Wealth Formula Podcast

You know what drives me crazy? Politicians talking about how rich Americans need to start paying their "fair share". First of all, they aren't really taking about the rich. They are talking about you—the high paid professional. To be clear, if you are making $400K-$800K per year as a W2 wager earner, you're doing well for sure. But you aren't rich. Yet, you are the one that gets vilified and gets destroyed by the tax code the most. And let me ask you a question. Do you think you are paying your fair share of taxes? In California, you'd be paying a tax rate of over 50 percent. I bet you don't think that's fair either. At least you can agree with those politicians on something! Then there is the estate tax. For those of us who have done well in our lives and paid taxes along the way, there is an extra kick on our way out. Its punitive—again taxing over 50 percent on money that has already been taxed. Do you think the government deserves that money or your family? I think I know the answer. And if you think that you aren't rich enough for the estate tax think again. Those numbers are coming down next year and there are many who would like to see it start as low as $1 million estates. This will affect you if you don't plan for it. Luckily there are groups like the National Taxpayers Union (NTU) Foundation out there that are looking out for us. In fact, there is a case about to go in front of the supreme court shortly that could have profound affects on your investments. The case is called Moore v U.S. and it is something you should absolutely know about. To help you understand what the stakes are, I invited NTU member Joe Bishop-Henchman to explain it to us on this week's episode of Wealth Formula Podcast. Show Notes: 00:07:47:12 Moore VS U.S. 00:10:21:01 The main arguement 00:15:17:18 What happens when either side wins? 00:20:10:24 What is defined as realised gain? 00:24:37:07 Implications of the ninth circuit court case 00:29:48:10 When can we expect a decision?

As the end of the year approaches, many of us are thinking about ways to mitigate our tax liability for 2023. Unfortunately, this year there is not a whole lot in terms of options. The IRS has clamped down on syndicated conservation easements and anything resembling it. If you are being talked into something like that, I would suggest you be very careful. Anyone selling them at this point is not looking out for your welfare. Similarly, although captive insurance is a legal right of every American, the IRS has made it its mission to audit them. It's almost as if the IRS has become a branch of government that ignores the legislative process completely. So what can we rely on? Oil and gas? No thank you. I've never made money in oil and gas and would have been better off just giving my money to charity. The space is also ripe for charlatans. At this point, you are pretty much left with investments that will give you some depreciation and that only helps you if you have passive income to offset. Real Estate opportunities have been far and few between. We have had one in 18 months and that is currently on waitlist. If you are an accredited investor feel free to check out that webinar at JoffreyCapital.com. You might get lucky and get in. So, what's left? Well, prepaying things for next year is not a bad idea. I used to prepay advertising for my now defunct cosmetic surgery office. If you are into deferred accounts that will give you some relief as well. There is one more option and that is simply to invest your money without significant tax benefits. Sometimes, as much as it pains me to say this, paying the tax is the right thing to do. After all, you can safely invest in a fair amount of stuff right now that is yielding pretty well. It's just not tax efficient. For example, you can put your money in CD's and get over 5 percent. Or, like me, you focus on life insurance products like Wealth Formula Banking or the Wealth Accelerator. There are many advantages to these kinds of policies that have been characterized as "investing with benefits". The benefits are often significant and under-appreciated as I have tried to point out on numerous occasions. But don't take it from me, take it from others who are doing the same thing and see if there is a line of reasoning resonates with you. These types of policies should probably be apart of every portfolio in my opinion. And in this week's Wealth Formula Podcast you'll hear why—not only from me but from other Wealth Formula community members. Show Notes: 00:07:06:15 What is Wealth Formula Banking? 00:13:19:07 What are the reasons why investors have chosen Wealth Formula Banking? 00:21:57:20 How have investors been using Wealth Formula Banking? 00:30:30:19 Amplifying your retirement strategy 00:47:57:06 The Wealth Accelerator 00:57:10:22 Advices from fellow investors

A lot has happened over the past year in real estate. It goes to show how quickly things can change. Unless you have been living in a cave, you know that interest rates went way up really quickly. When that happens, housing typically goes down in value significantly. Oddly enough, in much of the country, that wasn't quite the case. Why? Well, there wasn't much inventory. Record LOW rates created both a frothy market and a huge amount of liquidity in the housing market. People thinking of selling at that time sold. People thinking of buying were able to buy much more expensive homes than they normally could because of cheap money. And many of them locked those rates in. When there was a huge increase in interest rates, liquidity in the markets went way down keeping prices still elevated because of a supply and demand imbalance. A similar story was seen in investment real estate that is largely driven by cap rates. The difference being that much of investment real estate is purchased on floating rates. And, as many of us have seen, that has resulted in forced selling. Anyone who does not have to sell right now is not selling. Those who are forced to sell are losing money. This period in time for real estate investors will be emblazoned in our memories the way the financial crisis of 2008-2009 is. Hopefully some of us will also take advantage of what is occurring like people did in 2010. I anticipate 2024 will be a time with blood in the streets as many rate caps are expiring. This will be a great opportunity to pick up properties at significant discount. And those who do will very likely be rewarded for the ice in their veins. Why? Because predictions of lower interest rates in 2025 are overwhelming. If those predictions come true, it will create a situation where the investment real estate market becomes frothy again. People unable to hold on to properties is 2024 will be the biggest losers because they didn't do what they had to do to stay in the game. I know that staying in the game is not easy. For many of you, this period in real estate time has been the first and only time we've ever experienced loss. We know rationally, that, investors are not supposed to win every single time but that's what we witnessed for the past 14-15 years and we got used to it. But real estate is like every other asset in that it has cycles. This cycle ended abruptly and violently but another one is about to start. In this week's episode of Wealth Formula Podcast, you'll once again hear from an expert on the real estate market from the National Association of Realtors. When you hear what he has to say, along with other economists, you will understand why the mantra in the real estate investor ecosystem continues to be, "stay alive until 25". Show Notes: 00:09:57:17 What does 7% interest rate mean for real estate? 00:12:30:24 National Association of Realtors' prediction on mortgage rates in the coming months 00:14:38:09 Is interest rate the reason why people are not selling properties? 00:16:22:23 Is price stability regional or national? 00:18:26:12 Where are the strongest real estate markets in the country? 00:19:48:09 millennials vs Baby boomers: who's buying more homes right now? 00:21:32:07 Foreign real estate buyers in the US 00:23:14:05 How does marijuana legalization affect real estate 00:25:00:14 How do election cycles affect real estate 00:26:01:11 Prediction of the next 2-5 years

When I moved to Montecito a few years ago, I was amazed at how many people didn't seem to work. To be clear, we don't have a homeless problem out here. We just have a lot of people who own businesses. And it's not quite true that they don't work. They just don't have regular hours so there's a disproportionate number of people hanging out during the day. Of course, I myself am a business owner and my businesses have experienced their fair share of pain over the last several months. In fact, my cosmetic surgery business in Chicago finally went out of business after almost 15 years. And I know it's not just me. Everyone is slow and it seems like there are layoffs going on everywhere—lots of skilled people are losing their jobs. So I have been racking my brain trying to figure out why the economy is supposedly doing so well. I have come to the conclusion that we are not looking at the right indicators for the time that we live in. It's like we bought an electric car but are still watching to make sure we have a full tank of gas when we should really be paying attention to the battery charge indicators. We've always judged the economy in terms of two major indicators: jobs and GDP. And those numbers haven't looked that bad even after a year of oppressive rate hikes. But what does the jobs report really tell us? Is it telling us that many people left the workforce during COVID-19 and never came back? After all, you are only considered unemployed if you're actively trying to work. And when you see all those new jobs added to the jobs report every month, is that taking into consideration the additional part-time jobs people are taking just to make ends meet? The numbers we get make no distinction. The bottom line is, I am convinced we are missing something that will become very clear within the next 12 months. My guest on this week's episode of Wealth Formula Podcast believes this too. Believe it or not, he's an Austrian economist I discovered on TikTok. And, because of him, I now have a TikTok account and you probably will too! Show Notes: 00:05:59:05 Who is Peter St Onge? 00:09:20:23 Is there such a thing as true conservative economics in the modern political system in the US? 00:13:44:01 Is the economy actually doing well? 00:16:38:18 Why is the job rate going up when people are getting laid off? 00:21:38:03 Why high GDP might not suggest a strong economy 00:25:57:21 Statistics on Bankruptcy 00:28:50:18 When is the next recession coming? 00:35:40:04 Why have we not seen more regional bank failures?

