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MINDSET & MONEY | WHERE THE WEALTHY ARE MOVING THEIR CASH

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During this uncertain time, you may find yourself wondering what you should be doing to expand your opportunities. I recently wrote a blog post that details where the wealthy are moving their cash. We may not be in the rank of the ultra-wealthy, but it is beneficial to understand what the ultra-wealthy investors are doing. 

Mike Ayala explains the idea of long-term asset-backed income-producing assets and what this can mean at different savings price points. This episode will help you kickstart what you are passionate about. Find yourself a mentor and invest in that course you have been meaning to take. This is the perfect time to start expanding your knowledge and experience. 

“There is a lot of opportunity in times like this, but you just have to know your risk level.”

 

HIGHLIGHTS:

  • [0:01] Show Introduction 
  • [0:33] Start of the Podcast 
  • [1:13] Fortunes Lost on Wall Street 
  • [1:53] Prepared for An Economic Retreat 
  • [2:31] Long-Term Asset-Backed Income-Producing Assets 
  • [2:51] Where are the Wealthy Moving their Cash? 
  • [3:29] The Same Fundamentals 
  • [4:09] When an Opportunity Presents Itself 
  • [4:50] Investing for Freedom Facebook Community 
  • [5:49] Get to the People Who Challenge Your Thinking 
  • [7:13] What Can the Average Person Do Right Now? 
  • [8:05] Finding a Mentor and Coaching Program 
  • [8:54] Investing Your Money 
  • [9:42] Lending Money 
  • [10:35] What’s Something That You Have Been Passionate About Lately? 
  • [11:03] Real Estate Investing 
  • [12:05] Different Schools of Thought in Real Estate 
  • [12:37] Passive Investments 
  • [13:59] Knowing Your Risk Level 
  • [14:35] The Three D’s 
  • [15:53] Outro 

RESOURCES:

Four Peaks Partners | Where the Wealthy are Moving Their Cash
https://www.fourpeakspartners.com/where-the-wealthy-are-moving-their-cash/

Facebook Group | Investing for Freedom
https://www.facebook.com/pages/category/Editorial-Opinion/Investing-for-Freedom-471491206961417/

The E-Myth Contractor | Michael E. Gerber
https://www.goodreads.com/book/show/81950.The_E_Myth_Contractor

Tax-Free Wealth | Tom Wheelwright
https://www.goodreads.com/book/show/13238716-tax-free-wealth

FULL TRANSCRIPTION

[Intro]

Are you looking for freedom? Freedom from the daily grind and hustle, or just finding a way to live the life you always wanted. Then join us on the investing for freedom podcast. Our hosts, Mike Ayala will help you discover new ways to find freedom with tips, insights, and interviews. You’ll learn the exact systems he’s used to travel the world and live his best life. True success and happiness are all about freedom. And here’s your roadmap on how to find freedom on your own terms. Welcome to the investing for freedom podcast. Here’s your host, Mike Ayala.

Thank you for joining me on the investing for freedom podcast. Recently, it was actually May 7th at www.fourpeakspartners.com. I wrote in our blog there a little blog called where the wealthy are moving their cash. And to take that a step further if you are not of the ranks of wealthy yet, and hopefully we’re going to get there, which is the whole purpose and mission behind investing for freedom. What should you be doing during this time? I’ve been getting asked that a lot, like, “Hey Mike, would, you know, what should we be investing in? Should I be putting money in the stock market? Should I jump into real estate?” And the answer to all that is, I don’t know, what’s your experience level? Where are you really at? How much capital do you have? But let’s come back to the blog for a second.

Recently. What seems like instantaneously many fortunes were lost on wall street. A ton of jobs were lost on main street as everyone knows. And I don’t think anybody really could have anticipated the COVID-19 outbreak and the devastating economic situation that it would cause. I think a lot of people knew that; something was coming. Obviously, the ultra-wealthy investors knew, I think a lot of wall street knew a lot of banks were, kind of looking at it. A lot of people that I know that are investing in, multifamily, manufactured, housing, commercial, all of that. I think everybody was kind of like, man, we’ve got to be somewhat at the top, but I don’t think anybody could have seen COVID coming. So here’s the thing that I talked about there in that blog though, there was a class of investors that were prepared for some economic retreat and it was a group of ultra-wealthy investors. According to a June 2019 UBS global office family report, 55% of the wealthy family surveyed worth an average of one point $2 billion anticipated that the US would slide into a recession within the next year. And they were right. In preparation, the families were doing two things. They were hoarding cash for rising opportunities. And then number two, they’re shifting their investment strategies even more towards long-term asset-based income producing assets. And most of that was through private equity investments, not necessarily in the stock market.

