Wealth Formula Podcast

By Buck JoffreyBusiness Investing

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Wealth Formula Podcast episodes

December 06, 2020 241: Ask Buck Q4 2020 Part 1!
It's time for our next series of "Ask Buck" episodes. It used to be that we just did one of these every few months. But now we get so many questions that it has become a quarterly series! While all of our shows are educational in nature, the nice thing about the "Ask Buck" shows is that material is highly focused on practical information and strategy applicable to most investors. These shows have become extremely popular over the years and, if you are new to the Wealth Formula community, are particularly useful to "catch up" on recurring themes in our world. Tune in now for the first "Ask Buck" episode of Q4!
53 min
November 29, 2020 240: A Million Dollars a Month with Rod Khleif!
What if you were in a 747 jet airplane traveling 500 miles per hour. You could get to where you want to be pretty quickly. But what if you didn't know where you wanted to end up? Well, then it wouldn't do you much good to move at 500 miles per hour. In fact, depending on where you ultimately want to end up, it could end up making your journey take much longer than if you just walked directly there to start! The point is that it doesn't really matter how much energy you have or how hard you work if you have no idea where exactly you want to end up. Now of course it is hard, especially when you are young, to pinpoint exactly where you want to end up. But that doesn't mean that you can't start making some goals for yourself early on. You can always go back to revise them if they don't end up being as appealing later on or if you have goals that are even bigger. The point of having a goal is to engage your self conscience to autopilot you to a place that you can see in your mind's eye. Let's take, for example, the goal of making $1 million dollars per month. That's a big goal for most people. If you set that as a goal you truly want to achieve, you would have to take a pretty good look at where you are in life today and make sure your trajectory makes it possible. And if it doesn't, change course immediately! In other words, if you are working at a comfortable 9-5 job making $300K per year today, you are going to need a serious pivot plan to make over three times that amount every month. No matter how hard you work, that job is not going to get you to $1 million per month. On the other hand, what if you are already making $100K per month and your earnings are independent of your time? What if the only difference between $100K per month and $1 million per month is increasing the scale of what you do? In other words, if a unit transaction currently makes you $5K, is there a way to make that same unit transaction worth $50K without significantly increasing your time and effort? If so, stay the course. If not, abort and alter your plan. I know that it can be done. I've seen people add zeros to their income and net worth in just a few years over and over again. You just have to have a plan. It has to viable and you have to execute it. And…perhaps most importantly, you have to believe that you can do it! Henry Ford once said, "If you think you can do a thing or you think you can't do a thing, you're right." Mindset is everything. If you think there is no way to get to $1 million per month, you won't get there. The reason why is nothing esoteric. It's quite simple. Think of everything that you have done in your life up to this point. At one point it started as an idea that you believed would become reality. In order to make anything real, you have to create that reality in your head first. If you do that, your subconscious will help guide you along the way. Of course this type of goal setting applies to much of life. It's not just about money. It's just about what you really want. Visualize it, believe it, and make a plan to get there. My guest on Wealth Formula Podcast this week, Rod Khleif, credits all of his life's many successes to these basic concepts of visualization. And while it is easy to be cynical about this kind of stuff, I can tell you from personal experience that I have experienced this kind of manifestation myself and it's hard to explain. But it works! As the end of the year approaches, it's always a good idea to reflect a little bit and this week's interview with Rod might just be what you need for a little holiday dreaming!
49 min
November 22, 2020 239: Should You Invest in Oil and Gas?
I am not an oil and gas investor. That’s because I am not incentivized to do so by the tax code. The only time I was really incentivized to do so was before I became a real estate professional. Now with bonus depreciation, every time I invest in real estate, I can deduct the majority […]
37 min
November 15, 2020 238: THE NEED FOR SPEED: The Western Wealth Way!
