Wealth Formula Podcast

If you are struggling about finding the right Christmas present for your loved ones this year, I have a suggestion for you. Think EXPERIENCE. Last week I snuck my ten year old daughter out of school and drove her down to Los Angeles to be part of a live studio audience. It was for her favorite Nickelodeon show called All That—sort of like a kids Saturday Night Live. She was on cloud nine the whole five hours of shooting. She saw all of her favorite child stars and even got to give them high fives! Afterwards, she called it the most exciting day of her life. She thanked me profusely and couldn't stop taking about the show for the next two days. I am quite sure she will never forget that day. On the other hand, I pretty much guarantee you that I will be getting her a fair amount of stuff for Christmas that she will forget about within a few weeks at best. It's just the reality of stuff—it doesn't last. Memories do. The stuff will also cost me a lot more than this experience did. What's crazy is that being part of the live studio audience was free! If you go to on-camera-audiences.com, you can get a full list of free show tapings that you can attend at no cost. Of course, doing this sort of thing isn't for everyone. My seven year old daughter would prefer a Vikings game which we are going to do next weekend! That one is not cheap obviously. That said, the general idea of experiences over stuff is a good one and I have been trying to implement it into my gift giving as much as possible. Hopefully it helps you with a gift idea or two this season! Speaking of the gift that keeps on giving, this is the third week in a row of "Ask Buck". I was a little hesitant about releasing this but the feedback I'm getting has been quite good so it seems it's not necessarily a bad thing to finish off the recent tranche of questions with one more show. By the way, if you have questions for future shows, just reply to this email or record your question HERE. I prefer the recorded questions but either one is fine. In the meantime, sit back and listen to this week's show.

Recently I started poking my nose into various physician financial facebook groups. I try to stay away from these things because they tend to put me in a bad mood. But facebook alerts make them constantly pop up on my phone and my brain reacts instinctually for its dopamine hit. When I do poke around in these groups, I'm often left a little bit nauseous. It's not just because I have a fundamentally different investing paradigm than most people. I am pretty immune to hearing people wax poetic about outdated conventional financial wisdom regurgitated by various mindless pundits. What really bothers me is the attitudes people have in these groups. The over-all flavor of conversation in these forums can be best described by the word scarcity. I'm not talking about the young doctors who are broke and buried in debt. They actually do have limited resources. No…I'm talking about the know-it-all followers of various influencers in the space. There is a certain language that has now become pervasive amongst them that I simply cannot stand. There is a lot of talk about "living like a resident". For you non-physicians out there, this means living like you make $50,000 per year or less. The idea is that you should live like a hermit so you can get to that magic number, dictated by the "4 percent rule", sooner rather than later. On top of that, there are often discussions on how little money you actually need to retire. I recall one well known blogger saying you only need about 25 percent of what you make today. All of this is predicated on some strange machismo related to how sparse one can (and should) live. In fact, I see people making negative comments about physicians who elect to drive nice cars deriding them as financially irresponsible. How dare you drive a Tesla! Now I know I am a personal finance podcaster not a self-help guy necessarily, but I do have to say that attitude goes a long way. I can honestly say that I don't have a scarcity-type bone in my body. I attribute this attitude of abundance to the financial success that I have had personally. To me, the wealth available to you and to me is limitless. Don't spend all your time trying to live like a peasant. Instead, focus on expanding your means and letting your lifestyle expand with it. Life is short. Isn't it depressing to think that your sole purpose in life is to save enough money not to outlive it? That's essentially what "live like a resident" means. Now if you are one of the devotes of the aforementioned movement, no need to reply to me with a cynical remark. I get plenty of those in the forums and that's why I try to keep my hand off the keyboard. The good news for me is that my listeners tend to be people who truly believe in abundance and it is a pleasure to speak to people who have an open mind. It is no coincidence, I should add, that these are the wealthiest physicians and dentists that I know! People with abundance mentality are fun to talk to and that's why I do this podcast. It's even more fun in a question/answer format like we will do in this week's Wealth Formula Podcast. Tune in for Part 2 of Ask Buck!

I spend most shows interviewing other people. However, once in a while, it's fun to speak to you directly. We call these question answer shows, "Ask Buck". I recorded this podcast episode just before the holidays and I hope you enjoy it. By the time you get this note, Thanksgiving will be over but I do want to express my thanks to you for being part of the Wealth Formula Community! Enjoy the show!

With the recent boom of real estate crowdfunding platforms, I often get this question, "What do you think of the (fill in catchy name) platform? What platforms do you like?" The problem with this question is that it's really not asking the right question. I am a real estate investor. When I invest in real estate, either as a general or limited partner, I am looking at the asset itself, the business plan, and the people who are going to carry out that business plan. All that a platform is doing is bringing deal flow to investors and then collecting fees the way a broker does. So when you invest on one of these platforms, do you know what you are buying?—Sometimes. Do you know what the business plan is to yield the projections?—Not usually. Do you know who is operating the asset, their track record, or whether or not you like the way they do business?—ALMOST NEVER. You see, investing in real estate or any kind of real asset fund requires some due diligence and, in my book, it always comes back to the people who are operating the asset. Investing in real estate is not like investing in stocks. People can invest in the exact same stocks online from anywhere in the world and they get the same exact thing. So, you can ask someone, "Do you invest in Apple? What stocks do you like?" and it actually has meaning. After all, the Apple stock I buy is the same one you buy. That's just not how real estate works. And to be clear, these real estate crowdfunding platforms know that. They give you the same type of experience that you get on E-Trade so that you think that real estate functions the same way. But it doesn't. Unlike Apple stock, there is an unlimited flavor of real estate equity and it should not be mistaken for a commodity. A specific asset can't even be looked at that narrowly. Case in point—I was once in the best and final for the acquisition of a $25 million asset in Dallas. As it turns out, it came down to two groups. One group is a heavy value-add player with primary goal of creating forced equity and a large increase in value for investors. They did not intend to make this into a cash flowing asset but saw great opportunity to increase its value and to sell it quickly. The other team looked at it as a unique long-term opportunity to cash-flow while adding value in a more modest way. This involved keeping occupancies high and increasing rents more gradually. In the end, the cash-flow team won that battle and it is performing very well. However, it's being run very differently than it would had the other team won. It would still be doing very well, but the business plan would have been very different. I know this for a fact because I was on both teams! Bottom line is that it's not about the platform. It's about assets and people. I see financial bloggers and self-proclaimed financial experts writing about these platforms as if they were specific investment opportunities, and frankly, they sound like bozos. Don't take advice on real estate investing from someone who knows nothing about it. They are probably just trying to get you to click on a link to get an affiliate commission. For me, investing is personal. The majority of my assets are deployed into specific real estate holdings or funds that that are run by specific people. In some cases, I make the decision to invest more because of the people than I do the asset. A good example of that is AHP Servicing. AHP servicing has provided a fund of non-performing notes that I have, on multiple occasions, participated in as an investor over the years. I understand what they do but the note business is not something in which I would consider myself an expert. Would I invest in any old note fund? The answer is no. However, I do know the founder and CEO of AHP Servicing well. I also like and trust him. I am, of course, talking about Jorge Newberry. Jorge has been up to a lot of interesting things lately so I invited him back on the show to get us caught up. Listen to this week's interview with Jorge and I think you will get a good idea why I like him and his fund as much as I do. He is one of the smartest and most interesting entrepreneurs I have ever met.

In college, my two favorite courses were biochemistry and organic chemistry. The logic was very soothing to me. In high school, the only thing that gave me that sense of logically progressing to an answer was mathematics—especially geometry proofs. In other words, I like concrete answers and am not as comfortable leaving arguments unsettled. Like you, I also like money and am interested in how the economy works. Sometimes I wish I had studied economics so I could better understand the nuanced aspects of what is going on today. But economics is not science. It is a social science. What that means is that while you can build models and make predictions, it's very hard to accurately come up with the answer to a problem ahead of time. It's not that exacting. That's why a room full of Ivy League educated economists can look at the same numbers and come up with different conclusions. There is no answer—only theory and forecasts. As an investor that is frustrating for sure. In fact, sometimes all the economists are wrong because the data they focus on ends up not being the right data to look at! Case in point—I remember back in the late 1980s when everyone was talking about Japan becoming the next financial powerhouse. Virtually no one, except Harry Dent, predicted that Japan would go into a tailspin for the next three decades. Harry predicted that would happen because the population of Japan was shrinking—less work force, less productivity. Today, everyone is looking at China as the next global financial power. It has certainly grown at an incredible clip over the last few decades. But China did something in 1979 that could seal its fate as another failed Asian power—it created a one-child per family policy that continued until 2015. Will China become the next Japan over the next few years? Or, will another unforeseen variable like technology save its drop in productivity? There is no way to know for sure. The best we can do when we consider macroeconomics is identify the right trends and get ahead of them as fast as possible. Harry Dent has a pretty good record of doing this. Right now, just like a lot of bears including Peter Schiff and Jim Rickards, he is predicting a major financial crisis. But his flavor of armageddon is a little different. He's predicting a deflationary recession. How would this affect you? Find out by listening to this week's episode of Wealth Formula Podcast! P.S. Listen to the very end if you invest in apartment buildings.

A simple question can have so much complexity around it. Here's one I get all the time: "Should I pay off my house?". Conventional wisdom says this is a no brainer. Look at all the financial gurus out there like Dave Ramsey and Suzi Orman—they all think you ought to be paying off your mortgage. Is it possible that they are wrong? Even in the unconventional alternative space, this is a controversial issue. A mortgage on your house is debt. If you follow Robert Kiyosaki, he says that there is good debt and bad debt. Good debt puts money in your pocket (ie. mortgages on investment property) and bad debt takes money out of your pocket (ie. buying a television on your credit card). That's straight forward. But what about the debt on your personal residence? Clearly that does not put money in your pocket. You could argue that with appreciation it might some day, but it certainly does not make you any money in the short term. So…it's a bad debt, right? Yes, but wait a second. Chances are, your interest rate is pretty low. Instead of paying off your mortgage that is 3-4 percent, one might argue that putting excess capital into something relatively safe like Wealth Formula Banking that yields 5-5.5 percent compounding might make more sense. In fact, that would give you not only tax free-arbitrage, but also liquidity to borrow against at a moments notice. I hear some people say that they keep equity in their home in case they need to access it for liquidity through a home equity line of credit. But the problem there is that if you have an emergency (ie. you lose your job), your bank may not let you access your home equity anyway. Banks only lend to people with income and good credit. In other words, you may not be able to get to your own money when you need it the most! And let's not forget why that bank doesn't want you to pull that equity out if you get into trouble. When you have a lot more equity in your home, you become a bigger target for foreclosure. If there is little equity in your home, the banks don't see nearly as much value in foreclosure. Lots of equity in your home, on the other hand, makes you a bigger target for creditors. Just remember, when you get sued, debt like mortgages and other loans are your best kind of asset protection! Now, you may be reading this and concluding that I am a fierce advocate of leveraging your home to the hilt. That's not necessarily the case. I am just a fierce advocate of thinking about what you are doing rather than just following conventional financial wisdom. What I will say is that the math favors not keeping a whole lot of equity in your home if you consider the time value of money and asset protection. The rest, in my opinion, is psychological. When it comes to debt on your personal residence, the psychological often supersedes the math and that's okay too. I just want you to think about why you do what you do. Now, what if there was a way to access home equity without borrowing? What if you could sell part of the equity in your home and not have payments to worry about? There is actually a relatively new product known as a home equity contract that could potentially allow for you to have your cake and eat it too. That's what we are going to talk about on this week's Wealth Formula Podcast so don't miss it!

With the end up the year coming up, my mind is focused on what I can do to mitigate my tax burden. We've done multiple investor club webinars on different strategies already this year within investor club. However, my favorite strategy to minimize my tax liability is to maximize depreciation. As it turns out, I have two houses in the Chicago area that I rent out. I used to live in one of them. Because they are single family homes, I did not consider doing cost segregation analysis studies on them. I figured that it would not be cost effective to do so. As it turns out, I was very wrong. There are some providers that are very skilled that provide highly reliable cost segregation studies of smaller assets as well. David Brizel, CPA is the guy who kept coming up in Wealth Formula Network. The way people glowed about him, you'd think they were on his pay roll! Anyway, he's based in Phoenix but I'm flying him out to Chicago to do the studies because it will still save me money compared to the big firms out there. I'm glad I decided to look into this. As it turns out, the two houses combined will result in about $200K of depreciation for me that can be applied to 2019! Anyway, I can imagine some of you are in the same boat—rental houses that you didn't consider doing a cost segregation analysis on. So, I asked him to be on the show for a bonus episode. Hope you enjoy it!

By now, you know my paradox. The more I invest in real estate, the less I pay in taxes because of my real estate professional designation. It could be worse. I could not have the designation and not be able to apply passive losses to all sources of my income! It's a good problem to have. My situation makes me think about the profound impact of the basic tenet of microeconomics. That is, people do things because they are incentivized to do so. In my case, I am incentivized to invest in real estate. Because I have profound tax advantages from investing in real estate, it makes me hyperaware of investments and expenditures that do not have any tax advantage. It's the reason that I won't even consider investing in the equity markets. If I'm operating outside of my real estate happy place, there better be tremendous yield potential (ie bitcoin), a benefit beyond just the investment itself (Wealth Formula Banking), or something else compelling. As a car guy, this has put me in a difficult spot. I love cars—especially Italian sports cars. But buying a Ferrari off the lot just makes no economic sense at all. It's guaranteed to depreciate by no less than 50 percent over the next 20 years. Then, it may or may not start to regain its value. Another option I have considered is focusing on maximally depreciated sports cars—say something from ten or fifteen years ago. At least then I wouldn't have to worry about losing value as much. What I would really like to do eventually is have a collection of classic cars. I've mentioned this before and almost did pull the trigger on my first acquisition a few months back after a perceived near death experience. But the microeconomic incentives once again prevailed. I also realized that I didn't really have the garage space to park a multiple six figure investment. So…for now, I am still driving my Prius. However, to be clear, I still love the idea of buying nice things that will likely appreciate over time. Nothing you buy from Ikea will ever go up in value. So, why not buy some things that are more expensive that you can enjoy for a lifetime and sell them at a profit someday? Anyway, I will follow my own advice soon enough when it comes to cars. In the meantime, I have found a super cool business that allows you to own a fraction of your favorite classic or rare supercar and trade it via an on-line marketplace. The business is called Rally Rd. and it functions solely as a mobile application. It's a fascinating business model and one that you may particularly enjoy if you like to combine your hobbies with investing. This week's Wealth Formula Podcast features an interview with one of its founders, Rob Petrozzo!

