financial freedom

Money And Psychology, And More From The Finance Summit, Part 1

TWS 7 | Tony Robbins Finance Summit

 

Any Tony Robbins finance summit always bring game-changing opportunities for thrill seekers and for those who want to grow and stand out in their industries. Patrick Donohoe shares his fruitful experience from the event. Understanding oneself is key to establishing what you want. A clear set of outcomes along with the excitement that sticks with achieving it is one of the highlights of the summit. Discover more learning from the summit such the idea of money magnifying the understanding of psychology, the archetypes that people have, the five financial dreams, and Erik Prince’s economic influence.

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Money And Psychology, And More From The Finance Summit, Part 1

I’m up in Sun Valley, Idaho. It’s beautiful up here and cold. As most of you know, I’m at the Tony Robbins Platinum Partnership finance trip, which is a summit of a couple of hundred people every year that learns from some of the best minds in the economy about what’s going on, what are the opportunities and what to be aware of. I’m going to recap every day for you. It’s going to be day one and it was crazy. It was over a twelve-hour day starting at noon. We didn’t get out until almost 1:00. It was packed. Tony did the entire day. I learned a lot and a lot is repetition. I’ve learned some of these principles and ideas before. As most of you know, sometimes it takes 2 to 4 plus an emotional experience to have those ideas resonate so that they’re understood, not just analytically processed. There’s a difference.

Day One: Real Wealth, Your Economic Identity, And The Four Kinds Of Archetypes

Day one is philosophical. In the next couple of days, they get into some alternative investments. The CEO of Blackwater, Erik Prince, is one of the speakers, as well as Bill Gross and Ray Dalio. There are seven billionaires that are going to be speakers. It’s going to be a stock-full of valuable information, but on day one, it was Tony. For those of you who have had the opportunity to go to one of his events, you understand where he is when it comes to the importance of mindset. It doesn’t matter how much material things you have, real wealth is in the mind. He started right out of the gate by explaining how real wealth is being able to master the mind. Mastering the mind usually is in unfavorable circumstances. If you look at the wealthy and successful from a financial perspective, they have made their wealth during the downturns, the winters, difficult times where everyone’s afraid. Nobody is willing to act because they don’t have control over those two competing forces, the analytical mind and the emotional mind. It was refreshing. The theme is to be able to live without fear, especially when it comes to finances.

Let me get into a couple of my notes. I have probably 30 pages of notes from one day. It’s crazy. I’m going to highlight a few things that he said and expand on them. Developing ownership of being the creator of your life, not a victim of circumstance. This is a powerful idea. It’s something that I thought a lot about, especially when it comes to business. I believe that we get caught up in what’s called the tyranny of how, which is the analytical mind is trying to figure out, “How is this going to happen?” The emotional mind is telling us that it’s not possible as well. That’s where it comes down to understanding yourself as the possibility of creation and being able to establish what you want. Not having a plan of how to do it, but having essentially a clear set of outcomes that you are passionate and excited about. The ‘how’ ultimately manifests. Being in that mindset is a prerequisite for that manifestation. It’s an interesting idea.

If you look at the nature of growth, typically growth is not controlled. People usually will have to have some unfavorable circumstances happen to them in order for them to wake up, to snap out of it, to have a realization or an epiphany. At the same time, you can control that. There are these thresholds that we have within ourselves when it comes to what we want and what we’re willing to do. If you look at the nature of equality, our souls are all the same and equal. The value that we bring comes down to our psychology. The value we bring to the marketplace is represented in the monetary remuneration for that. He stated that getting to the next level, there’s something in your way in which you identify with economics. There are these thresholds. It’s this idea that you hit these thresholds, whether it’s the money that you make or the investments that you make, your risk tolerance, but it comes down to your mind. He ended that thought with the idea of what real wealth is.

He defines wealth as the ability to extract enjoyment from life, no matter the circumstances and being able to do that in every moment. The idea of money magnifies that understanding of that psychology. What that means is if you’re not happy, satisfied and joyous about what you have, that lack of that state will magnify. If you’re in a scarce, fear-based, frustrated, egotistical, envious type of state, the money will magnify that. It’s a powerful idea. That’s why he focuses on mindset and state so that it’s established. Regardless of what your circumstances are, you’re able to find the beauty, the enjoyment, the satisfaction with whatever is going on before you get to the next level. It’s almost a prerequisite. That mindset puts you in this state of being able to have more. It’s fascinating. We’ve talked about that before with the whole Have-Do-Be instead of Be-Do-Have habits. It is that same idea.

It doesn't matter how much material things you have, real wealth is in the mind. Click To Tweet

Tony mentioned that with all the things that go, the reason why he bombards you with information isn’t so that you absorb and take in all of that information. It’s the one idea that’s meant for you, the epiphany, the one takeaway, the one action on it, the one realization requires one to completely change your life. That’s what these events are for. That’s why I was persistent in inviting you out to UPW, which is his foundational event in San Jose. There’s going to be another one in Chicago. If you want all the information for my contact over at the Tony Robbins organization, you can register for that too with the same discount. There’s one in Chicago and there’s going to be one in New York City toward the end of the year. The idea is for you to have this awakening of sorts. It happens based on his teaching and explaining based on some of the physical things that you do, but also based on some of the interventions that he does that requires one idea.

He went through a lot of different examples, but there is someone that pays for the Platinum partner membership and comes to the finance event. At the finance event is where all these ideas float to him. He made a deal in 2019 where he sold a business to Merrill Lynch for $1.2 billion coming from one idea that he got at finance. The thing is putting yourself in the environment in which these ideas come to you. It’s not going to happen in your general set of circumstances. I have one idea on the kickoff dinner that I could have gone home. It’s one conversation with this guy in the home renovation industry, of all industries. It rocked my world. It’s one idea to completely change one idea, one realization, one epiphany, that completely changes your life. Another purpose and theme of the week is expanding your economic identity, those thresholds, your relationships when it comes to money and finance.

Ray Dalio has this amazing video that was played. It talks about the economic machine. I think you would get a lot out of it. It’s deep with information. At the same time, he makes it easy to understand that. It will give you the idea of a system and what to look for when it comes to economic opportunities. I’m going to get into the final piece. This is my realization and it may sound strange. The guy that was sitting next to me was an extremely successful venture capitalist. He’s younger than I am. He’s in his mid-30s and has a couple of nine-figure funds. He does some incredible things. He helped me identify something that I hadn’t thought of before. Tony is a coach for a lot of high-level people. He coached Conor McGregor in his win. I didn’t watch the fight. I don’t watch MMA fights that often. He used that experience to talk about these four kinds of archetypes that people have.

You have the warrior archetype, magician archetype, the lover archetype and then the sovereign or the King or Queen archetype. This struck me. I’ve been to over a dozen events and he hasn’t spoken about this before, but he did this time and it clicked. The individual I was sitting next called me out on a few things that things started to click for me. I want to be a little open with you. One of the exercises they take you through is they have you answered the question, “What is money?” You keep saying everything that’s on your mind, “What is wealth? What is money not or wealth is not?”

It does extracts language. It extracts words, whatever is on your mind. That’s flowing there. I realized that there are some dominant archetypes that we have that I don’t believe we are fully in control over, unless you’re aware of it. As you can imagine, I won’t get into a lot of the details, but the warrior archetype, you can imagine what that is. The lover archetype, you can imagine what that is. The magician archetype, you can imagine what that is, as well as the sovereign or the King. These are part of our identity, our psychology that has been essentially formed over the course of time. It’s also natural. Based on our circumstances, based on typically child events where we came to certain realizations of who we are and what we need to do to protect ourselves, we’ve formed one or a couple of these dominant archetypes.

In the language that I was using when I was coming up with, “Where my identity thresholds were?” I realized that my identity was heavily in the warrior identity and lover identity. It oscillated back and forth. There was some magician in there every once in a while. What I wanted was the sovereign and the King identity, but the language I was using answering on all of these questions, all related to the language of the warrior and the lover. A lover being gracious, charitable, altruistic in a sense of giving. You have the warrior, which is make it happen, do whatever it takes.

TWS 7 | Tony Robbins Finance Summit

Tony Robbins Finance Summit: Develop an ownership of being the creator of your life, not a victim of circumstance.

 

I realize that there are elements that I’ve seen myself in the past, as far as the characteristics of my personality, my psychology, that has come to certain circumstances with the magician. I know what the outcome is. The sovereign, I became more aware of myself in being able to identify what the best results that I get when my psychology is growing the most is in this specific archetype. It’s figuring out how to identify what that archetype, in a sense, act and show up as that archetype will get me the results that I want. Yet, I was showing up as a different archetype. This may sound weird to you. Conor McGregor, the example he used was his natural identity was a warrior. It’s like going to battle fighting and winning at all costs, all odds.

Tony brought out the magician in him and the magician was creative, figuring out how we win the game in a way that wasn’t anticipated or expected. The magician is looser. They’re more free-flowing. He was able to help Conor capture that and subsequently win his fight in 40 to 42 seconds. That’s the biggest breakthrough I had. It is understanding how I show up in my specific set of circumstances, how I view money, how I view economics and then establishing what I want, as far as the enjoyment levels of life. I’m going to discuss that as some of the things I put down, essentially establishing what those are. Once it’s all established, once it’s stated, then you can come up with plans and how to accomplish that. The psychology of believing that it’s possible first takes precedence. You are amazing. Thanks for tuning in. We will be back with another episode. Take care.

Day Two: The Experience Of Life, The History Of Money And Their Patterns, And The Five Financial Dreams

I’m back for day two of recapping the event. I’m still up in Sun Valley, Idaho. It’s the Tony Robbins finance conference that he puts on once a year for his platinum partners. It has been packed. It’s been crazy. I can’t find any time to do these recaps, let alone sleep. I’m having a great time. I’m learning a ton. I’m going to recap the primary things I learned from day two. Tony started out the day talking about your body. He’s writing a book called Life Force Ha, coming out in 2020. He’s been working on it for a while. He started with this quote, “A person with health has a million dreams and a person without it only has one.” It eludes to this idea that the experience of life is very much dependent on our physical wellbeing, our health. Although we have many conveniences, life is becoming easier from a physical perspective, people are becoming unhealthy. They are no longer forced to survive, which helps them retain that physical vitality.

They don’t need it. It is more of a choice to work out, eat healthy, in a sense is even more challenging than having to do it to survive. He then brings in all his companies as well as others, whether it’s Egoscue, which is a form of physical structure and different stretching and ways you can align your body. He has a number of others. He is huge on this whole idea of health and having your body in its optimal state in order to have the best experience of your day. I’m going to get into a couple of other things that I’ve thought through. It does have to do with the whole idea of health and our physical wellbeing, but it’s patterns.

I didn’t cover this in the day one review, but the speaker late on day one was Niall Ferguson and he wrote The Ascent Of Money. He is a consultant to a lot of major hedge funds as well as sovereign funds throughout multiple countries. He is a brilliant individual, funny, great storyteller. He is good at British sarcasm and humor. I researched some podcasts that he’s been on. He’s worth the listen. He talked a lot about the history, as far as the history of money and their patterns. I believe recognizing those patterns help us anticipate the future. At the same time, we don’t necessarily have to be subject to patterns. We can create our own patterns. This is where health comes into play. We have a pattern of health. We have a pattern of how we do things and understanding that it exists and be able to essentially refine, break the pattern, create new ones in order to improve our results.

The psychological thing that's going on in our mind is we put an impossible number out there which demotivates us. Click To Tweet

He specifically talked about patterns as it related to what’s going on in the world. Even though it’s all different, there are some things that are the same because human behavior is the same. He spoke to a lot of what happened in 2008 and 2009 and referenced other times in history with the same things that have happened. I will pick up his book, The Ascent Of Money. He’s updated it in the last couple of years to reflect some of the more modern things that are going on mainly in Chimerica, which he talked about extensively. This is about what is driving China, what are their motivations, what are their intentions? He looked at history to help refine what’s going to happen in the future. That was interesting.