Wealth Formula does, in fact, have a mathematical formula behind it. Wealth=Leverage(MassxVelocity) I believe the key to building your wealth is behind maximizing each one of these variables. Mass is simple. It's how much money you invest. If you have more money to invest then you are going to create more wealth. Leverage is critical. Despite what some popular personal finance gurus say, significant wealth creation is almost impossible without the judicious use of debt. It serves to amplify your returns. After all, growing your wealth at 5 percent per year is quaint but it isn't going to make you rich. Velocity might actually be the least understood and least appreciated variable of the Wealth Formula. Velocity is more complicated than a simple yield or cash on cash value although that's part of it. Velocity is how quickly you get your money back in your pocket to redeploy into another opportunity. So, if you have money in one apartment building that refinances and you get your money out of the deal while maintaining your equity position, you can now recycle that same capital into another investment. Now you are invested in two assets at the same time using the same initial capital. Velocity is a function of time. If you can do the same work in half the time you are going to double your annualized returns. If you redeploy that capital into multiple opportunities you begin to see exponential growth of your wealth. While that might seem like a fairly simple concept, it's not the way most businesses think. Even most value-add apartment syndicators seem blind to this concept. Every day that value is not created in a real estate project, it decreases the over-all return on investment. That's the secret behind our Investor Club partners: Western Wealth Capital. It's THE NEED FOR SPEED!!! If you have been part of our investor community or have come to one of our live events you have seen these concepts come to life and it's truly remarkable! You see the math is quite easy. Once you know the variables it makes sense. The hard part is the execution and, in this regard, Western Wealth Capital is the Wealth Formula coming to life. To talk about this remarkable organization, this week's podcast features an interview with David Steele, one of the principals and cofounders of Western Wealth Capital. As always Dave is not only brilliant but entertaining. Don't miss this episode!
51 min
November 08, 2020 237: Is Angel Investing Right for You?
Boring is good. Beware of shiny objects. When it comes to investing, those are the words that I generally live by. When I keep true to this wisdom, I don't generally lose money. Now that doesn't mean I have never lost money! Remember, before I became a boring domestic real estate guy, I was a flaming entrepreneur! I acted on every good and bad idea that I had. I made millions of dollars with some of those startups while losing most of it with just a few bad decisions. It was exciting—but not all that profitable. I remember a few years back after losing a ton of money in a failed business expansion that my net worth was preserved only by the real estate I had purchased along the way. Luckily, I had a rule that I had to buy at least one apartment building every year while building my other businesses. Guess what survived? Guess what thrived? Yep…the boring stuff. Those apartment buildings I bought while I lived in Chicago saved me! And while not all real estate investments grow by 500 percent plus in just 3-4 years like mine did, you can pretty much count on most residential real estate to be fairly safe in competent hands. Boring stuff like real estate is a slow-burn for creating wealth. We can amplify that growth through velocity—we can invest in value-add projects that quickly refinance and recycle capital. However, it is highly unlikely that you will end up with "10 bagger" on any individual real estate project. To get a 1000 percent plus returns, you need to do something a little riskier like I did with those start-ups. But is it prudent to do so? After all, if you are making $500K or a $1 million per year, do you want that kind of risk? For most people, the answer is no. But, what if you want to go from being a person with a net worth of $3 million to $30 million? Well, if you really want to do that, you are going to need to take some risk—asymmetric risk. If you've got the money to do it, it might make sense to take that 5-10 percent of your net worth and shoot for the stars. If you lose it, you can afford it. But if it takes off, it could be life changing. Bitcoin and other cryptocurrency speculation is certainly a good example of asymmetric risk. People who bought a couple of hundred dollars of bitcoin back when it first came out are worth hundreds of millions of dollars! That kind of crazy profit is extraordinarily rare and requires a huge amount of good fortune. However, more modest levels of asymmetric risk can potentially be systematized. That's essentially what an angel investor fund does and that's what we are going to talk about on this week's episode of Wealth Formula Podcast. So…if you're tired of all the boring stuff we do in Investor Club don't miss this episode!
41 min
November 01, 2020 236: Will Technology Lead to Deflation? Jeff Booth
In 1798 Thomas Malthus published a theory that predicted that human population growth would eventually outpace food production and thereby push living standards backwards. He based this on a simple mathematical observation that human population was growing at an exponential rate while food production growth was linear. While Malthus' theory was mathematically sound, it did not take into account that which it could not predict. Malthus had no way of knowing the impact of the industrial revolution and our increased ability to scale food production at a pace that would keep mankind prospering with enormous population growth. Doom and gloom predictions about the future are very popular and often substantiated with the available data of the time. However, technology always seems to save the day. Another example: Remember the "Peak Oil" bandwagon a decade or so ago. Whatever happened to that crisis? Oh yeah—shale and alternative energy sources. Turns out, human ingenuity finds a way. Is it possible, however, that human ingenuity in the form of technology could create so much efficiency in the system that it actually puts us out of work? Will artificial intelligence replace all of our jobs? Will technology create so much efficiency that everything will be less expensive than it is today? After all, think of all those mobile applications you use on your phone that we get for free. And when was the last time you had to pay for a long distance call to someone in another state? Will everyone start working from home and will that essentially eliminate the need for commercial real estate for offices and retail? If all of these things happen, there would be a natural deflationary pressure on the economy. Is getting stuff cheaper bad? Well..sort of. Deflation is probably the worst thing that could happen to a country's economy. We live in a debt based economy. We borrow money now and, because of inflation, we can pay that money back in the future when it is worth less. If we had a true deflationary movement, we would be screwed. We would not be washing away our debt with time but rather amplifying it. That's kind of a scary scenario. However, my guest on Wealth Formula Podcast sees this situation coming our way sooner rather than later because, of all things, the exponential rate of technology growth. Want to know more? Tune in to this week's show to listen to my conversation with Jeff Booth, author of The price of tomorrow: Why deflation is the key to an abundant future.
