.

SimplePassiveCashflow.com seeks to educate those looking for diversification and better returns outside of traditional investments such as mutual funds and stocks. This is part of a large effort to redirect billions of dollars going to the corrupt Wall Street roller coaster and help the shrinking middle-class find safer and more profitable investments in projects that benefit Main Street such as affordable workforce housing rather than luxury housing for the rich.

The true meaning of wealth is having the freedom to do what you want, when you want, and with whom you want. Building cash flow via real estate is the simple part. The difficult part occurs after you are free financially to find your calling and fulfillment. But that’s a great problem to have 😉

116 – Jay Papasan from the One Thing

YouTube Link: https://youtu.be/4K4VFnGpfJo? sub_confirmation 1

Text “simple” to 314-665-1767 to download the Hui Google Drive files and the 2018 Rental Property Analyzer

For a free electronic version of my bestselling book in 12+ categories text the word “ebook” to 587-317-6099.

Please help the show by leaving a review: http://getpodcast.reviews/id/1118795347

Join the Hui Deal Pipeline Club! SimplePassiveCashflow.com/club

Pardon the grammar – I’m an Engeneer, Enginere, Engenere… I’m good with math!

________Here are the Show Notes________

Jay Papasan is a bestselling author, vice president and executive editor at Keller Williams Realty International, and co-owner, alongside his wife Wendy, of the Papasan Properties Group in Austin, Texas. His most recent work with Gary Keller on The ONE Thing has garnered more than 200 appearances on national bestseller lists including #1 on the Wall Street Journal bestseller list. Before joining Keller Williams Realty, Jay served as an editor at HarperCollins Publishers, where he worked on such bestselling books as Body-for-Life by Bill Phillips and Go for the Goal by Mia Hamm.

Jay serves as Gary Keller’s co-author and executive editor on best-selling titles including: The Millionaire Real Estate Agent, The Millionaire Real Estate Investor, SHIFT: How Top Real Estate Agents Tackle Tough Times, FLIP: How to Find, Fix, and Sell Houses for Profit,HOLD: How to Find, Buy, and Rent Houses for Wealth, and The ONE Thing: The Surprisingly Simple Truth Behind Extraordinary Results. He also co-authored SHIFT Commercial.

Best investing books Simplepassivecashflow.com/books

The domino theory – momentum

18-25% total return for SFH

Start small – and go small first fast

Co pairing tasks

Focusing question – what is the one thing I can do that will make everything else go away

411 – annual goals

Work a maze backwards – begin with the end in mind

Counter balance not balanced

When do you stop pushing and start living?

Don’t buy your primary residence

Involving your spouse

Short segments:

 

 

Time is the most important thing… If not now when?

Time is the most important resource. You can trade time for money and vice versa. It is pretty rare that you can not throw money at a problem and make it go away. And if you have kids!

 

Some hacks I have implemented updated 8/1/18 (See how far I have come) 

  1. Using disposable chopsticks, plates, bowls, clubs, and forks to minimize time to wash dishes and put away. Also need less space for more of this “stuff”. I think we do not realize how much not only time we waste on this but water and electricity go into this.
  2. Use Uber as much as I can to minimize stress, the chance of an accident, 50 cents a mile per the IRS in wear and tear to your vehicle but most importantly you can bring your laptop and get some work done.
  3. Leasing a car – such a great decision. Its fun, the numbers make sense if you are able to grow your money at more than 14% a year, and don’t have to deal with any maintenance issues.
  4. Eat out. It just tastes better too. And no cleanup, prep, grocery shopping, etc.
  5. Send me some of yours!

I stumbled upon a great visualization of your time.  Basically, the yellow below is the time we sleep, blue is leisure, and light blue is at work. See the diagram here http://flowingdata.com/2017/05/09/adulthood-days/

Two takeaways:

  1. If you have not started investing… when the heck when? Get a mentor and compress the learning curve, decrease costly mistakes, and get on with your life!
  2. There is only a limited amount of time to create a legacy… VAs or Virtual Assistants I use.

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high-quality Gigs from over 150 service categories across 190 countries.

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performed. Freelancers use Fiverr to offer services in more than 150 categories, to customers
worldwide. Currently, Fiverr lists more than three million services on its site.
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Some of you had questions about Virtual Assistants which I have had some growing pains with…

Take 1: I went to various countries/regions Craigslist where I heard there was cheap virtual labor such as the Philippines, Ukraine, Latin America, Eastern Europe, Etc. I created a generic posting for a Virtual Assistant and a link to a Google Form that I created that was supposed to farm data of willing workers and ask binomial questions such as if they had experience with graphics, audio editing, Excel, English, and how much their hourly rate was. This was a success and the idea was that I would create a database that I could BCC the emails to competitively bid projects. Unfortunately, when I sorted my list for the desired skill I was looking for, I discovered that many of the potential candidates sent generic resumes back. They did not even read the job description. I guess as the saying goes “shit in shit out.” Tim Ferriss talks about giving strange instructions to potential job candidates such as a requirement to fax in their application (in an age of limited fax access) to see which candidates follow directions and can overcome minor Resistance of not having fax machines.

Take 2: It seems like the tasks are taking a lot more time than it should. To some respect, that is to be expected. What I am trying to wrap my head around is the cultural differences not to mention the language barrier. In some of these Asian cultures, honor and face are utmost importance and sometimes it is culturally the normal to lie to save face. In America, we preach stepping up and admitting fault and moving on which I believe is a true demonstration of high value. So it’s a little frustrating… I know the internet sucks at these places but give me a break. I am just surprised they are not telling me their dog ate the GoogleDoc. Successful people take ownership and I accept this as MY fault in terms of me not having my job scope defined and linear instructions for the virtual assistant to carry out. If my virtual assistant misses on the deliverable or takes too long I take full responsibility.

