Financial Insider Explains Why the Wealthy Don’t Use 401ks
47:46 Share

This time of year, a good hoody is absolutely essential, but these days it's tough to find one that will last through the season. That's why the american giant classic fuzzy pty is made to last a lifetime, so you can count on IT to bring you comfort and warmth year after year. Slate magazine called IT, the greatest hoodie ever made, and from cotton as zipper is made right here in the U.

S. A. It's crafted with timeless style, heavy weight fleas, a double lined hood in reinforced elbow patches, which means this hood I I can withstand any outing or adventure. It'll be your new favorite hoody, and you can depend on IT for years to come. Plus, buying from american giant means supporting local communities of farmers, manufacturers and more.

This season, snag the hoody that will bring you comfort for life, the american giant classic full zip and save twenty percent off your first order at an american dash giant dot com. When you use code classic twenty four, check out that's twenty percent off your first order at american dash giant dog com. Code classic twenty four.

This is the story of the one who, as a maintenance specialist for a historic hy rise, knows that vintage charm historically needs constant attention, which is why when it's time to upgrade turn of the century mechanicals, they turn to granger with easy access to a million plus products and the scale to deliver when and where you need them. The right tools and supplies are never far away. So the one can keep that vintage building running like new call class ranger up calm, or just stop by ranger for the ones who get IT done.

The following k is the worst investment you will ever make, and it's what they recommend to working middle class families. And it's a .

total game. everything? Wall street, what's in your pocket? Wall street, what's in your pocket? Guys, pensions, insurance, retirement plans like this one, financial planner, wealth managers, you know, you gotto know the credit card did all that stuff. The point is, of course, they want in your pocket well.

And to be fair, the four in k was never meant to be a sole retirement fun. And I was meant to supplement pensions and other things that you had invested in. The problem is, is the middle class is squaze so tight that they barely have money to even put in there for a one k so some people listening maybe put money on a foo in kay, others don't. But its most people's only retirement vehicle and it's just not going to be enough. And it's also not the best thing you can be doing with your money in most cases.

Yeah, think about a they're allowing you to put money into a retirement plan. They're managing IT. And I would chAllenge any of you that fighting us on this.

What exactly is that invested in? Like think about that. Like if you have a fifty grand in your four one k what is that invested in?

You don't know. You might say X, Y, Z mutual fund, but those mutual funds are super complex. They have lots of different.

So what did they to make them complex? So that way, it's like you you're just basics you understand. So let me, the financial adviser, understand IT for you and you'll be fine bees.

Yeah.

we're going to get into that.

Okay.

those up in and they don't job ahead. But but first, let's kind of look at that average rate of return. Here's before he's going into this.

There's one thing for sure the wealthy people are using for our own case. So if you wanted do what wealthy people are doing, they're not doing that. So that's to start. But Jerry, can you show the one.

how did I lose money with an average return of ten percent like WTF? Well, here's how where to start out with a hand grant, right? And then in year one, the hundred grand is going to go up fifty percent now were one hundred and fifty thousand dollars.

And year two, we're going to go down fifty percent now, or somebody ty five thousand dollars. Year three, we're going to go back up fifty percent were one hundred and twelve thousand five hundred dollars. Year 4， we're going to go down and fifty percent.

That's going to put us at fifty six thousand two hundred and fifty dollars. And in year five, we're going to go back up fifty percent. That puts us at eighty four thousand three hundred and seventy five dollars.

That is an average return of ten percent, but an actual return of minus fifteen point six percent. So this is what they do to trick you. And this is why if you keep following this channel here.

So I thought that was really interesting because whenever I talk to people, it's always like, well, if you get an average ata return, the average rate of return over the last ten years has been, you know, eight percent. And there's two things with that is the last ten years are not going to be the next ten years. And I think we can all look at that pretty accurately. But also the average orator return, you don't understand in that because like he said, the average orator return and the actually .

rate or turn can be very different yeah, the only thing they should be calculating is return to capital is still a hundred thousand. I like that uh, strategy or the guys and algy there that was interesting. Obviously, you're not going to have fit to percent swings each year was little dramatic, but there were fifty each way. So but I think the point is well made.

Yeah I just interesting because you know the financial advice ever tell you that did they tell you that the air gator turn and the actual rador turn very different? Yeah, I didn't .

mention that to you. yeah. And here's the thing that I don't like is. If you are investing with that, that you have a hundred thousand with somebody, doesn't matter if IT goes up or down.