Ray Dalio did the same thing. He talked about patterns. I mentioned that when it came to how the economy works. I reviewed that because it shows you the different patterns that occur. It’s not necessarily going to predict with 100% accuracy the future, but you’re going to start to be able to see signs of what’s going on and understand how those fit within the patterns of how an economy works. I’m going to talk about what I believe Tony is brilliant at. He has helped me. I mentioned this idea of understanding outcomes, understanding results, understanding your goals. Those are insanely important to be crystal clear about what you want, why you want it and the motivations to get it.

We all have these psychological thresholds. We have thresholds based on the amount of money our parents earned, our socio-economic circles earn, our peers, maybe our extended family, our siblings. We’re psychologically kept. It’s a glass ceiling, at the same time, it’s a ceiling. Understanding goals going to push you to the brink of that threshold and breaking through that threshold allows you to achieve those goals. Being crystal clear about what it is, how it’s measured, believing that it’s possible, making it a must. Not a could, but a must, “I must do that. I must achieve that.” Then ensuring that it’s worth it, that the reward is worth the struggle and pushing through. Nothing’s going to come without hitting that threshold. Those psychological thresholds, especially when it comes to money, we don’t even realize they’re there, but they’re there. Being able to have something that is motivating us is huge in getting crystal clear about that.

One of the things that Tony brought up is he’s very well off, which is clear. Most billionaires are very well off and their motivations have changed to what they originally have been. He had stated that there were at least twenty different charitable causes, whether it’s the partnerships that he’s done. Feeding two billion people sustainably is what his X Prize is with Peter Diamandis and Elon Musk. He’s pushing to these more contributions to the world projects that is breaking through the thresholds that he had previously. He doesn’t have to work. He doesn’t have to do what he does, but he has these new motivations that he has designed. He has created commitments there that have made him push through new thresholds that he had in order to achieve more.

His whole life is about contributing and giving back. There is a birthday party that he’s doing in Los Angeles. His wife and his circle of influence are putting it on for him. The proceeds are going through Operation Underground Railroad. There’s a documentary that Russell Brunson did. There’s also a movie coming out with one of my favorite actors. The guy who played The Count of Monte Cristo. There’s a movie coming out about human trafficking, the sex trafficking that’s happening all around the world. A lot of the demand is coming from the United States. These are places like Haiti and Asia. It’s horrific what’s going on.

Operation Underground Railroad is out in Utah. Timothy Ballard, who’s the CEO and is a former Special Forces, he may have been maybe a Navy SEAL, but he essentially got to the point with his position in the government where it was difficult to go after these types of criminals. He took it upon himself to form an organization that goes out and does that and is making a huge difference. Tony has raised millions and tens of millions of dollars. This whole birthday party is around that idea of contribution. There are the things that are motivating him that are beyond him. This doesn’t mean that we have to have these altruistic, charitable driven things at the same time. The gift of contribution, the gift of making a difference in somebody else’s life. There are more psychological and spiritual benefits for that than anything else that you could do. At the same time, your enjoyment of complete altruism is imbalanced.

TWS 7 | Tony Robbins Finance Summit

Tony Robbins Finance Summit: We have thresholds based on the amount of money our parents earned, socio-economic circles, peers, and siblings.

 

It’s your enjoyment of life, being able to do the things you want, go to the places that you want. What Tony does is he explains that there are these five financial dreams. The five financial dreams are facilitated by having savings, having your investments at a point, at a level, he called the critical mass level. The money is at a certain level that if it were to earn 5%, it would pay for these dreams. The first level of dream is that your investments in a 5% return on those investments would pay for your basic living expenses such as your food, shelter, clothing, transportation and basic insurance. You calculate what that is. What is the bare minimum that you can live on your rent, your food and so forth? What is the dollar amount that’s needed to hit that threshold?

One of the exercises he did in advance of this was powerful, where he asked the question, “What dollar amount would you need to be financially free?” You had people that put down $5 million, $20 million, $1 billion and $500 million. The answers were all over the place. The reason why he did this was to seep where someone’s psychology is. As he goes through these dreams, his intention was to show that we think it’s going to be much money than it is to be financially free and it’s much less. The psychological thing that’s going on in our mind is we put this huge number, this impossible number out there. It demotivates us from even getting started. Being able to establish that threshold, what is it going to take? Then going into, what is it going to take to be the first dream financial security? Having that critical mass, that amount of money that if it earned 5% would pay for your food, utilities, transportation, basic insurance. It’s a number that’s much less than what people think it is.

Then the next dream is financial vitality. Financial vitality is all of your financial security expenses plus one-half of your monthly clothing costs, one-half of dining and entertainment, one-half of small, indulgent and luck or luxury. This gets to the point where it’s not only your basic living expenses, but maybe it’s going on vacation or maybe going to the movies or going out to eat. It’s calculating what is your critical mass, what’s the amount of assets with a 5% return? It would create a cashflow sufficient to pay for financial vitality. That’s a bigger number than financial security. It is a number that is way less than what people think they need to be financially independent. This purpose isn’t necessarily to say, “I’m going to have enough money, then I’m going to have my living expenses covered.” It’s not to do that. It’s to create milestones. To create these psychological levels where we know that we have enough money, sufficient resources and sufficient cashflow to pay for these things. Knowing that allows us to push more. It operates outside of fear. That’s what I said, to live without fear. These are ways in which you can position your psychology so that you establish thresholds where you have certainty in your mind that if this happened, “I have enough resources to pay for my basic expenses or financial vitality.”

Next is financial independence, which is the critical mass at a 5% earnings rate that would support your lifestyle. People budgeted out their lifestyle and then calculated what it would take to get there. The next is financial freedom, which is financial independence, plus 2 to 3 major luxuries. This could be a big diamond ring for your twentieth anniversary, or it could be a trip around the world or it could be buying a dream home or second home on the beach or something like that. It’s calculating what that dollar amount is.

He had pages in there that showed the luxury cars that are out there. A home, they had mortgage interest rates and payments. You’re able to see what it would take in order to do that. It was much less than what people thought. Next is absolute financial freedom is whatever you want, whenever you want. This is where people were pushed to put things in there that you usually don’t think about. I was like, “If I had absolute financial freedom, I can do what I want when I want and what would I do.” I’ve started to calculate things. Things that came to my mind were taking my wife’s family, who are underprivileged and taking them all to Hawaii for a week of Thanksgiving. I calculated out what that dollar amount would be.

Life is becoming easier from a physical perspective that people are becoming unhealthy. Click To Tweet

Another one was my wife and I had the opportunity to go to Tahiti a few years ago. What it would take to go back and be able to take my brother? I got married within nine months of each other. For our twentieth anniversary, I’ll take my brother and his wife to that same experience that Cynthia and I had. What that would be? I started thinking, my parents are going to be moving from Cape Cod to the West. What would it take to purchase a home there and continue the legacy that we have? We’ve gone to Cape Cod every summer for several years. What it would take to do that?

You come up with all of these different things and calculate it out. It stretches you. You start to realize, “In order to have that, I don’t have to do much more.” What it does is it helps to calibrate where you’re at and push you beyond where your thresholds are. That’s what I wanted to cover for this recap. The speaker for the second day evening was Erik Prince. He is the Former CEO of Blackwater. Blackwater is a private military contracting company that he’d founded. There are lots of conspiracy theories around Erik Prince and Blackwater. I’m not sure whether it’s true. I looked at a bunch of different things around the internet, but I found him to be genuine. I found him to be intelligent. He’s since sold Blackwater and he has different investment venture capital funds, not just in the US but around the world.

He spoke with somewhat intimate knowledge about the rest of the world. He talked a lot about the Butterfly Effect because of how intertwined things are. One little blip here and there could set things off, specifically based on what we’re dealing with is the Coronavirus. He spoke a lot about China and about what China’s intentions are. He made the statement that China is not militaristic. China is not after conquering the world with their military. They are about their economic power, their economic influence in what they’re doing.

I mentioned on the show before that they have a huge presence in Africa and other parts of the world. The way in which they’re doing it is interesting. Erik went into what the supply chain looks like with China and how that relates to the rest of the world as well as shipping. He said he wasn’t afraid of China. He also stated that there’s a time where if you’ve been indulging for too long, it’s good to go on a diet. He said that is what the United States needs. We are at a historic low-interest rates, highest tax revenues, but also the highest amount of debt we’ve ever had, as well as our entitlement benefits. We’re at this point in time where we need to figure out how to cut trim the fat. He didn’t necessarily allude to any type of trigger that would do that. He also said that China is using its influence to become more powerful. They are hoarding gold. There’s a rumor or speculation that they are creating gold back cryptocurrency to create a more balanced trade.

It was pretty fascinating. He talked about how Venezuela had a tremendous wealth there, but also alluded to Maduro’s influence being deep-rooted and it’s going to be difficult for Guaidó to get into his position even though he was elected. He talked about how things are becoming so much more international. The world is very youthful. One of the statistics I saw, this is by somebody else and not by Erik, there are 600 million people in the age of twenty in Africa, which I found fascinating. I’ll get to that one next time based on another speaker who has a 5G satellite company, as well as a new technology. His insight was fascinating. He talked about how China is dealing with lots of other countries. He also talked about how the manufacturing is dependent on them. I know I’m going off on China, but the majority of people’s questions revolved around China because of what’s going on with the coronavirus. There are also a lot of Chinese that were supposed to come to this event. They weren’t able because of the travel restrictions, travel bans. I’m going to leave it at that.

He did say that there’s a tremendous opportunity if you understand the rest of the world. I think that the United States still has a tremendous opportunity, but for those of you who are reading that are very knowledgeable about the rest of the world, knowledgeable about how to do investment overseas. He had mentioned that some of the Middle East countries, African countries as well as some of the dependent pieces of the supply chain that we have with regards to China are huge opportunities because there’s capacity in other parts of the world other than China. He was specifically alluding to minerals and how minerals are our main manufactured there and how parts, whether it’s for computers, how industrial metals are being used, how those are rare earth minerals are being used to create different technologies. It was over my head to an extent. Erik Prince is somewhat active online. You can follow him. That’s it. Thank you for tuning in for the day two recap of my experience here.

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Achieving Financial Literacy And Freedom With Sharon Lechter

TWS 22 | Financial Literacy And Freedom

 

Everybody wants to be financially free, but are they willing to take action? For today’s segment, financial literacy expert, keynote speaker, and best-selling author Sharon Lechter teaches about financial freedom in its barest definition and shares how you can achieve it. Sharon co-authored the international bestseller, Rich Dad Poor Dad, and fourteen other books in the Rich Dad series. She recalls the inspiration that started her into financial education and how this literacy can be a catalyst for change. She also touches on the power of association and reveals the secrets to successful entrepreneurship. The choices that you make today shape what you will become tomorrow. Take action and don’t miss this podcast episode.

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Achieving Financial Literacy And Freedom With Sharon Lechter

Our guest is an interesting one. You will enjoy the interview. It’s Sharon Lechter. Sharon is the former CEO of Rich Dad and Pay Your Family First. She’s an entrepreneur and a number one New York Times international best-selling author, philanthropist, international speaker, mentor, licensed CPA and chartered global management accountant. She co-authored Rich Dad Poor Dad, which is why you must be thinking about her name. She also co-authored with Donald Trump and Kiyosaki in Why We Want You To Be Rich. Also Greg Reid who we interviewed, she co-authored a book with him called Three Feet From Gold and also Outwitting The Devil, Think and Grow Rich For Women, Success and Something Greater: Your Magic Key. She’s written a lot of books and she’s written quite a bit.

She was in Columbia and had some cool things to say about that. I do a lot of work with the Rich Dad organization, mainly their Rich Dad Advisors. I have great relationships with all of them, with Tom Wheelwright and Andy Tanner, the Cashflow Wealth Summit which is an annual conference is 100% online. I never had the chance to meet Sharon Lechter although I know she was part of the Rich Dad story. I came to gain a good feeling about her as well as respect and adoration. The influence she had on Rich Dad or the influence it had on here and vice versa, I know it’s mutual.