It's NFL season and I'm still glued to the TV despite my team's rough start and the fact that we lost our starting quarterback for the year. In case you don't know, my team is the Minnesota Vikings and our starting quarterback was Kirk Cousins who just went down with a brutal Achilles tendon tear. Kirk makes a lot of money—$30 million in 2023. Of course, when we think of professional athletes, we generally think of them as crazy rich so you might not be surprised. You might be surprised to know, however, that the actual median salary in the NFL in 2022 was only $860,000 per year. I know for a fact that a lot of you Wealth Formula listeners make more than that. You know what I think of when I hear numbers like that? I think about how much they must be paying in taxes. Kirk Cousins is probably paying at least $12 million of his salary in taxes. And those guys at the median salary level are probably paying out almost $400K. They are, after all, W2 wage earners. Again, no one is starving even after paying those taxes but it certainly puts things in perspective. After all, it's not really about how much you make. It's about how much you get to keep. Every person's finances are like a small business. You have income coming in and you have expenses going out. A small business is going to do whatever it can to decrease expenses so it can keep more profit. So, if you are a business, what is your biggest expense? Probably taxes. And if that's the case, what are you doing to try to reduce those expenses and bring more money to your own bottom line? To be clear, we aren't talking about anything illegal here. As it turns out, there are plenty of things the government wants you to do that will help you save on taxes. My friend, Tom Wheelwright, calls the tax code simply a series of incentives. That's the smart way to look at it. As it turns out, your best way of saving on taxes tends to be through the way you invest. And, there is simply no industry that has more tax benefits than real estate. I truly believe this and want you to understand why. If you choose not to act on this information, that's fine. But at least know what you are missing out on so you can only blame yourself. I am always amazed at how extremely financially sophisticated individuals have no idea what they are missing. This week's Wealth Formula Podcast reviews some of the major concepts in tax mitigation via real estate investing. There's something here for everyone including those new to the game. So make sure to tune in. Buck Show Notes: 00:09:30:01 How are people overpaying taxes? 00:10:34:14 How to get around active income with passive investments 00:18:55:22 Real Estate Professional Destination 00:21:19:24 Audit protection 00:22:29:07 Getting the benefit of being a Real Estate Profession through your spouse 00:24:25:19 Getting the benefit of being a Real Estate Profession with short-term rentals 00:25:29:15 Should I put my real estate in an LLC? 00:26:48:22 The role of a C-Corp 00:28:51:10 How to audit-proof your returns 00:30:45:18 Are you more likely to be audited if you are a Real Estate Professional? 00:32:24:16 How to use your kids to reduce tax 00:34:06:15 What is the cost segregation analysis 00:38:43:18 Upcoming new tax laws 00:42:34:21 Learn more about Keystone CPA

The world of real estate is kind of a cult. Members of this cult tend to think that pretty much anything outside of real estate is just a waste of money. I used to subscribe to this religion. And, for the most part, I still kind of do. My portfolio is largely real estate and I truly believe it is the most tax-efficient consistent way of building wealth out there. But it's not the only way. I've made plenty of money as an entrepreneur and I know that you can make a lot of money in other kinds of business as well. The key to making money in any of these endeavors is to know what you are doing. I know how to start businesses and I know how to make those businesses profitable, but I don't really know how to buy them or know which business to invest in. It's good to know your weaknesses because they are often not insurmountable. If you don't have the expertise, you just need to find someone who has it that you can trust. That is the primary reason that we have partnered with Zulfe Ali in Investor Club. These days Zulfe is a broker-dealer. But prior to that, Zulfe spent decades in mergers and acquisitions at the largest banks in the world and was the chief investment officer of a sovereign wealth fund in the Middle East that acquired multibillion-dollar businesses on a regular basis. My goal in bringing him on board is to develop a broader platform of investments in the Wealth Formula ecosystem and, frankly, in my own portfolio. I want to create a platform where all of our investments are of institutional grade whether that be in real estate or any other asset class. A platform like this for individual retail investors like us does not currently exist. I know that there are plenty of offerings outside of real estate that you see on a regular basis through the podcast ecosystem but I must tell you that I am wary of most of them. Too many people have been ripped off because the people raising money are either unwilling or unable to do the level of due diligence needed to make sure that an opportunity is real or economically viable. Hopefully, we can change that with what we are rolling out with the help of Zulfe. He introduced me to today's podcast guests so I feel comfortable exposing you to them. These guys, in particular, are in the commercial transportation industry and this week's podcast will focus on an asset class that you are probably unfamiliar with but is dominated by institutional money: the commercial airline industry. This is one of the areas in which we are currently doing due diligence and my guests today have been identified as a potential partner for our group. Make sure to tune in. This industry is fascinating and I believe worth consideration as a future addition to your portfolio. Start learning about it now. Buck

No one getting married thinks that they will ever get divorced. I can tell you that from personal experience. Yet over half of American marriages end up in divorce. I was lucky in that I had an amicable break-up. Most of the divorces I've seen in the past few years have been ugly. I have two friends finally get through divorces in the last two years. In both situations, the men originally offered what they thought were fair settlements that their wives rejected. In both cases, the divorces lasted for years costing hundreds of thousands of dollars. And, in both cases, the wives ended up with LESS than originally offered. But it wasn't just the ex-wives who lost out. No one wins in an ugly divorce. The kids suffer and there is a huge emotional and financial toll to pay for both sides. The only winner is the divorce attorney. Knowing this should be enough to convince anyone to have a prenup in place before getting married or even get a postnup in place after the fact. But it's not that easy. How do you even bring up a prenuptial agreement when you are in love with someone and planning a life together? My guest on Wealth Formula Podcast specializes in this area of the law and has experience at the highest level of prenuptial complexity with celebrities, athletes and ultra high net worth individuals. The issues, whether they are emotional or financial, are often the same and he has great perspective on how to approach these sensitive issues. So, whether you're married, divorced or just curious, make sure to tune in and learn the basics on prenups and postnups. LISTEN HERE.

The financial meltdown of 2008-2009 feels like ancient history. And like tragedies that happened long ago, it feel more historical and less emotional. I remember going to Pompeii several years ago and seeing people turned to stone from Mount Vesuvius erupting. It must have been horrific. But time has made it more of a museum than the scene of an awful natural disaster. That's the way most people look at 2008 as well—as ancient history. But for many it was a very emotional time. But those who stuck to their guns and took advantage of blood in the street thrived for more then a decade afterwards. A very good friend of mine is an incredibly successful entrepreneur in the real estate space. At the time, he was building multimillion dollar houses for celebrities. He was a household name in Los Angeles. Every famous person wanted a house that he designed. But like many successful real estate people, he got hit hard during that time and lost a lot of money. It was also around that time that his focus was turning towards hotels. By 2010 he was seeing incredible opportunities on hotels and was looking to raise capital to take advantage of the market. But no one wanted to invest. Even though things were at a steep discount, people were just too afraid. Fast forward to today, my buddy stopped trying to raise capital and ended up doing everything on his own. And now, he's in the middle of a $100 million 1031 exchange. And that's just one of his hotels. That time for buying is around the corner again. 2010 is coming. Investment real estate is being hit really hard and its important to keep calm and wait for the opportunities that come before you. My guest today is a new partner that I am going to ride the wave with when there is blood in the street. He's been here before and has had a stellar record even in these tumultuous times. In this episode you'll see how he has not only survived but thrived in this market and also how he intends to take advantage of the coming distress. Listen NOW! Buck P.S. Please note, there is an opportunity referenced in this podcast that can be seen at JoffreyCapital.com. This opportunity may not be available by the time this show airs, but check out the webinar for educational purposes at the least.

I'm not a doom and gloom podcaster as a general rule. There are plenty of those out there predicting the zombie apocalypse. However, I have to say that I'm pretty sure I've been seeing some questionable zombiesque characters running around town lately. It has occurred to me, however, that most people are not seeing what I am seeing. After all, the job markets are humming along just great and inflation, while still high, has decelerated. If you are a high paid professional, you are cranking away at your day job and nothing really seems that much different because a little bump in the price of groceries isn't a big deal to you. In fact, you might be irritated that your investments haven't been performing well and wonder why. But from where I am seated, I have to tell you, it's kind of scary out there. The investment real estate market is in turmoil and there is significant amount of distress because of the steepest increase in interest rates in American history over the last year. Real estate syndicators like me are all chanting the same mantra across the board, "stay alive until 25". The office sector of real estate is already bathing in blood. The majority of that debt is held by small regional banks. It is hard for me to believe that we won't have further bank failures. And it looks like we are about to have another war in the Middle East. What do you think that's going to do to energy prices? Guys…it's kind of scary out there. Pay attention. 2024 is likely to be a very tough year and there will be pain. And the global economy is not the fault of one person or a single company so stop pointing fingers. Now there is a silver lining to this all. As much as these transitional periods cause pain, they are also opportunities. Everyone successful says the same thing. Those who can overcome their own fear and can act rationally during this time will be in for the best investing years of their life. In the meantime, take the time to make sure you've taken care of housekeeping items. Make sure your asset protection is in place. Make sure your estate planning is done and that you have adequate life insurance coverage. Do the mundane things that have to be done for proper personal finance plans. Tax planning is part of that. And, if you haven't really sat down and thought about how to mitigate your own tax liability, you should do that now. My guest on Wealth Formula Podcast this week, Tom Wheelwright, is the smartest tax professional I know. Make sure to tune in to our discussion about taxes and his 5 decades worth of perspective on today's global economy.

My portfolio is not what most would call diversified. I am about 70-80 percent real estate, 10-15 percent permanent life insurance and about 10-15 percent higher risk stuff. My only stock exposure is only high-risk stuff like mining companies on the Toronto Stock Exchange. To be clear, I am not advocating for this approach. That's just what has worked for me up to this point in my life. I should add that, unlike ten years ago, I am also far more open minded to expanding my investments into different areas. That's why our investor club started working with a broker dealer/RIA better versed in private equity and paper assets. Unlike 10 years ago, I am no longer dogmatic in my "alternative asset or bust" position. In fact, as a general rule, I have softened on many of my more emphatic beliefs. My gray hairs have now convinced me that it just makes sense to have an open mind. I still believe that alternative assets are where the life-changing opportunities are but there are other considerations such as sector diversity, hedging and cash flow. Cash flow is not what you typically think of when you think of paper assets, but it is something that you certainly can create with stocks in very unique ways that don't involve simple dividends. Andy Tanner wrote a book about this kind of investing in Robert Kiyosaki's Rich Dad series and there is really no one better at explaining it then him. So, if you want to continue to explore other ways of investing your money, make sure to tune in to my conversation with Andy on this week's episode of Wealth Formula Podcast. Buck P.S. Here's the link for the free course Andy mentions in the podcast https://cf.thecashflowacademy.com/tcfa-6sn-wf-reg

