The Mark Perlberg CPA Podcast
The Mark Perlberg CPA Podcast
Ep 051 - Get Lean, Get Liquid & Get Out w/ Chris Miles
Join us for an exclusive conversation with Chris Miles, the visionary "anti-financial advisor," as we delve into the art of redefining traditional wealth management strategies. This episode is designed for the discerning high-income earner who seeks to challenge conventional financial wisdom. Chris, having achieved financial freedom by the age of 28 through his avant-garde approach to investment and cash flow, provides compelling evidence of his methods' effectiveness.
In this dialogue, we explore the sophisticated tactics for asset accumulation and income generation. I share my journey from the conventional path of mortgage reduction to leveraging equity for creating significant income streams. Together, we unravel the complexities of debt, demystifying common misconceptions about bank loans and investments. We shed light on how strategic debt management can be a powerful tool for accelerating wealth accumulation, and why misplaced investments might be inhibiting your financial growth.
Concluding our session, we provide exclusive insights into the lucrative world of real estate investment, showcasing how our clients have revolutionized their retirement planning. Uncover hidden gems in emerging markets and employ strategies that transcend ordinary financial planning. This episode is more than advice; it's about empowering you with the insights to curate a financial blueprint that embodies freedom and prosperity. Embark on this transformative journey towards financial independence with Chris Miles and myself.
To connect with Chris, email: chris@moneyripples.com or to learn more go to www.moneyripples.com
Welcome to the show everyone. I'm about to introduce Chris Miles. We are going to dive into some investing personal finance strategies. Before we do, I just want to remind you if you are interested in your hour services. You will see an external link at markproverspiacom. But email us if you know anyone who can join our team. We're always recruiting and looking for the best people. Send them to Info at markprovercpacom. All right, let's get into it. Chris, tell us in 60 seconds a little bit about you and what you do.
Speaker 2:Yeah, I get called often the anti-financial advisor, right? Pretty much, this means that I think financial advisors suck. The reason is actually, what I do now is actually help people do the opposite. Instead of waiting 30 or 40 years to maybe have that life of freedom and possibly maybe never, right? We actually show people how to actually create cash flow and passive income today, versus 30 or 40 years from now.
Speaker 2:It's funny because I actually started out being a financial advisor 20 plus years ago. I wasn't trained financial genius or anything like that, but I was actually looking to do a business of some sort. I was looking to become a business consultant in college, and so I figured I should have real-life business experience. The first business that came up that was intriguing was becoming a financial advisor. Because I thought, worst case scenario I learned about money, right? Well, what I didn't know other than they'll take anybody off the street, you can pass a test and not have a criminal record. What I didn't know is that you didn't have to be a financial genius to be a financial advisor. In fact, you're not a financial expert, you're a financial salesperson. So I did that for several years and the real reality hit me was when I met with my father. Right, my dad was like the ultra saver. He was like the Dave Ramsey kind of guy, like save everything, spend nothing, save it forever, stuff it away in your retirement accounts, pay off all your debt and you should be free someday. He was so guarded we'd never share about his money. But finally, after several years of me being a financial advisor, he said, chris, when are you going to advise me? So I sat down with him the first time I ever seen his numbers. He says, chris, I'm 61 years old. I want to stop working because I think my job's going to literally kill me here. So I looked at his numbers. He'd been stuffing money in that 401k. He was totally debt free, including his house. And I said, dad, I'll be honest, if you want to retire today, you better hope you die in five years, because that's when you'll run out of money. Okay, chris, well what do I do? I said I don't know. You did everything right from what I teach as a financial advisor.
Speaker 2:And so I kind of left that meeting trying not to throw him in something else. I didn't want to throw him in another stock market thing, because what's the stock market tank? Which, by the way. This was in the end of 2005,. It was only a few years later. The market did tank and got worse than where he was at at that point, and so I was kind of on a journey.
Speaker 2:I was really bugged that he wasn't financially free, even after being the tightwad that he was right, living on his own rice and beans, so to speak. He's doing his thing. And that didn't work. I was following the same footsteps, hoping that he'd create that same kind of freedom. That didn't work for him. Nor any of my clients were financially free, like in a place where they really felt like their money would last them, like they were confident with their money. And when I realized lastly, especially, this was a guy that was in real estate he says Chris, how many of you guys, as financial advisors, are financially free, not off the commission's earning, but actually doing these mutual fund investments?
Speaker 2:When I realized there was guys working in my office since late 1970s, I knew that there was a problem, and so I had to make a choice Either I stay as a financial advisor and just keep my head down, keep working and say, well, it's helping somebody do something, or I quit and keep my integrity intact, and so I chose a ladder, I quit.
Speaker 2:I would never teach about money again. I was just going to be a mortgage broker and teach ballroom dancing on the side, and while I was doing that, of course, I started to meet with all these guys who were in real estate investing, and these guys were actually financially free. They actually had enough passive income to not work, and so I started to learn from them, and later that next year, in 2006, I was able to retire myself when I was 28 years old, with having enough passive income to pay for my bills, and that's when my mind was really opened and realized that's a heck of a lot easier than what I was teaching as a financial advisor and came out of retirement in 2007 to teach people how to do what I did, which is the same thing right Work because you want to, not because you have to.
Speaker 1:Beautiful. So tell me about this passive income that allowed you to retire early.
Speaker 2:Yeah, I mean it's pretty simple, right, you got to get enough income coming in so that it can pay your bills and what I didn't realize you could do is that you could actually get your money to work harder for you. In the traditional financial advisor world, I was always telling people to accumulate money, then live on less than the interest rate, right, and typically what they're even advising is not much more than 3% a year is what you should be pulling out. So if you happen to save up a million dollars, you know, with the market going like this all the time, right, it's kind of like a bipolar. You know, ex-girlfriend, that you had right. I mean it's going all up and down. Well, 3% on a million bucks is only 30,000 a year. I mean that's living a poverty line.
Speaker 1:But that's a $90,000. I'm still paying you some taxes already.
Speaker 2:What's that?