She’s out there doing good and I believe she has some sound principles she talks about and we recommend you to go her website. She’s definitely mission-driven and still has a lot of work to do. I hope you enjoy the interview we had talking about the theme of entrepreneurship. She definitely is one that has seen many of those. If you like the show, we would love your feedback on iTunes. iTunes started deleting podcasts in general, hopefully not our podcast yet and hopefully never. They’re definitely restructuring some of the podcasts stuff on iTunes. If you would head over and support us, that would be amazing. All you have to do is give us a review and subscribe.

Sharon, thank you so much for taking the time to do this interview. I’m excited to talk to you about entrepreneurship because you have extensive experience in that arena.

Thanks, Patrick. I’ve been around a long time. I have done a lot of things.

Which says a lot. I’m hoping we can get to some of that. The first that I’ve been intrigued by is I’ve discovered that there are these universal variables or principles that determine the success or failure of a business or an entrepreneur. What are a few of those variables that you have discovered along the way? You’ve seen probably thousands of businesses, lots of success but also lots of failure. Have you come to some of those conclusions?

Certainly. One of the biggest ones is every entrepreneur, they’re in love with their product or their service, their idea, the deliverable of their company but too few of them take the time to build the foundation around that business. Everybody wants a successful business, but in order to make that successful business scalable and then ultimately saleable, you need to have the foundation around it. Some of that part is boring because you have to have the right legal structure, you have to have the right agreements, you have to have the right business systems and most people don’t think about that. It’s very important when you are a young entrepreneur to make sure you have a team around you and mentors that can help you build the business structure so that you can create and scale your success.

Getting to that point though, most entrepreneurs or business owners will start because they have a product or a service. Other than finding an amazing all-star team to put together right out of the gate, what are ways in which you’ve seen someone go through stages of a business to get to the point where they realize, “I need a team, I need some structure and I need to set up my operations this way?” What’s usually the process that an entrepreneur goes through before they have that realization?

The first step is you do start small. I invested $1,500 in our first print run of Rich Dad Poor Dad and continued to reinvest in the profits of the sale of the book so we can continue growing and expanding to a multimillion-dollar operation. It’s making sure you understand the needs that you have and then also that power of association is something that I talk about a lot. We were taught in school to do things on our own. Entrepreneurs typically they have their passion, they have their talent, they have their product and they feel they have to do everything themselves. The power of association is what’s going to speed your way to success.

When you're an entrepreneur, everybody's looking to you for the answer; it can get lonely and scary. Click To Tweet

In today’s world, it’s almost a necessity that you have the right people around, the right people that are going to help you market, the right mentors. It’s so important to have a mentor that can guide you around the pitfalls that other people fall into and open the Rolodex. When I have my mentoring clients, I want to make sure that they are looking at what that next level is, not where they are now but where they want to go and who can get them there the quickest. Do I know someone I can introduce them to? Is there a new association, somebody that can help them market their product? Entrepreneurship is a constantly creating environment but with that underlying structure, what you create stays and continues producing for you.

A few things that are interesting around people and having different people with different skillsets, different abilities. How do you go out finding the right person? How do you identify them? Resumes by now are understood as not necessarily the whole truth and nothing but the truth. How do you go about determining if it’s the right person?

There are lots of levels. If it’s an employee, I say hire slow, fire fast. You want to make sure that the employees that you’re bringing on understand your vision, understand where you want to go and that they have strengths where maybe you have weaknesses so they can fill that in but there’s a shared initiative. Let them be an entrepreneur within their job. Part of it is understanding what they’ve done in the past, what their strengths are and then giving them the opportunity to grow within the business. Not just hire them to do the same thing every day and give them the opportunity to own their jobs so that they feel that level of contribution.

In today’s environment, I talked to business owners all the time. If you’re not creating that entrepreneurial environment for the Millennials, install a revolving door because they want to feel like they have ownership over their life and what they’re doing even as an employee. When you’re looking at building your business advisers, does the accountant that you use have experience in what you’re doing so that they can bring their experience to the table to help create greater value for you. Is the attorney you’re using somebody that is an expert in what you do so that they can make sure they’re supporting you, that they’re not learning on your dime? Do you have a mentor who’s challenging you as well as supporting you?

Being an entrepreneur can be very lonely. You may have been a professional in a group of other peer professionals and if you had a question, you walked down the hall and walk into somebody’s office, but when you’re an entrepreneur, you’re the top. Everybody’s looking to you for the answer. It can get lonely and scary. That’s why it’s important to have those people that you and they may be in different industries, but if they’re going through the same growing pains, they may be able to help you deal with issues that come up and help you get past it. It’s a comfort to know that you have people out there that are supporting you in your success as you’re supporting them in theirs.

What are maybe some of those organizations that you have seen best support those leadership and entrepreneur roles? I totally agree with you.

There are quite a few that are regional. They may have a group in your area that may not be national. There is YPO, Young Presidents’ Organization. There’s YEO, Young Entrepreneurs’ Organization. There’s NAWBO, National Association of Women Business Owners. It’s for the women business owners who have more established businesses over $1 million. WPO, Women Presidents’ Organization, I’ve been on their national board and a member of for over twenty years. It’s an incredible organization of peer mentoring. There’s BNI, there’s LeTip. All of these are organizations are there to create and support and inter-networking and supporting each other in businesses. In addition, there are other probably local and regional organizations right here in Arizona. There’s one that’s more of a technology-based group. Check it out. Look out and find out. Talk to other people and what organizations they belong to.

That’s awesome because we haven’t mentioned any of those types of networking groups often. We’re talking about a lot of entrepreneurial principles but as far as networking, it’s always best to learn off of the experience of others instead of having to experience it yourself sometimes.

Experiential learning is so much better than book learning. If you get it from someone else, you save yourself the heartache of learning that lesson the hard way.

One of the things that I find intriguing is the notion of leadership. I find leadership an interesting principle. How have you come to characterize leadership and good leadership and maybe even bad leadership?

TWS 22 | Financial Literacy And Freedom

Financial Literacy And Freedom: Experiential learning is so much better than book learning. If you get it from someone else, you save yourself the heartache of learning that lesson the hard way.

 

There are so many thought leaders on the topic of leadership but from my perspective, I try to make things simple. A leader needs to know when to listen. A leader needs to know when to support. A leader needs to know when to make a decision. There are times when your function is that of a cheerleader, letting your team do what they do best and cheering them on. You duck when there’s praise, but you stand up when there’s criticism. There are times as a leader that you have to be the pit boss. You need to make the tough call. You need to call someone who are not performing. A leader always has the vision of the company, but also has the heart of the team and makes decisions based on both.

I would say one of the biggest things that I’ve faced is when you do have to make those critical tough, tough calls, I value the principle of co of kindness. Sometimes the managerial, dictatorial stick, for whatever reason, it’s never resonated with me. For those that experience those feelings, what are some rules of thumb to abide by to hold the line, tow the line but also do so with a degree of kindness as opposed to the proverbial stick?

The greatest talent of leaders being able to listen. Certainly, I know when I was a member of a team, if I knew I had the environment to be heard, no matter what the outcome was, I would respect it because I know I was heard. My thoughts and my suggestions were taken into consideration. As a leader, there are times when you have to be the decision-maker and you have to do what’s right for the company. Sometimes that means somebody on the team is in the wrong seat on the bus and probably if you sit and meet with them and you help them find something that’s better for them, they’re going to be happier in the long term. A toxic employee creates a toxic environment. That doesn’t mean as a leader that you can’t do it with passion and that’s how you communicate with them. Maybe it takes a little more time than a dictatorial leader will, but it ends up being better in the space in the long-term because an employee that is unhappy in their job may stay unhappy in that job. That’s not good for them, it’s not good for the company and it’s not good for the leader.

Part of that comes back to the first question you asked me is if you had the right business systems, the right code of conduct, the code of honor, things that imply what your business is for, what you believe the code of conduct is and an employee is not performing. If you can manage to the system, it’s a lot easier than manage to the personality because it keeps the emotion out of it. I had a client, a very successful dentist, he’s having a terrible time with her Millennial employees. She was very much more 8 to 5, “Don’t use your cell phone when you’re at the desk.” We sat down and I said, “Why don’t you have a code of conduct? When the next time you have a problem, you say, ‘Which one of these do you think you violated?’” It can almost become comical because I say, “I blew number five.” “What are you going to do about it?” It takes that angst, that emotion out of it because you’re pointing to a piece of paper, not to a person. That’s something that I share with all of my clients. Think of McDonald’s, you take out a little bit of that emotion and when you have high emotion, you have low intelligence. If you can manage the emotion, you’re going to get better results.

I’d love to hear your story. What are maybe some resources to point to, to understand what a code of conduct or code of honor is, how it’s created and then maybe get into some business systems? Are there some resources or guides that would help someone that’s listening that may have a smaller business that does not have established systems and would want to explore establishing?

Certainly. My husband’s an intellectual property attorney. He’s been by my side and he’s the legal mind behind many of the businesses I’ve built and created, this global brand as well as Rich Dad and many others. We put together a course called Essential Components of a Successful Business. I’m not intending this to be a commercial message, but I’m answering your question. We have that course. You can find it at SharonLechter.com because we couldn’t find it anywhere else. It’s like a college MBA class on how to build every aspect from the legal structure, understanding intellectual property, how to protect it and leverage it, business systems, how to raise money, different ways to use other people’s money, other people’s time, other people’s resources, understanding marketing and communication strategy and how important that is to have the follow up and the follow-through.

People talk about follow-up. Following through is usually the problem. It’s understanding every aspect of business systems from the moment somebody answers the phone, to following through on emails, whether you have a funnel, making sure that the customer experience is there and systems on how are you going to pay your bills, how are you going to collect money, what is your system so that you can stick to it, so that you have an organization that can be duplicated or scaled. Those systems are so important. It’s all held together by you as a leader, your team and your vision, your mission of the company. Once you can solidify that, you have an asset. That business becomes an asset. It’s no longer a job. It’s an asset that can operate with or without you.

From a system standpoint, there are so many different industries out there, different types of businesses, whether it’s product-related, service-related. Have you found that business systems are mostly universal or do they vary from industry to industry?

They vary between a large manufacturing company versus a service company. It is unique to the style of business that you have. Think operations manual, that’s step one. How does your business operate? How do you source your goods? How do you source your components? What are the financial terms related to that? Is it in time delivery or do you want to hold a certain number of days of supply down to how much of this do you have components? Who’s going to combine them? What’s the quality control procedures? What’s the return procedures? What are you going to do in handling defective merchandise? What is your return policy?

All of those and that’s a small piece of the types of systems that you have. Your operations manual is your first step in defining what’s missing within your business systems. I’ve got clients or people that have gotten all excited because they’ve got a big order from Costco or from QVC. They spent and they went and mortgaged their house to get the money to create products to be on QVC to find out that it all got dumped back to them. They lost a fortune because they got this high emotion. They didn’t have the systems and the financial intelligence to understand the importance of managing your cashflow.

Oftentimes, saying yes can get you in trouble. The entrepreneurial curse is you want to say yes to everything, but you should only say yes to a few things.

Financial freedom comes when income from your assets exceed your monthly expenses. Click To Tweet

A lot of people say yes and then figure out how. It can be a nice thing to say, but it’s a hard thing to do. You have to make sure you’ve got the financial wherewithal to follow through and then it’s the right thing for you and your business.

There’s a book that I read, Ready, Fire, Aim, and I see the point behind it. At the same time, there are also some drawbacks to approaching big decisions that way. Talk about what your story is and what gave you this bug. Clearly, you’ve had so many different experiences, whether it’s writing books or running businesses, consulting within numerous industries. What gave you that bug and what has kept it alive?

I started my profession as a CPA. Even from the very beginning of my career, I was inside companies of all different industries and saw how they did things right. Probably more importantly saw a lot of them did things wrong. It gave me this base of understanding of business operations and systems and what it takes to be successful in business. Fast forward a few years, I get married and meet the inventor of the talking book. I was able to take that and apply that in-licensing strategy around the globe. We had a new technology. This was back in 1987 before a child had any electronics. We were the very first electronic in a child’s hand. To get the parents to trust us, we partnered with companies like Disney, Warner Brothers, Sesame Street.