So let me say that again. Long-term asset backed, income producing assets. Ultra-wealthy investors and institutional investors have a knack for sensing economic disasters before they strike. And when they do strike, they don’t retreat like the average investor, they pounce. They’ve been preparing for months now building their portfolio for the right opportunities. So where or the wealthy moving the cash that they’ve been hoarding. That’s what we need to kind of focus in on. And again, I’m not saying that any of us ultra-wealthy, but it does behoove us to kind of listen to and see what they’re doing. So again, long-term asset backed income producing assets, to what we’ve talked about all along. It’s why I don’t spend a lot of time and money investing in the stock market. I don’t understand it. That’s why I like real estate. That’s why I like businesses because they’re long-term investments. It’s asset backed and they are income producing if we’ve done our job properly.

So where are the wealthy moving the cash that they’ve been hoarding? Surprisingly towards the private debt market, as opposed to the private equity market they favored in 2019. Not surprisingly the fundamentals remain the same. I’ve been saying this for a while. The fundamentals of affordable housing are remaining the same. People are going to need affordable housing. And on the backside of this, I think it’s going to be even stronger. These families are investing with a long-term view in an income producing asset that’s secured by a tangible asset.

So why debt? Well, because the opportunity presented itself pure and simple. You know what we’ve been looking at, again affordable housing, the fundamentals are the same. We’re not necessarily buying right now because we’re waiting for things to kind of smoothed out a little bit, but we’re beginning to look again. I mean, everything happened quick. It was short. And now we’re kind of moving through the other side of it. But again, the opportunity presented itself, plain and simple. With financial markets up ended by the pandemic and the conventional lenders tightening their borrowing requirements. A window opened up for the private lending market and the ultra-wealthy with money to burn or pouncing. So obviously these families are not just funding any deals with high yields coming their way. The fundamentals are the same. They’re analyzing the portfolios, everything else like you should as a good investor.

So I get asked the question, again I’ve said this several times, but “Mike, should we be investing right now? Should we be jumping into real estate? Should we be buying businesses?” And the answer, to all that is again, I don’t know. I would say to you, yes, you should be considering that. But I don’t have a direct answer. By the way, as a side note, if you want me to look at any of your deals, I don’t spend a lot of time coaching or anything else, but we do have a Facebook community that we’re launching called investing for freedom on Facebook. It’s a private community. It’s free. Even this week alone I’ve got some great guests starting to come in there. Damion Lupo and I are going to be having a conversation about how, obviously by the time you guys are hearing this, it’s already in there, but you can go see the recording. Damion and I are going to be talking about how the Cares act allows you to pull money out of your 401k. And you could move that into a qualified retirement plan or a self-directed IRA and start investing in real estate or business, pull that out of the market.

So I’m going to have another conversation with a guy this week named Gabriel Hamill, a good friend of mine, who as bought a lot of real estate with seller financing, low money down nontraditional lending, which is kind of what these families are talking about right now with the financial markets seized up. Conventional lenders are tightening. And so family offices are moving their wealth into asset backed financial debt. So a lot of opportunity for us right now, but the core of this message is you’ve got to get educated. You’ve got to understand you’re doing. And the way to do that is to surround yourself with people that have done that, mentors that are going to challenge your thinking. And the best way that I know to do that is just getting next to the people that are doing it.