If you read the title of this email and felt a little weird about it, I think that's pretty normal. It was intended to get a reaction out of everyone. For those who believe in giving for the purpose of being a good person, it might disgust you to think of adulterating your good deeds. If you are less charitable minded, it gave you good reason to read further rather than delete an email about giving your hard earned money away. The truth is that charitable giving is complicated. For those who have done much of it, you know there is a benefit to you that you understand yourself, but is a little hard to explain. You see, several scientific studies have shown that giving money to charity makes you a happier person. In that regard, charity is not entirely charitable. In exchange for a monetary gift, you are getting a psychological boost— a return of happiness so to speak. Of course giving can have a financial benefit as well. You get a tax deduction every time you give and, if you give enough, you can even drive yourself down to a lower tax bracket and potentially come out even. That's very basic charitable giving economics. But obviously there are a lot more levels of complexity used by the ultra-wealthy for tax and social benefit. You have already seen leveraged charitable giving in the form of conservation easements although they certainly are not without controversy. That has not stopped the likes of Ted Turner and Donald Trump from utilizing them. Charity, as it turns out, has its own complexity when it comes to higher level personal finance. You have probably heard of things like charitable remainder trusts and other vehicles used by the ultrawealthy to legally avoid estate taxes. These strategies are complicated for sure and I can't say that I really understand them. However, they are also really powerful and worth knowing about because they may very well begin applying to you before you know it if you are participating in our Investor Club offerings! For that reason, I invited Jerry Borrowman on Wealth Formula Podcast this week. Jerry is one of those guys who really understands the nuances of all of this stuff. That's more than I can say for 99 percent of the advisers out there—even the ones who deal with the ultra wealthy. If you want to understand how estate taxes can become legally optional and actually leave more money to your children by giving money away, don't miss this episode. Buck P.S. I asked Rod from Wealth Formula Banking to help me with the interview. If you have any questions about this interview, reach out to him at [email protected]

Where are you today? Where do you want to be? Based on what you are doing right now, is there any chance that you are going to get there? Those are questions that I ask myself frequently—especially when I feel like I'm in a rut. Why is it important? Well, for those of us who are fortunate enough not to have the burden of worrying about where our next meal will come from, we have the opportunity to create our own destinies. But the fact that we don't have to hustle anymore also increases the likelihood that we go on auto-pilot and live a life of abundant mediocrity. If you don't care for more than that, more power to you. However, if where you are today does not match where you want to be, make sure you do something about it. If you want to win the lottery, you have to at least buy a lottery ticket! In my case, I would like the opportunity to influence the thinking of more professionals like you. I've done pretty darn well this year and it would be easy for me to sit on my laurels and congratulate myself in hopes of simply repeating my success in 2020. However, simply repeating the success I had in 2019 is not what I wish to to do. In order to get where I want to be, I need to touch more people. I am a firm believer in the words of Zig Ziglar, "You can get everything in life you want if you will just help enough other people get what they want". So the question I need to be asking myself is whether I am putting myself in a position to maximize how many more people I draw into our Wealth Formula Community. I need to make sure that I give myself the best chance to grow the brand and to spread its message. How about you? What are your goals? Maybe you want to add a zero to your net worth. If that's the case, can you get there just by doing what you are doing now or do you need to actively change your facts? What is it that you need to do? The people who do the most in this world do it by design. Very few people accidentally get rich. Professional athletes and entertainers work their asses off at their craft before they become rich and famous. People who get rich from their investments do so by investing in things that could possibly make them rich! Stocks, bonds and mutual funds are not going to make you rich. Listen, I'm not here to tell you that you have to change your life. I just want you to make sure that you are not moving through life like a zombie and regret that you didn't at least put yourself in a position where achieving your dreams was even possible. Remember—you can't win the lottery if you don't buy a ticket. Being a physician, dentist or engineer does not define you. You define yourself with your own efforts. My guest on Wealth Formula Podcast this week is a great example of that. David Phelps started focusing on real estate during dental school and went on to become a major influencer for his colleagues in personal finance. When people think of David, they don't think dentist, they think financial freedom. He is a great example of someone who has taken his destiny into his own hands despite coming from a typical professional background. You definitely want to hear what David has to say.

I'm a doctor, but Wealth Formula is not a doctor podcast. Sure, probably 30-40 percent of my Accredited Investor Club is made up of physicians and dentists, but that just happens to be the byproduct of my own professional past. People with common background tend to flock together I guess. That's fine with me. I love working with other health-care types but I don't ever want to approach them cold. You see, when I first set out to do this show, I was going to make it about doctors. It made sense to carve out that niche since, at the time, no one was really filling the vacuum. In the end, what kept me away from a doctor show was that most physicians are too difficult to convince of anything other than conventional financial wisdom and other bad ideas. The voices that have emerged as influencers for doctors now talk of ETFs and "living like a resident", which of course is at odds with my real asset, abundance focused approach. Back when I lived in Chicago, I tried to reach out to some doctors locally a few times. One of my neighbors was a neurosurgeon making millions of dollars per year who was dumping his money into a financial advisor like everyone else and his idea of alternative assets was investing in medical device companies that would randomly solicit him at his office or in the operating room. Not to be too negative about medical device opportunities, however, I have never seen a doctor invest in a medical device and make the millions he typically anticipates. Why? Well, a good idea only goes so far. You have to have a demand for the product and a very good team implementing that plan. And while those great opportunities do exist, most individual doctors never see them because smart investors and venture capital get to them first. Most medical device startups come to doctors when they are pretty much busts to begin with and after everyone else has said no. But that's your typical doctor investing—send it to the wealth advisor or spend it on an idea that will never take off. It's painful to watch but even more painful to try to intervene. So now, I just work with the doctors, who along with everyone else in my network, find me and who are open to another approach to personal finance. I should point out that, as I've said before, I don't think it's a bad thing to invest in high risk high reward type investments with a small portion of ones portfolio. However, there is a smart way to do that as well. You still need to dig into the information that is available and be smart about your allocations. It is even smarter if you come at it as a team. Venture capital is certainly one approach to asymmetric risk that is worth considering. If you find the right group with whom to invest, you might have an opportunity to achieve considerable returns on an asymmetric risk fund. The idea there is that you put your money in competent hands to spread over multiple opportunities. Some of them might go bust and some might result in 5x-10x outcomes. I personally have not invested in any venture capital myself, but I would do that before I ever considered investing in a medical device company that came knocking at my door. Even asymmetric risk has strategy to it that can optimize outcomes. To help us learn about venture capital and to see if it might be right for you, this week's Wealth Formula Podcast features Vanessa Bartram of Zora Ventures. P.S. - If you are interested in learning more about ZORA and investing in Israeli tech, click HERE to sign up for a webinar they are hosting on Tuesday, October 22nd from 12-1pm EST.

I am in a financial position that may seem somewhat unusual to you. You see, the IRS rewards me for my real estate investments by taxing me less. If, on the other hand, I keep my income in the bank, or invest it in traditional equities or bonds, the IRS shows me no mercy! Admittedly this is by design. I am a real estate professional. One of the great benefits to that designation is that all of my passive losses flow through my personal tax returns. In other words, all that depreciation and mortgage interest I get by investing in real estate not only builds my net worth, but SAVES me money in the form of tax mitigation. Not a bad deal right? To illustrate the power of these completely legal tax advantages, remember that with bonus depreciation even limited partners often end up with K1 losses of 50-100 percent of invested capital. Those losses add up in a hurry! With that perspective in mind, why would I EVER consider investing in anything that is not tax advantaged? Think about the returns I would need to get in order to simply break even with the tax breaks I'm getting from investing in real estate. The returns would need to be HUGE. I'm not going to get that through Vanguard ETFs! In fact, I truly believe that the only way I can get higher tax equivalent returns on capital is by investing in asymmetric risk type investments. For me, that means a little bit of bitcoin. You may think I am crazy, but I actually don't even consider investing in bitcoin all that risky. Sure it's volatile, but I'm pretty darn sure that 5 years down the line anyone who buys bitcoin today will be pretty happy. I'm less sure about all of the alternative coins/tokens. They may have more explosive returns or they may simply go to zero. But bitcoin going to zero?—ain't going to happen if you ask me. Now I don't overdo it with my bitcoin portfolio. For one, it's important to have discipline and value add real estate is my bread and butter. In fact, I bought bitcoin with only about 5 percent of my investable assets this year. Aside from its riskier nature, buying bitcoin does not save me any money! It's not tax advantaged. So what's a bitcoin HODLR to do? How about "Buy, borrow, and die"? That's the mantra of the ultra-wealthy. The idea is that you can borrow against most assets that you own and invest in something else. You don't get taxed on your loan and you've got a way to create liquidity out of an asset that is sitting around waiting to appreciate. If you invest those borrowed funds into real estate, not only do you get the benefit of investing your capital in two places at once, but you also get the tax advantages! You can do this with all kinds of assets. Traditionally, the wealthy have done this with brokerage accounts and other real estate but also with gold and fine art. The good news is that these days you can even do it with bitcoin and that's what this week's show is all about. Zac Prince is the founder of a cutting edge company called BlockFi. BlockFi is essentially creating financial products from the cryptocurrency ecosystem including the origination of loans and even savings accounts that pay cryptocurrency in interest. In this week's Wealth Formula Podcast, Zac tells us all about it and gives us his take on the massive infrastructure that is creeping slowly but surely into the bitcoin ecosystem. Whether or not you buy bitcoin, you are going to want to understand what's going on in the digital ecosystem because soon it will be part of your every day reality. Don't miss this show!

Have you heard of the 4 percent rule? I'm guessing you have as it seems to be some magical number espoused by traditional financial advisors and bloggers alike. The idea is that you should safely be able to withdraw 4 percent of your portfolio to live on for retirement. Theoretically the 4 percent is based on the idea that, over time, portfolio yield should outperform 4 percent and result in principal preservation. Is it really that simple? Maybe it is. Maybe that's all you need to do and it will work out for you. As you may have guessed, I'm more than a little skeptical of the rule myself. Why? Well, for one thing, I'm a real estate guy. I like income producing assets with tax benefits that I can see, touch and feel. Admittedly, that's just my bias. The bigger problem with the 4 percent rule is that it is based on old data. Specifically, the modeling uses data from 1926 to 1976. To me, that's a little concerning. You see, the underlying assumptions of the 4 percent rule are that most of the most of the portfolio income is produced from dividends and fixed income. What is fixed income? Fixed income comes from bonds of course and bond yields are reflective of interest rates. I don't need to remind you that we are at historical low interest rate levels now and our president is advocating for negative rates. How does that make you feel about the 4 percent rule now? It makes me very concerned for my high-paid professional colleagues—doctors, lawyers and engineers who are following the 4 percent paradigm like it is religion. While it may work out, it sure doesn't sound like a risk that I would want to take. We live in unparalleled times. How in the world can we use hundred year old data to guide us into retirement? No way I'm doing that. But the problem is that most of our colleagues will and all we can do is watch them like an accident ready to happen, hoping they will survive. In the meantime, we need to continue to educate ourselves. Financial education is our best weapon defense against going broke. In line with that, my guest on Wealth Formula Podcast today is an author and educator that I have invited to teach us about the biggest financial sector on earth: the bond market. Without understanding the bond market, you cannot understand the economy. Don't miss this interview!

I am a simple guy. When I bowl, I throw the ball right down the middle of the lane. I couldn't put any spin on it if I tried. My thinking is equally simple. In order for me to understand things, I have to break them down into smaller, easier to digest bites or I won't understand. When I tell people that, they think I am joking. How does a guy who spent time as a brain surgeon call himself simple? Well, I am telling you the truth. I thrive on simplicity—by connecting a series of lines from point A to point B. If I can connect all the dots, I will get it and, in fact, I will be able to explain it to someone else so they understand it as well. If anything, that is my superpower. But I don't like complexity. Too many moving parts means too many chances for error. So, whenever something looks a little different than what I am used to, it makes me nervous. Agricultural investing is one of those things that I don't know much about. In theory, it sounds like a good idea. People have to eat, right? Investing over-seas?…I've done it before and I probably will never do it again. I like predictability. And, you can say a lot of negative things about the US, but it is still a land ruled by law and a government that will not be overthrown anytime soon. If someone screws you over, there is a good chance you will get retribution. It's good to be an American investing in the United States. That said, I also have an open mind so I like to talk to people about things that I don't understand or inherently feel comfortable about. After all, there was a time that I didn't really understand multifamily real estate. Since then, I have pretty much bet my life on multifamily real estate and, while many uncertainties in life make me uneasy, my real estate investments do not. Real estate in the United States is what I know, but living in a bubble is not good either. Therefore, I make an effort to constantly listen to new things and, as a result, have changed my mind more than once and fine tuned my own investing philosophy. So, this week's show is going to explore something I know nothing about: agricultural investing in Paraguay. Is it right for you? To find out, listen to this week's Wealth Formula Podcast.

There is clearly fear in the heart of investors in the equity markets and real estate alike as talk of trade wars and recessions abound. Meanwhile, I'm investing more in multifamily real estate this year than I ever have. In fact, I'm investing my 80 year old dad's money in the same offerings—the opportunities everyone sees in Investor Club! So why would I do this? Well, lots of reasons. Here are just a few: 1. I can't time the market. The podcast echo chamber has been warning of the impending zombie apocalypse for at least 4 years now. Since then, I have been in and out of multiple deals creating permanent wealth. If we do have a recession (which I don't doubt), does it have to be a blood bath? Remember, the average length between recessions is 5.5 years. If you enter an investment today, you could very well be back at the top of the cycle by the time you are ready to sell. 2. I only invest in quality assets that are in quality markets. What does that mean? Well, I like multifamily real estate located in high growth areas. If there is strong growth in population and in jobs organically today, then there is no reason that demographic trend shouldn't continue with or without a recession over the long term. That means a lot of people needing to live somewhere and multifamily real estate solves that problem. While it may be the case that my returns slow down for a year or two if rent growth slows, if I invest in quality assets in quality areas, I don't worry too much about it. I don't believe I will lose money. 3. What makes me so confident that I won't lose money? Well, the basic thesis of my investing is to not buy and hope. For those in INVESTOR CLUB, you know that I am a believer in forcing equity through value-add strategies. That means we are dynamically decompressing our own property cap rates and giving ourselves a bigger cushion in the event of any slow-down. We create value from day one and that's why our multifamily investment returns have averaged 30 percent annualized over the last 6 years—way above proforma's. If a downturn happens, we have a big cushion! 4. I believe in the volume averaging approach. This goes back to the fact that I cannot predict market cycles. I prefer potentially less growth and capital preservation during a recession (real estate) over negative growth or losing money (money in the bank or stock market). As long as I invest in the right deals with the right operators, I just keep deploying capital on a regular basis. The ups and downs of the market cycles will take care of themselves. 5. The longer I'm in the investing game, the more I'm convinced it has more to do with the team than the asset itself. Right now, I have operators that I trust that make it very easy for me to deploy capital and that is the BIGGEST reason I am investing so much in real estate NOW. Even if there is an economic downturn, I'm in a very safe position with an extremely competent team. In fact, we will continue to buy through any potential downturn and follow it all the way back up! Do I sound too optimistic? I would say I'm being realistic. Understand that, although I won't be surprised to see a downturn in the next 12 months or so, I believe the next decade will be the "roaring 20s"—just like the ITR economics guys told us in a previous podcast. I don't want to miss any of that! That said, I'm always listening to what economists and other experts have to say. In fact, on this week's Wealth Formula Podcast, I have a highly respected economist who specializes in multifamily real estate. His name is Ryan Davis and he definitely knows what he's talking about so make sure to tune in!

