Oct 14, 2022
Wealth for Life Concepts - Offense / Defense, Assets, Leverage & Control 3 Things
BRT S03 EP51 (150) 10-14-2022 – Wealth for Life
Things We Learned This Week
- Offense / Defense - Balance in a Financial Plan – Synergy of the Mix
- Assets – Difference between Appreciating & Harvesting
- Leverage – Get More w/ Less to Scale Wealth
- Control 3 Things – Taxes, Capital, & Assets – Tax Protection, Acquire Assets, & Access to Capital
Co-Host: Denver Nowicz, President - Wealth For Life
https://wealthforlife.net/brt/
https://twitter.com/denvernowicz
Denver is an advisor with nearly 20 years experience working with clients in investments and insurance, designing retirement plans with a combo of both. He takes us through different strategies for clients to get the best allocations for their money over the long term. It is the Combo Strategy of both Offense and Defense, the synergy of the mix, not ‘All or Nothing’.
Notes:
Beware Taxes! Defense is What You Need vs Offense in Your Investment Gameplan
Synergy of Offense / Defense – diversification of income streams, lessen market risk
Offense – stocks, crypto, real estate
Defense - IUL, Cash Flowing Business, Real estate, bonds, dividend stocks
Offense – tactical – hold 15-20 stocks – aka ‘best houses on the block’
Tactical Investment Strategy – goal of growth, shift with market sentiment, value to growth or growth to cyclical – active management. 15% beat market, 85% do not.
Secular trends – housing, building or energy
Index – safe but will not out perform market, just bought off shelf.
Index has Market risk and Zombie Co. problem.
Cash = bad, gets eaten up by inflation = Inflation risk
Stock market – good at growth, but inefficient on income, hard to capture the gains
“One Thing” Retirement Plan – 401K and stocks, hope it goes up and no volatility (market risk). 90% of people are on this plan.
Build Assets – or create assets, like a digital brand
Never go back to Vegas with scared money. Lose $, then chasing losses
Combine offensive and defensive strategies
Defense – wins championships, stable. Finances are stable, allows you to take risks IUL, CF business. During bad market, wait for stocks to rebound and pull money from IUL or business.
Visual – what is needed income or expenses – cover basics, then invest other money. Defense = 40%
More wealth created, less money in market – money from business or real estate, move money to index strategies. Use financial leverage to increase wealth.
Average worker – salary and money in market (401 K). All money is offensive strategy and subject to disruption and market risk.
Defense – Tax Protection and Tax Buckets 3 taxed, tax free, tax deferred
Full Show: HERE
Assets – Appreciating vs. Harvesting
Assets: Appreciating vs. Harvesting
There are many different Assets you can invest in. Common asset classes are Stocks, Bonds, Gold & Real Estate. There are Alternative assets like Crypto, Art, Private Equity, etc.
The classic idea is
you buy an asset as an investment with the idea it will
appreciate over time so it is worth more when you sell
it. Buy low, sell high.
It also may act as a hedge vs
inflation. Instead of having your money sit in
cash, and lose money to inflation, you purchase an
asset that goes up in value more than inflation.
What is rarely discussed is the
concept of Appreciating Assets vs. Harvesting
Assets. What's the difference?
Appreciating
Assets are the assets mentioned above, where the plan
is to buy low, wait for the appreciation, then sell high. You do
not capture the gains until you sell. You gain value on paper, but
if you wait too long to sell, you could miss the appreciation.
Likewise if they lose value but you do not sell, then only a paper
loss.
Stocks are a classic example. 'If I
just sold last month, I would have made 25%, instead of 15%.' You
have to time it right.
Other examples are Gold, Art, most
Crypto, certain types of Real Estate (Land for example with nothing
build on it yet).
These assets are only valuable when
they appreciate, and if you sell at the right
time.
Harvesting
Assets are assets that get interest, or give off
profits, or cash flow.
You are able
to capture some of the
gains from the asset.
Examples are:
- Rental Real Estate - get rental income, plus expense write offs, plus depreciation ***
- Bonds - collect interest during the term, and receive the full value if held the entire term ***
- Dividend Stocks - receive payments quarterly from the co. ***
- REITs - pays out 90% of income as dividends to investors ***
- Crypto that is Staked - receive interest payments while staking ***
- Covered Call Options - collecting premium on stocks you own, by renting them out ***
- Business - that is profitable, and gives off cash flow
- Index Life Insurance - receive credited interest during the term
*** Asset value can go up or down
in the holding period
In fact many of the above Harvesting
examples can all be both Appreciating and Harvesting
Assets:
Rental Real Estate, Bonds, Dividend
Stocks, REITs, Cash Flowing Business, Index life Insurance,
etc.
Full Show: HERE
Leverage - Get More with Less Effort – How to Scale Wealth
Leverage – more with less. Get More with Less Effort.
Ex: job with W2 income – no leverage, all based on single effort, cannot multiply.
Sole proprietor – limited leverage, one person can do so much.
Systems to multiply efforts – can be digital, team, finances
Financial leverage – mortgage. Buy house ($250K) for cash, or buy $1 million dollar house, put down same $250K at 25% , now control $1 million asset house.
75% leverage or 3 to 1. What plan will earn you more money? $1 million house appreciates more.
Digital Product – create 1 time, sell 100 times
Average invest $1 and have $1 earning, wealthy invest $1, borrow $3 and have $4 earning interest
Use OPM and deploy in safe ways.
Safer return on larger investment will win every time
Average using own money and risky, chase rate of return. Wealthy take more money and put in safer return instead of chasing 12% ROI on $250K, get 6% ROI on $1 million using leverage.
Full Show: HERE
You Need to Control 3 Things in Investing – Taxes, Capital & Assets
Investing plan for Top 10% of income earners ($150K +) or top 5% ($250K +)
Need different strategies, not just 401K or stocks, not like other 90% of population
Wealthy diversify their assets / investments, stock market is just 25% of their investing
Control taxes – protect money from taxes
Control Capital - access to capital – use leverage properly at 4:1
Control Assets – acquire assets to create passive income streams
Wealthy does not put all their money in the stock market.
Every $1 lost to taxes = $8 in lost wealth
$1 at 7% (rule of 72), at 10 yrs = $2, at 20 yrs = $4, at 30yrs = $8
$50K lost = $400K (x8) lost over the long term
If you earn over $500K / year +, top 1% of income earners
The ultra wealthy know that you have to control taxes.
401K does not reduce taxes, it defers taxes, and at $25K /yr, this will not move the needle enough, need major changes to reduce taxes, and propel wealth
Control Capital – protect principal, no losses, lock in gains
Use Leverage well at a 4:1 multiple, Control $4 with $1
Just like you finance your house thru a mortgage, finance your retirement (mortgage leverage is typically 3:1, loan is 3x your yearly income)
Deploy different strategies to grow wealth and make $ millions, really scale wealth from $1 to $5 mil, or $5 to $10 mil
Assets –pull money from passive income & use for more investing
Create investing cycle and repeat to grow wealth
Full Show: HERE
More Info on WFL and Tax Free Matching: HERE
Wealth For Life Topic: https://brt-show.libsyn.com/category/Wealth+For+Life
Link to Taxes Show on 10/31/2021 w/ Denver: Here
Link to Offense / Defense Show on 6/6/2021 w/ Denver: Here
Link to Shows, Denver was a Guest: Here
Investing Topic: https://brt-show.libsyn.com/category/investing
More - BRT Best of: https://brt-show.libsyn.com/category/Best+Of
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