Last week I talked about asymmetric investing and gave you an example of one of my own higher risk bets—Hedera with its HBAR Token. Right now, that cryptocurrency market is still sleepy. So, if you are motivated to do so, you could easily find a few tokens that are 10 percent or less of what they cost in the frothy market of two years ago and grab them. Of course, you would want to make sure those tokens had good projects behind them first. The thing is most people won't do that. In fact, most NEW crypto investors won't come into the picture again until the next frothy market at which point, they will likely go on to lose significant money in the downturn. No matter how rationale it is to buy low and sell high, the natural human tendency is to do the opposite. The same thing really goes for all assets to be honest. The truth is that at any given time, something worth buying is usually on sale. But it gets ignored because it's not the shiny object of the day. Try not to make that mistake. The hype may not be there even for real estate right now but don't ignore a good deal when you see one. Be rationale not emotional. Now getting back to cryptocurrency, the reason I invest in it is because of the asymmetric risk profile. However, I also invest in projects that I believe in. Web 3.0 is real. It's coming and cryptocurrency is the only way I know how to invest in it as a retail investor. Artificial intelligence is also real and there is no doubt that it is going to change the world as well. Unfortunately, I don't really understand how to invest in artificial intelligence. But maybe you do? The way you figure out how to invest in technology is by understanding it and that's what my guest on this week's Wealth Formula Podcast is really good at helping you do. I've done several shows on emerging technologies and I think this week's episode of Wealth Formula Podcast might be the best one yet. So, make sure to listen in! Buck

Last week I did a back-to-school episode for you on asymmetric risk. I told you that my primary asymmetric risk related investments are in cryptocurrency. As a reminder, asymmetric risk investing means you throw in some money that, if you lose it, isn't going to kill you. But on the other hand, if things go well, could make you rich. Cryptocurrency has done both for a lot of people. In fact, in many cases it has done both to the same people at different times (yours truly included). Let's take a step back and review this whole crypto thing a little bit for those who haven't been involved in the rollercoaster ride for the past decade and a half. It all started back in 2009 with a white paper circulating amongst computer scientists authored by someone calling themself Satoshi Nakamoto. The idea was a digital currency with no central authority like the US government or some big company. This currency would be tracked not by one ledger but thousands. In keeping a "distributed ledger", there would be no need central authority. This currency would also be immutable and something that no one could simply confiscate like a bank putting a lien on your cash. This is a massive oversimplification of bitcoin and purists are sure to correct me, but that was the essence of the original bitcoin thesis. It was simply a way to exchange value without a middleman. Bitcoin has interesting parallels to gold. It requires "mining" to make it. Mining in this case requires computational power to solve math problems. Back in 2009 nerdy computer types were mining thousands of bitcoins on their desktop computers. Now it takes serious expensive hardware and warehouses to mine bitcoin. Very few people thought it would be worth anything anyway. In fact, the first commercial bitcoin transaction was made on May 22nd, 2010—almost as a joke. 10,000 bitcoin were accepted as payment for two supreme pizzas from Papa John's. Last year, the cost of a single bitcoin had exceeded $70K. So, I hope that was a good pizza. Anyway, over the next few years, bitcoin saw its ups and downs but the regression line was clearly positive and extremely steep. Within the last 5 years or so, there have been bitcoin futures and publicly traded financial products as well. It has clearly been adopted by the mainstream. And, in my humble opinion, the chances of it going to zero are about…zero. Now despite its volatility, bitcoin has been recognized largely as a storage of value. This is another parallel with gold. And also like gold, it's a little bit difficult to use in everyday transactions. You see, the bitcoin network is extremely secure but very slow (in part because it is extremely secure). It would make your morning stop at Starbuck's unbearable. Other technologies like the lightening network have offered potential solutions to the speed issue, but for now, bitcoin really is a gold-like commodity. In the meantime, tech entrepreneurs have recognized that distributed ledger technology could be used for more than just money. Distributed ledgers are now being used to create a different kind of internet—the so called Web 3.0. Web 3.0 is owned by the user. So think about internet businesses like google and Facebook now. You use them but they are being monetized by a single company that you don't own. Web 3.0, in theory, creates online businesses with similar functionality but now, instead of there being a separate owner, the platform is owned by anyone who owns a token to that business. So…no more big brother like Facebook or Twitter telling you what you can or cannot post. And you aren't making money for corporate America by using these platforms. Anyway, so all these "crypto" projects outside of bitcoin really aren't about exchanging value. They aren't really meant to be money. Instead, the tokens in these alt coins (anything but bitcoin) are more like owning stock in software companies. Some software companies like Ethereum build infrastructure. Others are more specific and build functional businesses or games using the infrastructure software. Anyway, hopefully you get the idea. Web 3.0 is coming for sure. It's just a matter of time where it just infiltrates everything you do on the internet. You may not even know you are using software built on one of these tech platforms. It will just be one more thing that makes our lives easier that we take for granted. Anyway, a lot of these new programs and services require infrastructure that is not only on a distributed ledger and safe like bitcoin. But they also need to be fast. Hedera (aka Hedera Hashgraph) was a project that I learned about and invested in about 6 years ago in a presale. It is arguably the fastest and most secure distributed ledger network in the world. It also currently has the most transactions. In all transparency, I own a fair amount of its native token, HBAR. And, I have been praying for it to explode like many lesser cryptos have for the last 5-6 years. At one point it had gone up about 5X from wh

So far in our back-to-school series, we have covered asset protection, estate planning and my capital allocation strategy. Wouldn't it be great if you could hit all these important concepts with a single investment? Well, as it turns out, you sort of can. Let me back up and tell you a story. When I was fresh out of surgical residency and started to make some money, I started looking for advice on what to do with it. One of the questions I had was about life insurance. I was a newlywed and had a baby on the way (she just started high school by the way). So, I started asking the guys I was working with if I should buy term or permanent life insurance. One of the younger surgeons was a bit of a know-it-all. He had a lot of advice about everything and most of it was not good. His facelifts weren't good either as I started revising them just a few months later. Nevertheless, I listened to what he had to say and he told me quite confidently to "buy term and invest the difference". In other words, don't buy permanent life insurance. Stick to term life insurance and, with the money you don't spend on permanent life insurance, throw it into the stock market. The older guy had very different advice. It was 2009 and he was planning to retire until the financial meltdown kicked his butt. He told me he wished he had bought more permanent life insurance because that was pretty much all he had left. And while his situation was illustrative, I felt like I needed to do the opposite of whatever this guy suggested because I didn't want to end up like him. So, I ended up buying term and didn't think about it again until a couple of years later when I had started my own practice and was making a lot of money. At that time, I was part of a mastermind with a bunch of high net worth business people. At some point life insurance came up and several of them talked about premium financed permanent life insurance policies. It occurred to me that a lot of high net worth people actually were buying permanent life insurance despite what that know-it-all young surgeon told me. Anyway, a few years later, I decided to look back into my options. What I discovered was that both of those doctors that were giving me advice viewed permanent life insurance as something that it did not need to be: a poor yielding but stable investment. The reason for that was that most professionals only get to see poorly designed policies that are primarily created to maximize commissions for those who sell insurance. What they think of as permanent life insurance is not the permanent life insurance of the rich. PERMANENT LIFE INSURANCE MEANS DIFFERENT THINGS FOR THE MIDDLE CLASS THAN IT DOES THE RICH. The policies that the high net worth group had were designed very differently and optimized for investment purposes. In fact, in the high net worth world, these policies have a special name: LIRPs. That stands for life insurance retirement plan. Permanent life insurance in this world plays a role in not only risk mitigation and estate planning, but also retirement income and asset protection. The more I learned about these strategies, the more they became no-brainers for me. The guys that taught me most about this stuff are Rod Zabriskie and Christian Allen. They designed all my policies and now design policies for many of you as our Wealth Formula Banking partners. On this week's Wealth Formula Podcast, a couple of guys from that team are going to take us through the basics. If you haven't heard about this stuff before, chances are that you are going to be blown away and wonder why you don't already own a policy. So make sure to tune in. The decision is yours, but you should at least know about permanent life insurance structures utilized by the rich. Listen NOW!

Asset Allocation Diversification and Leverage Permanent Life Insurance and the Wealth Accelerator Multi-Family Real Estate Asymmetric Investing: Taking a Risk How to Avoid Single-Point of Failure?

Zulfe Ali is a broker dealer and investment advisor—but not your run-of-the-mill type in this field. He's been in the middle of the action on Wall Street as a mergers and acquisitions guy for JP Morgan and Bank of America in the 90s and ran a multibillion-dollar sovereign wealth fund for over a decade. I've seen photos of him with world leaders like former UK Prime Minister Tony Blair and others as part of his former position. To say the least, he's not one of those 6 week course advisors out there. While he has now opened his door to individual investors like us, he is using institutional principals to help clients grow their money. As you can imagine, those principals are quite different from your typical advisor and I am happy to endorse him to anyone looking for a third-party financial advisor. Many people have asked me for a recommendation throughout the years and I have not been able to give one until now. In this episode of Wealth Formula Podcast, I speak to Zulfe about his perspective on asset allocation and the current economy. Make sure to tune in to see what a guy at his level is thinking. And later on this week, tune in for my "Back to School" episode where I give you insight into how I design my own investment portfolio. Listen NOW!

Return to Personal Finance: Estate Planning Do You Need a Will? Is the Estate Tax Stupid? Avoiding the Estate Tax

Those of you who have been listening to me for a while know that I am not really a precious metals guy. I know the arguments and I respect them. Gold has held its price over an unprecedented amount of time. An ounce of gold got a guy a nice toga and sandals in Roman times and today it will get you a nice suit and a pair of shoes. In that regard, gold has been the ultimate hedge if you are looking for wealth preservation over a thousand years. And that's what people selling you gold will tell you. They aren't lying but there is often an element of fearmongering involved in that world that I find distasteful. The thing that I don't really like about gold is that it is an asset that doesn't throw off any money. And if you are storing it somewhere it's going to cost you money to do so—kind of like real estate that has negative cash flow. With negative cash flow, leverage doesn't make sense either—not like it's available on gold anyway. So I guess my perspective is if you want a real asset that is hedged against the dollar and keeps up with inflation, why not buy real estate? In fact, if you don't put any leverage on the real estate it's pretty much behaving like gold but giving you an income as well. I remember Dante Andrade and I looking for properties for Touro and seeing Chinese buying $30-40 million dollar assets for cash. They were essentially buying a storage of value outside of China. Kind of sounds like gold, right? Except the real estate cashflowed of course. Anyway, today I'm not anti-gold by any means. I'm just not a gold bug. As for other precious metals, they often have more utility than gold so that certainly is an appealing quality. Silver, for example, is used in several industrial applications. In that sense, there may be some additional value there that could lead to price increases in the future. I'm certainly not an expert in this area though. That being said, personal finance is personal and you should hear the argument for all types of assets and make your own decision. My guest this week is an expert on silver and makes a pretty interesting case for why you might want to add some to your portfolio. Make sure to tune in! P.S. Later this week, look for another podcast as part of our "back to school series"!

