Financial Advisors Correct the Internet (Part 2)

[00:02] to you, never fear. We're here to correct the internet. Friend, I am so Here we go. >> I bought into the Pelosi fund. >> I bet it is. >> Yeah. I only put $1,000 in there, but

[00:15] it's beating my own money, guys. >> It's crazy that you could know, oh, we're going to do this big deal with AI chips. Nvidia makes AI chips. I'm just going to buy a ton of Nvidia stock and then boom, we pass this thing. Hey, look

[00:30] at that. 500% increase. Nancy Pelosi is the scapegoat. But if you look, it's red, blue, across the line. They're all trading, making tons of money. They all go into Congress broke. They all come out rich as they get $100,000 a year.

[00:44] >> It is amazing that there's not more restrictions on these elected officials with essentially profiting from knowledge cuz you insider trading all through what we do >> has a lot more restrictions than what

[00:57] our elected officials have to deal with. Yeah, insider trading is illegal, but folks getting called on it and actually being able to like track down insider white. That is a little bit frustrating for everyday investors. Now, what I

[01:10] think is the better learning thing here is often times you can come up with an go buy this fund." Maybe it's some fund that tracks a politician or maybe it's some growth, some tech thing. and all of a sudden you do it and you get a 20% 30%

[01:27] 40% rate of maybe maybe you participate in an IPO of a stock that comes out and all of a sudden it shoots through the roof at IPO. Holy cow, I'm a genius. out. And lo and behold, if you give it enough time, time will expose all fools.

[01:43] And if you give it enough time, you'll recognize that, man, maybe that strategy thought that was this magic bullet that was going to go make me all this money wasn't quite as good as I thought. And maybe the thing I ought to be doing with

[01:55] my dollars is the boring, slow, consistent, lowcost index investing that's proven to build millionaire after millionaire after millionaire after >> Well, and even if you wanted to use this strategy, NY's retiring, so um just

[02:11] stick with the S&P 500. I That's an applause line. >> I don't think people truly understand what Robert Kiyosaki means by savers or you probably need to listen up. >> Yeah, cuz the advice you're listening to

[02:25] right now is advice that was given to you before the iPhone even came out. You save $10,000. It's sitting in your account. Inflation, let's call it 3%. account. Inflation, let's call it 3%. Money debasement, let's call it 10%. The

[02:39] hurdle rate is 13%. For you to break even. Last time I checked, high yield savings accounts aren't paying 14%. So, so you think already getting taxed on that interest anyway. So, rugpool. Oh, yeah. The S&P

[02:54] 500's pretty decent. It does just around 13%. All seriousness though, look into assets that grow over 13% in a year or find a way to exponentially increase your income over 13% in a year or you can

[03:08] start a business and you can exponentially increase your income. thing? >> I I don't know. He was he he threw so even know what the the point. >> I HAVE SO MANY QUESTIONS. LOOK, I

[03:24] thought he was going down the the the the the solid path where is basically cash because inflation's going to eat it alive over the long term. But then when he started throwing tomatoes at the S&P 500, I mean, we have shown over and over

[03:38] and we even we survey our millionaire clients being consistent and starting early even with things like the S&P 500 is going to make you fabulously wealthy and successful over the long term. So to to hear somebody poo poo it really kind

[03:52] of disappoints me because that's because what can you Yeah. Maybe you can do a oneoff and and make greater than 13% in a year, but consistency. >> Yeah, that's what I was going to say. It it's not untrue that entrepreneurship

[04:07] and investing in small business and that sort of thing can have outsized returns, but they are outsized opportunity, low probability success. But you know what has a high probability success and also a lot of opportunity? Investing in

[04:20] lowcost index funds like the S&P 500. Yes, inflation will erode your money. But if you can earn 8 to 11%, which is what the S&P makes on average over the long term, then I'm going to argue your dollars are not just going to keep up

[04:35] and keep pace with inflation. They will actually grow through time, increasing rate of inflation, which is what you want to do as you build towards kind of implying on real estate, because Kiasaki's real real estate, um, with

[04:49] lever debt, you know, guys, if you do that too early, all you got to do is taking from little pockets when the market goes bad and you don't have other sure if you're going to do real estate, we love real estate, we do real estate,

[05:03] just have deep enough pockets that you can survive those bad moments cuz they will come your way while you're doing real estate. Here is what a financial if you gave them $200 a month to invest. First thing that they would do is they

[05:16] This would just be the investment account. Now, that $200 would go into that account, but it would actually get split into three different buckets. The first bucket would be $120. The second

[05:30] first bucket would be $120. The second bucket would be $50, and the last bucket would be $30. Then they would take this $120, the bulk of it, and they would basically put it into S&P 500 index funds, things like VU for example. They

[05:45] would take the $50 and they would invest it likely into international index it likely into international index funds, VXUS as an example. Last $30 they aggressive, something with higher risk, as an example, QQQM.

[06:00] process by connecting your bank account, setting up an automatic withdrawal of $200, and then automatic purchases of all these index funds in these exact amounts. Like, if you did this from the age 30 to 65, at the end, you'd end up

[06:16] with about $360,000. Not bad. Here's the thing. If you did this yourself, you'd actually have closer to $458,000 just because you would have to pay them about a 1% fee every single year.