40 min
October 25, 2020 235: Cashing in with Cash Machines!
We live in interesting times: a global pandemic, a recession and a divided country heading into an election year. Anyone who says they know for sure which way the economy is headed for sure in the next six months is lying. So, what can we do now to prepare for an uncertain future? Well, that’s […]
43 min
October 18, 2020 234: What You MUST Know about Estate Planning!
Estate planning is by far and away the most ignored topic amongst the high paid professionals with whom I talk to every day. First of all, it's not a very sexy issue. Who likes talking about dying anyway? It's kind of a buzz kill. But I got news for you…eventually you are going to die and you probably won't get to pick when. Remember—I'm a doctor so I'm qualified to make this statement! The other hesitation many have when it comes to estate planning is that it often requires the concept of gifting your assets to a trust or to your children. When you are in your 40s or 50s you might think, "I'm not ready to give my stuff away. I want to have some fun!" A good friend of mine had that exact response when I brought up the issue to him recently. But here's the thing. Gifting an asset to a trust DOES NOT mean giving up control. Remember the old dictum, "Own nothing, control everything." That's what good estate planning is all about. You really don't need to change much of anything in your life while you are living. However, good estate planning will make a world of difference to your loved ones when you die. Imagine for a second that you have amassed a net worth of $10 million and you suddenly pass away. If you didn't do any estate planning, your kids aren't going to see any of that money for a year or more as it goes through a process called probate. And to be clear, A WILL DOES NOT PREVENT PROBATE. Probate is the judicial process whereby a will is "proved" in a court of law. In California, that takes a minimum of two years! The good news is that avoiding probate is easy as establishing a living trust and funding that trust with all your assets. Now, if you are one of our typical accredited investors, a living trust may not be enough if you want to really protect your family's wealth. Estate tax laws are rapidly changing and if you thought this was only a problem for $20 million plus families, you might be in for a rude awakening as new tax legislation is almost certain to come to fruition in the next several years with or without a Biden administration. Estate planning is an area that, regardless of its minimal sex appeal, must be addressed to preserve your wealth and to keep your family safe. You don't want them dealing with this stuff at the same time they have to grieve your death. The good news is, again, you don't have to do a lot to make adequate adjustments to your finances and it's not very expensive. Just do it once and then you can go back to pretending you are immortal! How do you do it? Well, this week's Wealth Formula Podcast will make it all very clear as I interview attorney Joe Longo. Your family will thank you for listening to this one!
47 min
October 17, 2020234: What You MUST Know about Estate Planning!
Estate planning is by far and away the most ignored topic amongst the high paid professionals with whom I talk to every day.
First of all, it’s not a very sexy issue. Who likes talking about dying anyway? It’s kind of a buzz kill.
But I got news for you…eventually you are going to die and you probably won’t get to pick when. Remember—I’m a doctor so I’m qualified to make this statement!
The other hesitation many have when it comes to estate planning is that it often requires the concept of gifting your assets to a trust or to your children. When you are in your 40s or 50s you might think, “I’m not ready to give my stuff away. I want to have some fun!”
A good friend of mine had that exact response when I brought up the issue to him recently. But here’s the thing. Gifting an asset to a trust DOES NOT mean giving up control.
Remember the old dictum, “Own nothing, control everything.” That’s what good estate planning is all about. You really don’t need to change much of anything in your life while you are living. However, good estate planning will make a world of difference to your loved ones when you die.
Imagine for a second that you have amassed a net worth of $10 million and you suddenly pass away. If you didn’t do any estate planning, your kids aren’t going to see any of that money for a year or more as it goes through a process called probate.
And to be clear, A WILL DOES NOT PREVENT PROBATE. Probate is the judicial process whereby a will is “proved” in a court of law. In California, that takes a minimum of two years!
The good news is that avoiding probate is easy as establishing a living trust and funding that trust with all your assets.
Now, if you are one of our typical accredited investors, a living trust may not be enough if you want to really protect your family’s wealth. Estate tax laws are rapidly changing and if you thought this was only a problem for $20 million plus families, you might be in for a rude awakening as new tax legislation is almost certain to come to fruition in the next several years with or without a Biden administration.