I live in Montecito, CA. It's a small beach town of about 5 thousand people at the southernmost part of Santa Barbara. I moved here from Chicago in 2017 and started living here as a renter. One thing I learned over the years is that whenever I move to a new area, I always end up finding a part of town I like better so it's best not to buy right away. There was also quite a bit of sticker shock when I moved here. In the northern suburbs of Chicago where we moved from, I paid $2 million for a 7000 square foot home on 2.5 acres and an indoor pool. $2 million didn't get you much of anything in Montecito so I needed some time to digest this new reality for a bit as well. In hindsight, that wasn't such a good move. Since 2017, Montecito homes saw an average sale price increase of over 60 percent—the steepest rise in prices in California during this time. And to be frank, that number sounds a bit low to me. Covid didn't help. Rich people from LA, San Francisco and New York realized that if they had to work from Zoom anyway, they might as well do it from paradise where they could also hike the mountains and go to the beach on the same day. You know what else didn't help?... Low interest rates. However, I will say that the number of cash buyers of multimillion-dollar homes in my area is unreal. As for the rest of the country, the suburbs pretty much everywhere took off. Near zero interest rates and nowhere to go made people buy homes so they had a nice place to be all day long while quarantined. Now that quarantines are over and interest rates are high, you might think home prices would have fallen off the cliff. Nope. Remember it's all about supply and demand. Right now, supply is low. Why? Well, if you bought an expensive house at a fixed rate in the last few years would you be selling anytime soon? Mortgage rates have more than doubled. In other words, many people today could not afford the house they bought a few years ago. That's a problem across the country. As a result, supply is so low that even minimal demand is keeping housing prices high. All I can say is thank God I ended up buying a house before it got too crazy. The issues around real estate prices right now are complex but worth understanding. My guest on this week's Wealth Formula Podcast is an economist who specializes in these specific issues. Make sure to tune in and see what she has to say about this very unique time in real estate history.

I don't know about you but my kids are about to head back to school. In this spirit of that, I thought it might be nice for us to get back to basics as well. For the next few weeks, I will be releasing at least one podcast that involves the basics of personal finance in addition to whatever else may be on the docket. This week's back-to-school episode is about asset protection and my guest is Doug Lodmell. Make sure to tune in and let me know if these shows are helpful!

I have a medical degree and am a former board-certified surgeon. Yet that is not my identity. My identity is that of an entrepreneur and investor. This is an identify for which I did not go to school. Without trying to sound dramatic, I was born this way. I think it's a genetic thing. You see my dad came to this country in the late 1960s and trained as an engineer. He eventually got caught doing real estate on the job and got fired shortly after I was born. That's sort of my story too—I was working at a cosmetic surgery company while planning to start my own company. When they found out, they perceived me as a competitor so they fired me. The apple does not fall far from the tree I guess. He went on to a career as a real estate entrepreneur and continues in that endeavor even today into his 80s. Despite my detour into the surgical world, I too have spent the majority of my life as an entrepreneur. It wasn't a choice. It was in my nature. I am unemployable. I hate having to answer to others and I despise hierarchy—unless I'm at the top. That's why I am a business owner and not an employee. Again, to be clear, I don't think there is anything wrong with being an employee. I just am not built that way. Now, in my case, I had the daredevil instinct to start businesses from scratch. Some of my business ideas failed and some were wins. The good news about being an entrepreneur is that you just need a few big wins. Now if I did not have daredevil entrepreneurial instincts would I have been able to be a successful business person? Yes, but I don't think I could have started businesses from scratch. But that does not mean that you have to have to be born an entrepreneur like I was. It just means that you might want to find a more structured way to get into the arena. Buying a business is certainly an option. I will say that when you start a small business you get suspicious of buyng other small businesses because you know that somewhere in your own business there is a closet full of skeletons. When you buy a business, you don't know where that closet is. That closet often has all kinds of secrets. For example, it may tell you who the key people are that make or break that business. What if those people leave when you buy the business? The only way to avoid buying a business with such an Achilles heel is to buy one of sufficient size that can't rest on just a few shoulders. But not all of us can afford a $50 million business with an executive team in place. That's where franchising might make sense. The value proposition of a franchise involves having the playbook on how to successfully run a business with the backing of a larger entity behind you. In theory, this should provide you with play-by-play directions on how to start and run a successful business. In addition to guiding the less business inclined into ownership, franchises may also provide some level of risk mitigation to people looking for business opportunities but reluctant to deal with the unknown variables of business ownership. That said, it is not without a price. Franchise fees are real and must be weighed into the entire equation. My guest on this week's Wealth Formula Podcast helps people navigate the world of franchise opportunities and is a great resource for those interested. I should point out that I have no financial relationship with Kim nor have I found franchising suitable for myself at this time. But it might be for you and you should certainly know a little bit about this option. So tune in!

It turns out that the conversation about getting out of fossil fuels and into green energy is a lot more complicated than just energy. Of course "black gold" has literally fueled our society into its wealthiest state since the beginning of man. No one argues that. But there is a clear movement globally to try and move to clean energy for the sake of the environment. Beyond energy, however, oil plays a pivotal role in the manufacture of several products that we rely on in our daily lives. For example, the petrochemical industry heavily depends on oil as a raw material. Petrochemicals derived from oil and natural gas are the building blocks for a wide range of goods from plastics to resins, synthetic fibers to rubbers, detergents to adhesives, and even solvents. Without these materials, you wouldn't even have the materials to make the computer or smartphone you're using to read this email. Right now, we literally need oil to live. Many pharmaceuticals such as aspirin and the coatings on time-release pill are made from oil derivatives as are artificial heart valves, artificial limbs and even contact lenses. I could give you a myriad of other products that rely on oil but suffice it to say that life without these products would not be the same. Does that mean that we should give up on alternative energy? No. We should always be looking for cheaper and cleaner alternatives. The point is that to truly get off fossil fuels we also need to start thinking about alternatives for all of the products that rely on oil as well. It's an underappreciated problem that my guest on this week's Wealth Formula Podcast addresses and it's worth your time to understand the full scope of the issue. Listen Now!

It has been a tough year for real investors. Inflation and interest rates have created distress and uncertainty. But let me remind you of a few things. Investing isn't for the faint-hearted. EVERYONE loses at some point. The idea that you can always win is a fallacy. Of course everyone would agree with that statement rationally. However, our brains are not wired to think rationally in stressful times. It's a tall order. There is a concept in psychology called "loss aversion" that means we are wired to fear loss more than we desire gain. So if you have an investment go bad in a distressed market, you might let the fear of future losses prevent you from investing in an asset that might create significantly more gain down the road. The Chinese word for crisis is the same word for opportunity. When there is blood in the streets, you want to activate your instincts as a predator more than that of the hunted. That's something all the world's greatest investors will tell you. And by the way, those investors have all lost money at some point in their life. Go back to basics. Why do you invest your money rather than leave it in the bank? I invest my money because leaving it in the bank is a way to guarantee loss of purchasing power. Think about it. Last year, inflation soared over double digits. Did you get even 1 percent return on the money in the bank? Money in the bank guarantees a loss of real buying power—double digit losses over the last year. Why do you invest in real estate or other alternative assets instead of only a portfolio of stocks, bonds and mutual funds? I invest in alternatives because they can result in extraordinary returns. I have experienced that over and over again and taking some losses now is not going to change my view of investing in the future. I stand by the notion that no one ever gets rich with a portfolio of stocks, bonds and mutual funds. At best they are going to preserve your wealth with modest growth. I'm willing to take a little bit more risk for the larger reward. So far it has paid dividends. The point of all of this is to say that decision making in personal finance is like anything else. The hardest part of it is to stay rational and not let fear or other emotions cloud your thoughts. My guest on this week's episode of Wealth Formula Podcast knows a lot about making decisions under duress. He's a fighter pilot who has had to think clearly to avoid imminent death. And well…it's the same type of thinking you are going to need to do if you're going to make money as an investor in this unpredictable world. Listen to the interview NOW!

I was in high school when the Berlin Wall came down. The ensuing decade was really like no other I have experienced in my life. It was the 1990s. There was no more cold war. Decades of fear of nuclear annihilation vanished into thin air. And 9/11 had not yet happened so we did not yet know the new world of terrorism. It could be that I was young and stupid but life seemed good. The news of the day was about Monica Lewinsky's stained dress and political conflict seemed ludicrous but benign. Back then, I used to think that the world just got better with time. But in the last 20-30 years I have realized that it's actually more of a pendulum. There is no doubt that we now live in turbulent times. The country is horribly divided to the point where rational individuals have brought up the idea of a national divorce. Ronald Reagan is rolling in his grave. Nevertheless, as crazy as these times may seem, we should keep in perspective that we have seen worse before. In 1861 we actually did have a civil war. As for cultural wars. Well, all you have to do is go back to 1968 to see that what's going on now is actually pretty tame. Of course, I don't need to tell you that the United States has had numerous economic booms and busts throughout our history. Bottom line is that history does not repeat itself but it certainly does rhyme. My guest on today's episode of Wealth Formula Podcast is an esteemed historian that has recognized specific historical patterns and suggests that they are highly predictable. So what's next for the United States and its economy? He thinks we are in the final stage of an 80-year cycle. Find out what that means for you on this week's Wealth Formula Podcast.