Up to 10 percent of my liquid assets are in very risky stuff—specifically digital assets and startups. A lot of people people think I am being irresponsible—particularly because I have a captive audience with whom I have influence. Now if I was shooting at the hip and telling you to put all your money in this stuff, I would understand. But even highly volatile investments (ie. gambling) may have their role in your portfolio. To be clear, every year, I allocate no less than 80 percent of the money I invest into real estate through Investor Club. There are many "wealth advisors" out there who would tell me that's nuts too—that I would be better with a substantial portfolio of stocks, bonds, and mutual funds. Ain't gonna happen. One of the great benefits of becoming financially literate is that you get to make your own decisions and feel confident about them. You don't need someone with a three month long accreditation course to tell you what makes sense. In my opinion, residential real estate isn't risky if you know what you are doing or invest with someone who does. People have to live somewhere regardless of the Dow Jones Industrial Average. Real estate in the hands of an ambitious immigrant with no money (my dad), ultimately paid for my upper middle-class upbringing and my education through medical school! Why would I consider it risky? The only time my dad got in trouble was when he invested in the stock market. Now, let's go back to this buying digital currency thing again. You and I know this is seriously risky. But you know what?— a lot of people have gotten very wealthy off this stuff already and it's still in its early days. So let me ask you this. Say you invested $20K into a variety of cryptocurrency projects today and lost it all. Would that kill you? Alternatively, say your $20K became $2 million—is it worth it for you to at least have a chance of this happening in your lifetime? That's the kind of analysis you need to do for yourself when considering investments of the asymmetric risk profile variety. Chances are if you are a follower of Wealth Formula Podcast, you are already doing fine. You make a great income and have all the basic things you need to live a happy life. But what if you had exposure to something that could put you in another league of wealth entirely? Would it be worth putting a little capital at risk to make this happen? It is for me and that is why I invest in cryptocurrency. This is not foolish—this is calculated risk. It is the kind of risk that the wealthy take all the time. It's how millionaires become billionaires and how ordinary people can make money that they never imagined possible. In fact, even the largest, most respected university endowments like Yale and Stanford are getting in the game with small allocations in the digital currency space just to make sure they don't miss out. And why now? Well—because no one is talking about it. The bull market of 2017 had everyone and their mother investing in cryptocurrencies. Two years later, technology is better and institutional money is starting to get in, but investors don't seem that interested. That's exactly why, if you have not gotten exposure to digital assets, now may be the best time to take the leap. The more you read about this stuff, the more excited you will get! To help you understand what is going on with cryptocurrency and whether you should consider getting into the game, I invited Teeka Tiwari back on Wealth Formula Podcast. He's a former Wall Street guy with serious credibility with institutional investors and family offices. He is also a great teacher so make sure you tune into this week's show. P.S. To find out EXACTLY why investing in cryptocurrency makes sense NOW, make sure to sign up for Teeka's upcoming webinar HERE.

Last week I was in Monterrey for car week. While I still drive my Toyota Prius from 2008 that I purchased during my final surgical residency year, I have an appreciation for vintage Italian cars so I attended the annual Concorso Italiano. Those old Ferrari's are beautiful! There was a particularly stunning silver 1973 Ferrari Dino that I couldn't get out of my mind. There is a guy at my YMCA who drives a Dino (only in Montecito)—he bought it brand new in 1975! I was telling him about the event and, as it turned out, he was there too. "Yeah—but Dino's are slow," he said. "If I buy a new car, it's going to be a Tesla. Those things are crazy fast!" "But Tesla's have no soul!" I argued. To me we were talking about two different things. He was talking about performance, and I was talking about art. Now, I'm not much of an art guy but I think my love for old Ferrari's is much more inline with an art critic's love of Andy Warhol rather then a guy who just wants a fast car. I could care less if that Ferrari is slow. I just want to appreciate it for what it is. It's a sensory masterpiece. Look at it. Listen to it! Tesla's are silent and damn ugly in my opinion—especially that SUV. It looks like an overgrown Prius. Now why did I go to this car show anyway? Just to torture myself with envy? No… I've been thinking about buying my first vintage car. There's a few I have in mind. I love Ferrari's but a 1967 Lincoln Convertible sounds cool too, and I could throw all my kids and their friends in the back seat (and the rest of the neighborhood as well). A couple years ago, I would have never even considered buying something so "frivolous". That's because I never saw it as investment. While it's true that buying a fancy new car would guarantee a loss of money for the foreseeable future, buying one that has fully depreciated in value and pivoted to become a collectors item is a totally different animal. The new car is what Robert Kiyosaki would call a "doodad". While a vintage collectible car would be, what I would call, an asset. Sure it doesn't cash flow but neither does gold. I would rather have a Dino than a few ounces of gold any day! In the world of the affluent, the theme of buying things that you can enjoy today and have as something worth more ten years from now is quite common. I didn't really notice it until some of my wealthy friends opened my eyes. If you can afford it—it's a very smart way to live. Just think about the amount you spend on cars, furniture, watches, and wall decorations that are sure to be worth zero some day. What if you could replace all of those with appreciating assets? It's a very interesting way to live and one that I am really starting to warm up to—that's not easy for a guy who still drives his 12 year old Prius. Now I get that not everyone can afford to spend $300K on a vintage car or $3 million on a piece of art. But financial technology is really making some of the things that were previously not attainable for most of us into a reality. How about owning an Andy Warhol? Did you know that right now you can invest as little as $25 and own part of a famous Warhol piece? You can even visit the painting at a gallery in New York and enjoy it for yourself. This whole new world of investing is very exciting and my guest on this week's Wealth Formula Podcast is one of the entrepreneurs who is making it happen. So, if you want your piece of that Warhol or whatever blue chip artist gets you excited, listen to Scott Lynn tell us exactly how to do it.

With the rocky stock market and concern for recession in the air, it is always interesting to go back and reflect on investing behaviors over time. These days, when people are frightened, they don't invest. Instead, they keep all of their money in the bank. Why? Well, you've probably never witnessed a bank failure and lost your money. In fact, unless you've lived through the Great Depression, you've seen nothing but bank bailouts and smaller banks being gobbled up by huge banks that are too big to fail! But during the Great Depression, thousands of banks failed and there was no FDIC protection for those who lost their life savings. People living in that period of time experienced banks closing their doors and not allowing them to withdraw funds on a regular basis. As it turns out, as banks turned their backs on people, the life insurance industry provided its policy holders with substantial amounts of liquidity at a time when it was much needed. Cash value life insurance policies saved many families from financial ruin. It is no surprise, therefore, that after World War II the life insurance industry entered a Golden Age. Those living through the Great Depression wanted nothing more than reliable growth and stability. Bank failures and the stock market crashes were fresh in people's minds making the safe haven of life insurance all the more appealing. It is this sense of steady growth and security that has made Wealth Formula Banking such a major part of my investment strategy. It is a dynamic tool providing tax free growth, the ability to have access to significant asset protected liquidity and an opportunity to provide leverage to all of my cash flow investments (double dipping as I call it). Apart from all of these features, it is simply the safest investment I have. Now don't get me wrong, the majority of my money is in real estate which, when done properly, can be pretty darn robust in a downturn as well. In fact, part of what makes insurance companies as strong as they are is that they own a lot of the most expensive real estate in the country. The stability of life insurance products makes it incredibly appealing to me. How do I use it? Well, typically people have portfolios of stocks and bonds. In my case, I own almost no stocks. I own real estate instead of stocks. My version of bonds is Wealth Formula Banking. What's funny to me about being such an advocate for Wealth Formula Banking is that, despite the fact that it is a life insurance product, I think of it as an investment tool for when I am living. Until recently, I didn't even think about the death benefit. But recent false health alarms in my life have led me to start considering legacy and the value of the death benefit as well. As investors, we don't get to see the upside of the death benefit on our own policies obviously. However, there is a way to get exposure to this part of the life insurance benefit—by buying someone else's life insurance policy. You see, permanent life insurance policies are assets that can be legally sold to someone else. When I first heard about this concept a few years ago, I was amazed that I had never heard about it. As it turns out, it was because only hedge funds, banks, and other institutional players were playing in this market. When I set out to find a way to get exposure to this asset class myself, I was lucky enough to run into a company called ASR that, after significant due diligence, I decided to partner with and they have been part of my team since that time. Tim Wright is a partner at ASR and a wealth of knowledge when it comes to life insurance products and their role throughout history and in your portfolio. If you need some hedging in your portfolio, you are not going to want to miss this week's episode as I talk to Tim about the different ways to get exposure to life insurance policies as an investment.

A while back, I had a guy on the show who had created an entire business focused on the creation of new Udemy content. Udemy is an app that allows anyone to make a course and publish it for others to buy. Courses are peer reviewed so you get a pretty good idea of what might be worth your time. It's actually a really good deal. You can cherry pick only highly reviewed courses and buy them for just a few bucks. It's amazing how cheap learning can be online these days. Because of that, I have developed a rather bad habit of accumulating courses that I never watch. So, this morning, while at the YMCA chugging away on the elliptical, I decided to pick out a course to finally start. I had several options dating back to over six years ago. Most of them were not really that relevant. The archive of courses gave me an interesting glance into my thought patterns over the last few years. I once bought a course on how to buy probate properties. It's probably fine for someone doing this kind of thing full time, but the idea of sending out letters to executors about buying single family homes and hoping someone responds doesn't quite make any sense any more. It sounds like a lot of work for relatively modest gains—sort of like wholesaling or flipping houses. I know some of you are probably really good at it but it's not an easy thing to do and even harder to scale into an eight or nine figure business. Frankly, I have come to realize that the effort required to scale something to eight figures is not any more than what it takes to get to six figures. The only difference is the monetary reward of each endeavor. If you are in the wrong business, you can very easily be highly successful yet struggling to pay your bills. So, if you are just starting out, make sure you focus on something with some real upside. Here's an example—rather than flip houses, why not flip apartment buildings instead? You can make millions of dollars that way. Don't think it can be done? Well, that's how Western Wealth Capital started and now they have over a billion dollars of multifamily real estate under management. Just watch one of our Investor Club presentations and it will blow you away! It took me a while to come into this kind of state of mind—to think only big and to say no to everything else. I used to have a problem that a lot of entrepreneurs have—chasing shiny objects. Not anymore! That's why you don't see me at every conference and you don't see me investing with a million different groups. It's really not about how much you work. It's about spending your time doing things that are actually impactful. I have found that the best course of action is to find something that works that is scaleable and keep working on it rather than looking for new projects or partners. I wish I had come to this realization earlier but I've never really had a mentor to help me get there quicker. I'm not sure it would help as I have been told that I am uncoachable anyway. That said, I am always happy to share my own experiences and evolving perspectives these days to anyone who will listen. That's why I do "Ask Buck" shows like the one I recorded for you this week!

Everything was fine until I got up from that recliner and walked down the stairs of my parents home to call it a night. Suddenly something seemed very wrong. It was like I was in a dream. I could not keep a thought and my whole body started to feel very heavy. I made it down stairs and saw my wife getting ready for bed. As I lie down, I felt like I was losing consciousness. "Olivia, call 911. Something is very wrong with me," I said. She looked very confused and I told her what was going on. She called 911 and the next thing you know, a couple of horribly out of shape paramedics showed up. My elderly parents also came down the stairs. My mother was terrified and took a bad spill on the stairs as the ambulance loaded me up. As a physician, I was trying to figure out what was going on. I had no chest pain. My vital signs were normal. But I couldn't stand up, my body was tingling all over, and I had an impending sense of doom. I didn't know what was wrong, but I knew it couldn't be good. As the ambulance took me to the University Medical Center (in case I was having a stroke), I felt that there was a very good chance that I was about to die. I was terrified of losing consciousness for fear of never waking up. I started thinking about my wife and kids. Had I set them up properly? Christian and Rod were finalizing a significantly larger life insurance policy for me that was lacking just one thing—my signature! I couldn't believe it. Had I taken care of that a day earlier, my family would have been set for life. Now I was thinking about what I actually had and wondered if it would be enough. I also started wondering how my wife would ever know about where to find all of our investments. I had not done a good job of keeping her in the loop on the basic stuff. Just imagine my poor wife, Olivia, trying to get into my crypto accounts! What a nightmare. And all that investing and deferred gratitude—was it worth it? Would it really have hurt if I had splurged on that Vintage Ferrari that was up on my bulletin board or that 1967 Lincoln convertible that I passed on for more real estate positions or bitcoin? Indeed, all of those years of hard work coming down to these last few hours—all I could think about was how I didn't adequately take care of my wife and kids with enough life insurance and cars I didn't buy. When I got to the hospital, they put me through a myriad of tests. The good news was that they seemed to rule out anything big and bad. I started to feel a little better mentally at that point—maybe I was going to make it after all. Then, after a few hours of tests, I was given three liters of fluid and I started to feel normal again. As it turned out, it was a false alarm. I just had a very bad drug reaction and the fluids seemed to wash it all away. I spent that night in the hospital but fortunately went home with my wife and three little girls the next morning. I felt very grateful for being alive and seeing those little faces again. For the next few days, I was on a bit of a high and grateful for everything around me. And of course, as soon as I could, I signed those life insurance documents and vowed to make Wealth Formula Banking an even more important aspect of my personal portfolio. What would you be thinking about if you were convinced that you were going to die in just a few hours? It can happen to anyone at any age of course. Tyler Jenks, who was on my show a couple of times died suddenly a couple weeks ago. He was on Twitter posting videos just a day or two before that and there was no indication that there was anything wrong with him. And what about all of those people who got killed in the recent mass shootings? No one expected it. It just happened. I was lucky. Not everyone gets to "stress test" their own sudden death. I found that I wasn't ready for it but I'm getting another chance. Most of us never really think about mortality despite the fact that it remains the only guarantee in life. You may think of it as a depressing topic but I have to say that it is critical that we keep it in mind to live our best lives. To discuss my experience and help us all learn from it, I interviewed Dr. Colleen Crowley for this week's Wealth Formula Podcast. Make sure to tune in!