Estate planning is an area that, regardless of its minimal sex appeal, must be addressed to preserve your wealth and to keep your family safe. You don’t want them dealing with this stuff at the same time they have to grieve your death.
The good news is, again, you don’t have to do a lot to make adequate adjustments to your finances and it’s not very expensive. Just do it once and then you can go back to pretending you are immortal!
How do you do it? Well, this week’s Wealth Formula Podcast will make it all very clear as I interview attorney Joe Longo. Your family will thank you for listening to this one!
Joe began the LONGO LAW GROUP, LLP on the foundation of service of clients and results. He was influenced by his father, Dominic Longo, who founded Longo Toyota at a converted gas station with a 4 car inventory and eventually built it into a 22 acre facility housing the #1 selling car dealership in the world based on customer satisfaction. When most people are looking to hire a law firm its because they need something in the legal world accomplished. Its not to get overcharged and to have your attorney stop communicating with you. This firm’s philosophy is to provide the most vigorous representation, best service, ongoing communication, and at the most competitive rates. Joe has numerous Federal and State jury and bench trials under his belt, along with his sports practice that includes arbitrations, grievances, drug suspension hearings and appeals. Over the past two plus decades Joe’s practice has included Civil Litigation (business), Criminal (both State and Federal-Tax), Probate Litigation, Sports (MLB and NBA), Asset Protection, Trust and Estate planning. His clients have ranged from publically traded, international, corporations, professional athletes, professional sports franchises, leagues, individuals, to volunteer pro bono work for indigent clients. Along the way he has taught law at Los Angeles City College, Mission College, and Pasadena City College, and is currently an Adjunct Professor at Loyola Law School. He has sat as a Judge Pro Temp in the Los Angeles Court System. He has been a Panelist on many law panels including “USC Gould School of Law— Institute on Entertainment Law and Business”, “Loyola Sports Law Institute on Collective Bargaining & Individual Contract Negotiation In Professional Sports”, and “Negotiation For Lawyers—Lessons from Baseball Salary Arbitration Cases” Joe is also the President of Paragon Sports International, LLC (www.ParagonSportsInternational.com).
Joe has attained an “AV” peer rating from Martindale Hubbell, the national directory of attorneys, indicating preeminent legal ability and the highest ethical standards. He is a member of the California Bar, the Beverly Hills Bar Association, the Los Angeles Bar Association, the Sports Lawyers Association, and The Wealth Counsel. He received his B.A. from Brown University in Rhode Island, where he was a starting Defensive Back on the Brown University Football Team in the mid 1980’s. He obtained his Law Degree from Loyola Law School in Los Angeles, CA. His charitable endeavors include sitting on the Board of Ability First.
Shownotes:
What is Probate?
Why do you need a Living Trust?
Joe talks about the advantages of having a Dynasty Trust.
How do you find a good Wealth Planning Attorney?
49 min
October 11, 2020 233: Tom Wheelwright: Change Your Tax By Changing Your Facts!
It's not what you make but what you get to keep. Think about that for a second. If you are a physician in California that makes $500K per year, do you really make $500K per year? No you don't. With combined state and federal taxes, you make half of that. The Federal government and the State of California made the other half. Believe me, I've been there. I spent the first year after residency as a W2 employee and it's painful. I've illustrated how painful this is to my children by getting an ice cream cone then taking half of it myself and telling them I'm taxing them. They get the point. However, their first inclination is like many others—they try to get two scoops instead of one. They don't ask the question, "Daddy, is there a way that I can pay less tax?" It's human nature to accept certain things in life. Even Benjamin Franklin famously said, " …in this world, nothing can be said to be certain, except death and taxes" While as a physician I can tell you that we do not have a solution to the former, the latter is a problem with several potential solutions. Look at our current president. Well…I guess he did pay $750! The truth is that it is the right of every citizen to legally mitigate the amount of taxes they pay. I've heard the argument that it is unpatriotic to decrease your tax burden. However, understand that the tax code is written as a series of incentives. In other words, if you are paying less taxes, you are doing something that the government theoretically wants you to do. Anyway, if you are concerned that reducing your tax bill is unpatriotic, you probably don't like Wealth Formula Podcast anyway so I won't say much more about that. However, if you would like to seriously start to change your tax, my friend and CPA Tom Wheelright says there is only one way. You have to change your facts. And, if you want to change your facts, I can tell you with some level of certainty that there is almost always a way to do it. You just have to have the right advisors. Of course, Tom Wheelwright is my tax advisor and he is the best in the business. So, if you want to start keeping more of what you make, don't miss this week's episode as Tom and I focus on the concept of creating passive income.
1 hr 17 min