Speaker 1:You're still paying me some taxes on it Not a lot, but some taxes on that too.
Speaker 2:Good point, yeah, even bring up, they have to pay taxes on that money too, right? So even if you live on 30,000 a year, you might only walk away with 24,000 a year or 2,000 bucks a month from a million bucks, right? And so what I realized, though, is that it's not about how much you accumulate like I've been trained as financial advisor it's about what that money can actually pay you, and so, for example, at the same million dollars, it pays you 1% a month. Right, that's $10,000 a month. You're earning, not 24,000 a year 10,000 a month, and you may or may not pay taxes, depending on the investments you're doing.
Speaker 2:But that opened my eyes, and so that's why I started doing, and I started doing things. I had some rentals, I did, too, and things like that. I even did a little bit of flipping, which is more active. I wouldn't call that passive. I did some active stuff, but that was more to help make money, right, like make chunks of money, but the actual income came from doing things like rentals, even like lending money where you can get paid a certain interest rate, things like that where I'm lending my money to other investors, and whatnot, and that's what surprised me, is that, and now granted. At that time I only needed about 3,500 a month because I had a very young family back then 20 years ago, so it wasn't too hard to become financially independent, but still, I mean, that was the kind of thing that blew my mind that that was actually possible.
Speaker 1:So your income was through a combination of lending and rental income, correct?
Speaker 2:Correct, awesome.
Speaker 1:And how did you have enough resources to build this pipeline of passive income to live on with all that? Because I'm assuming you weren't making mountains of money here, so how did you do it so quickly?
Speaker 2:Yeah, I mean, part of it was I had equity in my house. At the time, my whole focus was paying down that house, paying it off and being debt free. Well then realizing wait, well, that money you're trying to pay down pays you nothing. Well, what if I can get that money out and use that to produce? So I started doing that. I also started like I still had other streams of income coming in too, and so even when I got to that point, I was like well, I never expected to be here so fast. I don't know what to do with my time, especially because there's not that many 28-year-old friends of mine that would be willing to hang out in the middle of the day. So I just kept working, and so I kept building up that cash more and more that could help build more savings to then invest.
Speaker 2:You know, and I did another interesting thing as well at that time is is that I remember I was meeting with one of my friends who was a real estate investor or new friend that I had made at that time, and he kind of became a mentor of mine. He said so, chris, I see you're doing mortgages, do you like doing mortgages? And I said well, I like getting people the results, I like teaching them about, you know, pulling out equity and investing and things like that, but I absolutely hate the paperwork. Like I cannot stand the underwriting process and going, you know, telling people it's gonna be like three weeks before we close and they call the next day saying can we close? Yet you know, like I hated that getting calls at all hours of the day. He said well, chris, what if you had somebody else do all that for you? I said, wait, somebody actually wants to do paperwork. So, yes, chris, there are nerds out there that actually like paperwork, that don't care about finding new clients, they just want to do the work.
Speaker 2:And so I went to that brokerage company. I said, hey, is there somebody that fits this description? They said, yeah, his name's Clark, which, if you have the name Clark, you're gonna be someone who likes paperwork, right? And so, yeah, I went to Clark and I said, clark, listen, if I give you clients, they're already ready to go. You just have to do all the work. Will you pay me 50%? And he said yes. And I said, great, you know. And so I'd spend me a half hour hour with these clients, educating them and trying to get them understand this concept about use your equity to then essentially pay for your mortgage payment or even pay off your house faster if you wanted to. And they're like this is awesome, how do I do it? I said talk to Clark, he'll take care of you, he'll give you the best deal.
Speaker 2:And so a month or so later I get this check in the mail for like a thousand or 2000 bucks because we split the origination cost, because that was mortgage licensed, right. And that was a big a ha for me, because I always thought that in order to make money, I had to be the one creating it, I had to be the one producing it. But all of a sudden now I'm getting, like you know, a thousand, 2000 bucks a month just by referring seriously just friends and family. I did zero marketing, I wasn't even even when people asked me what I was doing at that time I was like I sell drugs, like I didn't even know what to tell people, because I'm like it's so different than how I was trained to put your head down, work hard, and if you work hard you might make money right. And this was totally opposite. It wasn't even about working harder, it wasn't even about working smarter, about working right in the right way, finding ways to create value for people.
Speaker 2:And, by the way, it wasn't just that company.
Speaker 2:I started realizing like hey, is there other people I could connect with and you know kind of like referral, be a referral source for?
Speaker 2:So there's like a wholesale jeweler in Salt Lake City. I bought my engagement rings from there for like a third of the cost you buy at normal ring stores, and so I would tell people if they're looking to get engaged. I'm like, don't buy it from these places, just go here. And then those people would send me a 5% check. So my friends would save money. But then I would get a referral check from them too. And so I started to hold a couple of different companies I was referring to on a regular basis, cause, all of a sudden that whole possibility opened up. So now I'm getting paid from a referral your stream which just with those referrals alone, I was probably only spending a couple of hours a week doing that, and with the real estate investments I was making more than enough to pay my bills. I mean I was way above and beyond. I just had money coming in that I didn't even know what to do with.
Speaker 1:Wow, Okay, Very cool. So I want to backtrack first. So well, actually, let me add on to something that I see a lot of people do here Just so many people are afraid of debt and this is what rich people do?
Speaker 1:They leverage debt and to me it's a simple mathematical equation on what can you do with the money? Versus how much debt Do you pay an interest, and if the spread is significant enough when accounting for risk, you take on the debt. Yeah, simple as that. So I thought about this in my own personal life. When I started my business, I still had student loan debt. Well, I was paying like a 5% interest rate on my student loan debt.
Speaker 2:But if I invested into my business or hired?
Speaker 1:someone who was productive, the profitability would be far greater of a return than the cause of the interest In high in paying off the student loan. So I said, let's let this student loan debt grow a little bit and have my wealth and reinvest into things that make me money at a faster rate, accumulating at a faster pace, and then one of these days I'll just pay off all the student loan debt and cash. Yeah, and then it doesn't make sense and it doesn't mean anything anymore. So, and then you see so many people who are just so afraid of debt and owing money. There's something in our society. I mean, now there's a lot of people who have too much debt. And then you know, our country, especially our government, may have a little too much debt. That's all of the conversation.