Is this market hot? Are real estate and equity prices too high? Invariably you are hearing this left and right these days. In fact, I can honestly say that I have been hearing that for at least the last three or four years. My initial response to the impending zombie apocalypse was to stop deploying capital. That was a mistake. While those of us listening to Chicken Little sat on cash a few years back, other investors made money hand over fist. So who's to say that that people sitting on cash three years from now won't be saying the same thing? It is very difficult to time the market. So, what do you do? If you lose money by not deploying cash and letting inflation eat away at it and if you are worried about deploying capital into an over-heated market, what's left to do? Of course there are options like building up cash in Wealth Formula Banking that may make sense for cash accumulation that is very conservative. However, another simple concept is to be selective of where you deploy capital! For those of you in Investor Club, you know that I am deploying capital heavily right now. Why? Well, the projects we are doing are not of the "buy and hope" variety. We are buying heavy value add properties and budgeting significantly for capital expenditures. We are not relying on market appreciation to increase the value of properties, we are creating value through forced equity. In doing so, we effectively deleverage ourselves and perpetually de-risk our assets. Am I afraid of an oncoming recession? Not really. A recession is part of the business cycle. We just happen to be in the longest economic expansion in the history of the United States. I fully expect a recession in the next few years. But a recession does not necessarily mean zombie apocalypse. We used to have recessions all the time that people barely noticed. Despite my belief that a recession will happen sooner or later, I am also of the belief that the next decade will be one of prosperity along with a fair amount of inflation. That long-term perspective helps me to focus on the idea of buying high quality assets in good markets and the creation of equity through value add strategies. Even if the economy slows and markets correct a bit, I consider this is a pretty solid approach and superior to sitting on cash that simply erodes in value over time. Now, I should point out that when times are good like they are now, it is also not a bad idea to take some profits off the table. If you were lucky enough to invest in real estate over the last five years, you look like a genius right about now—even if all you did was buy and hope. Selling a business is a pretty good play as well given private equity's on-going quest to find yield wherever they can. Whether you're selling a business or real estate, liquidity events can be very exciting. The idea of a big lump of money headed my way always puts a smile on my face. But one of the things you have to think about before it gets to you is how you are going to keep as much of it as you possibly can. If you don't, the tax man will be happy to take some of that big wad of cash out of your hands. Unfortunately, most people having liquidation events have little knowledge of all of the potential options that they have to defer taxes. In fact, there are multiple strategies to do so and my guest on this week's Wealth Formula Podcast is here to tell us exactly what they are. Don't miss it.

At a recent investor conference in Tenafly, NJ, I spoke on the topic of what I call Wealth 2.0. This is my preferred paradigm for investing that can be simplified into the the following equation: Wealth=Leverage(Mass X Velocity) Mass is simply the amount of money that is actually deployed into investments. After all, it doesn't matter what kind of return you get if you aren't investing any money in the first place. You've got to deploy enough to move the needle. The good news is that mass, like all variables in this equation, can be manipulated by the savvy investor. For example, paying attention to the tax implications of your investments can actually decrease your tax burden and free up more money to invest. Case in point, I have invested a significant sum of money into projects that we have presented through our Investor Club this year. I am estimating that, in addition to creating equity through my investments, I am simultaneously significantly reducing my tax burden for this year—up to 80 percent of all my invested capital should be tax deductible! How is that possible you ask? Well, It's because I am a real estate professional and can utilize bonus depreciation on all of my real estate investments (even those done passively in syndications). If you navigate the tax law thoughtfully, you will have more money to invest. It's that simple. Now let's look at the next variable—velocity. People often talk about a certain cash on cash return when they think about investing. That's useful, but I prefer to ask the question, "How long before I get my money back?". You see, 10 percent cash on cash is great but that means that for the first ten years of my investment, I'm just getting my own money back. I prefer investing in opportunities that get me ALL of my invested capital back within 5 years and yet still allow me to keep my equity in the asset. In that case, my cash on cash return is not five or ten percent—it's infinite! Think about it. If you have all your initial invested capital back in your pocket and still have equity in a deal, its like recycling capital and using the same money in multiple deals. That certainly speeds up the wealth building process—another reason to call this variable velocity! The last variable in our equation may also be one of the more underrated—leverage. Leverage is critical to building wealth. In fact, infinite returns as I have described above, are virtually impossible to attain without the skilled use of leverage. Most people familiar with real estate understand instinctually that leverage is important to making money in real estate. But when you do the math, the numbers can be staggering and explains why so many real estate investor have become so darn wealthy. However, leverage is not just about borrowing money from the bank. Inherently, the word leverage simply implies the use of a tool that amplifies ones efforts. Certainly bank money fits that description but there are many other creative uses of leverage that often go underutilized. For example, what if there was a way to leverage your charitable giving? In other words, what if you could support your cause by donating a certain amount of money that had the simultaneous benefit of amplifying the size of the deduction on your tax returns? Wouldn't it be great if you could donate $10K but get the benefit of donating 50K on your returns? Believe it or not, there are ways to do things like that. My guest on this week's Wealth Formula Podcast is in the business of land conservation. It's something that, in my opinion, is a very important cause that I would support even without the financial benefit. However, there happens to be some pretty significant leveraged benefits to this kind of giving so it's even more appealing. Suffice it to say, this is an interview that you simply cannot afford to miss!

Learning is an electrical function of the brain. When we first start learning something, our brains start developing connections to integrate that information. Over a period of time, those electrical connections become stronger and stronger giving the perception of something becoming second nature. It isn't until a basic function becomes second nature that you can then start adding layers. For example, a professional baseball player was, at one point, an infant who couldn't walk. Eventually he went on to develop his athletic prowess to the point where he might even chew tobacco while hitting a hundred mile an hour baseball with a piece of wood. At that point, he doesn't have to think about how to walk anymore. You see, expertise in things requires depth of experience that allows for complex neural circuitry to form and to make certain, more basic skills, run on autopilot. At that point, you are able to absorb information in multiple dimensions—some conscious and some not. This next level in learning allows us to function at a higher level. So how does this relate to investing? Well, becoming a sophisticated investor requires some of the same layering of information and development of neural circuitry to allow for a more comprehensive approach to personal finance. I've talked before about how novice investors are often attracted to the "good from far but far from good" investments. You know—the kind with big front end cash on cash returns that then depreciate to zero in just a few years. Seems obvious to avoid such things but cash on cash is a simple thing to cling on to for novice alternative investors after reading books like Kiyosaki's Rich Dad Poor Dad. It represents the metaphorical "learning to walk". Over time, the successful investor starts layering depth and complexity to his investing strategy. He might even start paying attention to the more nuanced lessons in the Kiyosaki books that are often overlooked at first glance. I will admit whole heartedly that there was a time several years ago that I was just "learning to walk". There is no shame in that. Over time, I just spent so much time thinking about this stuff that I got more sophisticated than most when it comes to thinking about money. That said, I've been around for a long enough time to know that five years from now I'll be a hell of a lot smarter than I currently am! Now, over the last several years, one of the most critical elements of investing that I have learned is to understand the importance of the interplay between deploying capital and taxes. In fact, I would say that taxes play a DOMINANT role in my investing decisions and, for that matter, my life decisions. Let me give you an example of what I mean. Say I earn $100K that I can deploy however I wish. For better or for worse, the first thing that comes into my mind is the fact that a big chunk of that is going to get sliced off and sent to the government in the form of income taxes. That is, unless I do what the government wants me to do like invest in real estate. You see, the tax code is largely a series of tax incentives. If you do what the government wants you to do, you will will be rewarded by paying less taxes. What does the government want you to do? It wants you to stimulate the economy through business activity and investments into things people need like a roof over their head. If I want to keep as much of my earned money as possible, I personally invest it in real estate. With cost segregation analysis and bonus depreciation, my investments not only serve to build my wealth in the future, but also decrease the amount of money I have to give to the government today. That is one hell of an incentive to ignore! Now compare that to investing your hard earned money into another opportunity that might be appealing but not so tax advantaged. For example, a lot of people in the alternative space really like debt funds that pay higher cash on cash returns than other investments. I get it—returns look great. But the way I see it, if I invest in real estate equity instead, not only do I get the benefits of tax sheltered income, but I also get to largely write off the invested capital itself! And don't forget, investing in real estate also gives you the upside of appreciation. Investing in debt has NONE of those advantages. I'm not saying don't do it—just look at it like a multidimensional investor rather then a rookie investor seduced by big cash on cash returns. Think about your investments holistically. Earlier, I mentioned that the tax code has not only influenced my investing decisions but actually some life decisions as well. You see, after I left medicine, I had to decide where to focus my time. I was already investing in real estate and enjoyed it so one of my options was to become a full time real estate professional. A real estate professional, defined by the IRS, requires a minimum of 750 hours documented real estate activity per year with no other activity that you spen

If you can't explain it, you don't understand it. Remember that the next time you look across the table at a financial advisor type and feel confused. Ask yourself if you could explain what you were just told to someone else with some level of confidence. If not, start asking questions because the advisor will not expect you to! You see, this is a set-up—a financial ambush so to speak that high paid professionals get caught up in all the time. Let's say you are a hotshot surgeon coming out of residency and you just signed a contract that's going to pay you $500K per year. You know nothing about about investing, taxes, or asset protection and suddenly, you have a bunch of new "best friends" who want to help you invest that money and do your taxes. The money manager starts talking about all these buckets and different kinds of risk and yield. He seems to know what he's talking about but you don't really get it. Even though you don't know how those different buckets produce the returns the way the guy said they would, you figure he knows what he's talking about. After all, he manages money for all the other guys in the practice. Instead of asking a lot of questions that might sound dumb, you decide to just to trust him and give him all your money. After all, like you, he is a "specialist". Let him do his job! Now, as a Wealth Formula Podcast listener this scenario may sound ridiculous to you, but I can guarantee it happens every year when surgical residents graduate and start making money. Even surgeons with massive egos are fooled into thinking that personal finance is too complicated for them and should be handled by a professional. After all, we have all been brainwashed into believing that by Wall Street. They want you to be afraid. They want you to think that what they do is so complex that you would be down-right irresponsible to take things into your own hands. It's actually a brilliant marketing play if you think about it. The idea is to weaponize complexity to generate fear. The highly educated, highly paid professional falls for it all the time! Do me a favor, next time you are in a situation like this with a money manager, tax professional or asset protection attorney, start asking them all the questions you can think of even if they seem stupid. After all, if they can't explain it, they either don't understand it or they are simply trying to make you feel dumb. None of this stuff is over your head. Furthermore, if you think you are too busy to learn about your own financial matters, you will pay a steep price that you won't discover until the end of your career when you look at your bank accounts and start wondering why you don't have more money. I see this all the time with doctors and other highly specialized professionals and its sad—people making hundreds of thousands of dollars per year for decades and winding up with less than a million bucks to retire! I am sympathetic though. The fear of complexity is powerful. I have to admit that I have followed the lead blindly into some things as well. A few years ago, I signed up for a foreign asset protection trust because it seemed like a good idea—and for me it was. The problem was that I didn't really understand the strategy very well. But the guy who recommended it to me seemed like he knew what he was talking about and was very confident that it was the right thing for me. And to be clear, he is a smart guy. But I always left meetings with him a little confused and frankly embarrassed to ask any more questions. I figured he knew what he was talking about and that he was taking care of me. When it comes to asset protection, that's pretty dangerous. After all, when push comes to shove, you have to know exactly what your situation is. There is no time to be confused in a knife fight! For better or for worse, I was in some asset protection knife fights over the past year after a business failure. Everything turned out ok but I found significant flaws in the way I was set up. It's never a good idea to stress test your protective mechanisms in real time but that's what I did. Since then, I have been on a mission to really understand asset protection at a higher level. I told my CPA Tom Wheelwright what I was trying to do and he recommended I speak with Doug Lodmell—my guest on this week's Wealth Formula Podcast. Doug is unique in that he is brilliant, practical and a great communicator. If you want to start understanding this stuff and protecting your assets in a practical manner, don't miss this interview.