Understanding that power of association that helps validate you and elevate you when you needed it most allowed us to grow a very successful company that exploded over the four years from $1 million to $9 million to $23 million to $52 million in sales. Selling that company, we moved to Arizona. This was back in ’91 and in ’92, my oldest son went off to college and came home from September to December. He came home in December with a credit card debt. We didn’t even know he had a credit card. He got to college and there was a table saying, “Free pizza, free money,” and other one, “Free T-shirt, free money.” He had a good time his first semester in college. That was when he came home. It was December of ’92, we said no to bailing him out and we made him figure it out on his own.

It’s probably one of the better decisions we’ve made as parents. That was December of ’92 and that’s when I dedicated the rest of my career to financial education, financial literacy and entrepreneurship education. My passion now is as strong as it was in December of ’92. The way that I’ve done things that built the Rich Dad organization over ten years to be the largest personal finance brand in the world because of the need. I grew up in a very entrepreneurial home. I didn’t understand that everybody didn’t think the way I did. Financial freedom comes when income from your assets exceed your monthly expenses. It’s that simple. You want to invest your time in buying, building or creating assets. Once those assets get to that point, you’re financially free. It doesn’t need to be millions of dollars.

When I met Robert Kiyosaki, he was only making $100,000 a year. He lived in a two-bedroom condo. He had two small apartment complexes and it generated $100,000. His living expenses were $30,000. He was technically financially free. That message is what more people need to understand because people think financial freedom is when you’re at $10 million. No. You can become financially free if you focus on buying, building and creating assets. That has been my lifelong passion. I had fifteen books with Rich Dad. I’ve done four books with the Napoleon Hill Foundation, Three Feet from Gold, Outwitting the Devil, Think and Grow Rich for Women. Success and Something Greater, the reason I wrote this book is I want people to wake up that success means different things to different people.

We have some content that has never been published from Napoleon Hill, but we also highlight close to twenty people that have created success in their industries, all from different magic keys or secret sauce, whatever you want to call it. Their focus and their definition of success is different, but then they also always gave back that success and something greater. The reader is going to see these different stories of success and one may not relate to them at all but the next one can go, “I can do that.” I want to empower people to realize that you are where you are now because of the choices you made before now. If you want success in your life, start making different choices because it’s never been easier to start a business. It’s never been easier to promote a business. It’s never been easier to create success in your life if you do it with the right information.

From 1992, you have grown and it’s awesome that this book is coming out. At the same time, what trapped your son in 1992 it seems that the educational system, the business environment has continued to grow as well and not necessarily providing the financial education for individuals to achieve that end of financial freedom. What do you see in the Millennial generation or what do you see in the environment now that gives you hope? I’m talking mostly in the United States, but the indoctrination of kids and how they’re trained to be employees, trained to be managers, what are some signs that you see that things are changing, that kids are waking up? The Millennial generation, I find extremely fascinating because it’s totally different than all previous generations and they haven’t bought in as hard as a lot of other generations have. What else are you seeing maybe besides the Millennial generation that gives you hope?

There’s a positive and a negative. Millennials now and the younger generation, they recognize that there’s no job security. They recognize that there’s not going to be a 30-year career with a gold watch. They’re not going into it with that expectation, which means they also have more demands. You have to make sure you understand as an employer that it’s not just the paycheck, it’s the environment. If you want to build loyalty in your employees, you need to understand what they want, what they’re looking for and make them feel ownership in what they’re doing with your company. In addition to that, the school system itself is still behind the times. We’ve succeeded in some states, Arizona, we now have personal financial educations as a requirement for high school graduation. It’s not enough and we’re still working on that degree.

We talk about how the rich get richer, the poor get poorer. That’s because they learned about money at home, not at school. If we truly want to level the playing field for students and people around the world, providing that financial education is what’s going to give kids an equal footing. As we see these kids coming up, a lot of people say, “They’re lazy. They don’t want to do anything.” There are those individuals in every generation. I see young people eager to take control of their own lives, eager, recognizing that there is no job security. We will always need employees. Companies will always need employees. If you are in the market and with our low unemployment right now, it’s even more important to create an environment where your employees are proud to be part of your company. Proud to be there, proud to want to work for you and create success. As an employer, as a leader, sometimes you have to be more creative as to how you maintain that environment of excitement even if it’s a corporation and environment of entrepreneurship.

TWS 22 | Financial Literacy And Freedom

Financial Literacy And Freedom: If you want success in your life, start making different choices and start building your business.

 

Sharon, you’ve provided so much information. Tell the audience how they can get your new book and also access some of the resources that you have available. Maybe talk one more time about the business course that you have available on your website.

Thank you so much. I appreciate that. SharonLechter.com is my website. I’m also Sharon Lechter on Facebook, LinkedIn, Twitter, Instagram, everywhere. On my website, you can find more information about several online courses I have. One is the Essential Components of a Successful Business, which I spoke about earlier with my husband. I have a Financial Mastery Course that is also very in-depth getting you from being financially stressed to financially secure. I have a Play Big course, which helps take you to the point where you are financially free. All of those are available. I also have another course on Think and Grow Rich for Women.

For free, I have a podcast, Play Big Movement with Sharon Lechter and then I also have a private Facebook group, Play Big Movement with Sharon Lechter. I invite you all to join all of those. The book Success and Something Greater is available through Amazon. If you want to have a special gift related to you defining your own personal success equation, you can go to Bit.ly/successequation. It’s not a sales pitch. It’s a download of walking you through your own personal success equation, your passion, your talents, your powers of association, what actions you can take and most of all having faith in yourself, faith that what you’re doing is needed and necessary and faith that you can succeed.

Sharon, this has been amazing. Thanks again. Any final words of wisdom?

I want to thank you, Patrick, for what you’re doing. The more information we get out there energizes people to take action. I literally came home from Columbia and the folks down there, South America, they’re so eager to learn. They’re so excited. They were there before the doors open. They stayed until after the doors closed. They were so eager. I think we need to get people energized, particularly in the United States, to take the action. Many people are waiting for it to come to them. Don’t wait, make that decision and go out and create your success.

When the spectrum is wide as far as having freedom and not having freedom and being pushed in certain directions, especially from a country and political standpoint, it’s amazing how much freedom is valued, how much education is valued, how much other perspective is valued. I have tremendous hope for South America. Columbia has made its strides.

It’s amazing. It’s like the beginning. It’s on the upswing. It’s very fast-growing economy with people that are so loving and excited and eager to learn. I’m looking forward to seeing how the economy there grows.

Sometimes those countries have to experience some pretty rough times in order to turn things around and have a shift for the better. That’s awesome you were down there and were able to give them value.

Thank you. It was wonderful. They were incredible people. It was incredible seeing the progress.

I know it’s making a difference and I look at countries like Venezuela and I know Argentina is having issues too. It’s one of those things where you have the Columbias of the world and you have other countries that are making these drastic changes, it provides that flagship and a beacon of hope for the other countries that are their close neighbors. Thank you again for your time, Sharon. Best of luck on everything. We’ll get the word out on all the resources that you mentioned as well as your books.

Thank you, Patrick. Thank you for all that you do.

Important Links:

About Sharon Lechter

TWS 22 | Financial Literacy And FreedomSharon Lechter is internationally recognized as a financial literacy expert and keynote speaker. She is a New York Times Bestselling author, successful entrepreneur, philanthropist, and licensed CPA and CGMA.

Sharon has been a pioneer in developing new technologies, programs and products to bring education into people’s lives in ways that are innovative, challenging and fun, and remains committed to education – particularly financial literacy and entrepreneurship. In 1989, she helped the inventor expand the electronic book industry to a multi-million dollar international market.

As founder and CEO of Pay Your Family First, a financial education organization, Sharon has served as a Presidential Adviser to Presidents Bush and Obama on the topic. In 2009, Sharon was appointed to the National CPA Financial Literacy Commission as a national spokesperson on financial literacy and was reappointed in 2014. Sharon is also a Founding Chancellor for Junior Achievement University of Success and was appointed by Arizona Treasurer Kimberly Yee in 2019 to the Arizona Financial Literacy Task Force.

Sharon co-authored the international bestseller Rich Dad Poor Dadand 14 other books in the Rich Dad series. Over 10 years as co-Founder and CEO, she led the Rich Dad Company and brand to global success. In 2008, when the economy crashed, she was asked by the Napoleon Hill Foundation to help re-energize the teachings of Napoleon Hill. Her best-selling books with the Foundation includeThree Feet from Gold, Outwitting the Devil and Think and Grow Rich for Women. And her fourth book, Success and Something Greater was just released in September. She is also featured in the movie Think and Grow Rich: The Legacy.

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Financial Freedom For Millennials with Daniel Ameduri

TWS 18 | Financial Freedom For Millennials

 

The road to financial freedom has always been dictated by financial norms, a lot of which don’t really seem like freedom at all. Editor and the Founder of Future Money Trends, Daniel Ameduri, talks about financial freedom and what it looks like for the Millennials. Walking us through the concepts of his book, Don’t Save for Retirement: A Millennial’s Guide to Financial Freedom, Daniel notes that the Baby Boomer generation has inculcated in most Millennials the idea of saving for their retirement and putting their money on retirement funds which has given the younger generation more pressure. Breaking the shackles that are forcing us to commit to that tradition, Dan teaches Millennials how to deviate efficiently from investment and embrace the gifts brought by their time.

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Financial Freedom For Millennials with Daniel Ameduri

On this episode, I have my good friend. He’s become a great friend, but he’s also the Editor and Founder of Future Money Trends, which is a publication business. He has come out with a book, Don’t Save for Retirement: A Millennial’s Guide to Financial Freedom. I know he has been working on this for a while. I had him on the show many years ago. Daniel has been front-running the cryptocurrency, the cannabis, the precious metals and other alternative investment world for quite some time on his YouTube channel and very popular website, FutureMoneyTrends.com. You are going to get to love his perspective on life and I think you’re going to get a lot out of reading his book and hearing the story firsthand. Daniel is an amazing writer and entrepreneur. If you’re reading about him for the first time, then it is going to be a treat. Without further ado, welcome, Daniel Ameduri.

Daniel, thank you for spending the time, it’s awesome having you back on. You were on several months ago. It’s a pleasure and I’m super excited about your book.

Thank you for having me on. I should let the audience know that I have seventeen policies, dividend-paying, cashflowing, gushing, safe. I’m dual compounding them too, but I’m sure we don’t want to go down that rabbit hole but they need to learn from Paradigm Life for that.

There are many things you can do as a Millennial if you embrace all the gifts and the things that the world has given us. Click To Tweet

Daniel, I’ve gotten to know you over the years and you’ve done some incredible work. It was awesome to hear more about your story. I never got into that with you even though we’ve had some discussions over the years. Your book is well-written and I like how it opens up your life. How people come to this opinion or perspective of life, there’s a backstory to it. Without that backstory, sometimes it’s hard to buy into a person’s perspective, especially if it’s different than the status quo. Looking at the title of your book, it’s totally against what most people believe. Telling your story and opening yourself up that way awesome. Would you mind maybe talking through what was the book about? What was the purpose of it? What message do you want to send? Who is it intended for? Maybe start there.

The book is called Don’t Save for Retirement. For your audience, we’ve set up a special page at FutureMoneyTrends.com/save. They can read the intro in the first chapter. If they like it, they can buy it. There’s a link. This book started when I was in an attorney’s office setting up my trust, my will and I turned to my wife like, “We know where the kids are going to go. We know where the money’s going to go. What about teaching the kids? What if they get this bad conventional wisdom conditioned into them without mom and dad there who is a fairly strong presence and force against that stuff.” We started brainstorming what we could do. I was like, “How about we write a book? It will be great for the business. It will be great for other people who can read it.” It started with no initial audience in the sense that it was teaching my children, but also keeping in mind Millennials and other people who might be saving the conventional means of retirement and what they could do with their money.