Speaker 2:We'll leave it to the economy.
Speaker 1:We'll leave it to the economists to talk about it, but certainly it appears that the fear of debt is keeping many people from achieving their dreams, because they don't have the capital and they're never going to get the capital.
Speaker 2:That's right. I mean, if you really. I mean here's the thing, like you know, like you said, like rich people don't mind using debt. Now, ultra wealthy, they'll tell you all the time, oh, don't have debt. You know, pay off your debt. Well, that's because they did it. They had so much cash to burn they didn't even know what to do with it, so they eventually just paid off debt which I've been in that place, you know. So I get what they're saying, but you got to be careful, because many of those same people used and leveraged debt to get to where they were and then they paid it off, right. So they're talking about it from after the fact, saying like, oh yeah, be debt free. Because they're talking from their perspective, not from where you are right now.
Speaker 2:And I'll tell you this I mean, with debt, you got to be a wise steward, right. I mean, that's, it's all about stewardship. If you're going to blow money, don't do it. If you're a gambler, you're not an investor, you're a gambler. You think, high risk, great, high return. Don't use debt because you will screw it up. You will lose money. On the flip side, if you're responsible, you're wise, you take very calculated risks where you can control those risks and make them work in your favor, then it works great, you know.
Speaker 2:So, like you mentioned student loans, it just brought back to memory. I mean, I spent 15 years before I paid off my student loan because I kept put into deferment, because it was 3.62%. And you even brought up an interesting question, or interesting thing too, about as long as you're going to beat the interest rate which, by the way, that's not hard to do, right? Basically, if you're a business owner or you're an investor and you're at least halfway decent, you should be able to beat that, no problem. And so I postponed, I paid the minimum I could, I deferred from time to time so I wouldn't pay payments, I'd pay on other things to make more cash flow than what that would do, what that would free up for me, and it worked great. Eventually I had to pay it off, because it just got the point where it was like, okay, you got $3,000, chris, it's like $150 a month. Just pay it off, you know.
Speaker 2:But here's something that's kind of cool though Even when people hyper focus on the interest rate, you don't have to beat the interest rate to beat the interest, and let me repeat that because that sounds a little weird. You don't have to beat the interest rate to beat the interest. And what I mean is this is that let's take that same student loan, right? You said 5% on yours, right? Well, if it's 5%, the one thing that people don't realize is that if you have the money to pay off your loan, you know and there's some times it might make sense like if that payment was $300 a month, $200 a month, I might consider just paying off that loan. Right, because investing $5,000 may not make that kind of payment for me.
Speaker 2:But if I have that, say that, say, it's $10,000 left on this loan, here I have $10,000, I could pay it off free and clear, and it's at 5%. All I have to do is, if I want that money to beat it, all I have to do is earn at least half that interest rate over the next five years, because compounding interest and simple interest, which is what you pay on the loan, is simple interest. Compounding interest and simple interest are not the same. Do you ever run the numbers Like you run the numbers of how much interest? Like, oh, and a five-year car loan is, say you put it at 5%, you'll see how much interest gets charged over the life of that loan. But then take that same amount of money that you could have used to pay off that car.
Speaker 2:Put that into a CD at 3% and you'll find out the 3% CD in five years will earn more interest than it cost you over five years of interest on that car loan, even if it's at 5%. You can actually earn less interest and still make more interest because of the compounding effect versus the simple interest that you pay on that loan, because the more you pay every payment you pay is you pay the principal down. It goes down, down, down. The interest you get charged lowers, not because they're screwing you over, like some people claim, but banks are screwing you. No, they're not, it's just simple math. As you pay the loan balance down, you pay at least interest-only payments, or better than interest-only payments. You'll watch that balance go down and interest will start to decline each and every month when you pay. But in a savings account or whatever it might be that you're earning interest in, even for the crappy CD earning 5% right now, you'll beat that five-year car loan because of the fact that it's compounding on itself each and every year.
Speaker 1:Are you saying that when you have car and student loans, though let's say you don't pay the interest, are these loan vehicles where well, let's just talk about student loans let's say you don't pay your student loans Are they going to charge you a flat interest on the original principal and they're not going to compound that interest?
Speaker 2:Yeah, they don't compound it at all. Nope, oh really, that's good to know.
Speaker 1:That's really interesting.
Speaker 2:It is because banks I mean when people start saying like we kind of come back to this question again, like why people fear debt so much. Well, the recession, the Great Depression in the 1930s did not help, right, like people were having their houses taken away from them because their note was called due. But during the Great Depression, when that happened, the government passed laws so that companies can't do that to you. They cannot call a note due as long as you're making your monthly payments. They can't do that anymore. With some exceptions, of course, we know, like in rental real estate that's possible if you're not disclosing things up front about having LLC on it and things like that.
Speaker 1:Although it's highly unlikely that they'll actually do it. It's a possibility but we've never seen it happen. But we always have a conversation.
Speaker 2:But the likelihood is very, very small, right.
Speaker 1:So there's fear for that. But the other fear is credit from the banks.
Speaker 2:Oh sorry, I didn't hear you talk about it, so I just said what we found and we don't like to give we don't want to spoil anyone's prey.
Speaker 1:But we found that the banks are just not incentivized to foreclose on someone if they change the notice in LLC and they're paying on time. So I've never heard an instance where that actually happens. But because it's a possibility, you have to acknowledge the possibility. I've never seen it happen to anyone paying on time. But yeah, let's get back to what you're talking about.
Speaker 2:And what you're saying pretty much right. Where I was going with that is that it's really the banks that have created most of the fear for us. Because, think about it Most people believe and I used to believe this too, by the way, I believe the same thing. With a financial advisor, I would tell people, even when I was a mortgage broker, telling people well, if you want to stick it back to the bank, pay off that house early. That's how you stick it to them. But here's the truth. Banks want you to pay off those loans early, not the other way around.