Let me tell you about another one of my failures. A few years ago, I was listening to a well known podcast and I heard about this concept of turning single family houses into elderly care facilities. The idea sounded pretty compelling so I decided to go to the "course" in Phoenix. In fact, I went out there with another entrepreneur buddy of mine. In short, we both got sold on the concept (and I mean sold). The next thing you know, we were dropping five figures on a coaching/mentorship program. Have you ever bought something like this? I bet you have if you think about it. Good marketers know that people respond to fear and greed and this one had elements of both. Now I am not saying that this program that I signed up for was worthless. I did learn a lot and I believe that had things gone another way, I could have had a successful small business on my hands. However, a lot of things got in the way. First of all, I bought a house that was clearly zoned for such conversion, but it was clear that the neighbors were not going to have it. But wait..if you are zoned properly, shouldn't you be able to do whatever you want to do? Not really—that's where the theoretical and the real world of local real estate politics collide. In short, the neighbors were making me jump through all sorts of hoops that they knew would be time consuming and expensive. The proposed traffic feasibility study alone would have cost me tens of thousand of dollars. In the end, I asked my business attorney if the neighbors could really stop me and he said, "no, but they can make you wish you had never started". Now understand that while all this was going on, I was making a lot of money doing things that were not nearly as hard. Had I known what kind of effort would go into this, I would have never started. So, I decided to just sell the house. A couple of weeks after listing the house, my broker called me up and let me know that he had taken a potential buyer to the property and that a pipe had burst. There was water everywhere and he could already smell the mold. Fortunately, I had insurance and it covered me for just about everything. We got permits and the contractor started to work. But things were going unusually slowly. A year later, the contractor had made very little progress other than to tear the thing apart. It started getting ridiculous. There was all sort of excuses for delays that made absolutely no sense. Eventually, the contractor confessed that he had taken the money and bought a couple of other houses to flip. The problem was, he couldn't sell the houses that he rehabbed! Can you believe that? He then agreed to return the money to avoid litigation…until he spoke with an attorney. Then he denied ever saying he used up the funds to buy other houses. The next thing you know we were off to the legal races. If you want to know how this thing ended ask me next time you see me. But suffice it to say, this did not end up the way I wanted it to. When all was said and done, I was down over $250K with nothing to show for it. Now, I don't blame my coach/mentor for this. The service provided was reasonable and had circumstances been different, I might have had a profitable little business. But there was a valuable lesson there. No matter how you cut it, what I was embarking on was an extremely high risk endeavor. I was doing something that really had not been done before in the Chicago suburbs. It involved significant investment into real estate and there were an enormous number of moving parts—many of which were out of my control. For a guy with some highly profitable businesses at the time, did it make sense for me to take this on? In retrospect the answer was clearly no. Even had things turned out ok, the reward simply was not high enough for the risk involved. Understand that I am a serial entrepreneur. I have successfully started multiple businesses with seven and eight figure yearly revenues. But I have also failed on some. That's why, when it comes to my entrepreneurial activity, I never accept investor money. I am willing to take a lot of risk on my own dime but I'm leaving you out! So, losing money in that venture was not that big of a deal to me. I've lost a lot more than that with other efforts. But what bothered me about this one was that the upside was so limited. Why did I think it was worth it? Well, I think I had mistook a business start up for a real estate investment. When you hear about 30 percent cash on cash projects, that sounds pretty good to a real estate investor but it's not that big of a deal for a business start up. You should expect that kind of return from buying an established business. But for a start-up??? No. That's enough. For reference, my successful startups have had returns in the 400-500 percent range and have been incredibly scalable. That makes up for the big losers. The best case scenario for this start-up was 30 percent cash on cash, lack of scalability, and a ton of work and responsibility (it

We recently had a Wealth Formula Network call in which we talked about an offering some members were participating in that I didn't care for as much. One thing to remember is that smart people can disagree about things without anyone necessarily being wrong. I pointed out some things I avoid when I invest and the topic seemed to garner a lot of interest. So, I decided to share some of the lessons I have learned over the years. After all, the best way to become a good investor is through age and experience. The problem is that age and experience are hard to teach. When I did my first face lift, I thought I was good. But looking back after doing 500, I definitely was not. I had the basics down and got lucky with my results, but it was no where near mastery. When you are a young Turk plowing ahead full of energy, you look at guys a few years older and wonder why they are so cautious until, one day, you learn for yourself—the hard way. When you make a mistake that matters it will stick for ever. The good news is that while mistakes are critical to learning, they don't always have to be your mistakes. But in order to learn from others mistakes, you have to be humble and receptive. So, let me give you a few investing pearls that have come along with my graying hair. 1) When it comes to investing, it's not just about the numbers. It is also an over-simplication to say to "invest with people that you know, like and trust." Of course I truly believe that is a requirement. The problem is that I know, like and trust a lot of people with whom I would never trust my money. Would you trust your grandmother to choose where to invest your life savings? Look for people who you know, like and trust, then judge their competence by looking at what they have already achieved. A track record is important and really is the report card that you need to look at. Don't be part of someone's resume building exercise or someone's multimillion dollar lesson if possible. If someone has a full time job as a software engineer and trying to get you to invest in their $20 million dollar real estate acquisition so they can work toward quitting their job, politely decline and say you might be interested in 5-10 years. 2) Avoid "good from far but far from good investments". Every species has some kind of physical attribute that make it more likely to reproduce. Think of the peacock with colorful patterned plumage fanned out for display purposes to attract a mate. Investments have similar qualities that are irresistible to investors and deal sponsors know it. Cash-on-cash is probably one of the most attractive features to the novice investor because, on the surface, high cash on cash numbers can be pretty seductive. Everyone loves the idea of replacing their income with passive cash flow asap. Let me ask you this—would you rather get 25 percent cash on cash or 7 percent cash on cash? 25 of course, right? Well, what if the 25 percent depreciated down to zero in 4 years while the 7 percent cash-on-cash investment increased in value by 100 percent? All investment proformas must be considered holistically. As investors, we should be looking at the profit we make from our investments rather than being content with monthly checks that represent our own money being given back to us in small increments. I would suggest looking at investments in terms of annualized returns or internal rate of return instead. In the process of making this calculation, you will need to get an idea of how the investment will be exited. In some cases, you may discover that there is NO EXIT! No exit is not a good thing—tough to get a return of any kind on that. 3) Risk should be factored into your expected return as well. Many of the real estate deals we see in investor club project an annualized return of 18-20 percent—approximately doubling your money every 5 years. That's pretty good right? I think it is. After all, we typically deal with tried and true multifamily real estate. If an apartment building has been around since 1980 in a nice market, that's essentially a highly stable business that's been around for 40 years. The risk of this business is significantly less than a start-up business that lives only in the imagination of the entrepreneur. Real estate investors really get messed up on this one. Established real estate is pretty low risk in competent hands. That's why we are happy getting 8-10 percent cash on cash or 18-20 percent IRR. Those are great numbers for real estate. But the level of risk for a small start-up is significantly higher. If you buy a small business from a mom and pop, you are going to pay 2-3X profit. That means that you should expect 30-50 percent cash on cash on that business. Why so much higher than real estate? Risk! Now, I see people advertising investments in start-ups with returns projected at 8-10 percent. Does that make sense to you? Maybe it does to you, but not to me. Higher risk should mean higher reward. Make sure you don't compar

Last week, I got a few emails wondering why I was sending out "scammy" emails from my friend Teeka Tiwari about investing in pot. Actually, I totally understand. If you don't know Teeka, those emails might sound a little bit like snake oil advertisements. As you know, I pride myself on not being a platform for internet marketers or for people raising capital that have no clue what they are doing. Early in my podcasting days, I was less careful about who I interviewed. I was more interested in the idea of exposure to broader alternative investment opportunities without necessarily advocating for anything. As a podcaster, I thought that I was just providing education and that people would understand that and not jump to the conclusion that I was supporting a particular investment. The problem is that once you get behind the mic, whether you like it or not, you end up being a bit of an influencer. So, you have to be careful who and what you expose to your audience. You see, there is a lot of noise out there and most of it is worthless. The challenge is to figure out who to take seriously. In my own experience, you cannot draw a direct correlation between marketing efforts and value. In other words, there are individuals who market heavily who actually are worth listening to. Robert Kiyosaki is a good example. He is a master marketer. He is so good at marketing that you don't even know that you are on the receiving end of it when you are. I recognize that. I also recognize that Robert's books and philosophy have fundamentally changed my life and the life of hundreds of thousands of other people. Newsletters are particularly difficult to assess. The very business model of a newsletter is to sell newsletters. But if you can't make any money selling newsletters who is going to actually write them? How do you get more people to buy them? The answer is that you have to advertise. Now, does that mean that a newsletter is not valuable because it is being advertised heavily? In my opinion, the answer is no. There are some really smart people writing newsletters with tremendous value who market like crazy. Marin Katusa and Doug Casey are just a couple of examples. One of my favorite newsletters is Palm Beach Confidential written by Teeka Tiwari. The focus is cryptocurrency. I have been a subscriber to it for two years and, although the cryptocurrency market has been frozen for some time, I have really learned to appreciate how much time and thought Teeka puts into his work and his approach to speculative investments. I don't agree with everything he says or recommends, but he works his tail off and is one of my primary sources for cryptocurrency news and information. That's why you have been getting emails from me about Teeka's latest venture into the cannabis space. Teeka works under the umbrella of a marketing machine called the Palm Beach Research Group. I don't have an opinion on most of what they do because I am only concerned with individuals that provide the underlying content of a given newsletter. When I found out that Teeka had focussed on the cannabis space, I was happy to support him. A lot of people in Wealth Formula Nation, including myself, have been trying to figure out how to get exposure to cannabis investing while avoiding all the shady characters. That's a tough job. But that's the focus of Teeka's latest venture and, if anyone can do it well, I think Teeka can. Check out this week's Wealth Formula Podcast as I interview Teeka on the topic of cannabis investing and you will get a sense for why I decided to support him. P.S. If you want to find out more about his latest work on pot, click HERE.

Debt is like a lethal weapon. It can be used for good and it can be used for greed. It can be used to create wealth and it can be used to destroy it. In short, debt is nothing more than a tool. The problem is that a fool with a tool is still a fool. Debt gets a bad name because of this. But the reality is that, in skilled hands, debt can be used to create unlimited wealth. In Investor Club, we use debt to create the extraordinary strategy of infinite returns. We also use it in Wealth Formula Banking and Velocity Plus. Debt is the weapon of the wealthy. Unfortunately, it is also the opioid of the poor who often use it to pay their bills. In situations like that, debt can be downright deadly. That said, like a loaded gun with good intentions, sometimes debt can explode at unexpected times and create unexpected casualties. That's why it is always important to respect it and fear it… just a little bit—like driving a motorcycle. If you don't, it will take you out in a flash. Many smart entrepreneurs have experienced this first hand and gone through the painful process of dealing with the repercussion of good debt gone bad. Jorge Newbery is one of those guys. He is a serial entrepreneur and, using debt, was worth millions of dollars as a real estate entrepreneur. Then it suddenly went south—literally an act of nature took down his empire. A lesser entrepreneur would have been wiped out for good. Not Jorge. Not only did he overcome the debt, but he built an entire career based on it. And he's got fantastic insight on how to deal with it now. Debt is a big part of getting rich. Learning about it is a key to becoming wealthy. That's why you should listen to this interview with Jorge Newbery now.

These days you hear a lot of people use the word "sustainable". It's actually one of those words that I don't really understand very well. I guess by definition, it means something that you can keep on doing in perpetuity—something you can recycle and use over and over again. In that regard, the kind of investing I advocate for is "sustainable investing". Those of you in investor club know that one of the primary strategies I look for is called "Infinite Returns". The idea is to shoot for not 8 percent or 10 percent cash on cash, but instead, we want all of our invested capital back in our hands in 4-5 years while maintaining equity, cash flow, and eventually the benefit of capital gains. Meanwhile, we use the money pulled out of that first deal and recycle it into the next. It sure is a lot easier than just making more money. Anyway, the problem with the word "sustainable" is that it sometimes gets a bad rap from us capitalist types. It's a word that has some loaded connotations with imagery of hippy socialists trying to tax us into carbon submission. That's why I don't think I will ever use the phrase "sustainable investing" when describing my own strategies, although it sure seems appropriate. Imagery aside, there appears to be a growing capitalist case for renewable energies that just might not be easy to ignore over the next few years. Just like computers doubling their power every couple of years, it seems like Moore's law is starting to apply to alternative energy sources as well. In other words, in the next decade, you might see a massive shift in energy resources not because people worry about the climate impact of fossil fuels (which I do), but rather because it is so much cheaper to use the alternatives. It's just the way capitalism works. I've heard multiple smart individuals talk about this in the past year and I think its worth actually thinking about critically as an investor. So, I thought it might be a good idea to have someone on the show who can intelligently speak on the topic. Hunter Lovins certainly can do that and she is my guest on this week's episode of Wealth Formula Podcast.

We've had a number of webinars and podcasts related to tax mitigation over the last several weeks. Unless you are new to the Wealth Formula ecosystem, you know that when we think about investing, we think not only about how much we are going to make, but also what we are going to keep. For those of you in the accredited investor club, we've talked about the power of utilizing bonus depreciation for passive investors, and investing in assets that are tax friendly. My friend and CPA, Tom Wheelwright, says that the tax code is simply a series of incentives for investors and small business owners. If the government wants you to behave a certain way, they can get you to do that through tax incentives. Oil and gas investing is a good example of this. Much of the world's oil reserves are in countries that don't like us much, so energy independence is desirable for our country. That's why investing in oil and gas drilling in the US has significant tax benefits. Investing with tax benefits in mind can become kind of addicting and it is important to keep tabs on yourself. You want to be careful not to let the tax wag the tail. In other words, tax incentivized investing is valuable but it's even more valuable to actually make money. After all, you aren't going to get taxed on investment losses anyway. With the new Trump tax code, it is still my opinion that bonus depreciation is still the most powerful and useful benefit available to investors like us. Theoretically, however, there is another new law that is also pretty compelling from a tax perspective. It involves what are called opportunity zones and they are being talked up big in the real estate podcast world. Is it the greatest thing since sliced bread or a bunch of hype? Well, I finally got someone on the show to talk about them. My guest this week on Wealth Formula Podcast is Mauricio Rauld. Mauricio, as you may know, is my SEC attorney and an overall great guy. He starts out by giving us a little review on the guidelines for investing in private placements and tells you what to look out for given his breadth of experience. Then we get into the nitty gritty of Opportunity Zones on which he has become an expert. Quite honestly, I thought I knew more on the topic than I did before talking to Mauricio. If you are a serious investor, especially if you are trying to figure out how to deal with capital gains taxes, do not miss this show.

I am a lousy trader. I've said it before and I fully recognize this fact. That's why, I try very hard to stay focussed on investing rather than trading. Nevertheless, I still get trapped in behaviors that I invariably regret. For example, you may know that I am a believer in bitcoin. I truly believe this will be one of the best investments of my lifetime over the course of the next few years. That's why when it dropped to $3100, I should've bought some more. But, I didn't because I got greedy. I figured it might drop even more so I waited. The end result was that by the time I bought more, it had actually doubled in price. Now, over the long run I still think that's not a bad price at all. Especially considering I believe that we will see $100,000 bitcoin within the next couple of years. However, I was kicking myself because I was timing something instead of just recognizing that it was a good time to buy. In the heat of the moment, it's hard to remember Warren Buffett's wisdom. Here's a good quote for you. "It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price." The point is recognize when you have a good opportunity and can buy a quality asset at a fair price and just do it! Now some of you may disagree with me that bitcoin is a "quality" asset. We can agree to disagree. However, let's focus on that principal with another example. One of my friends is a famous home designer and is particularly well known amongst Hollywood celebrities. He told me about a house he once put on sale in Los Angeles. At the time, it was the most expensive house per square foot in all of Los Angeles. He had a very motivated buyer who happened to be the daughter of a well-known tech billionaire. My friend said that dad had three questions before he bought the house for his daughter. 1) Was the house in a desirable area? 2) Did the house have a great views? 3) Was the house built well? The broker assured him that all three answers were a resounding yes. The billionaire went on and bought that house for his daughter at full price. And, that house which was the most expensive house per square foot in LA at the time (in 2007), sold for a significant profit only 10 years later even after the housing correction. The moral of the story?—most of the time when we think we are saving money, we really aren't. It may be more expensive to buy a higher quality asset or an asset that is in a higher quality area. However, over the long run, you will come out ahead. Think of it this way. Ikea furniture is not going to appreciate. So, if you can afford it, buy something that might appreciate so that, someday, you have something of greater value. This is the kind of perspective you get over time. That's why it's a good idea to listen to people of been around for a while. Tyler Jenks is one of those guys. He's been in the financial industry since 1971. That's before I was even born! Tyler can speak on a broad base of financial topics with perspective that is both unusual and multidimensional. From the S&P 500 to gold and even to bitcoin, Tyler is a wealth of knowledge as you will see on this week's Wealth Formula Podcast.