It’s hard to get obviously next to these ultra-wealthy, but there are people that are not, they don’t fall in that ultra-wealthy rank, but they’re willing to help you. So the investing for freedom Facebook community is a great way to do it. Obviously, you’ve already found the podcast, or you wouldn’t be hearing this. But unlike stock market uncertainty where an investor can watch their portfolio vanish in an instant, these ultra-wealthy families, they have the comfort of knowing that that’ll never happen to real estate. Not if again, the fundamentals remain the same. So as long as they’re analyzing the deals and they’re not getting too overextended, meaning simply put like, you go get a mortgage from a bank and they require you to have $1,000 or $2,000 down or $5,000 down on a $350,000 house. That’s overextended, 95%, 98% loan to value. These ultra-wealthy families are not doing that. They come in at a point where, basically their debt, if they had to come and take that asset back, because somebody didn’t make their payment, they’re in a good position to where the money that they’ve lent is a better loan to value than, so if they have to take this back, then they’re basically in a good position.

So what can the average person do right now? Is it a good time to invest? I actually would say yes. And I know that I several times said, I don’t know what you know, what’s your experience, what are you investing in, how much money do you have. But actually I think it is a good time to invest. But here’s the thing. If you’ve got a $1,000 to $10,000, Grant Cardone has a fund that I think will go down to $5,000 or something, it’s a non-accredited investor fund. So he’ll take $5,000. Would I recommend that you go and invest in that fund? Yeah. If you’ve got, $25,000, $50,000 and $5,000 is not going to hurt you if you lose it, I would absolutely go invest in something like that with $5,000. Because you’re going to learn, you’re going to get the experience. You’re going to be able to, see some financial statements and that kind of stuff. If you’re okay losing that $5,000. Now I don’t know very many people that have, $500,000 or a million dollars that they can play with that are going to go invest $5,000 in Grant Cardone’s fund. Maybe they would do that just to test it out, see how it works, and then they’d go invest more.

So if you have a $1,000 to $10,000, here’s what I’m going to say to you. Find a mentor, find a mastermind, find a coaching program in an area that interests you, maybe it’s business. If you’re an electrician, maybe go find a course that you can take on running an electrical company. One of the best books I’ve ever read was the E-Myth contractor. E-Myth has an entire series. But the E-Myth contractor, if you have an interest in contracting, make sure you order the E-Myth contractor and they’ve actually got a coaching group. So if you’ve got a $1,000 to $10,000 invest in yourself, find a mentor, find a mastermind, find a coaching program.

Here’s the next step. If you’ve got $10,000 to a $100,000 set aside, you’ve got a little nest egg. I’ve talked to a lot of people in the last few weeks that have $50,000, they’ve got $75,000, they’ve got a hundred thousand dollars saved up, but they’re not an accredited investor yet. A lot of passive investments require you to be an accredited investor. I’m not going to go into what that really means right now. If you don’t know what an accredited investor means, just go Google it. There’s a certain, requirement that the government has set for accredited investors versus sophisticated investors versus non-accredited investors. And that’s basically to protect you. It’s a certain financial requirement. Again, go Google it. We’re not going to get into that right now. But if you’ve got $10,000 to a $100,000 to invest, what would I do with that right now? Well, just like the ultra-wealthy are doing, you could potentially lend that out. Now that’s your hard-earned money. So don’t just go lend it to the first person that comes along. But honestly at $50,000, you could invest alongside of five other investors in a real estate investment.

Again, there’s some legal stuff here on the accredited investor versus non-accredited. So dig into that and join the investing for freedom Facebook community. We talk a lot about that in there. If that’s a question just, you could ask it in there, we can have some discussion on it. But $10,000 to a $100,000, do you have a business idea? Are you an expert in a certain area? Could you create an online course? Could you have some kind of side hustle? Do you want to launch a physical products brand? Social selling, or multilevel marketing, same thing. What’s something that you’ve been passionate about lately and is now the right time to maybe take $10,000 or $15,000 or $50,000, and maybe take your chances at launching a business. Now I’m not a proponent of just throwing money away, but if you find yourself in a situation where you’ve got some cash and you’re concerned about the future, now might be the perfect time to start building multiple streams of income.