Speaker 2:If the interest rate is the evidence of showing you what they want you to do, they use the interest rate to influence behavior. Think about it which has the lower interest rate, the 30 year mortgage or the 15 year mortgage? It's the 15 years, right? Yeah, yeah, why would they incentivize you to want to pay it off in 15 years? Don't they make more interest over time if you do 30 years? So shouldn't they just do a lower interest on 30 years? So everybody goes for long ones and they keep making money?
Speaker 2:You would think that would be the case if you're thinking from a you know, basically a brainwashed savers paradigm, not an investor's paradigm, right? But banks don't want you to have that loan out. They want you to pay back as much principal as possible. That's why they even have little incentive programs saying hey, listen, you can do bi-weekly payments, you could pay every two weeks, you'll pay off your house faster. Guess what you do the math If you pay every two weeks without being required to, you'll still pay it off faster because you're paying an extra month every year.
Speaker 2:There's no magic. The banks are just trying to incentivize you to pay them more principal. Why? Because for every dollar you give them, they are legally allowed to lend out $10 for that extra dollar you gave them in principal. So if you paid an extra $10,000 on your mortgage, you're thinking you're so smart by putting that $10,000 in a place where you'll make a 0% interest. Yeah, you save a couple percent. Whoop, the freaking do. But what you've done for that bank is that extra $10,000 now allows that bank to loan out $100,000, making way more interest than what you even were able to save. That's what they're really trying to do?
Speaker 1:Banks are continuously borrowing. They know the game.
Speaker 2:Yeah, that's true.
Speaker 1:They're leverage.
Speaker 2:Yeah, if you go online, you could like Yahoo Finance or whatever, look up like stocks, like bank stocks, and then look at their debt to equity ratios. Look them up Banks have the biggest amount of debt. Well, if debt were so evil, why do banks have so much of it? You might say, oh, they're not smart with it. Oh, please. I mean, there are banks that have gone under In 2008, for example, when people was like, oh, it got horrible.
Speaker 2:Well, yeah, because Fannie Mae and Freddie Mac, not to mention some of the big five banks that we had to bail out got Congress to pass to give them looser laws, looser limits, because before they can only leverage, if that you've paid them the extra $1, you put that $1 in savings, they can loan out $10. But they went to Congress, the big five banks, with their lobbying power, went to Congress, said we want $40 to $1 leverage, not $10 to $1, $40 to $1. So, yes, they got over-leveraged, they got stupid and greedy and that, and, of course, what happened? We as the taxpayers, had to bail them out, didn't we Banks still won, they still won right. And so you got to take these rules and take the tables and turn around in your favor and say what if I could do the same thing? What if I can use their debt in my favor? Now again, you have to be a wise steward. The best banks are great stewards of their money, which is why they make so much. You have to do the same thing.
Speaker 2:And so when I'm mentioning about the simple interest thing, right, and I even pull up on the calculator, like, say you get like a $30,000 car loan, I mentioned over five years and say it's at even a 7% interest, you know you'll pay an interest on that $30,000 car loan. You'll pay total $5,600 of interest over the life of that loan. But that same $30,000, like I mentioned before, right, if I had that only earning, I'm going to put at 4%. So just over half over that same five-year period of time, guess what? I made $6,500. So I made over $1,000 more. Even though I earned 3% less. I was paying 7%.
Speaker 2:But again, because you pay that loan down, the balance down, less and less gets charged interest. They're just charging you the interest rate divided by 12, right, 12 months. They're just charging you the interest rate. But as you pay the loan balance down, less and less is getting charged interest. It's not about them charging you up front. You could pay extra up front, you could make a payment to pay it off faster and it would be the same. Right, it's all about how it works, but again, that compounding effect. That's huge.
Speaker 2:That's one reason why, when I've talked to people about infinite banking, for example, which is one strategy we use to really enhance what we do with real estate investing, it's not required to become financially free, because the real estate investing is the real magic.
Speaker 2:But if we want to add a little fuel in the fire, we use infinite banking too. Well, people say why would we borrow money from the insurance company at that low rate? Because we have to pay them the interest. Right, despite what some people say, they'd lie to you and they'll tell you oh, you pay yourself back. It's a bull, you don't pay yourself back. But when I get a line of credit from the insurance company, they're still paying me tax-free interest over here. So I'm making money over here while I'm paying them interest. But because I'm compounding, but while paying them simple interest, I still win. That's why you finally made 10% on a real estate deal. Over time, you know, 10% a year, I might actually end up averaging 11, 12 plus percent using my infinite banking policy to finance that project, versus just using cash out of my savings or checking account.
Speaker 1:So I want to bring a quote now from Albert Einstein, which you may have heard, on compounding have you heard of it?
Speaker 2:Oh yeah, I know what you're going to say. It's the one that's been misquoted. But yeah, you might have the right quote. Let's hear it.
Speaker 1:I may not. I just Google it right now because you got me thinking about it. But what I have here is compound interest, is the eighth wonder of the world. He who understands it earns it. You who doesn't pays it.
Speaker 2:Yeah, so that's a if you have a credit card charging compound interest.
Speaker 1:Right yeah, they're going to hit you in the head and those are like 20, 25% interest rates. It's crazy.
Speaker 2:Yeah, well, what you did? You just blended two quotes together, or one paraphrase quote from Einstein with a quote from Ben Franklin, and they threw it together. So I actually look up that quote from Einstein If you ever try to. You try to, like you know, I don't know, you know, fact check the quote. He actually said compounding numbers is the eighth wonder of the world. He said nothing about money, just compounding numbers, referring to the science of it, right, and the mathematics.
Speaker 2:But when it came to money, the only time I could find that quote was on financial advisors, websites or network marketers. That was pretty much it, you know. And then other people. Let's paraphrase it. I mean, there's still truth to it. No, there's no doubt. Right, definitely those that understand it, just you know, earn it. Those that don't pay it, that's still true. I mean, that's that's taking a quote from more Ben Franklin.