Afterthoughts: A great discussion at a recent Mastermind I attended around this topic. Seems like a lot of people are backtracking from cheap (sub 8 dollar an hour labor) and opting for higher quality workers. I believe the vision of an employee is to get something done cheaper than your personal hourly rate, also get it don’t faster, and with a “Sir… I was completing task X and I found this wrong in our process so I took care of it and wanted to discuss this with you.” I don’t know if I will ever achieve this level of initiative in any person trading their time for money but one can only dream. Until then I will try to switch to a more project-based system as opposed to having a VA on call for a 10-40 hour set time. The cons of this project-based methods are that it requires more touch points for me to keep micromanaging each project and this is the exact reason I am looking for help in the first place. Time is the most important thing Jelly Bean. https://www.youtube.com/watch?v=BOksW_NabEk

The Random list of tasks to outsource:

1. Organize your travel (including learning your travel preferences). This includes making all your travel arrangements,
organizing all your flight info into your favorite travel app, and even remotely monitoring your travel to be ready to deal with
any missed flights or oversold hotels.
2. Handle billing disputes.
3. Help setting up bills onto auto payment on your credit card.
4. Address and mail cards, letters, and packages. Sure you may still handwrite the thank you, but do you really need to look up
the address and post the letter?
5. Update your contact manager (or CRM database).
6. Screen your e-mail and handle low-level responses. This includes deleting or archiving things you don’t even need to see.
7. Update your blog and social media accounts.
8. Organize and manage your filing system, both paper-based and scanned e-files.
9. Take dictation (either live or via recordings, perhaps using Voxer, one of my favorite apps).
10. Set up appointments and hold your schedule.
11. Gather all the needed data and prep information for all your appointments. For example, I ask my assistant to put to the
memo of any appointment she posts to my calendar any recent email exchanges and the contact information of the person
I’m meeting with. This saves me untold time when you compound this service over 15-20 meetings I hold each week.
12. Daily clean-up of your office, including refilling items.
13. Screen phone and e-mail so you don’t get the interruptions.
14. Take notes at key meetings and follow up with attendees on key deliverables.
15. Keep a master chart/list/calendar of your projects and deadlines and set reminders.

16. Tickler all birthdays and anniversaries, holidays, or other important dates, and even arrange for gifts, cards, or phone calls
that make you look good.
17. Update his or her own “Project List” so that all the tasks and deliverables they are responsible for in one place for you to
review.
18. Get, open, sort, forward, handle, and if need be shred your mail.
19. Coordinate with outsourced vendors when you have an IT issue. You just work from a back-up computer for the day and let
him or her troubleshoot it with your IT vendor.
20. Order things online for you and handle any product returns or service issues.
21. Handle any personal errands or schedule any household repairs. Yes this is perfectly reasonable as it saves you time that
you can reinvest in creating value for your company.
22. Notarize your documents by becoming a Notary Public in your state.
23. Help you to streamline your office—filing, sorting, and systematizing wworkflow
24. Basic updates to your Web sites.
25. Create and continue to refine the “expert system” for how to be your assistant (this one should be part of their job function
right from the start). This way if you promote your assistant they have created the core system for your next hire. If they leave
you to work elsewhere, the transition is much less painful.
26. Dealing with tech troubles on your phone or tablet computers. They can do this during the day when you’re in the office doing
other more valuable work.
27. Any parts of your projects that he or she is capable of doing for you. Constantly be on the lookout for things to try them out
doing. For example, my assistant helped expand the syndication reach of my business articles by over 100,000 annual
readers.
28. Download movies or audiobooks
29. Search for contacts of people you need to meet
30. Bookkeeping with a CPA or without one
31. Edit videos
32. Make calls
33. FInd sellers
34. Take Calls from leads
35. Call banks to find a portfolio lender
36. Assemble a list of podcast guests to contact

Podcast #113 – Buck Joffrey – Medical Surgeon gets fired and goes into freefall

For the limited offer coaching from Buck and program: Simplepassivecashflow.com/buck

Video Version: https://youtu.be/jq0MhXDEzzA

 



Text “simple” to 314-665-1767 to download the Hui Google Drive files and the  2018 Rental Property Analyzer

For a free electronic version of my bestselling book in 12+ categories text the word “ebook” to 587-317-6099.

Please help the show by leaving a review: http://getpodcast.reviews/id/1118795347

Join the Hui Deal Pipeline Club! SimplePassiveCashflow.com/club

Pardon the grammar – I’m an Engeneer, Enginere, Engenere… I’m good with math!

________Here are the Show Notes________

 

We heard you on podcast 17 and you told your story – https://simplepassivecashflow.com/podcast-17-serial-entrepreneur-dr-buck-joffery-wealthformula-podcast/

Hearing your story high paid doctor. Describe yourself as an employee?

Great butt kisser

Lane’s getting fired story

So you were fired what gave you the security to not go back?

Lane’s getting fired story

 

http://richhabits.net/catastrophes-reveal-inner-greatness/?mc_cid=610082b2da&mc_eid=a129173ca3

 

Why professionals are trained to go through the system

 

The two excuses why not to leave the professional system

 

Wealth formula – Mass (money) x Velocity (Leverage) = wealth

 

You need to make money

 

What happen to assisted living project?

 

Taking shots and trying things out? Where is the transition point from taking singles to going to homers?

 

We are talking about Jorge from Simplepassivecashflow.com/ahp

 

SPC listeners are usual creatures. Get me in a room with a bunch of W2 workers talking about their frequent flier miles and their cars and I’m completely turned off. What are your thoughts on coping with this?

 

What are some ways you teach the entrepreneurial spirit with your kids?

 

What if they just want to work for the man or do peace corps?

 

Simplepassivecashflow.com/buck to get the free 1-hour coaching offer from Buck.

—————————————————–

 

Our worst W2 moments which were our Han Solo Moments

 

How to make it as a medical professional? – Kiss Butt 😁

 

We are robots.

 

For more content go to Simplepassivecashflow.com/buck

Podcast #112 – #LaneHack – Fear + How much risk to take + KProxy!

YouTube Link: https://youtu.be/8K4AY4oOAUs? sub_confirmation 1

Text “simple” to 314-665-1767 to download the Hui Google Drive files and the 2018 Rental Property Analyzer

For a free electronic version of my bestselling book in 12+ categories text the word “ebook” to 587-317-6099.

Please help the show by leaving a review: http://getpodcast.reviews/id/1118795347

Join the Hui Deal Pipeline Club! SimplePassiveCashflow.com/club

Pardon the grammar – I’m an Engeneer, Enginere, Engenere… I’m good with math!

________Here are the Show Notes________

The two biggest enemy of success is fear.

It inhibits you from taking action. And nothing happens without that.

Fear, never goes away, no matter how successful you become. Same thing is said about CrossFit workouts… they never get easier. You just plateau to a new level of suck.

The same fear exists for the successful, why don’t they hold them back from taking action?

It made me push to busy my first out of state rental in Birmingham from Seattle, sell my Seattle rentals to 1031 into a dozen out of state properties, and lately moving toward a portfolio of syndicated private placements. I don’t know what’s next?

Successful people simply make a habit of taking action, despite the fear. They have gained the habit/muscle or mental six pack of taking action.