Shownotes: 0:00:00 - Advancements in Cancer Detection Technology 0:00:35 - GRAIL Galleri test 0:02:11 - About Dr. Josh Ofman 0:05:14 - Cancer really is a disease of the genome 0:12:35 - Various guidelines for early detection of certain cancers 0:16:45 - Cancer Detection in Blood Biology 0:19:03 - Cell-Free DNA 0:23:38 - How many cancers is the GRAIL Galleri test able to detect?

Why is financial education not part of our school system? To understand that, you have to understand where our school system came from. Our educational system started during the industrial revolution and was influenced heavily by the Prussian system. What do you think of when you hear "industrial revolution?" I think of factories and conveyor belts. This was a time of massive production gains in the United States and a fundamental change in the way we live. So not only did businesses need to produce more products with factories, but they also needed factories to create people to work in those factories. Schools became factories for people. Students were treated like products on an assembly line, all learning the same thing at the same pace, much like widgets rolling off a conveyor belt. The rich business owners were the beneficiaries of this system. They got a workforce ready to fit into their industries, and these workers were less likely to question or challenge the system because that's not what they were trained to do. Despite the fact that we have moved beyond the industrial revolution into the information age, the old education system remains. Lots of standardized tests, rote learning, and teachers seen more as authorities than guides. Now, ask yourself why financial education isn't part of our school system. It becomes pretty obvious doesn't it? Why would a system designed to create a workforce teach them about money? After all, financial independence doesn't exactly incentivize someone to continue working. My guest on this week's Wealth Formula is a young woman trying to change the system. It's clearly an uphill battle but make sure to listen and hear how she's planning to do it.

This week's podcast is about energy. But before we do that I want to comment on a few things about our investing ecosystem. A decade ago when I first started playing around with this podcast concept I was very excited about a whole new world of investing that I was learning about. Why invest in the stock market if you could invest in real estate, oil and gas and other businesses that seemingly made a lot more money and had a lot less risk? A decade later, I can see why it often makes sense for people to just buy ETFs and call it a day. Or, maybe a highly stable asset class such as permanent life insurance i.e. Wealth Formula Banking. Private investing can be very lucrative, but it's not regulated so it attracts all kinds of nefarious and/or incompetent characters to the space. Retail (mom-and-pop) investors are particularly vulnerable to these people because they tend to have less financial sophistication. That's not to say they aren't intelligent. It's just hard to be a full-time professional and a sophisticated investor at the same time. That gets a little dangerous because personal finance podcasters like me are looking for content. We see ourselves as providing education and entertainment when in fact we often inadvertently endorse individuals to whom we should not give a platform. I have to admit that I have been guilty of this myself. Especially early on, I would interview anyone with an interesting idea without considering that my listeners might take the interview as a stamp of approval from me. For example, despite my own vehement and vocal dislike for investments in oil and gas drilling, I've given a platform to people on my podcast who were raising money for that. People in our community lost money because of that. For that, I apologize. In recent months, retail investors in this space have been hit especially hard. The SEC has shut down funds in the carbon capture and cannabis spaces that appear to be based in some level of fraud and other funds have simply collapsed based on poor business plans that were never attenable in the first place. Fortunately, our group was able to dodge these schemes. It's hard enough to invest without swimming with sharks. Case in point…my real estate portfolio and that of my investor group absolutely has some losers in it right now. Much of that is due to an unprecedented slope of rate hikes and unexpected price escalations in such things as materials, property taxes, and insurance. But it's not because of fraud. In investing, you can't always win. You just need to win more than you lose. At the end of the day, my own investments are still going to net out quite profitably. I've borrowed from traditional investing paradigms and "volume-averaged" into a lot of different assets. I've stuck to a plan over several years that will, fortunately, overcome some setbacks and I will now position myself to be opportunistic and take advantage of oncoming distress. It will get ugly and most will be too scared to take action—especially if they have suffered losses. But that's exactly when you want to be greedy, not afraid. But going back to how we can move forward in the safest way possible, we do need to be proactive in risk mitigation—especially when it comes to avoiding scams. So what am I going to do? 1) I will not interview anyone actively raising capital unless I am personally involved in the operation in a position of transparency. 2) Our Investor Club will only present opportunities in which I am a managing partner and/or which has undergone due diligence by a third-party SEC registered broker-dealer. In taking these steps, my podcast itself does become a little bit more challenging. As you may have already noticed, we have shifted to more macro issues than investment-related topics. However, I also believe that the steps we are taking with the podcast and with the investor club will provide our group a "best in class" retail experience that involves institutional-level due diligence. It will be more complicated and challenging to execute but that's what you deserve. Now, getting back to this week's episode of Wealth Formula podcast. We are going to talk about oil and alternative energy sources at the macro level. It's information that you need to understand the larger global financial picture today so make sure to tune in!

What a crazy ride it's been. Despite Covid, plunging interest rates actually made home prices explode to new highs. In my own neighborhood, housing prices doubled. Then it started to look like the housing bubble had started to burst. There were mortgage companies in distress and laid off thousands. Economists warned the next housing recession was upon us. It all made sense. How could such a wild ride not end with a hangover? But then a funny thing happened. For the last few months, housing prices actually started creeping up again. They aren't going up by much. But the big thing is that they're not going down. A lot of this is really due to reduced inventory. People who were going to sell their homes, most likely sold them as they saw their largest asset bubble into a pile of potential cash. With less inventory bidding wars are helping to push prices up further. In fact, Zillow predicts home prices will keep rising in 2024. Obviously a lot of that will depend on what the Fed does in the next few months. This is tricky stuff to predict. My guest on this week's Wealth Formula podcast is using Big Data to make his own predictions. Listen now to hear what he has to say.

Last week I called the economy schizophrenic. Actually, that's an insult to schizophrenics. This is simply a dysfunctional economy. It's the product of a good idea called capitalism with excessive intervention—namely by the Federal Reserve Bank of the United States. Today's economy reminds me a little bit of the movie, Jurassic Park. Altering the natural order of things has unexpected consequences… like a T-Rex eating you alive. Similarly, the Fed printed money for years and kept interest rates at artificially low levels—even when it probably didn't need to. Sure, raising rates 10 years ago might have caused a little recession along the way, but that's NORMAL. Instead, they decided to take intervention to a new level. Rather than seeing the role of business cycles in a healthy economy, they became reactive to equity markets. To be clear, keeping equity markets in a bubble has never been a mandate of the Federal Reserve. But there they were. They would threaten to raise rates, the markets would panic sell and then the Fed would quickly back off. The Fed was playing a game of chicken with investors and the investors won over and over again—so much so that people began to believe that the Fed wouldn't ever let the markets go into free fall. Then Covid happened and, with it, something unprecedented. True helicopter money was released into the hands of ordinary Americans by the United States government. You see when the Fed prints money it lands in the arms of banks who would simply hoard it. This time, things were different. People needed the money to eat so the government put it into their hands. And that, along with high demand for goods because of a crippled supply chain lit the fire of rapid inflation—the worst we have seen in 40 years. Of course, somehow the Fed didn't realize that it was real at first and didn't act quickly. In hindsight, gradual increasing of rates would have made sense and probably prevented the need for extreme measures. Instead, it waited for things to get out of hand and then put its foot on the gas like never before. Now we are sort of in no-man's land. Inflation seems to be getting under control. There is some distress in the economy as seen by bank failures and corporate bankruptcies at 2010 levels. The commercial real estate markets are a mess. But…we also added 339,000 jobs last month. Why? I don't know other than to guess it has something to do with optimism that the Fed will change course and become Dovish with rates. In other words, businesses may not believe that the Fed will let things get that bad before they reverse course and start cutting rates. It reminds me of a spoiled child who knows that if he whines long enough his parents will give in. It's not the kid's fault that he behaves that way. It's the way the parents taught him to behave. Similarly, businesses and investors don't really believe the Fed when it says enough is enough about low rates and money printing. I'm not sure that I do either. So, that's this non-economist's take on what's going on with the economy. There's a good chance that I have several flaws in my argument but, as I've said before, I'm trying really hard to make sense of it so I can move forward. Richard Duncan is a real economist—one who recently spoke to Congress on what he believes needs to be done to move America ahead. He has some pretty good ideas about what's going on with the economy now that I think will be useful to you. Listen to my interview with him on this week's episode of Wealth Formula Podcast!