I wanted to bring in what my wife and I did because I didn’t want people to think that, “This guy has got an economic sense on his shoulders and all this stuff.” The intro starts in a bankruptcy attorney’s office. We were messed up after 2008. I got a job making $10 an hour. My wife was a school teacher. We were about to have a baby. Things were wrecked. That’s where the book starts. It starts off how I dug myself out, what it took not just financially, but a change in my mindset and my change in what is even acceptable. The book, Don’t Save for Retirement, I would say almost is a cross between my personal story and personal finance. That’s an alternative way.

It’s not Robert Kiyosaki where it’s all getting leverage. It’s definitely not Dave Ramsey where it’s like, “No debt.” It’s like, “This was my story. This is how I did it. This is all the things I learned along the way.” One thing that rings true with what I’ve learned from Robert Kiyosaki is the poor and middle-class speculate, they just do, no matter what they’re in. Their retirement vehicles, they’re always speculating. The rich preserve and focus on income, which is one of the reasons why I’m so attracted to your company, Paradigm Life, that preservation and income mindset. The advantage of the rich is they’re already rich. However, I learned that if the middle class apply those same principles, they can also be very wealthy.

TWS 18 | Financial Freedom For Millennials

Don’t Save for Retirement: A Millennial’s Guide to Financial Freedom

You use some very strategic words in the book. The one that comes to mind is the idea of control and I thought a lot lately about group psychology, a group narrative. I look at our school system. I look at the workplace. I think it’s programmed into our mind the being told what to do mentality, “You’ve got to do this. I am superior, therefore do what I say.” These days, people are speculating, but they’re not even thinking. They’re doing what everybody else is doing and they’re assuming that whoever’s telling them to do it is going to give them the results that they want, which of course there are many different examples of that not being the case. It was cool as taking control and using your mind to figure out what you want financially is where it starts. Unfortunately, there are these traumatic events, difficult events that cause us to have those paradigm shifts. When you’re writing the book specifically for your kids, if they read the book, what did you want them to get? What was that message? They close the 196-page and it’s like, “What is that next thought?”

That they choose their destiny, that there is no right way or wrong way. Whether they have a job and become great passive income investors or they have a business and they’re investors as well or they’re a stay-at-home-mom or a stay-at-home-dad. I don’t care what they do. I want them to know that they can do whatever they want to do. It is their life and many of us, exactly in line with your question, do what everyone else does and follow the crowd. Everyone else is going to college. Everyone else is saving for retirement. Everyone else is financing their house for a few decades. Everyone else is financing their cars for a few years. Everyone else is buying term because your whole life’s a scheme.

It’s nonstop no critical thinking and I want them to let them know like, “You can do whatever you want and if you want freedom, you have to buy your freedom. It’s not going to be free. It will require sacrifice and it will require good decision-making that will compound. You’re not going to be eighteen and financially-free, but you could be 25 to 40 years old and be financially free as opposed to the alternative plan which is, ‘Give all your money to Wall Street and we promise you in 30 to 40 years, even though you have no idea what your tax withdrawal rate will be or what the funds will even be at, you’ll be able to retire at this magic number that some German politician wanted to win an election.’ He upped the other guy by instead of running on 70, he said 65.” I want people to know that ultimately you choose your destiny and a lot of us have to be woken up and slapped in the face like, “What are you doing? You’re on autopilot.”

I’d love to hear your opinion on what are the events that would cause a person to read this information and not necessarily have it discarded but actually implemented and used. We’re in this period of time where debt is an all-time high, student loan debt, consumer debt. If you look at household income, it’s been stagnant for many decades. You look at people who are not getting ahead and I know that there’s frustration. There are polls. There are headlines that come out all the time about the frustration that exists in America with people not growing, not getting ahead, which essentially is the anti-life because people are naturally compelled to grow. Where do you think the pain threshold is until people snap out of it?

I hope their pain threshold is not bankruptcy or like me, where I was in a bankruptcy attorney’s office with my wife crying. I certainly hope their pain threshold doesn’t go to a point where they get so angry at their job that maybe they do something that gets them fired or damages their resume for the future. Ultimately, that frustration Americans are feeling is because they have subscribed to a middle-class lifestyle that is not sustainable. Much like the national story of what our government is doing, our citizens are doing. I can’t fix the government, but we can all fix ourselves by making some changes in our own lives. In the book, I talk about what my wife and I did. We drastically cut spending.

Did we do it forever? No, but we did it for a year-and-a-half, two years. Even when we weren’t drastically in cutting spending mode, we still live very frugally. I always tell people it took many years. When I achieved that financial independence, net worth millionaire status, not even liquid, but net worth. I was driving a 2003 Nissan Altima. It was a ten-year-old car. I was living in a house, at the time when I purchased it, it was about one time our annual income. By the time I was financially independent, the thing was one-third of our annual income, but I was still doing that and not permanent. Now, I live in a very nice house and I get to enjoy all the luxuries of those sacrifices that I made.

If you want freedom, you have to buy your freedom. It's not going to be free. It will require sacrifice and good decision-making. Click To Tweet

You have to, at some point in time, say stop. For most of us, unfortunately, we’ve subscribed to the unsustainable lifestyle. You might have a car that’s equal to your annual income spread out over a few years. You might have a house that’s ten times your annual income. You might have done a lot of things that have messed you up. That’s where I love the Dave Ramsey personal finance part like, “Start the cutting spending.” Stop doing all this stupid stuff that’s excessive. What I like to do is after I cut the spending is shift the savings of the spending into buying income and training that brain that everything I buy, I want to see a check either quarterly, annually, monthly. I want money coming in from everything I do. One of the things I have in my house in the children’s schoolroom is only to buy assets that cashflow.

We’re all going to get involved with speculation. I’m the worst. I love microcap investing and venture capitalism, especially here in California. Ultimately, 90% of my efforts and my focus is focused on buying income. Anyone who’s frustrated and who is in that lifestyle of trying to keep up with the Joneses realizes that financing everything in your life and spending every last bit of your paycheck, it is not normal. It may be perceived as normal because that’s what everybody else was doing, but it’s not. You have to say no. If you’re reading and that resonates with you, it can be done. It’s going to take a few years to mop this thing up, but you can be financially independent and either quit your job or work part-time or full-time because you love what you do.

These are all amazing points. In the book, what direction are you giving to people? What are the steps that they can take? Starting with whomever that person you were writing to when you were typing out the words of the book and getting them to take that first step then the next step. What are some steps that people can take to go from where they’re at and start to circumvent better or build a bridge over the gap to where they want to be?

The first chapter starts with, “What is wealth?” A lot of people don’t even know what they want. They’re just going through the motions of life. They’re killing time while they’re here on earth, which is very sad. For me, wealth is the ability to be able to do what I want with my time, to wake up when I’m done sleeping, to be free. I think that’s the first step is defining what you want. I always tell people, I learned this from James Altucher. He talked about the three things you want people to say at your funeral. What do you want people to say who you are and then embrace those things? Remind yourself, write it down on a piece of paper and see it every day when you get up. I have daily statements for every single of my kids and my wife and I. I like to remind myself that. Steve Jobs talked about that, ask yourself every day, “Am I happy with what I’m about to do right now?”

The next step is if you decide to become financially free, you need to see what the gap is? What do I need? How much income do I need to pay for my expenses, my monthly lifestyle? Ultimately, becoming financially independent, in my opinion and in the book, is to be able to have multiple sources of income. Instead of having a one or two-household income, think about having how do you get to a 21-household income? Maybe it doesn’t pay all the bills, maybe it just pays the utilities. How good will that feel? It pays all your utilities, maybe it pays the mortgage. However, you want to look at it, how would you like it if every month you went to work and you realize that all your utilities and your mortgage were being paid by passive income?

TWS 18 | Financial Freedom For Millennials

Financial Freedom For Millennials: The Millennials may have been conditioned to believe that they want socialism, but they love the efficiency of capitalism.

It starts small. The book talks about the biggest first step is work where you can cut. For a lot of people, that’s moving, that’s one of the biggest expenses. Whether you’re moving to a further area in your county or you’re moving to another state. My wife and I moved to a desert community in California. The next area is retraining their brain. Instead of dumping all this money into a 401(k), start using these whole life policies to dual compound. Start using different investments that pay an actual dividend that bring a check into your life. That’s the biggest thing I can tell people to have that mindset of start buying things that make you money.

It’s interesting and I’ll be somewhat open here because the first thing you said resonated. Most people don’t know what they want. I think it goes back to the mindset that we’ve been programmed or highly influenced to understand, which is being told what we want or being told what to do instead of us recognize. It sounds trivial but us recognizing that we have a choice of what we want. I had one of my business coaches, I had this meltdown. I didn’t even anticipate it, but it was the rocking chair test. They essentially get you into this state where you’re 95 years old, you’re sitting in a rocking chair and you’re describing what life was about. It was powerful for me and I connected with what was important to me. I connected with what I wanted.

It wasn’t necessarily a dollar amount. It was more about my relationships. It was about the people that I loved as opposed to anything material. At the same time, those material things allow a magnification of the experiences with the people that you love. The second piece is interesting too that you talked about, which is the idea of understanding where you are financially and where you want to be. I look at what most people obsessed with, which is weight and money because it’s measurable. At the same time, how people measure money is fascinating because it usually has to do with either their income or their bank account and that’s it. The true measurement of money, which Robert Kiyosaki heavily emphasizes in all of his books, is a financial statement.

He has a whole book at how to create a financial statement, which is ultimately the scorecard for where you’re currently at but can also help you objectively measure what you need to do in order to get to where you want. Ultimately, the wealth side of things is fascinating, Daniel, because in the end, why are financially successful people so miserable end up committing suicide or getting multiple divorces or alienating children? It’s interesting where people have connected wealth with money but yet, in the end, people would trade all of their money for what is truly valuable to them if they opened up and were vulnerable. That’s where I look at where we’re at in our day and age with society and what’s available to us with technology.

Wealth is the ability to be able to do what you want with your time, to wake up when you are done sleeping, and to be free. Click To Tweet

It’s more possible than ever to live that type of life, but yet the comfort that people have with what society has told them is a success is still bought into. Even though people are starting to see that there’s a different way of doing things and there’s a different lifestyle. “Look at this guy, look at this friend,” but yet they’re still programmed to do what’s safe and comfortable. How did you break out of that? Where have you may be talked about in the book how you have written whether it’s your newsletter or your YouTube channel, like getting people to snap out of it and believe in what is possible.

I would say that what you just touched on, the first thing I thought of was the Millennials. The Millennials are trying to apply the Baby Boomer life plan to a totally different economy. They are suffering and complaining about it. I got rid of my car because I Uber everywhere and I go for nice long walks or I jump on a Lime scooter and I go as far as I want. I don’t have to go back to a parking lot. I flip out my phone and five minutes later, I’m back at the house. You can start a website for $10 if you’re a Millennial, a business for $10. You can freelance anything, sell your skills, you’re going to work from home and you can monetize your own job. There are many things you can do as a Millennial if you embrace all these gifts and these things that the world has given us.

I ordered lunch and I wanted to order some Thai food, so I went onto Grubhub. A lot of people are trying to do the same thing with their investments and their investment mind setting. The Baby Boomers had the best bond market, best real estate market and the best stock market. According to Vanguard, the median account for 65 and older is only $58,000. If that experiment didn’t work for them, and by the way for most people, 401(k)s have only been around since the ‘80s. They passed them in the ‘70s but ‘80s for all intents, purposes and implementation. A lot of people think the 401(k) was with Adam and Eve, and they came out and they had their employer match.

TWS 18 | Financial Freedom For Millennials

Financial Freedom For Millennials: Trying to keep up with the Joneses financing everything in your life and spending every last bit of your paycheck is not normal.