There's no there's no skinnin the game by the people managing your money at all. You know they're still a few. They're taking, obviously, they're onna make more money if you make money, but if you lose money, if the actual investment goes down, they're still taking their fee, their percentage, whatever IT is, you know.

And so that's another piece. There's there's no the the manager and the investor are not aligned exactly because it's the manager's entire strategy is to get more A U M asset undermanning ever that the whole strategy and then they make a percentage of that. And then there's so much that revolves around that and it's not based on return.

right? So let's start talking about the cons of the four and k, and then we're going to get into vote, you know, things that the wealthy people are doing that you could do instead. But first, let's kind of you dive into this. So let's first start with texture hero because that's definitely A A selling point of before win k is you don't have to pay tax on the money until you .

take IT out. That's not like think about the Price that lock you up even more, right? Like you can't the other thing as you can invest IT in your own stuff.

well, I mean, put you put in this way, do you think taxes are gonna lesser more in ten years? I mean, let's look at our property taxes. Let's look at our home insurance.

What do you think taxes are are gonna in ten years? They're gonna be higher. So they sound like it's only a benefit like you can put all this money in, it's tax be deferred and to take IT out. But no, it's you you're probably end up paying more than you would if you were pay taxes. Now even with know without that compounding interest on the tax.

right, I would rather make a lot of money and pay tax, then then headed to somebody else and have a differ what.

And I think a lot of people, you know a lot of people online that I was looking day things that therefore one k is not text at all. As long as they wait till their fifty nine and a half to take IT out. And that's that truth. There's an an additional penalty tax if you take IT out before fifty nine and a half.

but it's still tax that's so long.

Yeah you can't have access your money without a panel.

They basically take your money and stick IT in jail.

Well, and you could be losing money, gaining money. You don't know. You don't know how this investments even going to do.

but you can.

And do you put you do exactly you pay tax on IT later and think finally so it's only differ red until you take IT out in tax. So privy more I think there .

is some color rough that you can move IT into but not exactly sure. Um I think there's a way to do that, but to your point.

it's good. Yeah I mean, with a rather I think you pay taxes actually put IT in but you're still, I think, tax on White the gain and that's the other part of IT is do you think the capital gains to accents can be more now or more in ten years or in not ten years? And yeah, whatever you you take IT out because that's what the politicians keep going after, is that capital gains?

And you guys probably know that tax is what pays the bills for the government. So and the government doesn't have a baLance of budget. So that's a pretty logical theory that um they're onna want to have more tax on on the people to pay for all the expenses.

absolutely. And then the second thing you started to dive into and that is fees and know whoever is in charging your forewing, ky, is charging you fees. Fees have actually lowered on foreign case in the last few years, but they're usually between you know half a point in two percent.

yeah. So think about that. There is no real incentive or retire to if the airport folio losses one or two or three percent a year. Their still making pretty close to what they are making.

That the the point and you know a traditional al real state deal, if it's structured correctly, you're investing in IT the sponsor or the G P. That called the general partner, they get paid after all the money so that we supposed to be. So let's say you put a million box into a rosie deal as A L P.

There's a waterfall where there is first to preferred return, not a estimate, a real preferred return. So let's say five, six, seventy percent, whatever, that might be desperate first, then the actual million is paid. Second, then the actual sponsors paid. Third, which is the G P. Lets say in most case, so so in most cases, people to put the deals together, don't make money and tell all the equities paid back the the wealth management business to poor one k specifically let's saying those those are they get fees regardless of the up and down of the of the of the performance .

yeah and exactly. And on average, like just looking at you know average calculations, one percent of fees will take away twenty two percent of the cash the two earned by the end of the four one key on average OK. Yeah, now europe fees might be lesson one percent. They might be more, but that's a that's a huge number.

And let's not forget, once you give up that money instead sits in a poor one k jail, you Better hope that they're putting IT into some kind of inflation adJusting program because that that's another way like right now, if you have cash, let's say, sitting in savings, you're getting club bored because of inflation. But you can put IT into inflation, adjust that vehicles. IT doesn't have to you can be.

And if stock investments are one doesn't have to be real state, IT can be whenever you Better make sure. But if IT isn't, if it's in some that but it's in some industry that that is going down um then you're even more at risk. So then you have you have the inflation number.