I am annoyed with this economy. That doesn't seem like a very professional thing to say but I don't know how else to express my feelings any better. You see, nothing really makes sense. Inflation has been as high as it has been since the 1980s. At first, the Fed didn't think it was real and then reacted by increasing interest rates at the fastest rate in American history. Businesses are feeling it. Corporate bankruptcies are at 2009 levels likely in response to illiquid lending markets. The commercial real estate market is paralyzed with blood starting to seep through the streets. But…last month's jobs reports showed that we added 339,000 jobs significantly exceeding expectations. WTF? It makes no sense at all. Why is the jobs report important for us? Well, because that's one of the variables that the Fed is looking at as they decide what to do with rates going forward. Inflation is down to 4 percent which is starting to feel comfortable, but a jobs report like that is going to give the Fed pause on being dovish going forward. So, I have no idea what to expect next. And if I have no idea what to expect then other businesses and investors are likely equally confused. And the problem with that is that uncertainty is what the markets hate the most. So…that's where we are at and that's why I am so annoyed. This week on Wealth Formula Podcast I interview an economist who teaches entrepreneurs. He's written a book on how we can start looking at the economy in a practical way. His perspective is a little different than the academics who run the Fed and it will be worth your time to hear what he has to say. Listen NOW

There is a significant amount of distress in the investor world right now. With inflation and interest rates climbing quickly, it has left the equity and real estate markets in shambles. We will get through this. And while I encourage you to fight against the fear of investing so that you can take advantage of oncoming blood in the streets, I understand if you are reluctant. We've had tough times in American economic history. The Great Depression of the 1930s was a period of extreme economic hardship and uncertainty. It started with a stock market crash on Black Tuesday, October 29. The Dow Jones Industrial Average lost about 12% of its value that day. The crash continued into the following weeks. By mid-November 1929, the market had lost over $30 billion in value (approximately $400 billion in today's terms). This loss of wealth led to reduced consumer spending and investment, which in turn led to job losses and business closures. Real estate prices also fell significantly during the Great Depression. Many people were unable to afford to keep their homes or buy new ones, leading to a surplus of available properties and a corresponding drop in prices. However, life insurance companies displayed a surprising level of resilience during the Great Depression. While it was a challenging time for these companies, as it was for the entire economy, they weathered the storm better than many other types of businesses. For this reason, an entire generation of individuals put a premium on permanent life insurance as an investment. It was all they had left once the dust of the Depression had settled. Nevertheless, the next generation of Americans forgot about the depression and the value that permanent life insurance had played in their parents' survival. Even with insurance strategies that significantly increased investor returns, financial advisors focussed on their personal AUM continued to treat it like a red-headed stepchild. As you may know, I am an advocate of permanent life insurance, specifically overfunded type policies such as Wealth Formula Banking and Wealth Accelerator. They have been a source of profitability and stability for me. Even in times like now where my portfolio has taken such a beating, I can count on the insurance portion of my net worth. As I thought about that last week, I decided to bring it back on your radar so I invited our insurance partners back to the show. If you haven't yet secured permanent life insurance as part of your portfolio, you will want to make sure you listen to this week's episode of Wealth Formula Podcast.

With rising interest rates, I keep getting questions about whether value-add real estate is dead. The answer to that question is a firm no. Remember, people have made money and lost money in all kinds of interest rate and cap rate environments. The interest rates we have right now aren't even close to the highest they have been in the United States. So why is there so much distress in the real estate market and all other correlated markets then? The biggest problem that the Fed has created for us is that they did not react to inflation fast enough and so it got out of hand. They ended up having to play catch up and raise rates at the highest slope in American history. All markets hate instability and extremely rapid rising rates wreak havoc on all of those markets that we typically rely on for investments including real estate and equities. This is particularly problematic for floating rate scenarios and for businesses that need liquidity. Banks don't like to lend when rates are moving up quickly. The truth is that I don't know anyone who hasn't lost money during this period of time—whether that be in real estate or stocks. That doesn't mean it feels good although misery does love company. The key, as I will continue to emphasize, is to be prepared to mentally cut against the grain of fear. Investing money while you are down is extremely counter-intuitive to the human psyche. Fear is designed to protect us. If you were running from a lion, you wouldn't be inclined at that moment to consider how you might avoid running into one in the future. You would be focused on the danger at hand. That reaction of focusing only on the danger might be useful in the wild. But when it comes to investing, it could prevent you from keeping your eyes out for great opportunities. While they might not be here yet, be prepared mentally. These are the times when investors with ice in their blood make a lot of money. Use this time to get the rest of your house in order. Get your asset protection and estate planning in place. Start learning about other sectors. The truth is that there is almost always something to invest in if you know how. How about tech? How much do you know about artificial intelligence? Probably not much. I don't either. But it's clear that this is going to be life-changing technology for better or worse so maybe we can make money off of it. Today, we are going to spend some time talking to an expert in artificial intelligence. I urge you to listen to this episode. I learned a great deal and it opened my eyes to its potential. Listen HERE

This week's Wealth Formula Podcast features me trying to answer your questions. Make sure to tune in as I try to answer questions about interest rates, the state of value add real estate and Central Bank Distributed Coins! Listen HERE

Joe Biden says the economy is "strong as hell" but he's wrong. Interest rates increasing at the steepest slope in history over the last year have caused a serious problem for the economy and hell is about to break loose. I'm not the zombie apocalypse type but I have seen some shady-looking dead people walking around with silver dollars in my yard and I am a little concerned. Bankruptcies are up 216 percent on the year, higher than the 2008 crisis and double that during the Covid lockdowns. This is before a recession has even been declared. Banks aren't lending. Much like they did in 2008, they are sitting on bailout money. Not only does this cause bankruptcies but it also keeps healthy companies from thriving. The Federal Reserve has really screwed us and it could take a while before we dig ourselves out of the impending mess. It doesn't help that the current administration appears blind to the problems that we face. We as real estate investors are not immune from the carnage. We rely heavily on debt and those rates have made the markets illiquid and have significantly affected property values. So we need to come to grips that there is a good chance many of us are going to lose some money soon. I know I have already. But it is important to put things in context. The ride up has been fun. Anything people bought and sold between 2009-2021 invariably was a win. But that's not how markets work. Everybody loses sometimes. The key is understanding that to get ahead you have to win more than you lose. That means learning lessons when you lose and also not giving up. In other words, just because you lose some money in this market doesn't mean you don't prepare yourself to take advantage of the same set of facts on the buy side. That would be a mistake. Nothing that happens in the next year is going to kill you. Don't lose sleep over it. This too shall pass. My guest on Wealth Formula Podcast this week has thought and written a great deal about the psychology of investing and retirement. Listen to this interview as it may help you to navigate the headwinds before us.

I was a surgical resident for years. I started out as a neurosurgeon, moved over to Otolaryngology Head and Neck Surgery then ended up in cosmetics. During my training, it didn't matter how much I worked. I would always get the same paycheck. I wasn't lazy but I certainly didn't enjoy working for what amounted to minimum wage. And I was not about to volunteer for any more work than I was assigned. Eventually I did finish training and I was hired by a facelift company. I know it sounds kind of weird but they would recruit patients with questionable marketing tactics and hired an army of young surgeons to do the work. I got paid about 15 percent on revenue I generated for the company. They didn't charge as much as your typical facelift surgeon, but because I was doing 3-4 facelifts a day, it turned out to be really good money. For reference, my most recent job was as a chief resident in San Francisco for which I was paid $50K per year (that's poverty in SF). The day I became a capitalist was the day I got my first real paycheck. In two weeks, I made more than I did in my entire surgical internship year. It blew my mind. Suddenly I realized that the harder I worked the more money I could make. And that made me work really hard! Suddenly, I was more than happy to put in long hours. I enjoyed doing the procedures and I was good at it. But I also liked the idea that my work was getting proportionally rewarded with dollars. There was a noticeable change in my spirit. Even though I didn't own the place, I cared about the office and wanted to make sure we were doing a good job. I took ownership and that mattered. After all, in the history of the world, no one ever took a rental car to the car wash. Of course, like all entrepreneurs, I eventually realized that there was an even better way to make money than getting paid for the amount of work I did for the business—own your own business. I went on to start multiple businesses and the rest is history. But the moral of the story is that opportunity for those who have talent and work hard is endless in our country and getting paid for the first time gave me my first taste of that. Anything that threatens that reward system threatens the very core spirit of who we are. Of course not everyone shares my views—especially these days. And it's not always as simple as perhaps I make it sound. We still need to take care of people in need and we still need to provide opportunity for the underprivileged. This became even more evident during Covid when people simply couldn't work. But I fear some of the remedies of a difficult time have permanently altered our culture. After all, it is difficult to take things away from people after you give it to them. My guest on Wealth Formula Podcast today was right in the middle of policy making during the Covid crisis and was making decisions like what to do about people who couldn't pay their rent. What makes his perspective interesting is that he is a libertarian who works for a libertarian think tank. Find out how a small government guy navigated the biggest government intervention in American history on today's economy on this week's Wealth Formula Podcast!

When I was a kid, my dad deposited $1,000 for me and my two siblings at a local bank. I'm not exactly sure why he did that, but what I do recall is that my older siblings showed me that I could go into the bank every couple of months and ask for "interest." I remember being about 7-8 years old and riding my BMX bike to the local bank with my bank passbook in hand. For those of you who remember, the passbook was kind of like a passport with your bank information. Every time you made a deposit or withdrawal, they would put the record in there. This was the early 1980s, and interest rates were exceeding 15 percent. Now I don't know exactly what my rate was, but I do remember coming out of that bank with serious dough—like 20 bucks at a time. To celebrate, I'd cross the street and get myself a 99-cent McDonald's cheeseburger. Times have changed. No more passbooks, and I doubt the bank would let my 8-year-old daughter walk in and ask for the interest on her account. In fact, they would probably laugh at her and tell her that banks don't pay interest anymore. But wait…should they be? Back in those high-interest days, people were getting 10 percent interest on their money and living off of it. Of course, for the last several years, we have been accustomed to near-zero interest rates. It was great for taking out loans but not great for deposits. The thing is that now interest rates have risen back to levels more consistent with historical levels, and banks really ought to be paying us more interest. They know that. But as my buddy Peter Arts recently pointed out to me, they aren't going to offer it to you unless you ask. Pete's my old neighbor in Chicago and knows the banking system as much as anyone else. He's getting over 5 percent on his money sitting in the bank, and he says we should be too. Simple tweaks to make you thousands of dollars per year sounded like a great reason to interview him for this week's Wealth Formula Podcast. Not listening to this podcast could literally cost you tens of thousands of dollars, so make sure to tune in!