A lot of this stuff is new. It didn’t work and that’s okay. Some of the intentions were probably good. What does work? What’s been around for hundreds of years, thousands of years when it comes to passive income and the way the rich invest? I look at the frustrations of people that it’s a lot of times it’s because they’re adopting and applying these rituals. I was in Africa and I was with the Maasai. I was asking the guy, “What’s your goal in life?” He was like, “I need more cows.” I was like, “You guys cleaned our rooms and you see the bathrooms and the match them. You don’t want a mattress in your house? The houses are made of cow crap. You don’t want a toilet?” He’s like, “No, the elders say that’s not the Maasai way.” I’m like, “Tradition can kill,” like it’s doing to the Maasai, it’s doing to the Millennials here in America and all around the world because they are in the tradition of something that hasn’t even been around that long, especially when you apply the way conventional finance has been applied to for people.

Here’s what’s fascinating. What you said is that the root of the word capital, like capitalism, comes from cattle. The nature of capitalism isn’t the cattle itself. That’s not capital. The capital comes from the derivative use of cattle, how people figured out to use a cow for not just milk, not just meat, but leather for instance. I look at the world of immense resources and people look at the value in a piece of land or the property. That’s not where the value is. The value is our ability to take our mind and make use of that in a variety of different ways. Look at what we live amongst every single day, whether it’s Grubhub, uh, whether it’s the Lime scooters. These are essentially resources that people figured out how to look at some friction or some frustration and to get a solution to it. That’s all around us, but yet not understanding the fundamentals and subscribing to the status quo doesn’t open your mind up to what those possibilities are. That’s why the Millennials don’t like capitalism. It’s because everybody else is coming up with ideas and they’re not.

They may have been conditioned to believe that they want socialism, but look at every aspect of their life, they love the efficiency of capitalism.

It’s an amazing world we live in and it’s evolving so quickly. It’s awesome that there are more books like this coming out. They are reinforcing not just talking points, but they’re reinforcing principles that have been around for a long time, but also ways in which you can capitalize on the current environment to achieve the outcome that I would assume most people want.

In the book, I provided the links of the different companies I invest with. Obviously, your company is mentioned in there when it comes to my whole life policies. I didn’t hold anything back. I put it out there and the same thing goes with my letter at FutureMoneyTrends.com. If I’m investing in it or writing a check, it’s in there. If not, it’s not in there at all.

Daniel, what are some other ways in which they can follow you, learn about what you’re up to, learn about Future Money Trends, some of the video stuff that you’re doing online. Why don’t you throw those out there?

I would love for them to go to FutureMoneyTrends.com/save. They get the Weekly Wall Digest free. It shares a lot of the different stories and things that my wife and I went through and did to become financially independent as well as some stuff that I teach my children, as well as any investment, passive income or speculative that I’m actively involved in. They get to also read the first chapter of the book.

Daniel, it’s a pleasure talking to you. Thank you so much for taking the time. Hopefully, we get to do a follow-up soon.

I hope to see you soon.

Thank you.

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About Daniel Ameduri

TWS 18 | Financial Freedom For MillennialsDaniel Ameduri is a self-made multi-millionaire, a full-time skeptic of conventional thought, and a proud father of three. He is the co-founder of FutureMoney-trends.com, which, with nearly 150,000 subscribers, it’s the most widely recognized online authority in investment ideas and economic advice. He’s been featured in The Wall Street Journal, on ABC World News Tonight, and on Russia Today TV. Daniel correctly predicted the collapse of Lehman Brothers, AIG, and Washington Mutual on “Vision Victory,” the YouTube channel he launched in 2007 and which now has had more than thirteen million views.

 

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Italy – The Past, The Present And The Future

TWS FF 10 | Raise For Life

 

Humans are designed to grow, to expand, and to solve new problems. It may be at various levels and capacities based on our uniqueness, but we all have that within each of us.  With that in mind, how do you get a 10% raise for life? There are actually more opportunities to work from home or work in a place you want to live in because of how society is progressing. Everything is within your reach because of the internet. Knowing that all these options exist creates focus and ultimately a path to build your value statement. In this episode, Patrick tackles how to make more money or make the same amount of money with less time and do it every year.

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Italy – The Past, The Present And The Future

Financial Friday

I am in a different location than Salt Lake City, Utah, my home office. I’m actually in Florence, Italy. My wife has had a dream of coming here for so many years and there’s actually a conference that I’m attending so we’re excited to extend a little bit and visit a few cities. We were in Milan, then went to Venice for a few days, then came here to the conference in Florence. Then we’re headed to Rome for a few days. We’re hitting all of the hot spots. I thought what would be appropriate for this episode is to talk about Italy, the past, the present and the future, and what that has to do with you specifically in regards to the idea of compound interest. Get ready for another episode.

Let’s first talk about the past. I’ve mentioned this in episodes of the past, but Italy is actually credited as being the ground zero for banking. It’s really the more robust organizations. They had massive influence that started here in Italy and you can still see signs of that. One of the most prominent families, probably one of the more well-known ones was the Medici family. You could see their coat of arms everywhere and it’s popular here. I learned a few different things I thought that would be interesting for you. First off, they’re the first prominent banking family that had tremendous influence during the Renaissance era. Eventually part of this line became Popes and lots of influence. From a banking perspective, here’s something that’s pretty fascinating. They’re credited with the creation of double accounting using two variables: credits and debits. The banking family also funded the creation of the opera and they also funded the creation of the piano. These are things that we look at every day and realize that they’re just a part of our culture, but they weren’t necessarily here several thousand years ago. It’s interesting to see that history behind it and that it was funded by credit, by somebody taking a loan, using that loan to make something. In this case, it was opera and the piano.

However, a lot of the early banking families like the Rothschilds, obviously the Medici family is also part of it, they lent a lot of money to the Catholic Church. In addition to these ventures, the opera and the piano, the Medici family also funded the construction of St. Peter’s Basilica, which is at the Vatican City. That’s also very interesting. Then there’s a bank in Siena, which is the oldest bank still running today and it was founded in 1472. Before Columbus sailed the ocean blue, there was an Italian bank that was up and running and it’s called the Banca Monte dei Paschi di Siena. That’s essentially very instrumental in creating what we know as banking now.

Let’s get to the transition to the present. You look around Italy and it’s such an amazing culture. I’ve never been here before, but there’s beauty everywhere. The art, the cathedrals, the ornateness of everything, the food, the culture is so rich. Why don’t they have the power that they once did? They were the superpower of the world. Obviously, Rome being one of the greatest examples of a society that rose and then subsequently fell. There are many variables. If you look at why they lost so much power, I put it into two primary reasons. The first reason is the wealthy that were clearly intelligent, mainly coming from banking and being able to lend on ventures that were suitable for lending, such as the opera such as the piano, there are lots of different trade ships and the shipping industry being funded by banks. They had it going really well and there were some incredibly wealthy nobles and non-nobles.

What you started to find was that there became this idea that in order for the wealthy person to get into heaven, they had to make some pretty big donations to the church for them to be permitted to go to heaven. It was interesting. There are several different comments on some of the tours we took that talked about how much of the wealthy’s money went into funding, just these incredible cathedrals and churches, which is nice because we still have that today. At the same time, you look at the productivity and the wealth that was created in the first place, the ability to analyze and price-risk that it wouldn’t do something that really did not produce anything.

Humans are designed to grow, to expand, and to solve new problems. Click To Tweet

Second variable is that disruption happens. What happened in 1492? Columbus sailed the ocean blue, new trade routes were created, new trade partners were created. It no longer was the Mediterranean Sea. It really became to the Americas and slowly the Roman empire as well as Italy and their significance started to falter. It’s interesting to see how us as humans and our race, how we innovate and we’re always making things better and new things are created that we don’t necessarily anticipate. It ruins businesses sometimes. Just look at what the retail industry is becoming because of Amazon, you have disruption and you have cycles and you have new ways of doing business. It puts the older businesses, established business on the fritz. You see that quite often, especially in our day and age, and it happened back then too.

Let’s transition to today. Italy today is part of the European Union. This is the present. It’s not doing so well. However, Italy has a pretty big economy. It’s about a $2 trillion economy. It’s part of the European Union. I think it’s either fourth or fifth as far as its GDP. $2 trillion is its GDP. The issue with Italy is that from a banking perspective, they should be the experts in loans. If they’re the ones where banking originated, right now their GDP is over 150% and their credit rating is one notch above junk. Junk is considered a very high-risk bond or a high-risk investment. That’s where Italy’s bond rating is right now. One of the riskiest countries out there, one of the poorest situations, they’re in a recession. They had some negative quarters of GDP in 2018.

I’m going to give you one example of some of the stuff they’re spending money on. They’re taking out loans, you would think with a background in banking that they would know how to price the risk of different ventures just as a culture. They committed money to building this tunnel that goes underneath the Alps and it connects to France. I know the European Union has pledged money for it as well as France and a few other countries. However, Italy pledged 30%, 35% of the project and the project from the get-go has a negative $7 billion return. Obviously the point of making an investment with debt is to have a positive return. That’s the nature of debt. Oftentimes when you put debt in the hands of government politicians, they don’t necessarily have the incentive to always be profitable. It’s to do what’s good for everyone, yet there are a lot of unintended consequences with that, such as the situation they’re in right now where they have way more debt than they have GDP. As interest rates should be creeping in on their ability to go into Junk status and possibly be defunct and bankrupt. What’s interesting is the whole concept of bankruptcy originated in Italy, banco rotto, which is like a broken table because banking used to happen on a table. That’s where banco comes from.

This is where Italy’s at. I looked at where they’re priced in the market and they’re priced at a very interesting interest rate. In the United States, typically to understand the medium of short-term and long-term bonds, you have the ten-year yield. In Italy, it is basically at the same level as the US’ ten-year bond. That shows you just how mispriced the markets are when it comes to the underlying collateral, which is in this case, Italy’s government and being on par with the United States who has the best credit rating that’s out there. It’s just fascinating. The reason why it’s priced like that in the present is because you have the European Union, the European Central Bank, is ultimately going to be forced to bail them out. Who knows what the future is going to be? Oftentimes the fundamentals, the logical way of thinking as far as A plus B plus C equals this, “If this happens, then this should happen. Then this should happen.” It’s the human being’s ability to deduce and the ability to be rational and understand connections. At the same time, human beings also have the tendency more often than not to be irrational and their behaviors don’t reflect logic.

That comes down to the future. That in the future we don’t really know what’s going to happen. We can speculate but right now, Japan has been operating at over 200% debt to GDP for a really long time. They keep on going. Obviously, they have their own central bank, which is the Bank of Japan, whereas Italy does not see the European Central Bay because they’re part of the European Union. They can’t create their own currency. It would be interesting what the future holds. What this does show is that there are a lot of things that are out of whack and things are changing very quickly as far as technology, as far as the new people coming online, new technologies. That disruption is what creates companies going out of business, countries having major issues politically. What does that have to do with you? That has a lot to do with you because we live in a world that is interconnected.

The majority of American savings, which I’m assuming the majority of my audience are Americans, the majority of savings is tied to markets and markets are affected and impacted by a few things, the speculation of what things are right. For instance, the two and a half percent-ish that the Italian tenure is at as far as yield is concerned. That’s priced into expecting that the European Central Bank is going to bail them out. If they don’t bail them out, what is going to happen? You’re going to have a tumbling in the bond market, which means prices are going to go down quite a bit and the yield is going to spike to where normal levels should be for a country that has a bad rating. Right now, the expectation is that the European Central Bank’s going to bail them out. Therefore, the yield is still pretty stable. You look at other aspects of the market and what it prices and sometimes it’s rational, sometimes it’s not. The disruption and how quickly things are evolving shows that there is going to be volatility. When you have volatility, you have a much higher probability of loss when asset prices go down.

Let me hit on one more point. I look at my experience here in Italy because it’s not just the debt to GDP, which is really high, but there’s super high unemployment, almost 11%. Walking around the streets of these different countries, you wouldn’t think that there is a high unemployment rate. The people of Italy seem to be very productive. What I mean by that is they don’t open until 10:30, 11:00 in the morning, stores, cafes, restaurants, and then they close for the majority of the afternoon for like a siesta. Then they open up at night and they still are profitable. I look at the amount of youth that are on the street as well as a lot of the businesses that I have observed. There’s a lot of productivity. It’s a very dynamic people too. You look at how beautiful the hills are, the environment is the tourism that exists here. It’s incredible. Those resources are there for the Italian people. Yet oftentimes that’s not what is relied upon for things to rebound. It’s typically government who intervenes and thinks that they know the right decisions to make. Apparently that’s not working out so well for most companies, but we’re not going to have to be talking about that more than what I’ve already mentioned.