It's I like my dad, I told I tell her that story when my dad passed away um kind of a weird thing but you got dig into your parents finances and my mom um um in in our case was rely on my dad so the kids again in my dad had a ten thousand turn policy that at the time he bought IT he thought my gosh just saying is the greatest thing on the planet you know your mom is covered and I remember that ten thousand dollar insurance policy IT did pay out IT basically paid for his funeral, which is something but IT wasn't what he was anticipated. And I didn't adjust with inflation, had IT adjust to with inflation. And women, well over one hundred thousand dollars, but I wasn't. So you know, you have to take a look at what the money invest in yeah.

And before we even get to that, you know, people, you know, they put IT away and they work so hard and you were just put IT away and you trust, right? But a lot of people listening probably don't even know what feeds they're paying right now.

I would guess that most don't yeah not to mention the fact that guys there's other things going on inside of the and inside of the jail. So one, the fee you could probably and that you would find out. So let's say one percent or two, that's something that everybody failed to quote you pretty easily.

But then there's other fees based on the trades that they're doing. There's front loaded and backloaded fees that are based on the financial products that, that they're putting you in to. So don't forget it's your money. They're investing IT um often times um where they want and and typically the just like anything that is a financial industry is incentivize with the various products that they're trying to get you into. And some of might be doing great, but IT IT bees you to to to to really be educated on where your money where your hardwork and money is actually going.

So brydon just posted something interesting on youtube. I haven't checked the math, but he said I did the same calculation using ten per swings instead of fifty percent. And at the end of ten years, the average ten percent return the hundred k turns into a hundred and five point k and that's .

without taking out any fees. So with these, its negative net net, right and again, if it's you know who wants to who wants to do that just for text for all um and you are I guess well you know the four one k was a bit of a mistake, right? It's IT was the one nine hundred and seventy eight and I started off the handful of companies and then just grew like crazy and became away.

Where wall street could actually legally get people to invest with them from their paychecks. That's essentially what's happened. And so now you're you know now it's I think people are slowly um you starting to realize that no, maybe it's not as great as they thought. But to your point, the wealthy, no one I know has a foreign key well and here's .

the thing is that you know I think people are starting to open up their to a lot of things. And this is just another thing you may be should look at. And a lot of people on youtube were saying, what if your employer matches IT?

right? Like, is that Better if your employer meah? That's example? Yes, of course, that and that I think about IT employer matches is a huge peace because now typical leaders, some kind of vesting.

So what that means is there's is usually you was zero, and though in year one, I say twenty percent in year two, forty percent in year three. And then by the six year, you you're fully vested. So if they if they put one hundred dollars in, you get zero of that in your one and then twenty percent of that. And that keeps going up. And the reason they do that is to keep you at your job longer because now you walking away from a vesting, so that definitely can produce the return.

Now I can, but there still is probably things that are Better for you to be doing with your money, even with the match.

Well, I think that all boils done the exact same thing. And that's financial education. Do you want to turn your paycheck over to somebody else? Hey, MRI mental. Recently I ask mate mobiles legal team, if big wireless companies are allowed to raise Prices due to inflation, they said yes.

And then when I asked if raising Prices technical violates those owners to your contracts, they said, what the are you talking about you in saying hollywood? So to recap, we're cutting the Price of mt. Unlimited from thirty dollars a month to just fifteen dollars a month. Give you to try mt. Mobile doc ash.

S this is the story of the one who is a maintenance specialist for a historic I rise knows that vintage charm historically needs constant attention, which is why when it's time to upgrade turn of the century mechanics, they turn to granger with easy access to a million plus products and the scale to deliver when and where you need them. The right tools and supplies are never far away. So the one can keep that vintage building running like new call, click granger up com, or just stop by ranger for the ones who get IT done.

And if you do, do you know where is invested? Do you know all the fees? And are you taking an active role in your own money? Or is IT Better for you to do that? Someone else? I think that's kind of the whole point of this channel well.

And you know for some people, the following can may be the best option because maybe you're busy, you know how time to deal with that. You're making money. This is just part of your retirement plan, not the whole peace.