You might remember me talking about a part of the brain called the prefrontal cortex (remember I spent some time in the brain surgery business). The prefrontal cortex is the CEO of the brain. It's the part that's really good about making good decisions. For example, if you see a teenager doing something very dangerous and potentially lethal, it may be due to a poorly developed prefrontal cortex. And, if you think to yourself, "I would have done the same thing when I was 16. What was I thinking?", the answer is likely that your prefrontal cortex has since become more mature. In fact, the prefrontal cortex seems to continue maturing until your late 30s and early 40s. The scientist in me wonders why that might be and I have come up with an evolutionary theory. You see, when you are younger, you need to be fit and take some chances to survive. A young caveman would need to hunt and not be afraid to chase down a wild boar that could, in fact, be a danger to him. Wisdom, on the other hand, may lead him to back down for fear of injury and to starve to death instead. But, physical prowess begins to decline for humans beginning at around age 30. Just look at NFL running backs—seems to be the magic number. In evolutionary terms, by the time you are in your mid-30s, you are pretty much useless. You've reproduced and you are not as fast as the twenty year olds. The rest of the tribe is not going to find much value in you. You are simply a waste of resources. That is, unless you have something else you can offer the tribe that younger people can not offer like say…wisdom. Recall that living well into your seventh century and beyond is a relatively modern phenomenon. Even in the United States, someone born in the 1880s might expect to live to 40. That was old back then. So, perhaps the maturing of the prefrontal cortex in the third and forth decades of life coincides with the slowing of the rest of the body and provides a reason for the young hunters in the pack to keep you around instead of pushing you down a river in a canoe with your arms wrapped behind your back. Anyway, it's just my theory. But I must say that my prefrontal cortex really took off since I hit my late 30s and I feel like I am becoming smarter every day—even if my body seems to be headed the other way. It's strange to think of myself a decade ago. I was a completely different person and definitely not as smart as I am now. How I would have loved to ask "Buck Today" a few questions back then—even though I was probably too stubborn and dumb to listen anyway. It would have been nice to have me around. Speaking of "Ask Buck", that's the show for this week on Wealth Formula Podcast. Hopefully you get something out of it—at least enough to keep me in the tribe instead of sending me down that river.

In recent weeks, I have had a series of webinars for Investor Club called the Tax Day Postmortem Series. Investor Club is the Wealth Formula accredited investor email list. The webinars so far have been for strategies limited to accredited investors such as oil and gas and conservation easements. However, we will have some coming up that will be available for everyone to watch. That said, there is no question that there are more strategies for tax mitigation for people with more money. I guess that makes sense since they are the ones paying more taxes. In addition, the reality is that there are always more financial opportunities for the affluent than there are for the middle class and poor. Whether or not you think its fair is irrelevant. It's just the way it is. The good news is that most people, accredited or not, have opportunities to legally lower their taxes that they just don't know about. The key is to make learning about different strategies in tax mitigation as important as learning new strategies in investing and/or making more money. They all go hand in hand. Of course most of what I learned about tax mitigation strategies comes from my CPA, Tom Wheelwright, who is a genius in the space. But that doesn't mean I don't keep trying to learn from others. In fact, I have learned a few things along the way that some of the most sophisticated accountants don't even know about. The key to becoming an expert in anything is to learn everything you can from as many sources as possible then think for yourself. Cast a wide net on who you listen to and pay attention to everyone. When it comes to tax mitigation strategies, I have done this for years and it has really paid off. The truth of the matter is that most people I talk to, outside of Tom Wheelwright, are not telling me things that I don't already know but sometimes I catch a pearl or two. Or, I just hear the same thing from a different perspective that makes you understand it better. That's what happened to be me with Wealth Formula Banking. For that reason, over the next couple of months, I will have a few different voices on similar topics come on the podcast. This week on Wealth Formula Podcast I have Diane Gardner on the show. She's not a CPA but rather a tax coach. I didn't know who she was nor did I know exactly what a tax coach was but I was open to the idea of letting her try to teach me something. Why not? So, in the spirit of casting a wide net of knowledge sources, I encourage you to listen to the show and try to identify at least one thing that you didn't know before the episode. Let me know how it goes.

Back in 2014, two of my medical businesses were KILLING it. I was making money hand over fist. Unfortunately, however, I made a mistake that many entrepreneurs make. Instead of taking money off the table and putting most of it into stable assets, I decided to dump the majority of it back into the business to grow even bigger. In fact, I went on a national campaign opening offices across the country all on my own dime. I figured if I could crush it in Chicago then it would be a cinch for me to do the same in middle-markets across the country. I was fueled by people around me telling me that it was the right thing to do which emboldened me even more. Unfortunately, I was wrong. As good as I am as an entrepreneur seeing opportunities at a high level, I didn't know what I didn't know about being a multi-state operator. I didn't have a sense for the staff I would need, the time it would take to turn profitable, or the marketing capital I would need to put on the line for a successful campaign. I learned a lot from that failed national campaign and lost a lot of money. In hindsight, the smart thing for me to do back then was to milk these high performance businesses for all the profit and buy as much real estate as I could. Had I done that, I would have been millions of dollars ahead of where I am today. You see, there were lots of opportunities in real estate in 2014 that were ripe for the taking. Luckily my friend Rick, who is a mortgage broker in Chicago, sent me a couple of apartment buildings that he thought I should buy and, fortunately, I took his advice. While I lost millions of dollars in that failed national expansion of 2014-2015, those buildings I bought ended up being a gold mine. In 2018, I sold them for 500% and 600% returns. It was a good chunk of money. It was still not even close to the losses I incurred on the failed business venture, but it showed me the power of staying disciplined and not getting greedy like I did. At the time, buying those buildings didn't seem particularly exciting. I knew that real estate is where I wanted to invest, but it was a lot more fun making money rather than investing it. Now I understand the power of investing and I also understand the power of boring. What do I mean, boring? I mean that when you find something that works or an operator that you like, you don't have to keep playing the field. There is nothing sexy about multifamily real estate or self storage facilities, but they make for great investments. If you are a passive investor that has found a group or two that you like, you don't have to go find another group to "diversify". I can tell you from experience as an investor, boring works. On the other hand, there is no reason not to take a little money to play with on high risk high reward endeavors. If you want to grow your business, do it. But don't put every penny you have into it and create a single point failure scenario for yourself. As you might know, my hobby these days is cryptocurrency. Of course that's where I use money that I would otherwise blow on a Maserati or vintage sports car. Maybe I'll get lucky and 100X on my portfolio…you never know. However, most of my money is still going into real estate with the same old operators. Speaking of topics that might not seem sexy, this week's podcast is an interview I did with the founder of Harvest Returns. Investing in agriculture may not sound exciting, but people do need to eat and, as far as I can tell, that's not going to change anytime soon. That alone should get you to listen to this week's Wealth Formula Podcast.

Lately, I've been getting a lot of questions from investors on how to choose investments—particularly private placements that are readily available to accredited investors. First, let me be clear that there is no magic solution to getting all of your investment picks right. In fact, if you invest long enough, something will go wrong. Next, nothing I say should be construed as investment advice. All I can do is to share my experience. Experience is the way I have learned the most. I started looking into private placements about 7-8 years ago. My primary focus was something I felt like I knew a little bit about—real estate. But from there I had no roadmap to follow. Where do you start when you are new at this stuff? Well, unfortunately I started with google and ended up finding a guy who is a bit of a charlatan in the space. I spoke to him and he suggested that maybe I join his team given my real estate experience. That sounded like a great idea. Essentially, I would get to participate in the limited partner side and the general partner side and leverage that part as well. And, I reasoned, I would learn something about being a fund manager in the process. So, I signed up. Every week there was a team call and this guy would lead it. You see, I was not the only one he thought was special and worth bringing on to his exclusive team. There were a lot of us special people. We came from different backgrounds but we all had one thing in common—we all had a circle of friends/community that had money. In my case, I was tagged as a guy who could bring money in for doctors. Ok. So, that in and of itself is not a bad thing. In fact, if you can bring people to great opportunities and get some additional benefit for yourself, that's great. You are solving a problem and helping others in the process. Now…here was the unfavorable part of this fund. On these team meetings it was very clear that this self proclaimed "hedge fund manager" had very little interest in making investors money at all. Every conversation was about the fees we could charge (which he kept for himself) and the need for us partners to bring in more money. He urged me countless times to put together a group of doctors for him to speak with and even to get my father involved. Luckily, I didn't. It was pretty clear to me that this guy was a shyster and that I should distance myself from him as soon as possible. In the end, the money I invested was lost. For the last 6-7 years I have been receiving a K1 with no income. Meanwhile, I know the guy made a ton of money up front and doesn't really care about losing investor money in the least. So, what mistake did I make here? Well, I looked him up on google and he was a guy who made the podcast rounds and even spoke at events. He was a great salesman. I mistook that for someone who was a good fiduciary for my money. You think that is an uncommon mistake? Think again. While a number of these individuals that are prominent on social media and on the podcasting circle are not crooked, they have not really proven anything to you other than that they are good at getting your attention. So, if not google then where do you start? Well, in this age of the internet and social media, I actually rely on something a lot more mundane—positive feedback from previous investors who I know like and trust. The real estate operator that I work with the most did not find me nor did I find them on the internet. I found them through people in our investor club that told me about their experience and the kinds of returns they were seeing. That's what got me initially interested. Next, I did some good old fashioned reconnaissance. I talked to several different people on their team, tracked the ongoing sentiment of known investors of theirs, and made a trip out to walk properties with them and meet them in person. Finally, I got a stellar reference from someone within the same field with tremendous integrity. With that kind of social due diligence, I felt very comfortable moving forward and looking at the numbers and track record closely. Notice how the numbers came at the end and not the beginning. Anyone can make an investment look good on paper. In fact, I can honestly say that the glossier and fancier the offering memorandum, the less I trust it. I want to know the people and know the numbers…in that order. Of course not everyone has the time to do vetting like that and that's why a group like our accredited investor club provides a useful team approach to utilize collective wisdom. At the end of the day, it's not all that easy to find good operators. That's why I don't work with more than a handful of them. After all, the wealthiest people in the world get there through specialization and focus, not by chasing the next shiny object. Just look at Warren Buffet. My guest on this week's Wealth Formula Podcast today can attest to what I'm saying. He's been around some of the wealthiest Americans in the country and has learned the secret

When I first described by "work" to my CPA, Tom Wheelwright, he said, "So you are an entrepreneur who just happens to be a surgeon". I hadn't thought about it that way, but I guess that's what I am. Now listen, I don't take the label "entrepreneur" necessarily as a complement. It's more of an affliction than anything else. If you are an entrepreneur, you know what I am talking about. We can be a real pain in the ass for our significant others with all of our bright ideas and, often, our miserable failures. I often wish I had a personality that allowed me to simply be content doing the same thing for twenty years as a high paid employee and just enjoy my life. But…it's just not in my DNA. What is an an entrepreneur anyway? Of course we tend to think of entrepreneurs as people who start businesses, and by definition, that's true. But more than that, however, entrepreneurship is the love (maybe even the addiction) to solving inefficiencies or problems. If you can find a problem that is not being adequately addressed, you have a business opportunity. And for us entrepreneurs, discovering that opportunity is a rush. That said, everyone has a million dollar idea but only entrepreneurs are the ones foolish enough to act on it. To be clear, my entrepreneurial life has little to do with what I talk about on Wealth Formula Podcast. Wealth Formula is about investing the money you earn. You may earn your money by working a high paid job like a doctor or lawyer. I make mine by owning businesses. My businesses buy my real estate (I heard Robert Kiyosaki say that once). Wealth Formula has, however, turned into a business and the problem it addresses is the lack of financial education people have along with the minimal exposure to investments outside of the Wall Street paradigm. Admittedly I did not start my podcast with any idea that it would turn into a business, but because I was addressing a problem many people have, it became one. When it comes to investing our money, there are also a lot of inefficiencies in the system and problems that need to be solved. For example, how do you invest in 10 real estate opportunities through private placements when you have $100K per year to invest and each deal has a $50K minimum. That's the problem that TribeVest takes on head first and I think the concept is simple but brilliant. If you are an active investor and are trying to figure out how to get exposure to more investments with finite resources, you are going to want to listen to this week's episode of Wealth Formula Podcast.

It's funny how long lasting paradigms perpetuate without question for centuries without being questioned. It used to be in most places, specific religions were mandated by the government to its people and heretics were persecuted. Of course that still exists in many parts of the world but the point is that a large part of the world does not see that as simply status quo anymore. If you live in the United States, for example, you would likely feel very uncomfortable with the idea that the government chose your place of worship, what you ate or drank, and what you wore. Why is that? The answer to that, again, is that we tend to let outdated paradigms perpetuate without questioning them. They become part of conventional collective reality that few even think about questioning. Then, one day there is an awakening. The separation of church and state was one of those awakenings that has occurred gradually over time. Similarly, while this may sound like a bit of a leap, I believe that bitcoin represents the first modern step in separating money from state. I have been watching and studying this space closely and I have come to the conclusion that bitcoin is real and it's not going anywhere. And when you look around and see the infrastructure that is being built around bitcoin at the institutional level, that belief is no longer outlandish. A lot of smart money believes it's here for the long term as well. I'm talking about university endowments and even some pension plans. Bitcoin is not a fad. It's a movement that is unstoppable. It doesn't matter what the price of bitcoin is today. Its value is in what it's going to do to the world tomorrow and, in that sense, is grossly undervalued. In my opinion, you will regret it if you don't take time to understand bitcoin and its implications now. For that reason, I have invited a former Wall Street guy turned bitcoin purist for an interview on Wealth Formula Podcast today. His name is Tone Vays and you are going to want to listen to this week's show so you can start the process of learning what will, in our lifetimes, become a new reality in our economy.