Let’s get to the last aspect of this short episode of Financial Friday, which is compound interest. One of the things that I see as the biggest misunderstanding or financial point that is made that is never questioned, which is the idea of compound interest. Compound interest is typically defined when an amount, typically money, is earning interest and then that interest earns interest, and that continues to grow. The hockey stick example is often used, exponential growth is often used. The rule of 72 applies to compound interest. Whenever it comes to something that can lose, when there is a loss available and anything that is assessed as being a compound interest, the whole notion of compound interest must be questioned. Here’s why. I used this example in the book that I wrote in Heads I Win, Tails You Lose. I hit on it a few different times because a lot of the claims in financial services with typical financial planning, is that because the market has earned certain rates of return in the past that they use that even though they disclaim that the past results are not indicative of what future results are going to be, they still use it. They use an interest rate to determine how interest compounds over time. If the market has averaged let’s say 10% over the last 30 years, then that 10% is used every single year without loss to determine what an end value will be.

TWS FF 10 | Raise For Life

Raise For Life: As you’re doing research and due diligence on what is available to you to make more money, make sure that it is fulfilling and aligns with who you are.

 

Here’s the problem with that is if you actually look at the nature of markets, when a market goes up and interest is earned, but then the market goes down and there is a loss, what happens next is very important. You can’t just measure the number because if you look at an average return, if you lose 50% in the market and then you earn 50% that next year, so one year you lose 50% in the next year and you gain 50%, you’re not going to be at zero. If you earn 50% and then lose 50%, you’re going to be at zero. Why is that the case? Let’s look at 2008. The markets collapsed in 2008 and the S&P lost about 40%. Math shows that if it lost 40%, it’s going to get back to breakeven if it earns 40% because negative 40 plus 40 is zero divided by two is zero. However if you have a $200,000 balance, you lose 40%, $40,000 and then you gained back 40%, you’re only gaining back 40% on $60,000.

Let me do that math for you again. If you start with $100,000 and in 2008 you lose 40%, your balance is $60,000. If you earn 40%, you’re earning not on a hundred, you’re earning on 60% which is only $24,000. You’re at $84,000 not back to a hundred but yet the average return is zero. There was an event that boil my blood because he’s talking about compound interest and talk about average returns and they were showing what the future will look like if these average returns are earned. The claim was made that if you didn’t participate in the 300% increase in the market over the course of the last ten years, then you lost out. I’ve heard that quite a bit, not just from this group. This group particularly hit home because there’s an affinity that I have with so many other of their teachings. This thing totally spun me because of the notion of compound interest and just how misunderstood even at very high levels this concept is.

I ran some numbers. The numbers show that from 2008 to 2018, the eleven-year period of time, the market losing was 38.49% in the S&P 500. The gains that it earned since 2009, if you look at the increase that it’s being talked about, it’s the level of the S&P and the level that it’s at now, which we argued that those two levels show almost a 300% increase. However, that is not how money works. That’s how math works, where you can measure those two points and show the increase but you’re missing time. Number one, you’re missing ten years there. 300% in one year is amazing. Over the course of ten years, not so much. Even if you look at a 30% average, which you just took 300 divided by ten. That’s not reality. The average return is actually only 6.74% over that eleven-year period of time if you factor in the 38% loss. If you factor in management fees, 1%, then you factor in taxes, the actual return is just above 2.5%. That is how profoundly misunderstood this concept is.

When you hear average returns, that’s something that you want to call into question. If it has to do with an account that can lose money, where your balance can actually have a loss in a year. The notion of compound interest must be analyzed at a much higher economic level where you are able to factor in the actual losses of money, not just the losses of an interest rate. I didn’t want to lose you too much. I’m going to post a video that I did on compound interest because this will help kind of go through these examples. When you think, do you like what you’re reading? Is this interesting to you? Do you like some of the history of banking? I hope that you take some action and actually go and study what compound interest is, how it works. These videos are very short, ten, twelve minutes the particular one I’m referring to. I know that it will make a big difference because it will give you some knowledge, give you some education that as you’re learning about finance and seeing how it applies to you specifically, most people will ultimately run some compound interest calculations, make so you do it the right way.

If you wouldn’t mind and if you’re not subscribed to the YouTube channel, subscribe. If you aren’t following me on social media, Instagram, Facebook, I love to connect with you. I try to post as much as possible. I’m posting about being here in Europe. It’s a fantastic trip. I hope you get to come here if you haven’t already. Also if you would do some reviews, if you review in iTunes, that really helps us get the word out, get the message out. I love to hear your feedback. Thanks for tuning into this episode of Financial Friday.

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The Pursuit Of Financial Certainty And Happiness with Will Street – Part 1

TWSFF 06 | Financial Certainty

 

Everyone wants financial freedom, but not everyone is willing take responsibility to create one for themselves. Wealth strategist Will Street enlightens everyone on the importance of taking ownership of your finances. We can never be certain of the risk, but not taking the risk will not get you anywhere near financial certainty. Will shares stories of risks taken by investors and what we can learn from it. Failure is inevitable, but what makes a difference is rising up, learning from these failures, and having the will to continue the pursuit of financial certainty and happiness.

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The Pursuit Of Financial Certainty And Happiness with Will Street – Part 1

Financial Friday

I’m here with my good pal, Will Street. How are you doing, Will?

I’m good. It’s been a while since I’ve been on a podcast.

It’s going to be a fun one because we’re going to talk about the context of some of the guests we’ve had on so far for Financial Friday. We’re going to review an article probably as a part two that is going to help us prove or hits home some of these points. I look at finance and I look at it from probably a different perspective than most and I think you’re starting to grasp that. You had the legal background and practiced in the financial sector as an attorney, which gave you a perspective and then being here for a few years now. You’ve worked with a lot of individuals personally, but you’ve also heard things about the situations of people when it comes to finances. It’s helped you fine-tune perspective when it comes to what financial success is and what it isn’t. Talk to that briefly. What have you seen as the reasoning behind what creates success for people financially? What gets them into trouble, gets them to make bad investment decisions or financial decisions?

TWSFF 06 | Financial Certainty

Extreme Ownership: How US Navy SEALs Lead and Win

I finished reading the book, Extreme Ownership by Jocko Willink. I’ve read/listened to it. I had it and then I listened to the Audible version driving into work. The whole premise behind Extreme Ownership is you own everything. If there’s something within your sphere of influence, as a leader, he’s talking about it from the Navy SEALs perspective. You don’t cast blame on other people, you own it.

It’s your responsibility, your stewardship.

If something isn’t going right, don’t point fingers at somebody else. Look at what you could have done better to improve the outcome. To go back to your question, many people nowadays are passive when it comes to what they do financially. They assume that somebody else, whether it’s the government or Wall Street or businesses or whoever has their best interest at heart.

They’re competent to give them the advice that they should trust.

Things didn’t go well. Immediately, they look outward to try and cast blame on somebody else. My philosophy that has evolved over time is this idea that if I want to get somewhere financially or if a client wants to get somewhere financially, it’s got to start with us. It’s got to start with what we know, with what we understand, with what our objectives are and putting together a game plan to get there. It’s no one’s responsibility more than it is our own. That’s something that I didn’t understand the notion of Extreme Ownership in the beginning, but as people get into trouble it has to do with not taking an active role in what they do financially. Making assumptions that things will fall into place a certain way, that somebody else is looking out for their best interest and them not doing nearly what they need to do to take ownership of their own.

You’ve got to realize that all human beings, number one, we’re fallible. We all have opinion and we all have a perspective. Opinion and perspective can go hand-in-hand. Individuals tend to delegate responsibility to others, especially when it comes to things that they don’t understand. It’s easy. That’s the easy button. If they’re competent, they have experience and you don’t have to go through the trouble of learning everything, it makes common sense. That’s where most people get in trouble. What do you do? If you don’t have all the time in the world to study every single financial decision that you make, what’s the route that you take?

On this show, we’ve had individuals that represent a commodity type of investment. We’ve had Gene Guarino, who I’ve known for a long time. He has a new fund and investment in a cool niche part of the real estate industry. We’ve also had note investing guys in here. If you go to the Cash Flow Wealth Summit, the first presentation of Financial Fridays was my presentation at the Cash Flow Wealth Summit, which hits on a lot of this. We have the Hierarchy of Wealth, which helps to categorize where investments are. A lot of the categorization has to do with what you understand or the degree of certainty and control you have over whatever the financial decision is, whatever the asset is. In the Cash Flow Wealth Summit, we’ve had every type of real estate investing you can think of. We’ve had FlipNerd on and Mike Hambright on there. We’ve had Mobile Home. Andrew Lanoie was on as well for Financial Fridays.

These are all sorts of investment ideas, their perspectives, the little niches that people have and they’re presenting opportunities. You and I both know that there are a lot of opportunities out there that don’t end up the way that they were intended. That’s where I’ve tried to hit on this notion of instead of asking about the details or features and benefits of the actual underlying investment, it’s also to start to look into the business itself. The operations, the people involved because that’s where it starts to fall apart. There are some other things that you can do. That’s how I look at finances. I never try to discount anything.

When somebody claims or somebody says their perspective, I don’t say, “You’re right and I trust you,” I say, “That’s an interesting perspective and that’s valuable to me regardless of what the perspective is.” I start to ask some questions about it and verify if it’s a valid piece of advice if it’s a valid claim or not. That’s where we’ve used the three sides of the coin where you have heads, tails and the edge. Heads are one opinion, tails are the other opinion and then the edge is where you sit to make the most informed decision. As you’ve looked at investment opportunities and made financial decisions for yourself, what are some of the things that you do consistently that helps you make an informed decision?

You don't cast blame on other people, you own it. Click To Tweet

The image that I have in mind is the Cash Flow Wealth Summit is this financial buffet of all different options and different strategies, tools, experts, companies and things like that. What a lot of people tend to do when it comes to their finances is they’ve got their tray and they take a little scoop of this, they take a little scoop of that. Then they get back to their table and then start to dig into it, but there’s no rhyme or reason to it. There’s no forethought given to what they’re going to do and how these various elements might interact with each other. It goes back to your point about everyone has a perspective. Everyone has some background, some knowledge and some familiarity with something. Everybody has somewhere to start. What I try to do is recognize that, “I don’t know everything, but I do know something. I know what my risk tolerance is. I know where my interests are.

I know generally where my goals and objectives are. I can start to put together a strategy that will start to point me in that direction as opposed to taking a little bit of this, taking a little bit of that, throwing it against the wall and hoping that something sticks.” Instead of taking that buffet approach, doing some analysis of, “What do I know? What am I drawn to? What am I interested in? Do I have any prior knowledge or experience or expertise with certain assets or asset classes or companies and starting to build from there?” I love the hierarchy because it does give us our blueprint for how to build our financial game plan. If we don’t have tier one established, if we don’t have the foundation securely in place, we’ve got no business jumping to the tip-top of the hierarchy. You’ve got to start it and you’ve got to continue it in the proper sequence.

Here’s how I look at it. It’s made me think about the idea and principle of certainty. It’s like human beings have this drive toward both certainty and uncertainty. Uncertainty is variety. It’s doing new things. It’s experiencing going on a roller coaster. We have this internal drive to do that. Sometimes, choosing from the buffet of financial options, it appeals sometimes to that internal drive. That’s why we’ve developed the Hierarchy of Wealth is because the foundation is certainty. That’s where we have certain characteristics and criteria. We teach the wealth maximization account and we use that for the characteristics that it has. Above that is when the degree of uncertainty sets in. There are three tiers above that. There’s tier two, tier three and tier four. In each level up, the degree of uncertainty increases. The idea is once your foundation is set, now it can properly balance the pursuit of this uncertainty, there’s a variety of different things that you may do. Let’s talk about tier two and tier three and some of the characteristics there. I’m going to use some examples as far as some bad decisions that I’ve made and also some bad decisions that I know clients have made, actual experiences. How do you look at tier two?