Speaker 2:But many times you'll see financial advisors use that as a way to say, oh, we'll just set it and forget it. Just lock your money away in these mutual funds, even though it doesn't exactly compound, right, because you can compound lose as well, because you may also make more money. So you get your money up to a million bucks, you lose 10% in the market. You're now down to 900,000, right, so you just lost, you know, a hundred thousand bucks from that kind of thing. So so it's true, we want to make sure we understand the interest and how we pay it and everything else. But always remember too that you got to watch out for the guys that have an agenda, that they are paid to sell you a bill of goods and you could question I mean, people can question me on all they want. They're like, well, chris, what's your self interest? Well, yeah, I mean one, I want people to get away from what I taught as a financial advisor, because I felt like a lying, deceiving fool after I left that industry. But two, yeah, I do teach people how to do that stuff.
Speaker 2:I have my own podcast, the Money Ripples podcast. I share this stuff on. So, yeah, I definitely profit from teaching this stuff. But, more importantly, I don't need the money Like. I have more than enough money to pay for my bills and then some. Right, the only reason I'm doing this is because I believe wholeheartedly that this needs to be taught. People need to understand this stuff, because if you don't, somebody else's rules are going to dictate your life you will have control. You will be essentially kind of a victim and somebody else's based on somebody else's rules. You'll be living in ignorance, and ignorance is not bliss. Ignorance is expensive.
Speaker 1:So I'm going to give you another Albert Einstein quote while we're here before I ask some questions. The other one he has is the hardest thing in the world to understand is income tax. I want to talk about some of the strategies and ideas and scenarios, but before we even do that, can you tell so you talked, you kind of touched on when you were a financial advisor, some of the things that you realized, maybe some of the guidance that was given to folks where it was a little misleading and for each other, like what were some key things? I think mutual funds in which you pay tax on, may have been one of those things, but tell me some key things that people who are relying on their financial advisor then this may not all, and some financial advisors do incorporate infinite banking, but tell me about what are some of the things that our audience needs to listen to, as some really common misperceptions and ways that people are without a better way to explain.
Speaker 1:How are people messing up with the wrong financial advisors and using the wrong strategies?
Speaker 2:Yeah, it's a big ordeal, I would say. First and foremost, you'll hear phrases out there like high risk creates high returns. I mean, we hear that all the time. Let's define risk and I still have my insurance for the last 22 years. I still have to take my continuing education and every single time they say what's the definition of risk? Definition of risk is chance of loss. So explain to me how did a 90% chance of losing become a 90% chance of winning? The math doesn't add up, does it?
Speaker 1:The only way it would make sense is if the 10% of the instances where you won you would win like a 10x multiple, enough to cover all your losses. You didn't lose your hat every time you lost, so you had enough chips to keep on playing until you had enough of a win here to pay off all the times for your loss.
Speaker 2:Right, you could take the gambler method. I used to teach people how to trade stocks and options too. At one point. I always teach them how to let your profits run while cutting your losses short. It's really the gambler, the Vegas method. It's like if you know you're going to lose, get out fast, get your losses minimized and then, when you win, let it keep running, win, win, win, win and then pull your profits and run. You could beat the odds, but the truth is, if you have a 90% chance of losing, you do not have a 90% chance of winning. It's a 10% chance of winning.
Speaker 2:If that were really true, shouldn't all of us fire every financial advisor, pull our money together, buy some Powerball tickets or megabucks, buy those lottery tickets, because that's the highest risk with the highest possible reward. Let's be honest, it's huge. Let's cash all over 4MKs. Everybody, just go and we'll pull our money together. We'll split the profits, we'll split the share together. Oh wait, that's called a lottery. We don't do that. Okay, people do do that, but that's not a good, sound philosophy for making money. The real philosophy is how do we lower our risk, create higher returns? Because if banks and other financial institutions really believe that, wouldn't they be the ones investing their money in the stock markets, not your money? I used to teach this financial advisor. I tell people hey, banks and financial institutions are the number one investor in the stock market. Well, that's true. But the thing that wasn't true, that was misleading, is they're not investing their money, they're investing your money. They have zero risk for themselves. In fact, what do they do? They charge you guaranteed fees coming out. They have assets under management fees that they take out. That's how they make their money. They make their money off of however much you have in there, which is why, if you follow that advice of saying, hey, I want to end there, if you remember, think like a financial institution, right? You want to keep making money because you make steady cash flow from people that invest with you. Whether they make money or not, you could lose money and they still get paid. They're the one people that get paid when you don't. Same thing with financial advisors, because they get paid by those companies. But think about it All the myths talking about high risk creates high returns. They want you to take the risk, not themselves, right? They transfer the risk away from themselves to let you do it all so they don't have to.
Speaker 2:Two, when they say you're in it for the long haul, especially when the market goes down, they'll say well, just be in it for the long haul. My dad did the same thing. Do you know that and I had a lot of clients in this case because I've been around for a while that in the year 2000, if somebody had money in their IRA, and with all the losses between the Y2K and then the great recession that happened in the 2000s, it took them until 2015 to get back to breaking even from the year 2000. 15 years breaking even, but with inflation, they pretty much lost half their money. Right, that's what happened to my dad. That's why he had to postpone retirement into his 70s, because of that very reason.
Speaker 2:So you're in it for the long haul? Well, how long is the long haul when the market goes down? Well, as long as it needs to be right. How about? You know, keep putting your money in. How much money do they want you to invest? All of it? Keep putting in more. And if you don't, even if you put in the 10%, like they used to teach at one point, and now they're saying, oh, 10% is not enough, they don't blame themselves so that the advisors will say oh sorry, I told you wrong, you need to save more than 10%. They say you just didn't save enough, you should save more. Oh great, well, that just means you get paid more, while I'm still hoping that your methodology works right, that your gambled investments work, I mean so all these things, if you think about it, all these little myths they teach you about.