By taking action do you gain the experiences of facing obstacles and overcoming them, facing mistakes and learning from them, taking risks and surviving failure. Gained muscle or even a crazy mental eight pack. You draw upon these experience in times of hardship or difficulty.

Obstacles always change but your ability and track record to move around it is what is most important. When we evaluate people to work with Track-record is always important. Obvious we want to work with someone who is proven but realistically every situation in the future will be different and we are really looking for someone who can deliver despite the obstacles. We are not looking for who is a genius (although it helps) or even with some competitive advantage but mostly good character and ability to overcome obstacles… dare I say turn obstacles to opportunities.

There are a couple leads that have had touch times in their deals lately due to circumstances outside their control. What I know of their mindset is that they are freaking resilient that they will overcome the obstacles.

When crap happens we want say:

“we’ve faced a similar uncertainty before and this was the mistake we made and need to avoid”

“we’ve taken a similar risk before and we survived”

Do not mistaken brazen courage with competence/confidence. There are a lot of people who fake it till they make it.

Risk: If you are in aware of the risks and rewards (mentor/stage 3 of 4 of learning) then take the most risk as possible. The Shape ratio theory that I believe in that the more risk you take the more reward you get exponentially. Therefore take as much risk as you can to capitalize on the most reward. BUT… huge caveat here… only take the most risk that you are willing to take that if the worse that can happen you can live with.

This is why I don’t skydive.

This is why I stick primarily to non-recourse deals where the apartment is stabilized.

proxy service: http://kproxy.com/

Podcast #111 – Interview – Brent Kawakami – Saying NO to a measly $300 a month & Networking on Facebook

YouTube Link: https://youtu.be/dgdMLNq73TM

Text “simple” to 314-665-1767 to download the Hui Google Drive files and the 2018 Rental Property Analyzer

For a free electronic version of my bestselling book in 12+ categories text the word “ebook” to 587-317-6099.

Please help the show by leaving a review: http://getpodcast.reviews/id/1118795347

Join the Hui Deal Pipeline Club! SimplePassiveCashflow.com/club

Pardon the grammar – I’m an Engeneer, Enginere, Engenere… I’m good with math!

________Here are the Show Notes________

1) How much CF are you making today and how are you doing it?
Generally I’ve fluctuate based on buying/selling of real estate. Right now it’s all from passive investments in apartments. My peak was couple thousand a month.
So as I started investigating other investment activities I dabbled in:
P2P investing – Returns were decent (I think I made like 18%), extremely passive once you funded loans. I was fortunate that none of the ones i lended on defaulted so that’s real risk. While you are earning interest payments, it goes back to account so extremely illiquid. You wait out the loan term which can be long. No control. I’d rather do private lending that’s backed by a physical asset.
Dividend stocks – Lot of research, reading investment newsletters, etc. You’re still at the whimsy of the stock market. I could see doing this in future maybe if there’s a crash and you can pick up trophy companies cheap. Again no control.
Gold/silver – I got caught up by the Gold bug rhetoric of “the dollar not backed by anything” “ the crash is coming” “ look how much debt we have” blah blah . A lot of similar stuff you see some Cryptocurrencies saying now. To me you need treat as a store of value and something you don’t care about price. And you need to hold physically. It’s a chaos hedge. But it doesn’t cash flow. And if shit really did hit the fan, you’re not going to need gold, you’re going to need guns, lol.
Internet business (I did sell it later for a small gain). A lot of work…it’s a business. You can get caught up in the 4-hour work week thing, sell your ebook, etc but this takes consistent cultivating like any other business. I had an instance where a change in Google algorithm killed my profit.
Infinite banking (which i’m all in on still) – You’ve had podcasts before on this topic about all the benefits but it’s an amazing vehicle that complements real estate. Personally I don’t think of this as a true investment, it is a savings vehicle. I treat it as my cash war chest and foundation. Downsides to me are that you have to understand and treat as a system otherwise you’ll fail miserably. It’s also literally a lifetime commitment.
Ultimately I settled on real estate starting the single family route in Dallas area (buy, rehab, rent, self manage, etc). I eventually saw the light (What was the light) of multifamily and started investing passively, sold off my single family houses and now a new aspiring sponsor/operator. There’s all the typical things people say (econmies of scale, non-recourse, etc) but my a-ha moment (my 2nd Han Solo moment I guess you could say) was when I started looking for another rental house. I realized adding another $300/mo cashflow wasn’t going to drastically change my life. If I wanted to level up faster, I needed scale faster. Multifamily can do that. When you get a large check for hundreds of thousands from a disposition event on an apartment complex, that’s life changing and can get you places.

(So now you are in the stage where you are doing all the hard work before the success… lets go through this list of things that you are doing… this add value to the listener and maybe we can have a discussion about best practices – Just think in the future when a future investor listens to all the shit you did to get into this)

1) Joined mentorship program (I would rather not say who they were) No problem. Main best practice to me is it’s almost a requirement for MFH. This is a must in addition to all the other education (reading, podcasts, etc)
2) Regularly Contacting brokers/Signing up for lists
3) Evaluating deals
4) Scheduling in-person meetings with with brokers to connect (what did you do). My partner and I specifically reach out to have a meetings at a broker’s office. We’d talk about what we’re doing, looking for, etc and it gave us an opportunity to meet other associates. I’ve tried to do in-person at their office or if I can take them to coffee. For out of town brokers we’d do over phone or if we travel to see a deal (leveraging a current listing of theirs as a talking point to get convo started).
5) Making regular LoopNet rounds
6) Going on property tours
7) Networking on BiggerPockets/LinkedIn/Facebook, etc
8) Going to Meetups, events, and conferences
9) Partnered up with another new sponsor/operator to duplicate efforts, fill gaps, etc (What do you do well and what does he compliment).
My partner is better at making connections and relationships than I am. I’m more analytical and investigative. He’s an eternal optimist, while i’m Mr. Engineer worst case scenario. He can get shiny object syndrome whereas I’m much better at keepings things on task. We’re both at the same level/point in our investing so we have a good synergy with the perspective we’re coming from. One of the things we like is if it takes looking at 100 deals to get 1, maybe us both looking cuts that in half lol.

2) What is your Han Solo moment…

I had two.

1- One was a couple years into my career and i started think there was more than this for 30-40 yrs and began exploring other stuff (as mentioned before)

2- Shift from single family to multifamily. My a-ha moment mentioned before.

3) Worst life/business moment what did you do a er? Lesson learned?