Sometimes in this "alternative investment" podcast world in which we live, I hear about great "investments" that are yielding 20 percent or more. On the surface, they sound great. In fact, the yield part might actually be real. However, because we are so ingrained in the "investment" world, we often fail to see an obvious distinction that may not be so obviously disclosed. You see, there is a difference between investing and buying (or starting) a business. A business is inherently riskier than investing in something like real estate. Why? Well, businesses tend to have a finite life to them and often get phased out over time or just flat out fail. I've got a couple of those failures under my belt. And it's not just the little guys like me. For example, getting phased out by technology like the internet is happening left and right—blockbusters anyone? How about Sears. For some reason that catalog just stopped coming a few years after Amazon started. In the meantime, take a drive around Chicago or Boston and look at how many multifamily apartment buildings you see that are over one hundred years old. They are a dime a dozen! Needing a place to live seems like a problem we can't solve with technology yet. So, when someone comes on a podcast and makes a comparison between owning a business and investing without disclosing that they aren't exactly the same, they aren't being completely honest. Businesses are inherently riskier to own than assets like multifamily real estate. Now don't get me wrong—I made all of my initial money by starting businesses NOT by buying real estate. Like Robert Kiyosaki says, "My businesses buy my real estate". The idea is to take explosive earnings and lock them in to slow burning stable assets that create long term wealth. The entrepreneur's trap is to take that money and dump all of it back into his business. I've been guilty of that and gotten burned before and I see other business owners do it all the time. Knowing what I know now, it pains me to see them do it. On the other hand, if you have never owned a business, you might consider giving it a shot. Starting businesses from scratch is a little harder then buying established businesses for the non-business inclined. However, be aware that buying a business can be risky too. That's why instead of getting 8-10 percent like you might with leveraged real estate, you should be looking at getting 30-40 percent cash on cash returns. Beyond the higher returns, you also have a number of tax advantages when you own a business. Now, if you are one of those people tempted by the idea of getting into business ownership but don't really want to bet the farm on it, this week's Wealth Formula Podcast will be of great interest to you. My guest is from a business called Empire Flippers which brokers on-line businesses. Remember, brick and mortar is expensive but on-line businesses can have minimal to zero overhead with substantial upside. That should pique your interest!

I was just interviewed on a podcast earlier today and we got on the topic of gold. You know that I'm not a huge advocate for precious metals right now. Anyway, the argument became a little familiar. Ie. The global economy is going to melt down, there will be a zombie apocalypse and the only thing that zombies accept is gold and silver. A few years ago I would have gotten sucked into all of this and drank the cool-aid. But the reality is that I don't really see zombies headed our way anytime soon. That's why I'm not terribly interested in gold. Admittedly I do own a monster box of silver coins but I'm not even sure where they are. The zombies will likely find them before me. Anyway, the entire conversation got me thinking about what money is in the first place and where gold fits into that paradigm. It also got me thinking about cryptocurrency and why it seems like gold bugs should be all over bitcoin but they aren't. That curiosity led me to a site called GoldSilver.com. The site might suggest their primary interest, but I have found their founder, Mike Maloney, to be quite thoughtful in discussions regarding the history of money, gold, and cryptocurrency. So, I reached out to speak to someone and found Jeff Clark, one of their senior analysts. In this episode of Wealth Formula Podcast, we take another peek back into precious metals with a detour into the history of money and cryptocurrency.

You may know that by the end of last tax year, I sold most of the real estate that I held by myself—as owner and operator? Why? Well, first of all, I realized that to do real estate right, it really is not ever TRULY passive unless you have a full time operator doing all the work. The other thing that I realized is that for a busy person, finding the right operator with whom to invest passively is often MORE profitable than managing your own property. A good example of that is Western Wealth Capital—a group that many of you who are part of Investor Club know well. Cofounder and CEO Janet LePage was on Wealth Formula Podcast a few weeks ago and explained the operation that has produced investors annualized returns exceeding 30 percent on average. Let me tell you from being an owner operator of apartment buildings—it ain't easy doing that by yourself. That's why I have really focussed on a team approach to my investing and I know a number of you have made that decision as well. After all, you may think that you love real estate when, in reality, you love all the benefits of owning real estate like excellent returns and unbeatable tax benefits. Participating in limited partnerships can give you all the same benefits without the headaches. Now, last year I sold a few buildings and ended up with seven figures of capital gains with which to deal. I had to figure out if there was a way around paying the tax man. In my case, for better or worse, a failing business in Chicago provided some significant losses so I didn't get hammered as badly as I thought I would. But, as a general rule, I would not recommend that as a way to minimize your tax burden. I would have rather paid the tax! So, if I didn't have business losses to offset capital gains, what would my options have been? Before I tell you that, let me be clear that I am not a CPA so this is not official tax advice. However, I do happen to have a brilliant CPA so most of you know where I get this stuff. Anyway, one of my options would have been to invest as much of those capital gains into syndications using bonus depreciation as possible. That would have theoretically knocked out well over half the gains right there and actually allowed me to create equity in the process (let's get Tom Wheelwright on the show to explain that one). That's the only option I honestly knew about last year and probably the one I would still use at this point in my investing life. In recent months, however, I started hearing about another option that I found intriguing called a Delaware Statutory Trust. I had no idea that this was an option for me last year and I'm still not sure I would have used it, but the idea is pretty compelling. You see, there are options to doing 1031 exchanges with property that you don't have to manage yourself—and I'm not just talking about a triple net Walgreens which we usually think of in this scenario. This option that I just became aware of is called a Delaware Statutory Trust. It's similar to a syndication and limited to accredited investors. However, it is also a very intriguing option for those of you looking to get out of the real estate operating mode who want to avoid taxes and depreciation recapture. I love it when I learn about new things and I can share them with you on this show. That's exactly what I will be doing on this week's Wealth Formula Podcast with my guest Leslie Pappas of Archer.

Remember when you were a kid and you would go to the doctor? Your parents revered your doctor. The held him in high esteem. They trusted him. They would never say things like, "He's just doing that test so he can make some extra money" or "He's getting kickbacks from the drug company". These are the types of things I regularly hear when I'm in the Sauna at the local YMCA. Doctors and science are becoming decreasingly popular these days and it's from both political extremes. There are those on the right who deny climate change. You might be one of them. But…mainstream science disagrees with you. Similarly, you might be an anti-vaccination person most frequently observed on the left in places like Marin County. But…again, mainstream science disagrees with you. In fact, it's not just disagreement. These days, it seems like doctors and scientists often are the object of disdain from all over the place. A few months back, I was at a mastermind event for entrepreneurs and the mastermind leader in the room asked how many "functional doctors" we had in the room. I honestly did not know what he meant so I said, "Well, I'm a real doctor. Does that count?" You see there were literally twenty people in that room practicing some kind of alternative medicine without any degree at all. So, I just asked if being an MD actually counted as a "functional doctor". I got hissed at from a lot of people and told I was killing people instead of helping them by one person. I finally got off the hook when I announced that I hadn't practiced medicine in a couple of years and, as far as I could remember, never killed anyone. Anyway, it's not a good time to be "real doctor" these days. We are losing respect and we are losing reimbursement. For those of you who are sticking it out—fight for yourselves my friends. Now I should say that, while I am a "real doctor" or allopathic physician as we like to call ourselves, I don't disregard alternative therapies at all. In my view, if it doesn't hurt then give it a try. We don't always know why things work until later. Aspirin has been used for well over 100 years and comes from tree bark. I guess at some point someone was in pain and chewed on some bark and felt better. Who knows? Anyway, now we know why aspirin works. The same thing goes for acupuncture. Acupuncture has proven to be beneficial for a variety of ailments for centuries and has only recently been supported through scientific validation. For example, for years, people have claimed acupuncture helps with sinus problems. I wouldn't have believed it frankly but the studies came out and it actually does provide benefit to people with sinus problems. That said would I tell you not to try acupuncture if you wanted to give it a shot before the studies came out? Absolutely not! If it's not going to hurt you, and you think it might actually help, then give it a go. Anyway, one of the areas where there are plenty of non-validated treatments that many people swear by is in the area of chronic pain. This week on Wealth Formula Podcast, I will talk to someone who believes he has a novel means of treating chronic pain with greater than 80 percent efficacy. And…if you want to, you can even invest in this project. Full disclaimer: I have nothing to do financially or otherwise with this company. It is one more example of ways for you to invest outside of Wall Street.

To all those who made it out to Scottsdale last weekend, it was great to see you! Of course I'm biased, but I have NEVER seen such a high quality group of people at an investors event before ours. You guys are by far the most interesting podcast listeners in the entire podcast ecosystem—guaranteed. Of course the speakers were fantastic as well. Ken McElroy, Tom Wheelwright and David Steele from Western Wealth Capital dazzled us with their wealth of knowledge on real estate and related tax benefits. Damion Lupo taught us about using QRPs and also managed to sell a $1300 gold coin for $400 (nice going Eric!). And of course Christian and Rod reminded us how Wealth Formula Banking can enhance your profits even more with leverage. All of these speakers taught us a ton then we got to walk a property that Wealth Formula Investor Club members own that is already way-outperforming pro-forma in less than one year! Of course, that was a nice way to end the formal education but perhaps the best part of the whole event was getting to know each other. For those of you who attended the event, I know that you agree with that sentiment. If you enjoyed being part of the tribe in person, I just want to take this opportunity to remind you that you don't have to wait for the next get together to keep the party going. Consider joining Wealth Formula Network. There is a robust course with the likes of Tom Wheelwright, Ken McElroy, Kevin Day, and Dean Graziosi which helps you to get caught up with the foundations that every investor should have. In addition to this, however, you have access to me and to one another in a private facebook group and biweekly video conferenced mastermind calls. The people who are in it love it. That said, I'm not one to push things on you. If you are the type who loves talking about money and are looking for a fantastic group to do it with, go to WealthFormulaRoadmap.com and sign up. Now, going back to the meetup… there was one noticeable absence from the event. If you are in Wealth Formula Network, you already know who I'm talking about because we call him the mascot. He is also known as Goose! And there is no one better to debut for a new type of show that we will do periodically on Wealth Formula Podcast called The Real Investors of Wealth Formula. For investors like you, this might be a much better option than The Real Housewives… series. You see, what I realized at our event is that you guys got as much, if not more, talking to one another and hearing about your unique experiences, than you might have gotten from listening to the star-studded faculty. Anyway, let's give this series a try. And…do me a favor. Tell me what you think. I'm not planning to do this for every show by any means, but I think it's nice to have something every 6 weeks or so that includes you, the Wealth Formula Nation, into the show. So, when we come back, our first episode of the Real Investors of Wealth Formula starring Jerry "Goose" Gosnell! P.S. Check out Jerry's vacation rental: Goslings' Nest' in the beautiful Lake Placid region of NY- https://www.facebook.com/TheGoslingsNest/

Welcome back to the show everyone. I hope you enjoyed the show. If I were a dentist, I would definitely check this out. Think of it this way. The concierge aspect of the model is valuable in and of itself. If you don't care for cryptocurrency, immediately convert your crypto to dollars. If you want, keep some in crypto and see it potentially 100X in the next few years. Anyway, I like the idea and it may be worth checking out. Let's talk about some things happening in the crypto space right now. Nasdaq launched real-time information on two new indices linked to the crypto asset market —Bitcoin liquid index (BLX) and Ethereum Liquid Index (ELX) were both incorporated into the Nasdaq platform on February 25th. This is sort of like the Nasdaq composite with the end goal to bolster mainstream adoption by fusing crypto assets into traditional entities like the stock market. Bitcoin surpassed PayPal in yearly transaction volumes in 2018 with $1.3 trillion dollars more then doubling PayPal with just over $500 billion The CBOE/Van Eck ETF ETF wil have a decision on it made by April 5th—this was extended of course because of the government shutdown. Of course, BAAKT, the platform owned by the new york stock exchange owners—Intercontinental exchange—is still delayed with launch expected "later this year"—partnership with starbucks-not wanting to do it during a bear market. That it for me this week. This is Buck Joffrey signing off.

As you know, I have been on a kick to challenge myself to learn more about things that I don't know about and to challenge my personal investing dogmas. Recently, you saw me come out of the proverbial gold closet and proclaim that I don't see the point of owning physical gold. You can hedge the economy with appreciating real estate with leveraged debt and cash flow to boot. Who needs gold? Again. Please write me and prove me wrong but that's where I'm at right now when it comes to this beautiful but useless precious metal. On the other hand, there are areas that I went into thinking that I would be more excited about than I ended up being. To be honest, mobile home parks were one of those. I started looking at mobile home parks and mobile home funds recently expecting yield to be significantly better than apartments. No one buys low income housing for appreciation so I figured the cash flow must be super high and the tax advantages must be off the charts. But honestly, that's not what I found and so I'm back to being a true blue apartment investor. Recently, I got asked if I would like to have Jefferson Lilly on my show. I looked at his bio and was pretty impressed. He's a Wharton business school guy who lives in San Francisco. He's obviously smart. Furthermore, his bio said that mobile home parks were BETTER than apartments as an investment. So, I figured if anyone could convince me to leave my happy place outside of apartments it was him. So, on this week's Wealth Formula Podcast, you will hear that conversation and will give you a chance to make a decision for yourself. Don't miss this the show.

If I hadn't listened to Peter Schiff, I would have made gobs and gobs of money in the past few years. Now, don't get me wrong. I like listening to Peter Schiff's podcast. He is a very smart guy. In fact, he predicted the financial meltdown of 2008. It would be even more impressive if he had not predicted the financial meltdown of every other year that there was not a financial meltdown, but he did get 2008 right. Peter has a keen sense of the economy and a very strong perspective that you have to respect. I think the problem, in general, is that if you only listen to Peter, you might be only seeing his very narrow perspective on things. Let's take bitcoin for example. I started hearing about bitcoin back in 2015 or so when bitcoin was trading for under $300. The problem is that back then I used to listen to Peter Schiff's podcast religiously and every time he brought it up he was so damn negative about it. He made bitcoin sound like a big joke. Now, you may not be a bitcoin person, but if you dig down into the concept and the economics it represents, bitcoin should have been something that Peter actually supported. It is pretty much gold—but better in theory. Anyway, he was so darn negative about it that I never bothered to take it seriously. I didn't dig any further or try to listen to other intelligent voices with a different perspective. As a result, I lost out. Even at bitcoin's low this year, I would have still been up 1000 percent had I not listened to Peter back then. Now I don't actually blame Peter for not buying bitcoin in 2015. I blame myself. I blame myself for not listening to people with other perspectives then me. There were plenty of smart people like Eric Voorhees out there that made the case for bitcoin as clear as it is for me today. But I was too busy listening to the same podcasts who basically regurgitated what everyone else in the niche had to say. No one in the real estate/real asset niche knew a damn thing about bitcoin but everyone acted like it was a joke. My story of bitcoin opportunity lost has a larger message that must be taken to heart. Stop listening to the same source of information to make all of your financial decisions. You may think you are listening to a whole bunch of different podcasts but if the same guests keep popping up all the time then maybe you are just listening to the same ideas recirculating through a closed podcast circulation—sort of like an echo chamber. I don't want to be part of that. That's why I'm trying to get people on the show to explain to me why I'm wrong for believing what I believe. One of those beliefs that I have held for many years is the idea that I don't like commercial real estate. I don't like mini-malls, office space, or restaurants? I'm a multifamily guy for the most part. I want to invest in things people have to have…not what they want to have. So, today I invited a commercial real estate guy on the show who does exactly what I have said that I don't like to make his case for commercial real estate in 2019. Make sure to listen to this show—especially if you have the same bias as me.