I used to be a guy who prided myself on being a minimalist. Despite doing pretty well for myself financially, I drove the same 2007 Prius I bought the day after residency until just a couple of years ago. My clothes often didn't fit and I never shaved. Oh yeah—I was about 25 pounds heavier because I didn't really care how I looked. I also didn't really spend much on vacations or special events— I used to just blame that one on parenthood. It's funny because I sort of took pride in my rejection of material possessions and my frumpy looks. I was sort of giving society the finger. Then all hell broke loose: namely the beginning of Covid lockdown and the end of my marriage. They kind of happened at the same time so it was a little rough. Confused and disoriented, I didn't know what to do so I just began to hike the beautiful mountains in Montecito. It reminds me of the movie, Forrest Gump, where Forrest just decides to run one day and keeps going back and forth across the country until he seemed to figure something out. I hiked so much during those days that I pretty quickly shed most of my extra weight. Meditating on my life through those gorgeous trails every day made me see myself for what I had become: kind of repulsive. Ok, so maybe that sounds a little harsh but that's the way I saw the old me. I needed to update my self-image for myself. It started out with the material things. I bought that Italian sports car I always wanted. I bought clothes that actually fit me and that were younger than my children and I started to take my health seriously. Oh… and I started shaving every day. They say the Chinese word for crisis is the same as the word for opportunity. Well, I took this crisis as an opportunity to overhaul my life and to start over. In starting over, I became acutely aware of the time I had wasted not living the life I want: material or otherwise. I just didn't want to spend the money. But why wasn't I spending any of this money that I was working so hard to make? After all, I can't take the money with me after I'm gone. I'd already done a good job of setting my kids up with assets and insurance. Why not spend on me? Well, that's what I started doing! And I have to tell you it's a lot more fun than the alternative. And maybe I'm spending too much now, but I also have a lot of time to make up for. So now I'm buying the stuff I want and also living a life full of new experiences. The funny thing is that this was supposed to be about me, but I found that this change has also been great for my daughters as we now travel more and go to a lot of cool events. So why do I bring this up? Well, a couple of months ago, a friend and WF listener texted me and suggested I read a book by Bill Perkins called Die with Zero and it seemed to encapsulate so much of my new ethos that I wanted to share my thoughts on it with you. So I grabbed a couple of familiar faces to do a little book club on this week's Wealth Formula Podcast. Make sure to tune in!

Government is a funny thing. It is an organization that makes and enforces rules and regulations. The more rules and regulations it makes, the bigger it gets. It's a monster. Government is also a significant employer that doesn't seem to care much about being lean and profitable. Instead, it thrives on making itself even bigger and creating more things to control. But as the government starts to infringe on people's perceived personal space, people start to push back and that is the only force that resists this monster's thirst for power. Make no mistake, during these times when governments are held in check by their people, the monster's appetite for power and growth does not go away. It lurks in the background waiting for its opportunity to pounce. That opportunity comes when people are at their most vulnerable—in times of crisis. When things go south, people are willing to give up more of their freedoms in exchange for stability. Governments are more than happy to oblige. Just think about some of the crises in recent history and the government response to those events: The Terrorist attack of 9/11, the 2008 financial crisis, Covid, and the Silicon Valley Bank failure. In each situation, the government found an opportunity to change the rules and obtain more control. This playbook isn't just a conspiracy theory. It's just how things work. Mainstream government figures will tell you the same as you'll find out in this week's episode of Wealth Formula Podcast. Listen Now!

You know the old saying coined by Ben Franklin, "Nothing is certain except death and taxes". Longevity science might eventually prove that death is not inevitable but for the time being it is. As for taxes? Well, I've spent a lot of episodes talking about tax mitigation while you live and I know for a fact that a number of you are legally not paying income tax. (HINT: REP) But there's another kind of punitive tax called the estate tax (aka death tax) that kicks in when you die. The death tax is sometimes also referred to as the "stupid tax" because it has been creatively dealt with by savvy estate attorneys for years. They would tell you if you died with a ton of money without this kind of planning you might have been kind of stupid. All of this stuff might seem a bit too sophisticated for your situation if you are not in the ultra high net worth crowd. After all, doesn't that estate tax thing kick in at $25 million if you're a married couple? Well…for now, yes. But various tax laws are changing and that amount gets cut in half in just a couple of years. Do you think you are likely to have an estate of greater than $12.5 million ($6 million if single) by the time you die? If you listen to my podcast then there is a good chance the answer is yes. In other words, don't think that the world of irrevocable trusts and gifting does not apply to you because you aren't worth that much today. It's probably a pretty good idea for you to at least know your options. Even if you believe you will never get that wealthy, there are some things that pretty much everyone should do when it comes to estate planning. These things are inexpensive and only have to be done once. Whichever camp you fall in, this week's episode of Wealth Formula Podcast will be of interest to you as I interview my own estate planning attorney, Joe Longo. This topic might not sound sexy but I'm quite sure you will find this interview to be extremely useful and pragmatic. Make sure to tune in!

I have been at this alternate investment game since I finished surgical residency in 2009. Luckily, since then my wins have significantly outnumbered my losses and I have made a lot more money than I ever did as a physician. But It hasn't always been smooth sailing. The first apartment building I bought for myself in 2010 was a big flop. Why? Well, I knew how to do real estate from reading lots of books and crunching numbers, but I didn't really know how to not get bamboozled. Let's just say the seller in that first deal was creative with his financials and I didn't anticipate blatant fraud while I was doing my due diligence. I should have known better than to buy in a D-class South Side Chicago neighborhood anyways. I lost $300K when I sold that building but it was a tremendous relief to get it off my hands. Sound horrible, I know. But frankly, the amount I learned by experiencing my own personal real estate horror story was priceless. Since then, I've never lost money on any apartment building. When I started investing in assets as a limited partner, the skill set for success was different. Early on, I was given some reasonable advice: Only invest with those who you know, like and trust. That's not terrible advice but what I've realized over the years is that it is incomplete. There is a lot more to investing than to know, like and trust the operator. For example, you may know, like and trust your brother-in-law who is starting out in real estate syndication. But that doesn't mean he knows how to operate a multimillion-dollar asset. He may give it his best shot but that doesn't make him competent and certainly does not put your investment in good hands. Know, like and trust is only useful to the extent that it should give you some confidence that someone is not trying to rob you (on purpose). After that, you have to do your own research. Ronald Reagan used to say, "Trust…but verify". You can trust the operator but you still need to verify their competence. Ask a lot of questions. Look at the qualifications of the team to carry out the business plan put forth and be cognizant of the operator's track record. If you do all of these things, you will minimize your risk of disappointment. I say minimize because there are no guarantees in the world of investing. In competent hands, real estate will provide a profitable outcome most of the time. But not always. So what is an alternative investor to do? The task of vetting where you deploy your assets may seem both critically important and daunting. So, what are your options? Well, you could give up and invest in Vanguard ETFs. If you do that, you might be able to preserve your wealth but you aren't going to get wealthy. Alternatives create wealth on a regular basis. So what else can you do to maximize your chances of success? I have said this before but will say it again—there is great power in collective intelligence—especially if people bring different skill sets to the table. At the very least, creating such a tribe of like-minded individuals will help to pool the right questions to ask about any opportunity. So how do you put together a tribe? After all, chances are that your friends and family are not into this stuff. If they are, you are all set. Otherwise, you may need to go to some in-person meetings like our Wealth Formula Events and network with others of like mind. The concept of tribe is really important in alternative investing. My guest on this week's Wealth Formula Podcast created a business to help various tribes to deploy capital in an efficient way. Make sure to listen in for some ideas on how you and your tribe could use these tools!

I am going to keep this brief because I have a cold and I don't want to subject you to Sudafed altered commentary. This week's Wealth Formula Podcast features an interview with Jay Parsons who is Chief Economist at RealPage. He is an authority on topics affecting multifamily apartments which, of course, is of significant interest to us all. The picture that he presents is one of transition. The short term is consistent with what we are already experiencing…pain. But as I said last week, there seems to be an undercurrent of optimism for the near future given the significant interest from big money to invest in apartment buildings. I was encouraged to hear what Jay had to say and I think you will be too. Let me know what you think!

The Fed just raised rates another 25 basis points despite global banking instability and investor angst. This wasn't a surprise. Curtailing inflation continues to be their primary motivation. How long will the Fed continue to raise rates? Well, inflation has to be clearly under control and/or there must be something else that happens that threatens the global economy. Isolated bank failures remedied by corporate takeovers do not appear to be threatening enough. So what is it going to take to get inflation really under control? I hate to say it but it's hard to see inflation getting under control without increasing unemployment. You see, the economic pain is shaping up to be a top-down phenomenon. Every day people have not felt the pain yet so they have not curtailed spending. When people either lose their jobs or start worrying about losing their jobs, inflation will finally be curtailed. Until this happens, expect more of the same. The investor class is going to feel more pain. But as I've been emphasizing in recent podcasts, with pain comes opportunity and I continue to believe that is what we will see in the latter half of this year. In this week and next week's podcasts, you will hear a similar theme that should make you feel somewhat reassured if you invest in multifamily real estate. The common theme is that multifamily assets are favorable in down economies and that these assets have become a darling for large investors and institutions alike. On this week's Wealth Formula podcast, I interview Harry Dent. Harry is a really interesting guy. In recent years, he has been pretty pessimistic about the economy. And now, he's raising even more red flags. But again, pay attention to what Harry thinks is going to happen with the economy as a whole and also his take on multifamily real estate. Harry is also famous for his economic forecasts based on demographics which I find fascinating. It's definitely worth a listen. Tune in now!