I’ve had those crappy issues that come up with rentals, like plumbing issues, tenant issues, foundation issues, etc which sucked. Although one big one was not listening to my wife about a single family house. I had a tenant turnover in one of my rentals and I had been mulling about selling and focusing on multifamily. Instead of listening to my wife who encouraged that, I did the easy thing which was find a new tenant. I had gotten so in the routine and it was the easy option even though I knew I was ready to step into next thing. It ended up being my worst tenant ever (she paid but was really needy) and a headache. I ultimately sold it a few months later.

Lesson learned: Listen to your wife more. While she isn’t involved directly in the nuts and bolts, she is a better judge of character and intangibles in both myself and others.

4) Current 2‐week experiment and 6‐month project? (90‐180 day goal) A mark of a high performer is to put your ego aside and accept the help of others and mastermind maybe folks can help you by you asking.

2-week: Let’s see when we get there. Lot of personal type things likely going on (not sure if that’s valuable for your audience?)

6-month: Sponsor a 75+ unit, class b/c apartment. That’s my one thing.

5) What is your simple passive Cashflow number? Now imagine you had 2x that amount… Describe your ideal day, detailed rou ne, and what projects you are working on.

6) Something that you have recently or thought about “burning your cash” on for me savings or an improvement in quality of life.

Meal service, not the recipe in the box but the fully prepared, proportioned individual meals. I enjoy cooking but not thinking about what I have to eat is something that I find makes my day easier, especially now that I have a baby. It’s just fuel, i can eat the same thing everyday and be fine. Plus it helps me stay on the straight line nutrition wise.

There’s a good book on this topic called Happy Money I recommend.

7) Something that you changed your mind on? Our ego o en gets in the way of greatness.

2 Things:

1. I used to think of insurance for the financial aspects only but now I think about the riders, disability kickers, etc. Having a kid changes your thought process so now i’m more thoughtful about things like insurance, estate planning, etc. I’m still behind on that stuff, but now these long term planning things are in my thoughts.

2) Owning a house isn’t a big deal. We recently sold our house and moved to an apartment for a number of reasons…yada yada yada. I’m not full Grant Cardone though.

8) In this sellers market… what are you inves ng in? What should a someone who does not have a substan al level of cashflow yet be inves ng in?

My cash value life insurance/infinite banking strategy is my core foundation. I see that as the warchest and can let me sit on “cash” without losing too much. I’m obviously still actively pursuing multifamily, it’s harder of course with the current market, but deals can be found in all markets.

Nothing wrong with being patient if you think things are frothy. 100% of nothing is better than any percent of a bad deal. Being patient is the hardest thing.

brent@hellomultifamily.com

Podcast #108 – Rocky Lalvani recalls 2000 & 2008 corrections and regrets

YouTube Link: https://youtu.be/v0fB-e3579E

Text “simple” to 314-665-1767 to download the Hui Google Drive files and the 2018 Rental Property Analyzer

Please help the show by leaving a review: http://getpodcast.reviews/id/1118795347

Join the Hui Deal Pipeline Club! SimplePassiveCashflow.com/club

Pardon the grammar – I’m an Engeneer, Enginere, Engenere… I’m good with math! Here are the Show Notes:
Currently have 5 rentals and 80k of income and trying to paying off rentals because near retirement
Also flips properties where the goal is 20k profit
He outsources much of the work
Got rentals in 2011 and regret not doing it earlier
Got hammered in 2008
Got out of the market in 2000
Interest rates are very low which is different that past times which means a good time to lock in loans, stocks are pretty high
Real estate is not for everyone and might have a wrong skill set
If you don’t want to do the work be a hard money flipper but only make 10% (you need to have the money)
Don’t lend to someone doing their first flip
Need to hire a virtual assistant – 5 properties can manage by self
Let go of politics
Marriage advice
Begin with the end in mind – He already knows his legacy and just lives it
Teaching kids financial principals – mindsets and habits
To teach a 12-year-old – give them money
To teach a 30-year-old – they need to want to fix the money problem
Letting go to be happy
richersoul.com

Financial Planners & the Death of the “Fiduciary Rule”

With our technology today and the availability of financial information right at your fingertips, many people consider doing D-I-Y financial planning on their own.

We can’t blame them!

Some do not trust financial planners these days and they do not think that they’re not following the fiduciary rule at all. Perhaps, they have this one acquaintance who suddenly, out of nowhere, will message you and invite you for coffee. Only to find out that they want to discuss wealth management and financial analysis!

Is it still worth your time and resources to trust a financial planner?

https://youtu.be/KSar5qUV1d0

What’s a Financial Planner and What is Their Purpose

A Financial Planner assists you on your financial goals and purpose. They may involve in your budgeting, saving, tax strategies, wealth building and financial legacy creation.

They figure out your financial situation, digging in from your past financial problems towards creating doable financial goals that will bring freedom. In which, they must respond to the BEST interest of their client.

They figure out your financial situation, digging in from your past financial problems towards creating doable financial goals that will bring freedom. In which, they must respond to the BEST interest of their client.

David Rockefeller

Financial Planners and My Experience

Today, we call this ACH direct deposits but the importance of this cashflow has not changed. Yet, in the 1960-1980s, Americans were brainwashed to invest in non-income based investments that had heavy hidden fees with the creation of mutual funds.

This topic really fires me up!

Here is a little humorous video to lighten the mood. Warning… the video is 20 minutes so better put the sign on your desk saying you are “away at the toilet” or “away at lunch.”

I’m not a fan of Suze Orman/Dave Ramsey show because of their scarcity/frugal money saving ideas. But for some people who can’t seem to save two pennies to save their life, I guess it is better than nothing.🤷🏻

Obsessed on planning for your retirement?

https://youtu.be/gvZSpET11ZY

NOTE: Check out Suze Orman WTF face at 4:41 when the caller says their financial planner recommended buying an annuity (shocking 5% commission for the financial planner) . 

At 4:00 financial advisors make commissions and often put you in investments that are good for their pockets.

Obama tried to do a good thing and pass a law where all financial professionals (like brokers and insurance agents) had to adhere to the “fiduciary” standards—meaning they’d have to work in your best interest if they were advising you on your retirement investments. Unfortunately, this died recently and there is no more fiduciary rule.

Let’s make it clear, financial planners are NOT financial experts.

Have you noticed that many ‘experts’ are simply fee-based salespeople?

Most financial planners, advisors, wealth managers, professional managers, brokers, etc. are paid fees regardless of whether you make money. Even those who cater to the ultra-wealthy or manage family offices receive asset management fees based on total funds under management.