But if you want to make the most money that you can retire, it's gonna take some work because you're gonna to get educated. If you have someone do IT for you, then you're going if the four one key and that's Better for is Better than nothing, is Better than doing nothing. But IT just isn't really the best vehicle for that. And I wanted to go into inflation because you have mention that and you know the returns in the last few years have been four to seven percent in a lot of these four one case. Well, what's inflation been and what's inflation really been to not just what have the government saying but like what has that really been?

Yeah so guys. What is a one month T B bin four half five so and that's completely in your control back by the government. So do you want to turn IT over to somebody in a four one k and do four seven percent and hopefully that hopefully I tried.

And um or would you rather have control your own money? Um you know I I just I just paid a bunch tax on that interest. You I had a bunch of money in those thirty in those thirty three bills for um free of tax.

And I was interesting because I I didn't really track IT too well, but I I had a lot of money sitting in these as that as we try to deploy in a real cause. I wanted making money somewhere, but I also want to have access to IT. So the the availability of having that money is is and being liquid is more important for me.

And that's because i've taken an active role in my in investing my own money. And and I think your point, this is a, this is a do do you want to take control your financial future or not? You do you want to put your money into four one k and if you do, you should ask the right questions that I have.

There is all kinds of ways that that my C P A year says, um you know to to put money in the different things and so one of them was the fine benefit plan for me personally, right? So I had never heard of IT, but I I put a lot of money in the defined benefit plan. I I have think of two or three million dollars are now, but the point is, I just put this money in this, and this defined her plan.

So IT is a type of retirement plan to three, four, one k but the point is there are things that where I get credit that makes sense to do. But what was interesting and was frustrating with me is that, uh, I don't have access to that money. I can use IT.

I can't, I can't do anything with me for me personally. I can't do anything for my family personally. With that, money has to be invested somewhere else.

So that's the money I used to invest some my friends stuff, you know, because I get hit on all the time, want to throw some money here there and that's what I use IT for. But um once you once you turn IT over like that, now you've again you're completely reliant and there's rules and restrictions around. Um you know it's funny.

I was taxi with kiss socket yesterday and you know I said money money is if it's treated well, what procession means is when you drop a pebble on the water and there's those concentric rings, if if money is treated well, as compounding and control actually destroys procession. So what that means is the minute you put rules in control around IT IT, IT does the opposite of what should be a professional effect. So that's what you need to look at.

And when you have the full freedom of you, invest your money how you want. Then to me, that's that's complete control. And that's when you potentially could have a professional effect with with money.

So Jerry, if you want to play video clip too, here's one interesting .

to a former in case keeping your broke. So this is a job and is contributing five thousand north per year into four one. The seven percent returned in a three percent salary increase every single year.

One, four million dollars by the time return to five now is great and like a lot of money, but it's actually so infection says three percent every year and thirty years. This one point four million dollars will only be worth five hundred seventy six thousand dollars in thirty years. They have to really started thinking about this quality, maybe some hundred million.

So I thought that video was interesting, right? Because they attached on what you were saying about inflation. And I think the most interesting part of that video is that he kept inflation at three percent yeah, those years.

And know we talk about on this show, we're going to be having you know some pretty massive inflation probably over the next time twenty years. So his money was half right, and that's him putting five thousand a month. I mean, that's the more of a chunk of money than most people are gonna put IT and inflation at three percent.

yeah. And I think this is kind of a point like just go back and take a look at to what things cost ten years ago. And and you know for you to think that in ten years from now that might not happen again.

Go and go back twenty years, go twenty years and go ten and your seat, things are more right. Um I gotta take a funny story. Daniel and I were um having a nice lunch yesterday. Outside is beautiful and I said to drive to his neighbor od that I showed her in twenty twenty one. I said this is a neighborhood you might want to look at and it's right on the park and and there's this beautiful homes is sitting there and the homes were three and a quarter and um at the time and I said, let's let's dry by this neighborhood and electrical sea what the Price are and he goes all they're probably in the five hundred hundreds right now. So anyway, so we go sit down, we lunch and we pull out zero.

How much were they? There are seven .

hundred and fifty. So now that doubled and the planers thousand four years, you're not always going to hit those other guys. You're not.

But the point is they do happen right right now. Things are really hot, really pensive, so it's easier to pick on her. But the point is three years ago, three pandemic IT was very different and we had a hell of run. So um no, you can't do that with four one time money and that's the point.

Well, so before we go to there, let's a jerk. You pull up the chart week on the averages. So I think that this is interesting, right? And I don't like to look at the average baLance because those can be sewed by people putting a lot of money in.