[06:30] >> I agree with everything, and I mean literally everything that this guy said. all that financial adviser is doing for you is opening up a Roth IRA, having you

[06:42] deposit $200 and auto investing that $200 across three different funds. Yeah, you shouldn't pay an adviser. That's not the thing that a financial adviser you're paying 1% for that type of service, you are likely overpaying. If

[06:56] you're only getting investment advice from your adviser, that industry's financial planning when your life gets complicated. When you actually get to a to do with your taxes, you don't know what to do with your retirement plan.

[07:10] investments anymore because you know there's some efficiencies that you can pick up. And also don't forget, everybody always loves to quote the 1% rule, but when you're worth two million, three million, five million,

[07:22] This is like buying toilet paper at Costco. That's the most frustrating part what you get. Every time you see one of these people line up what a financial adviser does, they assume that the financial adviser adds no additional

[07:37] value. Well, the argument would be if you can do it all on your own the exact a financial adviser would provide, then don't hire a financial adviser. An adviser ought to be able to add enough value to your financial life that not

[07:50] only does it justify the fee, but you are in a better place because of it. receive. >> Every one of our clients can vote with their feet. By that, what I mean by that is that we don't do any proprietary

[08:03] products. We're using index funds. We're using ETFs. No, >> exactly what he covered. So, you have to ask yourself, why in the world are all these millionaires not leaving? When when we let them, we even lead with in

[08:16] up. Look, if you don't like this after a year, if I can't do these three things that I told you I can do, leave. And and they don't. you keep wasting money on these three things. First is your lifestyle. Most

[08:30] things. First is your lifestyle. Most people make it, spend it, make it, spend it, and have nothing to show for it. Second, a house. Most people in their 20s aren't married, so they don't need to buy a family home. Instead, buy

[08:42] rental properties and make some passive income. Third is a car. Most people finance a luxury vehicle with money they don't have to impress people they don't even like. Instead, buy a cheap secondhand car and you'll have the last

[08:54] >> I love one. I love three. I don't not love two. >> Yeah, I love that. That's a great example. >> Yeah, house hacking is is a great alternative to telling people to jump

[09:06] right into what in our system it's step eight of the financial order of operations to get into doing real estate investing. I think what I'd rather you you're trying to buy your own primary residence. Why not try to find a duplex,

[09:20] a quadplex, or something in your area? Because not only are you going to use other people's money to pay your own mortgage, but the banks, because you're you more favorable underwriting, they're

[09:32] the interest rate. It's just a better deal all around. Don't just jump into to deep dive into the the deep end of real estate when there's other ways in between. When you think about one and three, buying or letting your lifestyle

[09:45] increase or also buying luxury vehicles are often things that you do to impress people whose opinions do not matter. Don't waste your money doing those things. Only spend money on things that you truly value. Don't worry about what

[09:59] the world around you thinks. >> We are in $30 million worth of >> We are in $30 million worth of >> which means we owe banks $145,000 every single month in mortgage payments. Now, let me explain to you why that's a

[10:12] good thing and why it creates massive unceivable wealth for me. So that $30 million worth of debt allows me to own $50 million worth of real estate. So that's $20 million worth of equity that I would not have if I was not in that

[10:27] $30 million worth of debt. But on top of that, that debt owns real estate assets. And those real estate assets bring in over $350,000 in rent every single month, which of course is more than my $145,000 in

[10:43] mortgage payments plus all owning expenses plus positive tax-free cash flow. And if you want to learn how to do this for this is exactly how Dave Ramsey went bankrupt back in the 80s. He was way overleveraged. And all it takes is

[10:56] completely where the government's like, "You can't evict anybody and they're not >> Meanwhile, >> the mortgage companies and lenders don't care. They're going to collect. And so this guy uh is not taking into account

[11:09] risk whatsoever. And it drives me crazy. You know what? I don't disagree w with what George is saying there because if you are highly levered and you have no financial foundation to pull back on or to fall back on when COVID happens or

[11:22] when the great recession happens or when one of those things happens it can cause are going to invest in real estate and you are going to take on debt you better make sure that you are deep pocketed enough that you can weather those

[11:35] >> Well, the team has taken my my financial sidearm away. If I had it, I would, you doing the math. There's a big difference between if you took down this debt [music] pre202 or even 2021 when you could get interest

[11:51] rates in the 3% or less even on some commercial property versus right now, you're probably going to be at 6% or greater. So, for you to think that return as somebody who might have done this five to six years ago might be

[12:05] putting yourself in a box or in a bad situation because the other people's from a risk perspective, but you just might have a bad deal from what is even this property worth. Yeah. And let's let's not sleep with the fact that he

[12:19] said he had $50 million of assets with $30 million of debt. That's $20 million of equity that he has in those assets. Most people who want to get into real estate, who want to start on this path, don't get to start with $20 million of

[12:32] equity. They want to start, okay, I'm going to borrow as much as I can and put playing that game, there's a very good chance you're going to get yourself into situation. >> Here's a secret I learned from rich