Look you don’t have to invest in real assets and get the amazing returns and tax benefits but whatever you do don’t invest with a financial planner!

Why?

Putting your money in an S&P 500 index fund and forgetting about it will almost guarantee you higher returns than relying on a finance professional. The S&P 500 beats financial professionals, including advisors and mutual funds, 92.2% of the time. You’re better off investing on your own and investing in an S&P 500 Index Fund!

Note: Federal Department of Licensing discussion on conflicts of interest or kickbacks to the tune of $17 billion


My Recommendation:

I do not recommend any financial planner because I don’t take financial advice who is still working for a paycheck and not out of the rat race (lives in their parent’s basement) but if you must go with one of my friends or a flat-fee one – http://www.fpany.org/

I have heard of these guys/gals do their sales pitch and use fear-based words like “diversity”, “security” and “risk” where the 25-year-old kid is trying to sell random investments to me. And don’t get me started when I tried to tell them about the being your own bank concept. #FacePalm They just tried to sell a higher return (6% whoop-ti-doo) with no liquidity. Totally not what I was going for. Not saying these guys are bad people, they just don’t know any products of the Wall Street institutions.

Note: When I call out financial planners I am also calling out brokers and insurance salespeople. I repeat, never listen to a broker! If they make enough phone calls, eventually they get someone to purchase a stock and make their commission.

Don’t be another Tool who invests in mainstream retail investments. You are getting robbed with you knowing!

Share this with your co-workers & friends/family that still believe in the Easter Bunny (happy pre-Easter!) and have a false sense of security in what this financial planner says.

Who took all your money?!? We are living in the best time to be alive with all this information at our fingertips.

Why do people still choose to follow the advice from financial planners working for a commission or so-called low-cost index funds that have about a million middlemen taking the majority of your returns? Who knows, probably why 10% of people in this test are still using the “pull out method” as their form of birth control?

This is a little off topic but make sure you are still awake there because financial education is very important.

Check out this podcast with a CFP telling us of the insider secrets in the industry.

Speaking of less known tricks! Last year, I learned this cool financial hack utilized by the smart money. By being your own bank and using the “Infinite Banking Concept” you can create a dividend-paying whole life insurance. It is called Life Insurance but its just a tax code loophole to make a tax free yield in an account that is sheltered from lawsuits and creditors. I can assure you this is another thing your financial advisor or life insurance sales guys just don’t get. Likely because they are still working for a paycheck and it actually decreases their commissions.

Go to SimplePassiveCashflow.com/banking for more info.

“Fiduciary”- AKA Fid- “dushe” -iary –  Means nothing more than someone is intentionally not going to screw you. Or sell you investments that put more money in their pocket.

For you, high net-worth professions still dabbling in paper assets you won’t want to miss this other trick that I will reveal on there too.

Financial advisers and portfolio managers get paid no matter what.

They make money by taking a percentage of your portfolio called an asset management fee. They have skin in the game.

Here’s how it works when things are good and the tide is floating all boats:

  • Your manager creates your portfolio but doesn’t really out preform the index funds
  • You have a gain and your manager takes 1% of that sum.

But in a bear market this is how it works:

  • Your manager cannot save you from a market downturn because they don’t put you in hard assets (cause they can’t get paid off of it)
  • You lose 20% of your nest eff and yet your manager takes 1% of the sum.
  • They still invite your to the customer appreciation party 😉

In bad times these managers rarely take any blame. Conventional conversation says nobody could see a downturn and we were dollar-cost averaging anyway.

If the market is good, they can take full credit for their supposed management skills.

They try to make things confusing with their complex trading systems which no one can explain in order to glorify their position and allow you to just let them drive.

No one really gets rich with Wall Street investing other than the insiders. Not retail, mainstream investors. As real estate investors, we do not buy retail (turnkey is sort of retail) but syndications and private placements are not retail.

https://youtu.be/Y1PZCSZbBDI

I only invest in things that make sense. Where the income has to exceed the expenses. And where there is a forced appreciation (not market appreciation) where you have control over your destiny.

In the end, you want to buy direct as possible. Buying REITS is the same thing as buying mutual funds with a bunch of middlemen. Crowdfunding sites remove a few layers but as a syndication working with a Crowdfunding site is very expensive way of acquiring capital. Sometimes I wonder who are the people using this high cost of private equity… Perhaps they are “desperate syndicators?”



Do you believe in the Easter Bunny?

Annuities are products of insurance companies peddled by their agents. And built upon a pyramid scheme with an older guy (which white hair) employing a bunch of young guys to find warms leads to a fancy office. 

Annuities pay extremely high commissions, often 7% or higher. On a sale of a $200,000 annuity, an insurance salesperson can earn $14,000.

When you have to pay Peyton Manning and Brad Paisley to advertise your product.. I’m out.

The drawbacks of an annuity (especially the opportunity costs of buying your first turnkey rental) are often ignored by ignorant salespeople.  An annuity is one of the worst investments you can make!

Insurance salespeople use scare tactics to sell annuities using terms like: 1) capital preservation, 2) diversification, 3) risk.

They claim, with an annuity, you’ll never run out of money. The one so-called advantage every insurance salesperson will tout is the guaranteed monthly income the holder will receive once he reaches retirement age. No matter the state of the economy, the salesperson touts, “you will always get paid, and your principal will not lose value.”

Protected principal and a fixed income sound nice but here is the truth…

 

Before we get into the drawbacks of annuities, it’s important to discuss the principle differences between the two main types of annuities, fixed and variable annuities.

Fixed annuities are very much like a bank CD. You deposit a sum of money, and the insurer agrees to pay a certain interest rate over a specified period. Supposedly, you’re protected from downside risk in that your principal is contractually guaranteed.

Variable annuities, on the other hand, are more like mutual funds and can go up and down with the market. However, there are some significant differences between annuities and mutual funds that make choosing mutual funds over a variable annuity a no-brainer.

Stock Market Scenario (2022)

With the differences between fixed and variable out of the way, here are the primary reasons why you should avoid annuities:

1. Limited Upside

With fixed annuities, in exchange for the security of a monthly income, you give up most of the upside on your investment. Fixed annuities protect principal but also limit the upside. Some fixed annuities allow the holder to participate in the upside of their investment; however, they usually cap it at around 4% per year.

So even though it’s true if the market falls 20%, the investor won’t lose any money with a fixed annuity, on the flip side, if the market gains 20%, in most cases you will not participate in the upside. If you do, you’ll be limited to 4%.

With fixed annuities, even with the highest paying offerings, the most you will top out at is 4% per year. Factoring in inflation, that 4% on your principal in today’s dollars, may not be worth much when you retire in 20 years.