Speaker 2:You know putting in, you know set it and forget it. How many times you've heard people say that I just put in my 401k, I set it and forget it? Well, that's stupid. Anytime I put, I try to do any investing in the real world and I try to set it and forget and try to turn a blind eye to it. That's when I lose money. You know, that's like a dentist who says you know what? I'm going to have? The petty cash. I'm going to set it and forget it in the desk and I hope that no one of my employees ripped me off right.
Speaker 2:That's what happens in reality. We lose money when we don't become wise stewards and watch and manage our money. That's the problem. We trust financial advisors will do it for us, but they're going to get paid regardless. They don't even care. They're not even really watching that closely.
Speaker 2:Anyways, I'm not saying all financial advisors are bad, by the way. I know that. I myself I wanted to help people and I know that the vast majority do. The problem is is that their self-interest contradicts your self-interest. Yeah, they do want you to make more money, but in truth they really don't need you to make more money. They make plenty of money and the only reason they make money and that they seem wealthy is not because they're good investors, it's because they're good salespeople. Selling you on the dream. They sell you Hopium, hoping that someday it's going to work, and the vast majority, sadly enough.
Speaker 2:Fidelity if you do the numbers, only 750,000 out of 45 million clients in Fidelity have at least a million dollars in their retirement accounts. That's 1.5%. And of that 1.5% they did another survey from Transamerica that asked they actually used the quote 35% of that 1.5%. So really half percent of that 1.5% said they think it'll take a miracle to be able to retire. That really just means that one out of 100 thinks they're okay. Think about it if you had a Google reviews there was a 99 one-star reviews and one five-star review would you go to that restaurant to eat. Hell, no right, you would not touch it at all. But that's what financial advisors are they have a 1% success rate if they're lucky, and still people are teaching it, like that's supposed to be the thing that works.
Speaker 1:You're reminding me of when I used to work in corporate America and I watched how slowly my 401k was growing and I would get such minimal raises and I wasn't living such a lavish lifestyle. I was like how is this ever going to be possible for me to actually do something to replace my income with this thing? And I don't even know what's going on. I don't know who is moving the money around and doing what with it, and how much of paying fees. Not too busy maintaining my corporate job.
Speaker 1:I said, this is not the smartest way to build a fortune and a future for yourself? And I didn't really have much money left over to put in stock, so maybe I should. My mind doesn't even go back to living with roommates, or what am I going to do? Sell my car, rent a bicycle? It's just like it seemed near impossible to have retirement and it's a feasible option being in certain states of the money I was making.
Speaker 2:Yeah. Well, people always tell you that the match is the way to go. Right, you got to get that match, that company match. Well, the one thing that they don't count on is again going back to Fidelity. I ran their numbers last year in 2023. I said what's their 10-year performance of their retirement target date funds? Because they show that most millennials almost every millennial now percentage-wise use of the target date retirement funds as where they invest.
Speaker 2:Well, I went and looked at the performance. It was 8%, almost flat for the 10-year performance. Here's the problem. The stock market, the S&P, actually did 10.1%. That means your retirement fund did less than 2% worse, and that's before the 0.75% fee comes out right. So you're really losing about 3% compared to the normal stock market average, which is not fantastic.
Speaker 2:The normal average of the stock market is about 8% when you factor in long-term at the last 30-year average. Well, if you're doing 3% less than that, that means you're making 5%. And even if you get that match, even if it's 100%, when I run the numbers for people and showing the actual real returns, they usually only add 2% or 3% a year. So what does that mean? You just basically made up for the bad performance in your Fidelity 401k. You made up for it to basically make the stock market returns, which is not enough to really become financially free anyways. So that whole match that people think they're so married to doesn't work. It's not even worth it to get into lackluster, crappy funds when you and I know we can invest in other places better, in the alternative space, with actual real assets that are backed up by real things like real estate, and make double-digit returns without all that risk.
Speaker 1:So we've probably talked about enough stuff to. We've got some listeners at their W2s just starting out. We've said enough here to make them upset, disturbed, uncomfortable.
Speaker 2:Pop and Prozac now.
Speaker 1:And I was always. I always felt like this. I was like, what like this is realizing how much life actually costs. You know, once I thought I had met in corporate America, realizing this is not all as tragic to be. Let's talk about some solutions, some of the things, some key action items for the audience and also some scenarios of what you've done, what you've helped people achieve. Let's talk about. You know we're going to end our conversation on a high note here and let's talk about some of the wonderful opportunities out there. And I you know I'm a big reporter of entrepreneurship and rental real estate and taking initiative, in charge of what it's like. But let's talk about some of your ideas.
Speaker 2:Yeah, I'll give you the same advice that I give my own clients for the last, really, since 2020, especially because I knew that the market was going to start crashing here pretty soon. And the crazy thing is they pump more money in the economy to create a bigger bubble, which means the bigger the bubble, bigger the pop, or some people say, the bigger the party, the bigger the hangover, right, and so I expect that to still happen, and it hasn't really happened truly in the stock market yet. But here's why I would recommend is get lean, get liquid and get out. Get lean, get liquid and get out. So get lean just means be a wise steward of your money. You know, don't be cheap you don't have to live on rice and beans but definitely prioritize and spending money in areas that you actually want to be spending money in versus not right. You want to make sure you have more money available to you, so make sure you're doing that. Find ways to free up cash.
Speaker 2:We have one client came to us. He said $5 million in different stocks, like Google, metta, you know, like Facebook and some Tesla and things like that and they said, hey, we want to invest this money. But even before he did that, we realized like, hey, we can actually take your mortgage equity refinance, pay off some of these other loans, we'll free up $4,000 a month. Let's do that first and then, without paying a dollar to do that. And then we go and start investing and so now they've generated over a couple hundred thousand a year of passive income, better than what they were before. And so get lean.
Speaker 2:Get liquid means have money in your power and possession. Notice that every financial advisor tells you to put your money in prison. They tell you to lock it up in that 401k of the IRA where, if you try to touch it, they slap you with a 10% penalty if you're not 60 years old. Right, you know, dumb, that's like asking mom and dad for the car keys to the car that you bought. You shouldn't ask for. You shouldn't have to ask for permission to borrow your own money or get access to your own money. So get your money liquid in your possession, you know. Get it out of trying to put it into equity in your house. And again, they're trying to tell you lock it up in your house.