I look look at the medium baLance because that's more accurate, right? So on the medium baLance, for somebody that's retiring on there, four one k is seventy thousand dollars 1 thousand。 That's the average baLance is only two hundred thirty two thousand, but the medium is seventy thousand.

So you know based on that video we watched where inflation saying at three percent and everything else, that's not enough money to retire. And that's what the average sixty five year old has an A O okay. Also don't forget the sixty five years old were the board.

They went through all the good times, right? It's not like us mEllen's als or genes or we have math of inflation and we can buy a house and where struggling to pay our bills. The sixty five year olds right now have a medium of seventy thousand dollars. That's all they could put away and make in the four one. Ky, so for those of you watching that are millennial, that are gently most year medium baLance adjusted for inflation is probably going to be less than that, and that is not enough money to retire.

And watched in the the chiefs game yesterday, the bills beat the chiefs and how there is a commercial that I came on. I know if you saw this or not, but I was a very large health insurance company. Let's just put in that way how, let's say, watch and they were bragging because this guy had a big heart problem and that insurance company paid the bill.

So I was like, no is a true thing, right? But guess how much the hard problem cost nine hundred fifty thousand dollars? okay.

So what what people don't realize is that there's just one small medical in that case was a large example. There is just that could be wiped out with one thing. Seventy grand is no lot of money. No, I mean, most people you know .

it's gonna cost that, that might be if they own their home free and clear and they don't spend end any money, you might be a able to get two years out of that, maybe. But most people, if you apparent everything else, you just get one, you're out of that. So it's just not it's not practical.

It's not if you guys are just putting money away in your foo N K and thinking, you know hope and for the best thinking, everything's going to be OK like that's not a good strategy and you know there's Better strategies. And that's kind of what I wanted to get to. And some people online are talking about a self directed.

I arrive itself directed. Yeah, I arrive like you can do something like that. The end of the day, we prefer anything with real estate. yeah.

But here's the cool part about self directed. So first of long guys, you mean when I know this because I i've been all over the world and actually researched this here, that that's the beginning .

of a journey powered by the confidence that comes from driving a vehicle so reliable. It's back by ten year, one hundred thousand mile limited power train .

warranty where your .

journey well.

That's that to you visit you look a tear, dear. Today, key movement that inspires see retailer for warranty details always drive safely, limited inventory available.

In most countries. So in australia, that called superannuation, in a canada called rsp retirement savings plans, you start to look at other countries. In other countries, you actually have the power to invest the money how you want.

In the U. S. You do not just look at up and so um and so what now what they this new industry is emerging, and I guess it's not that new.

There is huge companies in this now. But essentially, you can move your money out of these retirement plans into what's called yourself directed and the self directed plants means exactly what that means. That means that you can self react, and so you can move IT laterally.

And telling me is not that easy. And the reason I know, is because we have a lot investors that invest with MC from their self directed. But so let's say they have a bunch of money singing and iran has a done that create.

They want to move IT into a self director. Well, the the the financial planner, the companies that that invested with make IT really, really hard to get that money to move laterally. The good thing is that there's no tax or anything like that.

You have to move IT over and it's lower self directed and how the self directed companies make money as they charge an annual fee essentially. And there's other little fees and stuff like. So you got to do your homework.

I'm not advocating one or the other, i'm just saying, and that's how the thing works. But then at that point, you can direct IT how you want. What's still frustrating to me is IT like I had money in a self directed, maybe I want to buy my, my, my, my kid a house.

Maybe I can't like you. There are things you can do with that, with your money. Maybe, maybe I want to buy a little place and and get out of scot stale for in the summer.

I can, I can not use that money because it's it's restricted again, control kills procession, as I said earlier. So um but the point is self directed is one step. You guys should be looking at that certainly, but only if you understand what to do with IT because now it's in your hands and you still have to invest IT. Exactly.

Terry, can you we're going to skip that one video and go down to the last video.

Four one. Kay, everyone told that your retirement, right? They just completed in twenty twenty four, a study on the last twenty years for the average four one k is producing four point two percent.

Inflation is sitting at four point one, which basically means if your moneys on a four one k it's breaking even. And here's the bigger problem, combine your foo N K with maybe more lucrative. You I ra at running at six percent, let you see your morning is earning six percent.