2. Fees & Expenses

Some compare variable annuities to mutual funds, but there’s one big problem with that comparison. Even though you can enjoy more upside than with fixed annuities, variable annuities are saddled with additional management fees not associated with mutual funds.

These high fees, usually known as insurance costs or M&E (mortality and expense) charges, result in higher annual operating expenses than mutual funds.

https://youtu.be/8v-DiV2b6wI

 Average annual expenses are up to three times higher than a typical mutual fund’s expenses, sharply reducing your future investment returns.

Example how impactful fees are:$1,000 for 40 years @ 8% = 24,523.81 => 0% fees = you keep it all$1,000 for 40 years @ 7% = 16,440.17 => 1% fees = you keep 66% of your return$1,000 for 40 years @ 6% = 11,020.97 => 2% fees = you keep 45% of your return1% in fees on an 8% return costs you 33% in compounded losses over 40 years.

3. Taxes and Penalties

Annuity distributions are taxed at ordinary rates. The monthly distribution on a fixed annuity is taxed just like interest on a CD. That fixed annuities are taxed like CDs is not unexpected. That variable annuities, invested like mutual funds, are taxed at ordinary rates when money is withdrawn should make every potential buyer of annuities run for the hills.

So on top of the already high management fees, you’ll more than likely pay more in taxes when withdrawing your money at ordinary rates instead of the capital gains rate you’d pay from withdrawals on your mutual funds. On top of the obvious tax disadvantages of investing in annuities, the various penalties associated with annuities should also deflate any enthusiasm for these products.

Annuities are contracts that require you to hold them for a minimum amount of years (i.e., surrender period) before the guaranteed payments kick in. If you withdraw your money within this surrender period, you’ll incur early withdrawal penalties. Surrender periods vary from two years to 10 or more, and the corresponding charges typically decline with time.

For example, a deferred annuity with a 10-year surrender period would charge 10 percent on money withdrawn the first year, 9 percent the second year, 8 percent the third year and so on. On top of the early withdrawal penalty, if you make a withdrawal before age 59½, you’ll be subject to a 10 percent federal tax penalty. With these types of penalties, annuities are designed to keep you in for life.

4. Their Guarantee is not Exactly a Guarantee

Unlike bank deposits that are guaranteed by FDIC for up to $250,000, annuities are not federally insured. The insurance companies themselves make the guarantees, and those guarantees are only as secure as the insurance company making them. If the insurance company goes belly up, you’ll be out of luck.

5. About That Guaranteed Income

It doesn’t sound so great when you really dig into the math. For example, if you bought an annuity at age 35 that doesn’t start paying until age 65, you’re tying up your money for 30 years. For what? The chance to make a maximum of 4% a year on a fixed annuity, taxed at ordinary rates? Variable annuities aren’t much better as outrageous fees absorb any potential upside. To illustrate how bad annuities are as an investment, especially for retirement, consider the performance of the S&P 500 over the past 30 years, which had an average annual return of 6.73%. You’d be far better off putting your money in an index fund for 30 years and letting that money compound so by retirement age, your return will far exceed the 4% return on a fixed annuity, and you will enjoy the advantage of your withdrawals being taxed at the capital gains rate instead of at ordinary rates with annuities.

Like a subpar cell phone pushed by an overzealous salesperson, annuities are subpar financial products pushed by overzealous insurance agents who stand to make a killing on commissions if they sell you one.

They prey on the fear that you’ll run out of money in retirement if you don’t go with something that pays you a guaranteed fixed income. You may want to think twice before considering annuities as an investment. I can’t think of one person annuities would benefit and the only ones profiting from them are the insurance companies and their agents selling them. Don’t fall for their incentivized sales pitch!

The hardest part of breaking up is just transferring over the money when your salty-FP does not help you and stops being your pal.

https://youtu.be/HJ89lMXLJGA

An excerpt from “Tax-Free Wealth” by Tom Wheelwright

THE MUTUAL FUND TAX TRAP

Mutual funds are the most common form of stock market investing. The problem is that mutual funds contain a tax trap that many people don’t know about. Think of a mutual fund as a pass-through entity like a partnership. The income earned in a mutual fund is not taxed to the mutual fund. Instead, it’s taxed to the investors. That might be okay if everyone entered a mutual fund at the same time. Everyone would simply report their share of gains and losses on the stocks sold in the mutual fund, and then they would see the value of their investment grow or decrease by those same gains and losses.  

That, however, is not how it works. If you invest in mutual funds, you will likely buy into a fund that has been around for many years. Over the years, investors have come and gone while the fund has purchased many different stocks over those same years. The challenge comes when the fund goes to sell a particular stock. Let’s say you decided to invest in Mutual Fund A at the beginning of the year. The fund bought Stock B for $10 per share fifteen years ago. When you joined the fund at the beginning of the year, Stock B had a market value of $50 per share. The day after you join the fund, the fund managers decided to sell the stock. So there is a gain to the fund of $40 per share on the sale of Stock B.

Who pays the tax on the $40 gain? You do, even though you just joined the fund the day before. All investors who owned shares of Mutual Fund A on the day the mutual fund sold the stock share the gain. Doesn’t seem fair, does it? It gets worse.

Suppose you paid $100 per share for Mutual Fund A when you bought it in January. At the end of the year, the stock takes a dip in value and now your shares of Mutual Fund A are only worth $80 per share. You still have to pay tax on your share of the $40 gain from the sale of Stock B inside the mutual fund.

RULE #17: Mutual funds are one of the few places where you can lose money and still owe tax on your investment.

Our mastermind did a book club on this book and here are the recordings.

Printable file to share with love ones

Financial Dogma

“Wall Street is the only place that people ride to in a Rolls-Royce to get advice from those who take the subway” -Warren Buffet s

 

This is a confession that I have trouble hanging out with regular people because I struggle to biting my tongue whenever I hear money myths.

Part of the problem is that people and their parents (role models) have lived this way for so long that I am fighting uphill. Combine this with confirmation bias and fragile over compensating egos who don’t have a clue what they are doing financially it’s just better to shut up and smile silently.

Many of the misconceptions out there are born from millions and millions of marketing dollars to feed the Financial Complex and commissions for misled sales-folks just trying to pay for food, shelter, and clothing.

I was reading this article on brainwashing your child to like your favorite sports team and it made me realize how impressionable we all are. And how it is all reinforced by each other.