Speaker 2:Well, I made that mistake in the last recession, you know, because I thought well, I got all this money that's coming in, I just throw it into my house because I'm a mortgage broker. If I ever need it, I'll just do a cash out refinance. So I wasn't afraid of debt. But I thought, oh well, the banks will always lend me money. No, they won't, because I remember it was September 2007. I kept trying from July through September 2007. They finally told me in September. They said listen, we don't give cash out refinances the business owners anymore. So you're better off having that.
Speaker 2:I would have been better off in the last recession if that money was actually in my possession versus in the bank's possession. So be liquid. And then now you have the money. That's liquid. People then of course freak out. They start saying, well, what do I do with that money? Well, that's where you get it out. And you get it out to cash flowing, real, asset backed investments right, not arbitrary stuff like Tesla, where, tesla, you can't even tell what the value really is because it's more hype than anything.
Speaker 2:Right Put it in the thing that has real value, like real estate, and it could even be your own business. You mentioned entrepreneurs. I think what the best investors can do is invest in your own business because you can control the risk. You can create massive returns there.
Speaker 2:I remember my brother in law. He even told me that same thing. He said, chris, this is when I was a financial advisor. I was trying to tell him to invest with me because his family had made millions. His dad was a self-made millionaire at the age of 21 after being homeless at age 16. I mean amazing family, you know.
Speaker 2:And I remember going to talk to him saying you should put money in this mutual fund. You might make 12%, which they never have. But I, I proposed, I, I shared it like it was. But my, my, uh, my brother wants that. He's like, chris, let me, let me go straight. If I give you 10,000 bucks to play with, you might make me 1200 bucks this year. That's right, isn't that awesome? Think about what I'll do in 40 years, he's like. But, chris, I can take that same 10,000 bucks, put it down, pay me on a semi truck because they were in the automotive business. Turn around, sell that truck a few months later, flip it and make 20 grand in profits in a three months.
Speaker 2:So why would I invest my money with you? You should be diversified. You should pull your eggs in one basket. Business is risky BS. I was totally feeling that I was just making an excuse because I wanted a sale Right. The truth was he was right. Business and real estate are the two places that have been proven by the Forbes richest people in America list. That's the one two places where people have made the most wealth, not from investing in stocks. Very, very few people have even made that list investing in stocks. And no, warren Buffett doesn't count. He buys companies. He's an entrepreneur that buys companies, controlling interest, so he can have real control and sale on those boards, versus someone who just throws a stock into Apple in hopes that they are going to make money because Tim Cook makes a good decision.
Speaker 1:Here's my thoughts on the best places to put your money, your education, because if you can invest into some sort of skill or trade, the value of that, if you have the right people or a mentor or some sort of the right type of skill or trade.
Speaker 1:So what I've seen, the greatest art return on investment in my own life and others the right education, the right network and the right mentors can give you anywhere from a 10X return year after year after year after year, so potentially maybe a $20,000 investment can help you make an extra 50,000, year after year after year, for a one-time investment perhaps, and another one of the best investments, which I would say would be far more impactful than any stock, unless you had some really insider information and maybe you really knew the market is higher in assistant. And then those things where you can really amplify, really optimize your life and your business and create profits from them at 2X, 3x multiples per year.
Speaker 1:Those are the most incredible things, and then the real estate and then you're investing in things that give you tax induction the write-offs. You know what I would have done with that truck? I heard you talking about it. I would have instead of selling it.
Speaker 1:I would have rented it out for a few months at least. Maybe. Write it off for bonus appreciation and get a tax induction cash flow. Sell it. Put the capital gains into a QOZ, maybe, but that's my inner tax geek talking out. But certainly these are the things where your money is so impactful, and what I'm wondering from you now is well, what I would like to talk to you more about is so tell us about how you're changing people's lives and helping them understand the best places to direct their cash.
Speaker 2:Yeah, I mean good point. I mean so, like I mentioned that one, when we freed up 4,000 a month and then we got them to invest their money and we got them to do into cash flowing real estate. You know, I like the things that are backed by real estate. It doesn't have to necessarily. Now, when I say real estate, it doesn't necessarily mean that you're buying rental in your backyard. That's what almost everybody thinks of when they think about buying real estate. Right, it's like I'm gonna buy my town and if they're in the western half of the US, like I am, they're gonna realize like, oh well, rent sucks here. And it's true, like I don't buy any real estate in the western half of the United States, I buy it out East. I buy it out more like Midwest to Southeast arena, because I make way more money out there and, yes, I could buy rentals. But when I buy rentals, I'm a horrible property manager. I buy turnkey rentals, right, I do that. Or I lend my money to other investors and let them pay me a contractual return of 10, 11, 12, or higher percent per year. I just did a short term loan for 15%, you know, because I know that money can be awesome, by the way. You know how I knew that was gonna be good, because in 2022, the beginning of 2022, before they start raising interest rates, everybody kept saying in the media. They said don't hold on to cash, cash, you're gonna lose money to inflation. Don't hold on to cash, get it deployed. So what I started doing in March of 2022, holding on to cash Like I realized that if I wanna make money as an investor, do the opposite of whatever the media says. So if the media tells the real estate's gonna go down, it probably won't. If they tell you the stop market's gonna go down, it probably won't. Right, that's. The thing is that the media is pretty much always wrong or they're always late to the party. So I started having more cash and so I started lending my money and doing stuff like that.
Speaker 2:I have one client in particular. He had a million bucks he actually had saved up in his 401K. You know he was 60 years old. His financial advisor did tell him. He said listen, having a million bucks in your retirement account, even though you've got a military pension, guess what? You can now live on 30,000 a year. And he said that's bull, I'm not gonna live on 30,000 a year. I live in California. No one lives on 30,000 a year. There's homeless people that live on 30,000 a year.