To put in perspective, the difference between sixty percent and six percent, sixty percent is not ten times more with the interest. It's literally a hundred times more plus. So a lot of people to understand that.

So you ve got some money save in a four one care and I way for someday it's earning the single digits and at six percent in twenty years old than this triple. So I call my fifty grand turned into utter and fifty grand in real estate if all you were turning was was in twenty five percent, which is four times the R Y. IT makes twenty seven times more money. IT makes four point three million dollars in that same by the time understanding R Y is actually a little bit party game.

So you know, that's why we like real thing, right? Because in real estate moves with inflation, and I think that's really important to know. And and I was actually having this conversation with my dad um the other day because you know their their retirement now and everything else. And I was trying to explain to him, you know, h fulling properties, social security doesn't count that income realized .

that that's a huge seg. Let's not just job over that.

In order to .

get some security, you have to basically not be working. National security doesn't account rental income as part of your income. So imagine that imagine if you had air ten rental, the cash flow and you'd still get all security.

Now the irony is, is you've invested that with your own money anyway. It's your you ve invested your own money that way. And the whole goal here now you can get burned on real state.

I want to be clear. You can give IT to somebody, and they can lose IT for you. You can visit yourself and you can lose IT, you know.

But the goal, like my sister, I was talking about my sister, how proud I love my sister. SHE was just buying like a house every few years, and then the tenant would paid IT off. That's the goal, right? And he was a bookkeeper. SHE worked on a motor ary. Her, her husband did tremeau just by slowly chipping away.

And their strategy was just to have one cash alling piece of real state and have the tennis paid off over time to eat the tenants great, make sure they're not um underwater, make sure cash flows and let the tenant pay down the mortgage. That's IT. That's the strategy. And then at some point, that mortgage is pay off and that rental income, whatever IT is because they are still going to be expenses is still going to, property tax is going, insurance is still going, those kinds of things, whatever that income is, is not used against you when you retire.

Yeah I I like related to because IT moves with inflation or runs move with inflation. So if you get this fix mortgage right now, what do you think rents are gonna be by the time you retire, they're gonna be more and you're going to have this six thirty year mort because you're going to do IT, right? That's what you're going to do, but you're making more money.

So you know you don't have to worry. You know, when I retire and thirty years, i'm not worried that rents are gonna exactly what they are now and i'm going to be making the exact same cashle that I am now because that's not what's gonna en. You know, just the basics of inflation runs gonna be more. I'm going to have more money to cover my expenses. Some of my expenses are going to be higher, but my main expense, my mortgage, will either be paid off or it'll be the same Prices that is yeah.

one of the things I want to point out, guys, one of the massively create things about real state itself is, of course, you cannot do this with four. One case is called leverage. So you could actually, if you're going to buy, I say, one hundred thousand dollars worth of a mutual fun stock in your four one cape, it's gonna be, it's going to its thing.

Or you can take one hundred thousand dollars and buy a three hundred thousand doll house or four hundred thousand old house. And that O P M, mature cash flows, that O P M or other people's money provides the debt. So you can take one hundred thousand.

And same thing that buying neutral fund stock put IT as a downpayment to a rental go matched IT up with two or three hundred thousand north of debt. And and of course, now you're in the management business, now you're in the rental business, but that the point and then that renter pays that off for you. So it's the same hundred thousand, but now you've got appreciation on the three or four hundred thousand.

You have appreciation on the debt. You have the appreciation on other people's money. Instead, i've just trying to make money on your hundred.

You're making money on the entire thing, and that's exactly why you want to use leverage with that hundred. And and most of the financial planner and wealth managers are not of lever up your your the amount you have. And so that's just one big thing.

There are so many others from the tax standpoint that you can get on real state. Don't not forget you know they they pump up the four one k with attacks to form. Well, on the real state side, you get appreciation.

You can just not Operating expense to offset your tax, you know. And and so there is all these things that you can do on the real state side. It's just, you know think of the four one k think of wall street as one big marketing peace.

That's what IT is and everybodys in your pocket um and and they're looking if if you want IT, where does a one hundred percent of the money come from? You, us, that's where come from all of IT and everything is O, P, M. Everything's other people's money, insurance companies other people's money, pensions other people's money, retirement other people's money, you know, that's all other people's money.