If I’m walking through the hierarchy with clients, which I do. The way that I explain it is where each layer, each tier that we’re building on top of the previous, there’s a little bit more risk or a little bit less control or a little bit less certainty with the previous. We don’t have a license to take on a bunch of uncertainty and give up a bunch of control if we don’t have the most secure, the most control and the least amount of risk established. For me, that’s that bottom layer. As we’re stepping into tier two and maybe it’s a little bit less certain, a little bit riskier and a little bit less control, I’m going to look at assets like real estate. Real estate’s a broad category in and of itself. For me, what I define as a good solid tier two asset would be the good buy and hold, three-bed, two-bath rental property. Going back to my own experience and my own expertise, my wife would tell you I have basically zero construction knowledge, expertise and ability. I’ll mess up an Ikea piece of furniture. That’s how bad I am.

In other words, I’ve got no business in a flip because I have no idea what needs to be done. I don’t know if it’s being done correctly. No clue, no concept. That is outside of my area of expertise, I understand buying a property. I understand what metrics to look at when it comes to rent relative to purchase price and some of those things. A good solid tangible asset like a piece of real estate or rental property is a fantastic tier two asset for me, or for somebody else, it might be starting a business. It’s something that you have control over. It’s something that you can impact. You’re not surrendering control to somebody else. You’re not leaving it up to chance. When you wake up in the morning, you’re not looking at the ticker and finding that, “The market is in the toilet now,” and you had no control. That’s not a tier two asset. We’re looking at something that might be a little bit less control, a little bit less certain and a little bit more risk than that bottom layer. We want to be careful about how much additional risk we’re taking on or how much uncertainty we’re moving into. At least that’s my philosophy.

TWSFF 06 | Financial Certainty

Financial Certainty: A good solid tangible asset like a piece of real estate or rental property is a fantastic tier two asset. It’s something that you have control over.

 

I’m going to deviate. This comes to some stuff I’ve been thinking about. I don’t want to get into failures and some bad decisions that I’ve made and clients have made. I look at some of the events that occurred in the last couple of years. You had Robin Williams commit suicide. You had Kate Spade and Anthony Bourdain. There are others as well. The thoughts that I’ve had is here you have individuals, you have human beings who achieved what some people are after. People are after what they consider financial independence, financial freedom and to be at a certain level. To be successful here, to be successful there, to have a lot of money here and a lot of money there. I would argue that that’s financial freedom that might not be freedom. Tier two for me is a lot of investment in yourself. I look at where people are at and a lot of what they want to become independent from or free from. It’s something that they don’t like to do, but that doesn’t mean that you shouldn’t do.

I’ve joined an inner circle of Tony Robbins, which is called Platinum Partnership. I’ve been listening to a lot of his material. There’s something that hit me and he said, “For a fulfilling life, you have to spend between 50% and 60% doing meaningful things.” It’s the discovery that I don’t think most people ever venture to do. Meaningful things are something that drives you, something you’re inspired by, something that you know makes a difference and aligns with who you are, your talents, your abilities, your strengths. The discovery of that is part of tier two because one of the things is potentially starting a business. Retirement is an idea of escaping something. You stopped doing what you don’t like doing, but it doesn’t mean you shouldn’t do because a part of you dies when you’re not contributing. I look at the meaningful things that people do and what drives them and why they thrive. It’s not because they make a lot of money but because there’s another interest in it besides that.

Tier two is where you can take assessments. You can take StrengthsFinder 2.0. You can take Kolbe, DISC and Myers-Briggs. There are a number of them out there. The idea is to understand more about you. It’s also to dig deep and start to pay attention and put some glasses on where you can see the world and the things that you enjoy doing, the things that make a difference. It’s starting to pursue a business that revolves around that. If you look at tier two, some of the criteria are things that you have more control over, but still have an element of uncertainty. Real estate has that, but at the same time, there’s still a degree of control that you have especially with how you determine markets. How you determine rents and values. How you determine down payments. How you determine mortgage payments versus rents. It’s one of those things where it doesn’t take a rocket scientist to have a good piece of real estate. It’s somewhat passive.

You look at other investments to make. There’s an article that I wrote a few years ago and I mentioned the idea in the book, which is how to get a 10% raise for life. Most people get a 3% raise. If you look at a 30-year career, someone that makes $100,000 will earn shy of $5 million total earnings with a 3% increase yearly. If you make a 10% increase yearly, the earnings are almost $17 million. It’s a huge difference, a little over $11 million. What’s the difference between someone that gets a 3% raise and someone that gets a 10% raise? 3% raise is because of the cost of living. It’s standard. If you look at 10%, it’s because somebody has figured out a way to create more value in either that capacity or another capacity. They get a certification. They learn management. They learn leadership. They learn how to do marketing. They learn things that create more value for an employer or for customers. That’s the idea. That opportunity is available to everyone. It’s where you have the most control when it comes to taking risks or delving into the realm of uncertainty.

It’s one of those things where all of us can think about times where we’ve done something meaningful. Maybe it’s giving to a charitable organization or serving in some way. The feeling of invigoration that comes from that, it makes you fire on all cylinders. If you can start to make that a part of what you do as a matter of practice, how much more driven are you going to be to get out of bed in the morning to work harder, to be better, to produce more. Think about somebody who’s stuck in a job that they don’t enjoy and how deflating that is and demotivating and difficult life can be and unhappy. Flip that completely 180 degrees the opposite and you start to invest in yourself and to fuel what drives you. That’s huge.

Let’s talk about some failures. We’re hitting on things that we’ve hit on before. It’s going into the context of what’s the purpose of being financially successful? What’s the end result to escape or to support or help to buffer doing the most meaningful things according to what makes the biggest difference in your life and in other people’s lives? The failure side of things, I look at all the decisions you make. You want to have trustworthy people in your life, but at the same time you have to look back and say, “Everyone has fallibility.” They make mistakes. They make bad calls. Rarely is an investment opportunity going to tell you not to invest with them. You have to look at that and that essentially gives you the area in which you can ask questions. You can dig a little bit deeper. You can verify. You can check and use your financial education to make a decision. Oftentimes, that comes as the result of not doing it. You can say, “That guy sounds like a credible guy. I’ll write him a check.” These are mistakes that I made a number of years ago. This was probably 2004, 2005.

I remember I was invited to this person’s house. In Utah, there are two things that happen at people’s houses. The first thing is it’s like MLM or network marketing company. They try to have you sell the vitamins or the juices or whatever, or it’s some investment or business. I’ve been to both. I didn’t grow up here, but I learned whenever you get that call, “I have this business I did. You’re a business guy. I think you should come and attend.” It’s one of those two things. This was an investment one. The investment opportunity was a fish farm and they had this proprietary way to breed fish. It sounded cool and the name of the company that did it was Winsome. That should have been a sign. It was a $20,000 investment and I never saw anything from it. It was a group of people that was in Sandy. It was about 30 minutes away. It’s an investment that went bad. The actual fish farm existed, it’s just that they had nobody to sell the fish to.

Individuals tend to delegate responsibility to others, especially when it comes to things that they don't understand. Click To Tweet

What was cool was this guy went to prison. This was a few years after this occurred. It was right during the time where I had tons of different failure business-wise. I was called into an FBI office. There’s a building here in Salt Lake and in the building, there are three floors of FBI. I went in there and there were no signs or whatever. I go into a huge boardroom and there are people everywhere, plus there were people on conference calls. There’s this horseshoe thing and I come in. They asked me questions like, “How did you hear about this guy? What happened? How much did you invest? What type of communication did you receive from him?” It was an interesting experience. I learned more about what this guy did. It wasn’t just people in Utah. There were a bunch of other states.

It’s one of those things where every single person that gave this guy money and it was millions of dollars. It was done by trusting that he knew what he was doing. Nobody asked questions about, “Who are your customers? Do you have contracts? Can I see those contracts? Let me see the business plan. Who else is on your team? Who’s doing the marketing? Who’s doing the operations? You’re in Texas so who’s running the thing in Puerto Rico?” It’s one of those things where nobody was asking those questions. All the questions were, “What’s the rate of return? When am I going to get my money? Do I get it monthly? Do I get it quarterly? How much is it? Could I get more?” All had to do with the financial details, not the principles, the values and the operations. That was one of the more crazy investments that I heard of.

I’ll give one that will make everybody laugh. This was in 2018. We started getting lots of people who were interested in cryptocurrency. You’re talking to them and explaining the Hierarchy of Wealth and how to position assets. People started to tell us that they were refinancing their homes and cashing out everything and putting their money in Bitcoin. This was when Bitcoin was probably $18,000, $19,000. They were convinced that Bitcoin was going to $100,000 and that was going to be the key to their retirement. This is an example that sounds ridiculous, but it was happening a lot. It was a number of instances. There’s another one too, which is the Iraqi Dinar. This was probably a few years ago when we started to get these types of calls where people were like, “I’m coming into this large sum of money, which is to the tune of potentially $500 million. I need a place to put that.” I’m not going to get into the details of that, there’s plenty of information online. Individuals, the uncertainty that they’re in pursuit of is natural. It’s not like people wake up one morning and like, “I’m going to go pursue uncertainty.” It’s one of those natural drives that compel us to want variety. We realize that, but at the same time once you realize it you have to position things so that you don’t let that get in the way for making good decisions.

TWSFF 06 | Financial Certainty

Financial Certainty: You want to have trustworthy people in your life, but at the same time you have to look back and say, “Everyone has fallibility.”

 

I would say there are a number of people I talked to that have lost money, lost investments and they value what we do a lot more than those that haven’t lost money, but at the same time, I look at that as a powerful tuition. It’s an investment and it’s an investment in your future. I got off the phone with a guy. He was a dentist. He was successful and made bad decisions. It costs him $500,000. He was like, “I want to make up for lost time.” I was like, “You didn’t lose time.” You gained time if you think about it because you learned some valuable lessons that are going to be essential as you expand your practice and as you raise your family and as you determine what your future looks like. You’re going to have so many financial decisions throughout your life, whether it’s purchase decisions, whether it’s investment decisions or whether it’s what you do with your career.

We advocate that having a foundation of certainty, which consists of financial education as well as certain assets and structure that allows you to buffer the uncertain decisions that you make. That’s where you start. It’s also to understand the values and the principles that underlie all of these decisions. Sometimes that’s the discovery of your strengths, your purpose, your mission, your calling and the pursuit of that meaningful work. We are going to be reviewing an article of a woman who studied 600 millionaires and she discovered where you choose to live has two effects on your ability to build wealth. We’re going to talk about that. We’re going to take the contrarian. Her opinion’s heads, this is tails. Stick with us until the next episode for the second segment of Financial Friday with Will Street. Thanks. We’ll see you in the next episode.

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About Will Street

TWSFF 06 | Financial Certainty

Will earned his Bachelor of Arts degree from Brigham Young University in 2005. After graduating from BYU, Will attended the University of Iowa College of Law and received his Juris Doctor in May of 2008. Will began practicing law with the law firm of VanCott, Bagley, Cornwall & McCarthy the oldest and one of the most well-respected law firms in the State of Utah. Will’s practice focused primarily on consumer finance-related litigation, consumer finance transactions, sale and purchase agreements, NDA’s, RFP’s, teaming agreements, security agreements, creditor’s rights in bankruptcy, and estate planning. Working directly with clients to analyze a problem, develop a solution, and working to ensure a successful resolution are what Will enjoyed most about being an attorney. Will comes to Paradigm after nearly six years in the private practice of law.

After his exposure to the Infinite Banking concept and seeing that his legal training would be directly relevant to his role at Paradigm, Will made the decision to leave his practice. Paradigm allows Will to continue to do what he enjoys most – develop client relationships, dissect problems, create solutions and work collaboratively with the client towards a successful resolution. Originally from the Tri-Cities area of Eastern Washington, Will currently resides in Salt Lake City with his wife, Sunny, and their three children.

 

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