Here are some of these myths that I want to call out in this safe SPC environment:

  1. A 529 college saving is for the investing clueless. A 529 plan is a type of savings account designed to help pay for college-related expenses. There are two types of 529 plans: college savings plans and prepaid tuition plans where college savings plans are more typical because prepaid tuition plans come with big premiums and are not guaranteed by the state Like a 401K or other retirement accounts, it grows tax-free. By investing any after-tax contributions in stocks, bonds, or a mix of other investment options you choose you can shelter it from taxes until you can take it out if used for qualified educational expenses (undergraduate or graduate studies, including tuition, books, computers, and even room and board and now private elementary, middle, and high school tuition). Prepaid tuition plans allow you to pre-purchase all or part of tuition costs for an in-state, public college. You can also transfer your investment to a private college 529 plan that is sponsored by over 250 private and out-of-state colleges. You are essentially locking yourself into current tuition rates but the sophisticated SPC Nation knows that you are losing out on the immense opportunity costs if you invested that money instead in income producing turnkey rentals or syndications. And that brings us to the bigger issue… investing within a 529 is will get you some tax incentives but you are still investing in garbage (stocks, bonds, REITs, money market accounts, mutual funds) with the most risk and lowest returns. Other notes: be careful not to put into the child’s name because that would not be smart because they will likely like to screw off in Japan or something (unqualified and will face a 10 percent penalty tax). Also, the maximum lump sum contribution allowed before a gift tax is applied is $15,000 per year ($30K per couple if your child is so lucky to have two parents) #gratitude. If you are trying to game your FAFSA to get student loans in most cases if a dependent child or their parent owns the plan, financial aid eligibility will only be reduced by five to six percent. If the child owns the account and files as an independent, it can reduce aid by 20 percent (we told you not to do this above). You can get really tricky if a non-parental relative owns the fund, there will be no effect on financial aid — unless they withdraw the money. In this case, FAFSA sees the funds as income, and this can reduce financial aid eligibility by up to 50 percent. To avoid reducing your child’s eligibility, be sure to withdraw the money after any financial aid has been awarded. But remember you are still investing in garbage (stocks, bonds, REITs, money market accounts, mutual funds) with the most risk and lowest returns. Invest in hard tangible assets where the risk is less and returns are stronger! 
  2. Non- solicited Advice. Ever hear retirement advice from a fellow co-worker? Well if they have been there investing their money in risky stock/mutual funds or better worse the company sponsored 401K or pension plan. Why the heck would you take their advice? One of the most common pieces of advice is that they tell you if you delay your retirement to age 65, you get more money! Of course, you will because the Government has done the math and they figure many of those sorry souls will die decreasing their entitlements they have to pay out.
  3. The tax code is written in such a way where only the first few pages of the tax code explain the tax rates. The remaining thousands and thousands of pages explains how the government will incentivize you for government stimulus activities where you can get tax breaks for them. If the government takes these tax breaks it would remove the incentive for the so-called rich (leaders in creating) business and jobs, provide housing, oil, gas, food or whatever government stimulus is needed. Learn more from our Book Club study of Tax-Free Wealth. Avoid Ordinary Income – The wealthy avoid ordinary income because you can pay up to 39.5%.
  4. Borrowing as a Strategy for Asset Protection. Having a paid off house is the worse thing for asset protection. Everyone knows what you owe (or lack thereof) and you are a sitting duck for litigation in a country that leads the world in silly lawsuits. Encumbering your assets (hopefully good ones that produce income) in debt makes you less of a target to a predatory lawyer. PS… debt increases your return on investment as well as locks in your value because as inflation continues to rise you are paying back the balance on the pre-dated amount.

REITS are like mutual funds. There are so many middlemen taking your money with hidden fees. It is like investing in real estate just as much as drinking high-fructose corn syrup “real” soda.     

-Lane Kawaoka

According to the 2017 American Association of Individual Investors Asset Allocation Survey, the average individual investment portfolio consisted of about 66% equity, 16% fixed income, and 18% cash.

Large institutional investors or “Smart Money” asset allocation models contrast that of the average retail investor.

According to a January 2017 report from the National Association of College and University Business Officers (NACUBO), university endowments report average asset allocations of 35% equity, 8% fixed income, 4% cash and 53% alternatives.

With 401(k)s and IRAs heavily invested in mutual funds and with investment advisors heavily skewed towards equities to drive up fees, it’s easy to see why individual investors prefer the convenience of Wall Street.

Why does the smart money allocate a majority of their assets to alternative investments? The simple answer is the returns are better.

Alternative investments are shielded from the volatility of Wall Street.

The JOBS ACT opened up the playing field is allowing more people into syndications.

This guy sold me a scammy life insurance policy, unlike the ones that the rich do… what can I do?

You basically have three options:. 

First option: Cash it out and just walk away with the cash that’s in it is the obvious choice that I would recommend in most cases especially when you can put it into a turnkey rental or syndication. In that case, you obviously no longer have a life insurance policy so the death benefit goes away.. Because of the way it was designed, it hasn’t built enough cash value yet for there to be any tax consequence so she doesn’t have to worry about that..

Second option: You could borrow against this policy and use the money that way.. Basically, she could do banking inside what she currently has, the downside is that it’s not a great cash building policy so there’s more cost in it than what you’d like to see and then the loan rate may not be real favorable..

Third option: Open a new policy (one that is designed for cash build up) and do a 1035 exchange into it where you could use the policy for banking.. The nice thing here is that you would have a little cash right up front to boost the new policy.. The downside is just going through the process of getting a new policy..

So basically, if you need/want the insurance death benefit and/or would like to use the banking strategy, the best bet would probably be to get a new policy that designed for that purpose and dramatically reduced cost.. If you don’t really care about using the banking strategy then you can just cash out and walk away with no issue..

Why We Avoid Investing in Wall Street

Wall Street investments:

  1. Is a roller coaster. Your investments are at the whim of the market. And things move so quickly.
  2. You have little input or control. With real estate you can use insider knowledge.
  3. Investments are retail meaning there are many layers of salesmen. Everything is based off sales commissions. The key is to get closer to the source to cut out all the layers of middlemen.