Bitcoin and Blockchain are not dead. In fact, if you look at the history of bitcoin itself you see that it seems to have a feline propensity for multiple lives. After being battered and beaten up so many times, why is bitcoin not dead? I am reminded of a movie that I recently watched with my nine year old daughter from the late eighties called The Princess Bride. If you happened to miss this one, you really ought to see it. It's a very funny love story based in the the middle ages with pirates, kings, and lots of sword fighting. The love story is between a farm boy called Wesley and Buttercup. The two are separated as Wesley goes off to sea and Buttercup presumes he is dead. Years later, she is chosen by the local King to marry and she agrees although she knows that she can never love again. Now this king is a bad guy and he knows that Wesley is not only alive but coming back to claim his beloved. Eventually, Wesley is caught and tortured to death by the King's minions. However, Wesley's allies need him back alive to defeat the king so, after finding him apparently dead, they bring him to a magician who was recently fired by the King. This former disgruntled employee of the King, played by Billy Crystal, says that Wesley is actually "mostly dead" but refuses to help unless there is a true meaningful reason to bring him back to life. So, he pushes air into Wesley's mouth and squeezes on his chest. What comes out of Wesley's mouth is "true love". The magician admits that this is, indeed, the most noble cause to bring him back alive but tries to get out of it anyway. But when he finds out that bringing him back will help him get revenge on his former employer, the King, he agrees and brings him back to life. OK, so perhaps my metaphor is a little overboard, but just like "true love" was worth bringing back to life in The Princess Bride, bitcoin has been brought back from the brinks of "mostly dead" several times over because of what it represents. What bitcoin represents is the ultimate storage of value. It has all the traits of gold but it's better because it is portable and can easily be transferred from peer to peer thousands of miles away from one another without the need for a central authority like a bank. Bitcoin is not hackable because it is decentralized and there is a finite amount making it "unprintable". Like many people, up until 2016, I didn't get it and maybe I don't entirely understand even now. However, this concept of eliminating the middle man is so powerful that I now believe that it CAN NOT be stomped out by anyone or any entity. That powerful message, unfortunately, has been bastardized by many like Tai Lopez and other charlatans who took advantage of people with the idea of getting rich fast because of the explosive growth of cryptocurrency. The bubble created in the frenzy of greed and subsequent popping of that bubble has led to the current round of bitcoin obituaries. That said, the concept of bitcoin and distributed ledgers in general, is anything but dead. It is actually in its early years and it is simply experiencing the growing pains of any new technology or concept that is new to the world. There is value in what is being created and people will continue to make a lot of money in the future from it. They may do so through owning cryptocurrency or through creating the infrastructure surrounding this new economy. For example, collateralized bitcoin lending services have nothing to do with investing in bitcoin, but they make a lot of money through a fairly traditional lending business model. There is so much going on out there. It's just important to make sure you are listening to the right people. One of the legitimately smartest individuals in crypto today is Nic Carter. He is not a social media figure and he does not have a newsletter. However, for those at the highest levels of cryptocurrency investing and technology, Nic has a voice to which everyone listens. So, despite the polar vortex sweeping across the cryptocurrency world, this week I urge you to listen to my conversation with Nic on Wealth Formula Podcast. Shownotes: Nic Carter's background What's is Coinmetrics How is Coinmetrics different than bits activity and other competitors Castle Island Blockchain, blockchain, blockchain… When will the impact of institutional interest reflect the market? Learn more about Nic Carter https://medium.com/@nic__carter

If I have given you the impression that my life since leaving surgical training has been all ups and no downs, I have unintentionally misled you. The first business I started which was an owner operated medical business did well quickly its true. It allowed me to start investing in real estate. But that first acquisition I did not go well and it turned out to be a $300K lesson in how due diligence should NOT be done. I'm happy to say that my fortunes with real estate have, indeed, been quite good since that time. But some of my business ventures have been up and down. A few years ago when my initial medical business seemed to be slowing down (around 2012), I started to look around for business models within medicine that could hedge my position. My first business, as some of you know, was a cosmetic surgical business that was all cash pay and it still exists in Chicago. The second business was related to a business covered by insurance. I decided I would stop being an operator on the first business and focus on this second business to create that hedge as soon as possible. That was around 2014 or so. My hunch was that with this second, insurance based model, I was on to something and that there was a window of opportunity to take advantage of it. I was right. In fact, that second model made a seven figure plus profit in its first year and pretty much made up for the lagging cosmetic business. I felt like a genius for doing what I did. In fact, not only did the new business save the old one, it seemed to some how drive a lot of energy into the initial cosmetic business. All of the sudden, it seemed like everything I touched was turning into another million dollar business. I bought some more apartment buildings around that time which was a really good move as well. But…I also ended up doing something stupid. I decided that if my cosmetic business could be successful in the third largest market in the country, I could open up a few more across the country and really kill it. I figured if I could do what I was doing in Chicago in four other medium size markets, I could potentially walk away with $40-50 million dollars. Now, that in and of itself was not a bad idea. I've seen similar things done. In fact, a company emerged at around the same time that was doing almost the exact same thing. However, they had a couple of advantages over me. First, they knew what they were doing! I knew how to dominate one city and I had the staff who could execute what I wanted them to do. I did not have the operational skill set, nor did my staff, of replicating our business model in multiple different states. My competitor was staffed with professional operators and the deep pockets of private equity making sure to guide their investment towards success. That brings me to the other major advantage of my competitor: capitalization. I was making so much money in 2014, I figured I'd do the whole thing myself. My competitor was using private equity money with unlimited pocket depth that would see the project through despite a few years of multimillion dollar losses. Suffice it to say, I lost that battle. After losing a small fortune, I retreated back to Chicago. The good news was, that despite the failure, the two Chicago based businesses were still killing it but now a lot of that money was going into paying down debt from the failed venture rather than underpriced Chicago real estate. When I think about what I could have made with that money by buying more real estate in the Chicago rather than trying to expand that business is mind boggling. Everything was on sale. A couple of the properties I did buy during that era were sold last year for returns of 500% and 600% on equity (and they cash flowed all the way through the 3-4 year hold periods) In hindsight, what could I have done differently? Well, I could have just done what I said…taken all that money and dumped it into real estate and other investments outside of my core businesses. That might have been the easiest. Given how my businesses were doing at that time, I could have also looked into private equity, at least for the cosmetic business. I could have let them buy a portion of my company and help me scale with them. That would have allowed me to take some money off the table and share the risk with an operator who understood how to scale the way I wanted (the leveraged buy-out option). Either option would have been better than what I did. The truth is that it is all easy to see in hindsight. When you are making money like I was for the first time, it's hard to see clearly and you can feel invincible. Now, going back to business two—it was a business that I knew could make a lot of money but I also knew that it was not a long term thing. It involved procedures that people needed but for which insurance companies were paying a lot of money. I knew that wasn't going to last. The insurance companies would catch up with me. It was a business that I considered as having planne

It's so strange to think of the way our politics have evolved even in my lifetime. The first president I remember (barely) is Jimmy Carter. Most of grade school for me were the Reagan years. After a bumpy start, the 1980s became the roaring 80s. It was a decade remembered for wealth and excess. Remember Wall Street with Michael Douglas and Michael J. Fox as the Alex P. Keaton on Family Ties? The Republican party, at the time, was clearly the party of the rich and made little effort to concern itself with poverty and equality. Ideologically, it was a different mind sent. The appealing nature of the 80s was that it was aspirational. It was indeed Morning in America. After the hopelessness of the Carter economy, everyone seemed optimistic. That's why even the middle class, the traditionally democratic bastion of unions and the democratic party, defected. They became Reagan democrats. The good times continued through the 90s into the Clinton years. In fact, Clinton represented a new kind of democrat who embraced Wall Street and free trade. The old democratic party seemed dead and the difference between Democrats and Republicans was minimal. Rising tides raise all ships—even if some ships are rising more than others. A recent Brookings Institute analysis found that out of the last five presidents the largest annual income gains in the middle class occurred during the Reagan and Clinton years. In general, these were good times in America. People were generally pretty happy and optimistic. Now to be clear, there is a ton of data showing that it makes virtually no statistical difference to the economic performance of the country whether there is a Republican or Democrat in the White House. In fact, I hate to say it, but there is a very slight advantage to the democrats. What I'm getting at here is that when times were good economically for the middle class, there was less divisiveness in the country. It is no coincidence that over the last 2 decades, median household incomes have barely budged, wages are declining and that this corresponds to the rise of political and demographic divisiveness and demagoguery. Almost 80 percent of Americans believe that today's children will grow up worse-off than their parents. Think about that. That isn't Morning in America. That's downright depressing. Now what happens when people are not doing well and are worried about the future? Well, it starts with blaming everyone else for our problems. Maybe that's why anti-semitism and white nationalism is on the rise? People become more tribal and insular. They stick with their own and look for scapegoats. The worst example of this in recent history was, of course Nazi Germany which followed a horrific economic period of hyperinflation following the first world war as it was paying reparations. That was extreme but we now see a lot more divisiveness in our politics and both parties are pandering to our worst instincts. I really hate that my kids are growing up in this kind of polarized country. Now most of us are doing pretty well and we've made a lot of economic gains over the past several years after the great recession so it's easy to not recognize what is underlying all this strife. But that's a mistake. Why? Because eventually when enough people are hurting, they will come for us with pitchforks. Whether that's with literal civil unrest or 70 percent tax brackets suggested by the likes of Alexandria Ocasio-Cortez—it's time to take this seriously. There are a lot of smart people who you might not expect to care that recognize what is going on and who have spoken about it extensively. Robert Kiyosaki, Billionaire Charles Koch, CEO of Koch industries, and even libertarians who most people consider insensitive to the poor recognize this. Now, how to deal with the problem is another issue entirely. This week, we speak with a libertarian from the Cato Institute, Mike Tanner, who shares some common sense strategies that are more nuanced than simply raising taxes. In fact, these strategies are probably the ones that make the most sense but get the least actual political attention. Shownotes: Mike Tanner's background Inequality and poverty from a practical perspective What's wrong with the criminal justice reform system now? The effect of zoning laws Occupational licensing Unemployment insurance Cato.org The Inclusive Economy

Changing your personal financial belief system is like changing religions. Think about it. Maybe you grew up Christian or Jewish. Whether you practice or not, you have some pretty established beliefs. That's why it's not that common for people to convert from one religion to another. Maybe that's an extreme example but there is a parallel when it comes to changing your personal investment strategy. We grow up being told that the "responsible" thing to do is to find a nice financial advisor and invest in a broad portfolio of stocks, bonds and mutual funds. You see the commercials all the time, right? Well, this heretic can't stand those commercials! It drives me crazy because it reinforces the notion that there is a conventional financial pathway that is right and that it involves Wall Street. I broke away from that "religion" long ago and have followed the heretical path of real asset investing in "alternative" assets like real estate and precious metals. You gotta love the label "alternative", right? It makes you think of blue hair mohawks and nose rings—not the nice responsible looking people you see on those brokerage commercials. Now some of you know that I have been thinking controversial thoughts even within the "alternative" investing space lately. It's funny because I'm even a little uneasy about saying this but…I will come out of the closet. I no longer own gold. I know, I know. Some of you are disowning me as we speak. My own hero Robert Kiyosaki loves gold and, if he heard me say that I don't believe in it any more, he would never come on my show again. Fortunately, I'm quite confident he doesn't listen to my show so that shouldn't be a problem. I'll just wait a little while before I ask him to come back on again. For those of you who have not heard me explain my stance on gold—well, I just don't understand why I wouldn't just own more real estate instead. After all, the reason to buy gold is as an anti-dollar. Gold goes us as the dollar goes down. In other words, it's an inflationary hedge. But so is real estate. In fact, real estate also throws off cash flow and can be leveraged. It is no more volatile than gold and it has tax advantages up the wazoo. Taxes on the sale of gold, on the other hand, are worse than capital gains. Ok, so all that said, I'm still trying to keep an open mind. I'm talking to people and letting them try to convince me why I should own gold. And my guest this week makes some pretty compelling points. So, if you are trying to figure out whether or not you should own gold, listen to this week's episode of Wealth Formula Podcast. It may help you make the decision once and for all. Shownotes: Ken Lewis's background Out of all things, why gold? Gold's volatility What's gives gold its value? Owning physical gold How does Ken tie gold to blockchain? Passive income on the gold you own Real Estate vs Gold Onegold.com Apmex.com

Not everyone is that excited about blockchain. Especially these days as the market is about 90 percent down from its January highs. But remember, while the bubble was real, so is the technology. There is something here that will start to permeate our world—even if we have no desire to invest in cryptocurrencies. You see, blockchain and other distributed ledgers create a tremendous amount of efficiency. So-called security tokens essentially allow ownership of real things (just like a regular security) but allow for greater liquidity through secondary market platforms. Not surprisingly, we are starting to see blockchain projects creep their way into real estate. It's just a matter of time that title searches and escrow companies become as useful as syphilis doctors. The challenge, in my opinion, is identifying what projects are actually useful. What projects actually need a blockchain or create some additional value that is not already there. After all, it is well documented that a number of companies simply added blockchain to their name to seem more desirable in 2017. In fact, some publicly traded companies saw appreciable differences in their stock price after changing their names to include "blockchain". So, as much as I am a student of distributed ledger technology, I am also skeptical of many of the applications that I am seeing out there. In order for a project to be worth investing in, it has to create value that is not currently available. My guest today makes the case for the tokenization of real estate—specifically extracting equity from your personal residence through security tokenization instead of a home equity line of credit. He also speaks to the many other possible applications of blockchain to real estate investing. I thoroughly enjoyed this discussion with Matthew Sullivan from QuantmRE and, even if you don't care about cryptocurrency, you will find this interview interesting and useful. This brave new world of blockchain is here before us. You won't be able to ignore it.