Hi everyone, Dan Thompson here. Thanks for joining us on another wise money tools video. In the last few videos, we've been talking about the 5 elements to wealth, and I hope you've gotten a real good sense of what all that really means. If you recall that first element is so important, it's where it all starts. It's extremely critical and that is pay yourself first. You know, this is such a simple concept, but it's so ignored today. It starts out oftentimes when kids get out of high school, first thing they do is they go to college, and they start piling up debt for school. They when they finally get a job, they go to work. They've got all this debt that they've got to pay off. And oftentimes, when they get that first job, the first thing they do is go out and get their first car. And then they rack up some credit cards because they just feel like oh, I'll always be able to pay off these credit cards.


And then that can take a decade or more just killing them when it comes to, you know, paying off that debt. Even worse, it's ignoring element number 2, which is to start right now, and they can't start saving because what they're doing is they're taking all their money and trying to get out of debt. They delay compounding and that's huge. This magical formula or this eighth wonder of the world if you will, of compounding is so simple if you just get started right away but man, it just gets way out of line. You know, Dave Ramsey, I call them that debt King. Yeah, I listen to him quite a bit. It's always the same thing basically, you know, trim down, eat beans and rice, pay off your consumer debt. Then when those things are gone, you can finally start to save and invest. And then you work on your home mortgage, and finally be debt free. But to make matters worse, his favorite savings location is typically mutual funds or a 401k.


If you have it, if not, then into an IRA. Luckily, at least I've heard him suggest to use a Roth, which is you know, it's a good start, but it's way too restrictive. What each of these investment choices have is this common theme of risk. And then we've got that next element, which is our plus sign. And this is the element that means we want to be moving forward. We don't want to lose money, we don't want to minus sign their. Losses setback are compounding opportunities, and it takes away the one thing we all run out of and that is time. You know, let me give you an example. There's been a few times in our history. If we go back to the crash of 29 and then through the 50s, and sometimes even through the 70s, you'll see plenty of examples where if you had $1,000 in, let's say 1929. It took 10, 15, 20 years just to be worth $1,000 again. That happened again in the 50s. That happened again in 2000.


And so there's been several times in our, you know, investment life period. Where it just can take years, sometimes a decade or more, just to get back to where we were. That's what we call last time. If you remember the video on compounding in time. The average person pretty much can compound without losses about 4 times in their working life. And maybe 6 or 7 times in their entire lifetime. So losing a 10 or 15 or 20 year period of time, just trying to get back to get our head above water, so to speak, waste years and decades of compounding. So putting money in mutual funds, when losses of, say 10 to even as much as 50% occur. You not only lose the money that's aggravating enough, but the time you could have been compounding had you not lost. Now, you hear a lot of financial advisors say, well, the market always comes back, just be patient write it out.


Well, it's true that the market does typically come back. It's also true that if you buy when it's down, you can catch up a little bit sooner. But human nature doesn't like to throw money into investments when they're down, when they're not looking very good or what we call when they're stinking right. The phrase, I don't want to throw good money after bad comes to mind. Although it's what I would teach and it's kind of the Buffett way, it's not easy to do that. Nor is it easy to sit on the sidelines and wait for opportunity or a crash or recession before you buy. So traditional advisors want you to just always be buying, never selling ride the roller coaster and just hope it works out in your favor, and you live in the perfect time frames. So many advisors use a 20 year or longer period of time to prove their points. And I like to point out that's all good well if you happen to live perfectly within those 20 year periods.


Let me give you an example. Suppose an investor saving for retirement. And they've saved every month they did pretty well in the market for the last 20 years. They've built up a sizable retirement plan. Maybe it even has a million dollars in it. They're excited to retire. They've been working hard and now it's 2007 and they're ready to hit the road in retirement, right. But then 2008 hits and their million dollars literally cut half their account values now, a half a million dollars would seem to be a ticket to the golden years now has basically turned on itself. There's really no answer for that. They happen to not live according to the financial advisors. 20 year time horizon, right? And I think about this, we've had some really good years festive this last, oh gosh! 8, 9, 10 years without a recession without a crash. And the thing is a recession and setbacks. They're a part of the economy. They come every so often, there's nothing really wrong with them. It kind of resets things.


Now, none of us have a crystal ball. But we know it's out there. We know it's a little mean at some point may not be for a few more years. Who knows, but if I were 5 to 10 years away from retirement, I'd be looking for a way to start eliminating risk of that crash. Protect my pile of money and add some significant peace of mind to my retirement plans. If we do have a, say a 30% correction, which is by the way, this market could really stand. That might mean last time and compounding and who knows, would that takes 2 years, 5 years, 6 years, 8 years, 10 years or more to get back where you are today. Now the 5 elements to wealth strategy then uses the power of "x" to grow money safely and exponentially using leverage. This is the secret sauce to the equation. All the other elements are great. Pay yourself first start today. Compound as long and as often as you can and don't lose money is perfect but where all this is enhanced, is when we can use safe and secure leverage.


Now, we take a decent return, let's say a safe return of 4 or 5 or 6%. And then we could potentially double or triple that return without adding risk. I know you say that's not possible. How do you do that? It's by combining our elements with each other. See, each element on it's own really can't do a whole lot for you. But when pulled together, it's a powerful financial tool. If you could make water for instance, you would need 2 parts hydrogen and one part oxygen, right? H2o, that's our formula. But if we remove or eliminate or reduce any one of those parts, we're not gonna get water. The same applies to the wealth formula, leave out or eliminate part or reduce one of them, and it's gonna make it much more difficult to attain wealth safely. Now look, there are other ways to build capital and wealth for sure. I mean business owners, you know, have done it for years through innovation, hard work, and serving their community with a product or service that other people want or needs.


That's kind of the whole capitalist way, build something that other people want. Other people can use, and that's can build your wealth. Then there's others who are professionals, medical, dental attorneys, whatever, that have very good incomes. And they can also that can give them the capital they need to save or invest. In both instances, taking capital and profit off the table, so to speak and applying it to our formula will not only build their wealth potentially faster, but take some risk and loss out of the equation too. We all like to think about growing our money faster, right? That's what makes investing exciting. And you know, I consider myself an investor. I like to have businesses that grow capital as well. We build houses right now. kind of fun. However, as good as some of these things can be taking some risk off the table as we go along. Yet not giving up potential returns is a very wise thing to do.


I remember back in 2008, when a builder that I knew really well, he had just lost everything actually had to go bankrupt. He came to me and we were talking, he said, Dan, if I just listened to you and taken some of the profit that we were making in all those good years and set it aside. I might have been able to save my business, but at least I might have a few bucks or a nest egg protected for a lot from losses. Now, I don't know if it would have kept him from bankruptcy, but it certainly would have given him a fighting chance. What's more is had he built up his capital base from profits sooner right from day one. The first profit paid himself through the 5 elements strategy, he may not have had to build all that long. Anyway, and he left the the equation and that magic of compounding work for him. So, bottom line folks is it's time you need to understand and implement this strategy as soon as possible. You need to get this equation working for you yesterday no more delays. So what we need to do is talk about this, either myself or one of my guys will potentially almost blow your mind with how easy and safe this can really be.


Well that's it for this video. Don't forget to subscribe we got a lot more good stuff coming up. If you have any questions, shoot them to questions at wise money tools. com. I answer just as quick as I can. If and you should want to have some sort of a strategy session when we talk about this click on the time trade link below and pick out a time that will work good for you. Until next week, hope you have a good one. Take care.