“We know what is going to happen if you keep investing in the same old stocks/mutual funds/bonds… you will keep working at your job with a lackluster retirement in 40-50 years. Invest in real estate for cashflow is a proven way that I created my pension today and allowed me to retire before I hit the age of 34. Do the math… the numbers don’t lie… people do”  -Lane Kawaoka

Thank you for supporting SimplePassiveCashflow. I made this website because I was lonely and wanted to build a tribe. Join me below:

Podcast #105 – Jordan Goodman – Affiliate connections + mortgage rate optimization + Dolphin mentality

https://youtu.be/MAvb05-xROY

Here is the download link for Jordan’s text on the mortgage rate optimization strategy: https://drive.google.com/open?id=1XajKX3Otl9egfIbTnPBsr49wf7pDZHsO

Cash our or Refi – https://simplepassivecashflow.com/cash-refi-question/

Webinar  – How to pay your 30-year mortgage in 4 to 8 years with Mortgage Rate Arbitrage – https://youtu.be/fwcY79AKkMA

YouTube Link: https://youtu.be/MAvb05-xROY

Text “simple” to 314-665-1767 to get access to the Hui Google Drive files and the 2018 Rental Property Analyzer

Please help the show by leaving a review: http://getpodcast.reviews/id/1118795347

Join the Hui Deal Pipeline Club! SimplePassiveCashflow.com/club

Pardon the grammar – I’m an Engeneer, Enginere, Engenere… I’m good with math! Here are the Show Notes:

Gets a piece of the action by leveraging your time, knowledge, and connections.

Download a free chapter in the Hui Files

Get a heloc, keep your income in the heloc and pay down your home mortgage
People depend on traditional sources
Don’t quit your job until you have the next thing going
Dolphin culture – help people without any return

Jordan Goodman has spent the past 40 years focused on one mission: to help Americans do better with their money. In a career spanning newspapers, magazines, books, radio, television, live events, teleseminars, and the Internet (www.moneyanswers.com), he has helped millions of people to solve their financial problems and realize their financial dreams.

An honors graduate of Amherst College, Jordan had just received his masters degree from the Columbia University School of Journalism in 1977 when he launched an award-winning, consumer-oriented newspaper insert, INFO, which reached 4 million readers every week. That early foray into consumer journalism soon led to an 18-year stint at MONEY, the foremost personal-finance magazine in the U.S., where Jordan reported and wrote on every aspect of personal finance. During his tenure at MONEY, he also became a regular presence on radio and television programs around the country. When Jane Pauley and Bryant Gumbel of the “Today Show” wanted to refute some of the more dubious strategies of financial guru Charles Givens in 1986, it was Jordan they asked to face down Givens. When Ted Koppel needed a financial expert to explain to “Nightline” viewers the implications of the stock-market crash of October 19, 1987, it was Jordan to whom he turned.

While at MONEY, Jordan also began to write the first of his 14 highly acclaimed books on personal finance. The Barron’s Dictionary of Finance and Investment Terms (1984), which Jordan co-authored with John Downes, has been translated into Spanish, German, Russian, Japanese, and Chinese, and has sold over 3 million copies worldwide. Now in its ninth edition, it is considered a classic in its field and a staple on the syllabi of college personal-finance and business courses, MBA classes, and securities training seminars.

In the 33 years since the dictionary was first released, Jordan has also written:
• Barron’s Finance and Investment Handbook (1986, co-authored with Downes) that provides a comprehensive analysis of every form of investment, plus a multitude of important investment resources. (The ninth edition came out in 2014.)
• Everyone’s Money Book (Dearborn, 1993, 1998 and 2001) a 970-page comprehensive financial reference that included over 6,000 resources and sold over 250,000 copies.
• The Everyone’s Money Book Series (Dearborn, 2003)
(including six separate volumes on Credit; Stocks, Bonds, and Mutual Funds; Real
Estate; College Financing; Retirement Planning; and Financial Planning)
• Reading Between the Lies: How to Avoid Becoming a Victim of Wall Street’s Next Scandal (Dearborn, 2004) aimed to educate consumers shaken by Enron-era debacles.
• Master Your Money Type (Warner Business Books, 2006) about the different psychological styles with which people relate to their finances, and how to minimize their weaknesses and maximize their strengths to build financial well-being.
• Fast Profits in Hard Times (Grand Central Publishing, 2008) that anticipated the current financial downturn and provides readers with investment strategies that allow them to make money even in a down market.
• Master Your Debt (John Wiley, 2010) which explains the many changes in the world of debt and offers specific resources to help readers pay off their mortgages in 5-7 years instead of 30 years, get control of their credit card debt, student loans and all other kinds of debt.
• The Ultimate Guide to Student Loans (CreateSpace, 2014) which explains how to save and invest before a child goes to college, how to get the best student loans when they get to college, and how to pay them off as quickly as possible after graduation.

It’s been 20 years since Jordan, in such demand as a keynote speaker, author, and guest expert on radio and television, left MONEY to focus on independent projects. He is the host of the weekly national Money Answers Radio Show which appears on the online VoiceAmerica Business Radio Network at www.voiceamerica.com. Once or more each week, he appears as a commentator on major TV news networks such as CNN, CBS, ABC, Fox News Network and Fox Business Network. During frequent trips around the country, he is a guest on local and regional radio and TV stations as well as a keynote speaker for such diverse audiences as the military, corporate employees, college students, and trade association members. He also participates in non-profit personal-finance-literacy programs such as those sponsored by the Jump$tart Coalition. And virtually every day, often several times a day, from a microphone on the desk in his home office, he speaks to millions of listeners through his regular guest appearances on countless radio shows. These include such prominent programs as “Sunday Morning Magazine” on KMOX that reaches numerous Midwestern states; KOA’s Money Monday hour with Mandy Connell in Denver, WCCO in Minneapolis with Jordana Green, WGN in Chicago with Steve Cochran.
Along the way, Jordan also has reached vast national audiences as a weekly commentator on CNN’s “Business Day” for 3 years; on Public Radio International’s “Marketplace Morning Report” weekly for 6 years; on the Mutual Broadcasting System’s “America in the Morning” daily for 8 years; and as a guest expert on NBC-TV’s “News at Sunrise” weekly for 9 years.

The son of a father who was a political-science professor for 32 years at the Ivy League’s Brown University, and a mother who was a dedicated community-service leader in Providence, Rhode Island, Jordan early on melded his father’s focus on world events with his mother’s emphasis on serving others. His parents’ formative influences, combined with his firsthand experience of a traumatic family financial crisis when he was a teenager, in large measure explain both the career path he has pursued with such passion and the reasons why he is today widely known as “America’s Money Answers Man.”

In all he does — in his books, his media appearances, his live speeches, his teleseminars, and even in the hundreds of email replies he crafts each month in response to listeners who write to ask for his advice, Jordan:
• teaches the underlying principles of responsible personal finance.
• makes clear the impact of current events on the consumer’s wallet.
• provides outstanding resources that can help the consumer to take the next smart step.