Oh what a mess this economy is! Helicopter money during Covid and supply chain issues brought on inflation like we haven't seen in decades. To respond to this self-inflicted predicament, the Federal Reserve began raising interest rates at an alarming pace. Never have we seen interest rates rise at this steep of a slope—even in good old Paul Volker's days. Inflation has been going down for several months although the most recent CPI figure is still 6 percent. That is well above the 2 percent target the Fed has had for years. That's why Jerome Powell was so hawkish last week about continuing to raise interest rates aggressively. They could do that without worry if nothing bad happened. But in the last week, something broke. Specifically, we saw bank failures of two regional banks. They weren't doing anything nefarious. In fact, they seemed to be doing what they were supposed to do—investing in conservative bonds that became worthless as interest rates rose. Things are moving quickly now. By the time I release this podcast a week from now, things could get a lot worse. So now, the Fed is in a pickle. Usually, when something "breaks" like it did, that is a signal for the Fed to back off its hawkish stance. But with inflation still at 6 percent, that isn't exactly an easy decision. So what do I think is going to happen? Well, whether or not rates go up at the next meeting is irrelevant. Unless there are other signs of systemic weakness too hard to ignore, the Fed will continue to raise rates until inflation is tamed. That is going to result in a lot more destruction to the economy than we see now. We are hearing all about banks right now but the real estate market is also about to see a reckoning. I do believe within the next few months, there will be the proverbial blood in the streets. In that process, it is quite possible that you will lose some money. However, the most important thing is to keep a level head. You see, it is in times like these that the most money is made. Those who are paralyzed with fear will lose out. Those who act rationally will win big. A buyer's market in real estate will be here shortly. This week on Wealth Formula Podcast, I speak with Jorge Newbery about the real estate and debt markets. Make sure to tune in!

If you want to build wealth quickly, you have to learn as much about tax mitigation as you can. Most of these mitigation opportunities are in the world of real estate and business. However, there are creative (and legal) ways to mitigate taxes for W2 employees as well—just not that many. And sometimes it's not obvious that, despite a very attractive tax benefit, you should probably stay away. I learned that the hard way by investing in oil and gas multiple times. Oil and gas drilling comes up often for high-paid W2 employees because of the compelling ability to deduct most if not all of the investment in the first year. The problem is that oil and gas investing, by nature, is quite risky. After all, you're essentially a speculator hoping your team hits a well. Oil and gas is also ripe with fraudsters and charlatans I have learned. Unfortunately, after multiple investments in oil and gas almost a decade ago, I have yet to get even close to recovering my money on any of the investments. I stopped investing in oil and gas years ago and now have stopped even interviewing anyone in that space. You're better off paying the tax in my opinion. Fortunately, there are a hand full of other opportunities available that don't rely on speculation or trusting PT Barnum types. For example, recently I interviewed a guy on short-term rentals. If I was a W2 guy, I'd be all over that. Ultimately though, you've got to figure out a long-term plan that potentially can transform your W2 income into non-W2 income. We've talked about this on the show before. In order to accomplish a complex strategy like this you need a good CPA. Tom Wheelwright, as you may know, is a great CPA. So, while you figure out who's going to get your tax plan together, take time to listen to this week's episode of Wealth Formula Podcast where Tom will update us on important new tax laws and give us some free tips on how to lower our tax bills. Listen now!

Why is decentralized finance advantageous? Let's ask artificial intelligence. As you may recall from last week's episode, ChatGPT is widely accessible to anyone right now. Here's the explanation on the value of decentralized finance from the ChatGPT software itself: "Decentralized finance, or DeFi, is advantageous for several reasons: Accessibility: DeFi allows anyone with an internet connection to access financial services without needing to go through traditional financial institutions or intermediaries. This opens up financial services to people who might not have had access before, particularly those in underbanked or unbanked regions. Transparency: DeFi operates on a public blockchain, which means that transactions and financial data are visible to anyone. This transparency reduces the potential for fraud or corruption and allows for greater accountability. Security: DeFi uses cryptography and smart contracts to secure transactions, making it difficult for bad actors to manipulate the system. Additionally, DeFi eliminates the risk of a single point of failure, which reduces the risk of a catastrophic failure of the financial system. Interoperability: DeFi protocols are designed to be interoperable, meaning that they can work together seamlessly. This allows for greater flexibility and innovation in the development of financial products and services. Efficiency: DeFi operates 24/7 and is not subject to the same regulatory constraints as traditional finance, which means that transactions can be processed quickly and at lower costs. Additionally, DeFi eliminates the need for intermediaries, which reduces fees and transaction costs. Overall, these advantages make DeFi a compelling alternative to traditional finance, particularly for those who value accessibility, transparency, security, interoperability, and efficiency." Not bad for a robot, right? Here's the thing. Decentralized finance is going to become mainstream finance in our lifetime. Large institutions are going to have to adjust or they will be irrelevant as the phone booth 20 years from now. So we need to understand what it's all about and figure out how we can capitalize on it. My guest on this week's Wealth Formula Podcast will give us a human expert's opinion on why. Listen NOW!

Ok, I know you keep hearing about how the world is going to look radically different soon. I have too. But what is that radical change and when is it going to happen? I'm no expert in technology but it is clear that the radical changes we are expecting are coming from two emerging technologies: blockchain and artificial intelligence. Blockchain really defines this thing that people call Web 3. We've talked about it before on the podcast but essentially Web 3 is the decentralization of various industries such as social media and finance (aka DeFi). Artificial intelligence (AI) is the other technology that is supposedly part of this great disruption that is about to occur. We've seen it in action without necessarily thinking about it already. Look at the WAZE application for example where shortest driving routes are based on huge amounts of human generated data points. In the last couple months, a new demonstration of the power of AI has come to surface and is widely available. It's called ChatGPT. Again, I haven't used it yet but essentially instead of searching for something on google, ask ChatGPT anything and it will give you an answer. Ask it to generate a speech on interest rates and it will. Ask it to give you a summary of a book and it will. It's really fascinating stuff that I wish I had during college to do all my homework but, as you can imagine, it also has the potential of being dangerous. The problem is technology is growing at a faster pace than perhaps we are ready for. Just because these technologies are powerful doesn't dissuade nefarious actors. It may be a bumpy road ahead. This entire space is so complicated that I wanted to get a real expert to discuss it…especially this ChatGPT thing. That's what this week's Wealth Formula Podcast is about. This was a really fun interview to do and I encourage you to tune in NOW.

The two most common mistakes I've seen people make in personal finance is to not think about asset protection and to not think about estate planning. Not thinking about estate planning is sort of understandable. Death is a topic that many try to avoid. Some are even superstitious in that if they set up an estate plan, it could trigger their demise. The topic this week is not estate planning but we've done that show in the past. Here's a little hint: The bare minimum you need is a will and a living trust to keep your assets out of probate should you die. OK, enough about estate planning. As I mentioned earlier, failure to implement a reasonable asset protection is the other most common mistake I see in new investors. Now I get it. If you don't have much then you have little to worry about. But once you start accumulating assets you've got to do something. Let me explain why. If you are a real estate owner, you have got two enemies to defend against. The first is the tenant who slips and falls. The second is the guy with the broken bones your kid hit driving her new car. Either one would love to get at something valuable that you own in retribution (and probably a little greed). That's where asset protection comes in. And here's the thing. If you set up good asset protection from the beginning you may not get sued at all. A lot of this legal stuff is optics. If you put up a lot of walls and traps, you're less likely to get sued in the first place because your estate will start looking a little bit like a turnip to any attorney working on contingency. Asset protection can be fairly simple but needs to be done right. My guest on Wealth Formula Podcast this week explains how and why that is important. He also spends a little time talking about tax advantages of producing movies which I thought was interesting as well. Listen NOW!

When you are in the alternate investment space like me, everyone assumes you are a gold guy. I used to be. The idea of gold holding its value over time is very real. An ounce of gold in the times Christ would buy you a nice toga and sandals. Now, an ounce of gold will buy you a nice suit and shoes. Admittedly, that is a pretty darn good track record. So does gold belong in your portfolio? Well, for me, gold is not an investment. It's money. So to the extent that you may want to have some of your "liquid assets" in gold, it may make some real sense. It's just hard to carry in your wallet. I am still trying to find someone to convince me otherwise, but to me, real estate has all the qualities of gold that I want while providing additional benefits. First, gold does not cash flow. When you buy real estate it should. In fact, with real estate, you can leverage and buy more of it and pay off the debt with income from the property. You really can't reasonably leverage the purchase of gold and, if you did, you'd have no income to offset interest rate payments. Both gold and quality real estate are hedges against inflation. Residential property is particularly advantageous when it comes to inflation because leases are typically year to year and can keep up with the rise in the price of other goods and services. But to be clear, this is just my opinion. I don't own physical gold but a lot of smart people do. I don't claim to be right in that regard. Personal finance is…personal. On this week's episode of Wealth Formula Podcast, I have a guest who speaks eloquently for the case of gold. Whether you are a gold bug or not, it's worth a listen to help you make your own decisions.

I've never spent much time on the concept of short-term rentals (Vacation Rentals) before because it didn't sound particularly appealing to me. But after interviewing Tim Hubbard for this week's podcast, I may have changed my mind. Here's the deal. Unless you are a limited partner in a syndication, there is no such thing as truly passive income in real estate. If you want your asset to succeed, you are going to have to do some work for it. And for me, making $300 per month for anything that takes more than 10 minutes per month is not really acceptable. But short-term rentals provide a sexier take on active ownership of real estate for busy professionals. Make no mistake, there will be some work involved. But now you may be making 5X the monthly income that you would with a traditional long-term rental. Maybe the rental income is still not that compelling. But what if you started buying properties in places you might actually like to visit yourself on occasion? At any point in the future, you could theoretically flip the switch and make it all your own. In the meantime, short-term rentals have extremely advantageous tax benefits—and not just to the real estate professional status types like me. If done properly, you could have a short-term rental, do a cost segregation analysis and apply that depreciation to other active income. Let me reiterate that I am not a tax professional but my understanding here is that through material participation in short-term rentals, depreciation losses can be ACTIVATED and used against your W2 income. If you can pull this off, the tax savings alone would be worth doing it in my humble opinion. With conservation easements pretty much DOA (victims of the IRS) and with oil and gas being full of crooks and fraudsters, short-term rentals could possibly be the best thing out there if you are trying to mitigate taxes. If this sounds intriguing, I highly encourage you to listen to this week's episode of Wealth Formula Podcast. At the very least, it's an option you ought to know about.