Credit or debt, other people's money like soon loans, other people's money like to all other people's money, even we put money in a bank, the bank owes you interest, and so they landed out of the people's money, which is really your money. So when you have complete control, when you move IT over to ourself to act and or invested yourself, and you can use other people's money. So just be smart about how you are investing your own money. You can t over to somebody and be part of O P M, and let them manage IT. Or do you use your own and then also borrow or invest longer of other people's money?

So peaceful warrior said, I did something that during the pandemic, and people thought I was crazy, but I took sixty five thousand for my retirement, which was money, the company, I would forgive me after twenty five years, and I bought real state.

nice. How do you do?

Did I think they did Better than but .

I don't think you probably would what had done well, right. But yeah and and again, let's let have your canet and be interesting to see how you've done on that. Of course, just like anything long term, it's in there for the long hall.

My my sister shoes by the houses when I mean this is crazy, think about but they're like forty fifty grand. And um years ago, he just retired. She's older than I am.

okay. Well, now those houses are worth a lot. And so the houses have gone off, the tennis paid him off and she's t great. And at the time, you know, IT, they seems like a lot well in two different things.

you know, between your sister and brother because your brother and my brother, very similar, invest in their four one days, and they work corporate and everything else. And your sister was more real entrepreneurs. Your sister knew exactly what her cash flow number was going into retirement.

He knew exactly how much per month SHE had to live on. SHE knew, and SHE was ready. SHE knew he had had the whole ratee where your brother and my brother both, you know, they just know what they have in their baLance right now, but that could change your year.

And they don't know, they have to be careful with how much they take out because it's a set number. So say it's five hundred grand, that's IT. Your sister has cashala months after month after month until SHE sells the properties where on the mall you know for one K I right side, you just have amount of money and you can stay invested, but you don't really know what that's going to do. And a lot of times in retirement, people go into really conservative investments because they don't want to lose money. And so you're more on a budget because you don't know how long your .

life exigency is is a good point and let's not forget that my brother is really, really bright um but he worked hard and he put his hand his money over to um the people and they managed IT for him and know he's happy and which is great blood to your point, that they know exactly what they're going to spend over their of their life. And I just I don't want anybody telling I want I want to be older. I don't want to sell assets to live.

I want I want the cash flow to to continue to. And I want to use that as my, I would call my unlimited or infinite banking. That's what I want.

I want to be if if if my asset that I own goes up a house, apartment building, whatever is, and I decided to do a cash out, refinance that tax free period, I can put more dead on IT free. I don't have to sell IT um I just keep harvesting IT. And i've done this over and over and over.

We buy a real state deal build and we put dead on them. And then we do cash out three, five, and we wait for another five, six, seven, eight years, and we do another cash out three, five. We wait five, six, seven, eight years.

We do cash out refinance. And I never sell the asset. You know, i'm doing A A trip today to one of our assets that we bought in two thousand and three.

So i've on this property for twenty one years, I bought for nine point seven million. It's worth in the mid thirties and i've done to two cash arrivals already on on the asset. And we got our money back in two thousand seven.

So at that point, i've been infinite the whole time. The cash a revise, not tax of all because it's dead and we just keep harvesting IT and not not to mention the several hundred thousand doors of cash flow we get every year. So and there's other tax benefits too. So when you build up your retirement plan, you basically have to pull out principle in order to live and then you get paid. You have pretext on that.

absolutely. Um so the point is it's really smarter about where you're invested your money. If you guys like this show, we also have a podcast that you should check out.

IT is on all them, spotify, apple, everything else is the can make show. We go more in depth, little bit on numbers and things in the show and talk about what M, C. Companies, which is cans company, is.

But now let's get to some of our questions. Those on youtube, make sure you ask some questions. And i'll pull a couple. Ginger is saying, I am so sorry, river is rubber I A new investor in a small market? What strategies or property types would you recommend to ensure consistent returns?

New investor? Small markets? I'm not quite sure. Um here's the thing like whatever um you've got to start with a return that the investor needs, right? So let's call six, seven, eight percent cash on cash.

What are that is? And then back in. So IT doesn't really matter. That could be a self start, could be office building, could be could be anything, could be a single family house, could be a duplex for you. It's hard to know um and but I find that our investors want different things at different times.

So we have some investors that want class a brand new new development stuff, and we have a new project called me and range that we just put out to our investors and a lot of people want that brand new. And you know, it's gonna something we hold for a long time. We're going to build IT for a whatever cost to build and then will do a cash out refinance when we put partner down on.