[12:45] people that took me forever to understand, but I'm going to explain it >> This is going to blow your mind. So, this is using a whole life insurance policy as your own bank essentially. So, if you had $30,000 saved and you put it

[12:59] in a bank, you'd earn 1% [clears throat] interest over 10 years, it's $33,000. It's like nothing, right? Well, if you wanted to buy a car for $30,000, you take that money out of the bank and then your 1% would go to zero. This is why

[13:12] banks are rich and we're we're not. Now, a whole life insurance policy, when you put that $30,000 into a policy, it earns regular market return. So 10% interest, power of compound interest. You probably heard this before, right? 10% interest

[13:26] for 10 years turns your 30K into 81K. The kicker when you want to buy that car's money out of the policy and it still gains this interest while you're paying it back to yourself.

[13:41] >> Where's the cost of the insurance? >> There's a lot of stuff wrong. when you're buying insurance products. There's the cost of the insurance. There's the agents that are selling you the insurance and 10%. When's the last

[13:54] consistently made 10%. >> Let's let's go down this path and say that you did do the $30,000 in the policy and you did earn 10%. Let's say what I want you to do. I want you to go buy a $100,000 car or $100,000 beach

[14:07] house or $100,000. Fill in the blank. If you pull all the cash value out of that You have to then make sure that every single year you are putting enough back into that policy to cover the cost of insurance. so that the policy does not

[14:20] lapse and create a taxable event for you. If you don't have the cash value in put the money in. You know what happens? Every year you get older and older and older, the life insurance gets more and more and more and more expensive. It is

[14:34] not a free lunch like these infinite banking people try to lay out. It does Anybody who says they've created a better mousetrap, but it's got a lot of scratch your head and go, something's just not math in here. Children are a

[14:48] financial choice. I always have people telling me it's easier for me to retire because I don't have kids. And yeah, it's true. My life is so much easier to spend my entire evenings working on my business. I don't have to wait in the

[15:01] school pickup and drop off line. I don't have to feed anyone except myself. I get to sleep in every single weekend. I don't have to pay for daycare. I don't education. I get to focus on my financial independence and my happiness

[15:14] first every single day. That was an intentional choice I made because I want would quite frankly ruin the life that I want to live. Does that mean I don't like kids? No. I love kids. If life wasn't such a capitalist hellscape, I

[15:27] refuse to be trapped working forever raising the next generation of workers for [music] this system. I want to get in sad and get out. That's an opinion. And I certainly don't want to like fault her for her opinion

[15:41] and and and her feelings around that. But I agree with you. It's kind of sad. Uh I have kids and I love my kids and uh are they a burden sometimes? Absolutely. Are they expensive sometimes? Absolutely. Just sometimes I just I want

[15:55] to grab them. Absolutely. Would I trade that for all of the money in the world? Not a chance. I worry that there will be some fulfillment [music] that does not happen if she thinks that just having money and having wealth and

[16:10] having freedom is that all this life is about. The thing that that that troubles and and maybe this is too much sharing because y'all know I'm at this stage of more kids. >> Um because mine are starting to leave

[16:23] the house. And here's the thing. I can go back in time and remember who I was back when got married. I don't I didn't really like kids. I I can still remember a moment where I was in public accounting. We were at a team outing and

[16:35] I was talking to some other of the male associates there and a kid fell over and like hurt their knee and everybody was making fun of us cuz we all just stared. I'm not a kid person. I don't we don't know what to do to fix this kid. And

[16:49] then I have my own children and holy cow I was like okay I'm not a kid person but I love my kids. There is something really amazing that is in us that when you have your own children, it is a love that you just can't fathom what what it

[17:05] is. I mean, it is it is just the it's the strangest thing cuz I've never need to smell babies and and do all this other stuff, but as soon as I had my own kids, I was like, "Oh, I'm in on this." I hate to hear so much pessimism [music]

[17:19] drowning out what what could be a lot of joy in this person's life. I borrowed >> You borrowed $300 million. >> And I bought the best real estate in the world for pennies on a dollar. That's how you get rich. Not by working hard

[17:33] and putting in [music] a stupid 401k full of stocks and ETFs. >> Those those are for the peasants. I don't touch that garbage. >> It's just not true that you cannot build wealth that way. And I would argue more

[17:46] millionaires have built wealth that way than by going $300 million in debt. Do you know how you get to the point where a bank will give you $300 million? You have to have enough success and enough financial foundation underneath you that

[18:00] you were a good bet for the bank underwriters. Here's the thing. The internet does not have your best interest at heart. But we believe that why we have all of our resources available at moneygu.com/resources.

[18:16] calculators free >> because we want you to be able to do >> Yeah. I mean, our system is easy. We go take all of our free stuff, create success. We don't ask anything of you until you reach a level of success that

[18:30] it's gotten complicated. [music] Your simple life gets really complicated remember who planted all the seeds, who abundance cycle works. [music] We love to work with you. We work with people

[18:42] all across the country. I'm your host, Brian, joined by Mr. Bo money team out.