So real estate “Mike, should I get into real estate investing?” potentially, with $50,000 to a $100,000 you could go in with two other partners and buy a $300,000 duplex, or you could take that $50,000 or a $100,000 right now and put it down as a down payment and buy a cash flowing duplex. There’s tax benefits that again, we talk about a lot on the podcast and in other arenas. By the way, on the tax front, “Tax free wealth” by Tom Wheelwright, get that book. It’ll blow your mind.

So you could go buy a single-family investment. You could invest in a non-accredited investment fund if you’re not accredited. Maybe you’re an accredited investor and you have $50,000 or a $100,000. There are still good funds out there to invest in. Again, the case for affordable housing is stronger than it’s ever been.

So here’s the thing you’ve got a $100,000+ saved up. Now we get into a whole other realm, but passive you could start a real estate investing business. So I think there’s different schools of thought here on real estate. So you’re either going to buy a few rentals or you’re going to develop a real estate investment business. If you’re going to be passive, you’re probably investing with someone else or you’re buying. The idea is to go out and buy 10 or 15 or 20 of them. Have a property management company manage everything, they’re taking care of all the taxes, everything. That’s somewhat passive. So maybe you’re in that 100K plus range. And again, I’m not saying that you have to have a 100K, but I don’t want you spending your last $50,000 on a risky investment, but if you’re in that 100K plus range, and you’re getting to the point where you’re really wanting to risk some of that, then maybe you get involved in passive or you start looking at a real estate investment business. I’m going to go out and acquire a portfolio or something like that, or a cash influx to a business operator. There’s a lot of great businesses out there that are struggling right now that are going to come back. What businesses are essential, what businesses had a great track record before they just had some of their revenue streams dried up. Maybe they just need a cash influx. And I literally know some guys right now that are taking a 15% stake in companies by just influxing capital to them. So they were performing well before, they need capital. Their lines of credit are dried up and it looks like that their business is going to come back. And so people are taking an equity stake with a debt component to it.

Buy a business. If you’ve wanted to launch a business, plumbing, heating maybe a construction business, you wanted to get into, I don’t know, quilt making. Maybe now’s the time. Maybe now’s the time you can find somebody who’s been operating a business for a while. They’re tired, they’re done. Their lines of credit are frozen. They can’t get out of it. Maybe they want to sell it to you. You could literally just like we can buy real estate with no money down. We can buy businesses with no money down. So be thinking about all that.

So here’s the thing. There’s a lot of opportunity in times like this, but you’ve just got to know your risk level. I’m challenging you to maybe start thinking about what level of risk you want to take with your capital going forward. And maybe you don’t even have to have any capital. What are the wealthy investing in? Long-term asset backed income producing assets. So I’ve bought businesses in the past. And if you want to talk about this, feel free to just reach out to me team@investingforfreedom.co. We can have some conversations around it. But I’ve bought businesses in the past with no money down. I’ve bought buildings with no money down. There’s a mentor of mine. He says the three D’s death, divorce, and don’t want them. I’m not going to spend a lot of time getting into that right now.

But basically if you can find somebody wants to offload their real or their business and you can structure a win, win that gets them what they want while you get what you want. There’s opportunities in that. So we’re obviously all going through some challenges right now, but I just wanted to point out that, during times like this even though it’s challenging, even though we’re all having some problems and we got to adjust, these are the times where opportunities show themselves too. And if you get creative and you don’t stick your head in the sand and you don’t let yourself get depressed and you keep your emotional intelligence high, you might just find some wins. And as I wrote in the blog, many fortunes were lost on wall street. Millions of jobs were lost on main street. No one could have seen this coming, but that doesn’t mean we have to stay there, get your head right, find yourself a mentor, invest in a real estate course or a business course, or some sort of mastermind around what you want. And just start expanding your knowledge and experience and keep your eyes open for opportunity because it’s everywhere. So I want to leave you with that. It’s time to thrive, not just survive, let’s go out and make some amazing things happen.

If you found value in this episode and you know someone who’s wanting to start or move further along in their journey toward investing for freedom, I would be forever grateful if you would share this show with them and help me get this message out to more listeners. Also, if you enjoy what you’ve heard, I would appreciate it if you’d take 30 seconds and leave me a five-star review and share this with your friends and until the next episode, cheers to moving further, along in your journey of investing for freedom.

 

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