Speaker 2:So he said I need to do something different. He started Search for Podcast, found ours, reached out. He says hey guys, how can you help me? And now, we're not investment advisors. We don't tell them they should or should not do this, but we are strategists and we're connectors so we can say, hey, based on your situation, if you want more cash flow or passive income, here's some good places to look. And then we connect with people to actually do it. We don't raise any capital, we don't do any investing that way. We're really just more guides and consultants that way. And so he keeps it up. He says podcast.
Speaker 1:What's that? Tell us the name of your podcast.
Speaker 2:Yeah, the podcast is called the Money Ripples Podcast. So yeah, he actually heard me on another podcast and then he came over to the Money Ripples Podcast and he said, all right, I'm gonna try you guys out. Well, we got him doing it. Different deals he got a couple of duplexes. For once we got some actual hard assets rentals. That way they were managed by somebody else. He did quite a bit in the oil and gas arena. That wasn't just oil and gas like speculative type stuff that I stay away from. It was more of mineral rights and having the land as actual assets.
Speaker 1:Oh yeah, that sounds cool, so he can't even double that. You can see the third one through it, by the way, but be careful.
Speaker 2:You gotta be careful, because it's not a big deal. Yeah, luckily they pay rent on the land. The oil companies pay the rent, so you at least get paid on that, and then any of the extra stuff, you get the royalties as a bonus. So he did that. He even bought into some apartment syndications. Well, by the time that his million dollars was deployed, he was now making not 30,000 a year, but 130,000 a year doing that same thing. Right, same money, but just using a way that actually generates real income. And we're not even touching the million bucks. That's the great news.
Speaker 2:Where, in a financial advisors perspective, we're like how do you live on less than interest now so that when inflation starts happening, you start eating into your money in your later years? So you start watching your bank account balance drop? Right, we don't do that. We actually try to get to generate the income. That goose lays golden eggs, but we don't slice away at the goose along the way. So things like that.
Speaker 2:I mean we had somebody else recently, a guy in Hollywood. He's a set designer. Crazy thing is you know, 2020, I mean you think about Hollywood. I mean they shut down more than anybody. They shut down in 2020, and then they shut down in 2023 because the writer strike.
Speaker 2:Well, both of those things affected him, but fortunately for him, he still had 4,000 a month of passive income coming in to pay his bills. So he wasn't rushing to get that next job and he knew he's like there's some really bad, crappy jobs, probably a Netflix special that I would have to get. I won't have to do that because I've got enough passive income. I can wait for the right job to come along. That will be a much better fit for me and I'll go to that. And so, while the rest of the industry like him or desperate waiting for the next job, he wasn't.
Speaker 2:And so it's not even just about, you know, trying to have a good retirement quote, unquote, right, it's really about giving you to be work optional. You can still keep working. You can keep doing the things you love, even your own business, like heck. I'm still doing that. You know I'm doing this because I feel like there's that ripple effect that can create in people's lives, hence the name money ripples. Right Is that you can bless more lives by being free. But that's a cool thing is that you work optional. You can quit whenever you want, but you keep working because you know that you have a bigger mission and passion in life than just sitting on a beach drinking mojitos.
Speaker 1:There's another quote from the jazz artist Duke Ellington. I don't have the exact words, but basically someone was asking him what are you gonna do? You know, tell me about what you're gonna retire for making music? He goes retire to what? Yeah? So when you're doing what you love and that's my place I love talking about this stuff, some of the stuff I don't love. But I'll always be in this space at some capacity because I love what I do, and as an entrepreneur or even an entrepreneur.
Speaker 1:With the right people, you can and should be steering yourself in the direction where you're doing what you love and you do it for free.
Speaker 2:So that's why I have my podcast. That's the evening. I've been able to retire twice technically. Once was in 2006. But then the second time was actually after the recession. I got my butt kicked, lost a lot of money, had to dig back out of that debt hole that I had created because I didn't file for bankruptcy, so I tried to pay it all back. It took me until the end of 2016 to get to the point where I had now over 10,000 months of income to pay my bills right Because my kids grew up. So you know, I got to that point, but even then I was bored. I tried vacationing in California for a couple months and I just felt I lacked purpose. I actually got depressed a little bit, and so for me, I realized.
Speaker 1:That's why they retire from a job they never liked, and then they're like. Now what? Yeah, especially if you're old, right Like, why would you?
Speaker 2:quit doing what you love just because you're trying to check the box of oh look, now I worked that job or that business and now I got to retire. No, you don't. You can do whatever the heck you want. You know, and that's the beauty is that you take control of your own life, your own freedom, and the great thing is that I mean that's why our vision is really about creating 1,000 financially independent families by 2030. We want people to have that experience, to be able to know really experience like what I experienced, which is have that control of your life, to be able to work because you want to, not because you have to.
Speaker 1:Beautiful. Now I like the phrase you said get lean, get liquid and get out.
Speaker 2:Can I use it as a title for this podcast? Sure With us.
Speaker 1:Yeah, beautiful, okay, awesome. So to close things out, can you tell everybody a call to action and where to find you and learn more about you and connect with you?
Speaker 2:Yeah, you can go to moneyripplescom or, as we've talked about before, find the Money Ripples podcast, on whatever platforms you find it, whether it's YouTube or iTunes or whatnot. I'll just say this the action you need to take is, like I said, the get lean, get liquid and get out. Just start there. Start wherever you are at. Find ways to get your money out of prison. Don't lock it away. Don't throw it into those retirement plans where you can't touch it. Don't throw it into your house equity like extra money than you have to, just where you can't get to it. Keep the money in your possession, in your control. That will give you options, and when you have options, then you have freedom.
Speaker 1:That's beautiful. I think we're going to have to turn that last part into a real wonderful conversation. Chris, I really appreciate your time and to all the listeners you got the info In case you're driving. The links in the name of the podcast will be in the show notes. And also send me some talent. Do you know any good tax accounts I'm hiring? Also, if you want to be a client, you'll find the link at mariammarkprovercpacom and feel free to email us anything at infoatmarkprovercpacom. Hope you enjoyed the conversation. Stay tuned for more great episodes coming your way.