Others want more force equity. So IT just depends. And so um and also I hope small market, i'm not sure exactly what that means.

There could be more risk there. You definitely want um some very diversified. So but it's all gonna boil down to the real state itself. It's hard to know that's not .

information. Cern, me, he said, are there any features that are good and slower growth areas? And you know you don't really like slow growth areas?

Yeah yeah not sure why you would want that.

Um I think probably because it's his local market would be my guys yeah well.

uh, we have made these decisions before. Excuse me, we've invested in alcohol city and tales of, for example, um very slow growth. Um now IT did grow over time but very slow.

We made decision to polite those markets and an investment into others that were growing faster. So um and and we've seen that a lot. We ve seen areas of houston that have been really slow growth and areas of houston that have been really high growth.

Same, they were two sons. So right now, two sons are growing very fast. We've seen slower growth in lost vegas, right? We just in the lost vegas now it's growing very fast, so those markets can change. Um and so I personally would rather have something in a in in a higher growth than a slow .

growth solution. So let's go to Masons question. Masons asking, are there situations where you would select property and pay the capital games? And instead of utilizing a ten thirty one, our property is barely cash flowing. But IT has appreciated.

That's a great question. I actually thought about this alert. so. If if you're you have to calculate everything, you gonna calculate your tenant paid down on the mortgage, you got to calculate what the tax would be and you have to include that in the final number.

So IT might be that you're just barely get by on a cash flow basis, but you have to look at the whole picture. So what's your tax exposure and you have to calculate and if they're is a capital again, then that comes away from. Um now of course, the real question is what you going to put IT into, right? So that's a person al choice me.

I like to keep my stuff in real state long term. I'm even if it's I have stuff fat on tirer time that struggles and you know and you just manage your heck out of IT. But if you're if you're in a situation like like detail, and I were looking at a like an airbnb neighborhood in fla in the I was destined .

um no orlando orlando.

The entire neighborhood was L B N B literally period. Well there were I think we've canada like twenty or thirty hours for sale in there. Now that's different because now you're starting to see Prices come down.

You kind of locked into a certain model. Um you on that particular case, I had a lot of equity. I would probably cut my losses and move IT, but in real stay, always have lots of choices. But he would probably .

ten thirty what I mean, I think the only reason that you wouldn't ten thirty one IT because you need the money, you need IT for something or you have a Better investment, but you're going to pay well, depending on how much should appreciate, you're gna pay pretty high tax on that. So you really, if you can want to a roll IT into something, I need .

the money. The problem could is always that if you know, what are you putting in into? So we are often times fine that people that are stuck in ten thirty you want to make bad purchase decisions because if i'm if I am a seller and somebody comes to me with ten thirty one money, I know they're in trouble, not in trouble.

I know that there um they don't really have room to negotiate much because they're trying to save tax. So that's the other side of IT. You know if you if you if you you think your ten, thirty one money is. H strength IT might not be no because you might overpay going in and of course, got to calculate your cat flow going on the next one. So we've looked at this extensively and IT depends on IT depends on what you're doing.

absolutely. So let's move into device question. Devin said, do L, P, S have any decision making power or just the GPT? So to be clear, the G, P is the general partner like a cana ros in a deal, and the L, P of the limited partners and there are the investors in the deal under canada.

Yes, it's a good question. Um you have to look at the Operating agreement and that's the governing documents. We think so just like anything so just like leases and apartments are different from place to place.

So are the Operating reems. Generally the word limited means limited. So but and there's a tremens amount of legal jargon inside of an open agreement. So um it's hard for me to know, but I would say generally no, generally no. Um you know the general partner is what you're signing on for and um but things are pretty clear and the document so I would start .

there well and realistically, you know as a limited partner, would you want a committee of people limited partners to be deciding? Or would you rather have that people lead in the investment that you invested in deciding?

Yeah and that's the whole point. That's why the general nis typically in charge um of the partnership and know that things require tax or potential loans or liquidity issues or you know there are the one dealing with the lenders and usually in charge of the property manage companies or whatever IT might be. So again, fall back to the Operating agreement.

And if you guys are interested in investing with MC companies, we do only take a credit investors, which you can go to invest with MC dot com, ford flash, youtube or main range. Uh, to learn more, have a good one too much, you guys.