7 Invisible Laws The Wealthy Know That You Don't

I matched this to the layout of the last two episodes (Gary Harper and Jordy and Brandon), which is the newest version of the template: ``` AI Sales Agents That Get You Signed Contracts On Autopilot: https://objectionproof.ai/yt-bac Maximize Your Tax Returns And Get Clarity On Your Financials With Our Tax Guys https://beccfo.com/ BONUS GET 10% OFF ON INVESTORLIFT Use promo code DISRUPTORS. https://get.investorlift.com/disruptors/ WANT TO BE A 100 MILLIONAIRE OR ARE ONE? Click here: [PASTE FULL objectionproofselling.com/mil... LINK] Fynanc https://fynanc.com George Antone, founder and Chief Wealth Strategist of Fynanc (pronounced finance), flew in from San Jose to sit down with Steve Trang on the Disruptors Podcast and share the seven invisible math laws behind how the wealthy build wealth, and why most people never learn them. George started his career as a software engineer in 1996 at Intuit, where he saw that the math behind building wealth was baked into the software his team worked on while almost no one outside the company knew it. He spent years cracking the code, walked away from corporate America in 2001, and has spent the last 25 years working for himself, building technology and coaching people on wealth, and he is the author of The Wealthy Code. George and Steve cover the formula that shows how fast your net worth has to grow just to keep up with inflation, and why you can be worth more every day and still be worth less relatively speaking; why speed is the first question to ask and why the real goal is to retire as fast as possible; how having a North Star changes every money question you ask; why capital structure matters more than the vehicle you pick; how borrowed capital and leverage work and why too much debt hurts the math; why mutual funds are the wrong move when you are just starting out; why he always begins with liquidity; what it looks like to go back and undo your three dumbest financial decisions; and how his software tells yo

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Speaker 0: Here we are thinking, wait a minute. The whole world needs to know this. The problem is no one knows how to solve it. The first thing you have to ask yourself is what speed? That's the speed at which your money is growing is critical.

So it's not about the number of doors. That was the biggest mistake I made when I first started. If you're beginning and you're buying mutual funds, that's the wrong move. If you're gonna buy mutual funds when you have 5,000,000, $10,000,000, go for it. And it turns out there is a right answer.

One of the things I talk about in my book really is I I call it the twenty year traffic jam. I wanna say this about lendings. So the question is, how do you beat that?

Speaker 1: Welcome and thank you for joining for today's episode Disruptors where millionaires are made today. We have George Anton with finance with a y and George Flynn from San Jose to share the seven laws to get wealthy on autopilot. Now, guys, I'm gonna mention to create millionaires. The information on this show alone is enough to help you become a millionaire in the next five to seven years. If you will take consistent action, you will become one.

And, we're talking about millionaires. I can't think of very many people that are better suited, to speak about this. So, yeah, so, again, we have George here. But before we even get into all the books you've written, all the best sellers, and all the impact that you made, and all the, apparently, mutual connections that we have, let's talk about what started this journey to go from working a job to, like, I have to get out there and tell people how to get wealthy. What was the origin story?

Speaker: So I grew up with... My dad was an entrepreneur. My whole... All my uncles were entrepreneurs. So I want you to imagine this going from entrepreneurial life, you know.

Mhmm. I was working with my dad at 15 years old. And at 18, 19, I go into college. I'm like, I have to go work in corporate America.

Speaker 2: Mhmm.

Speaker: I'm excited about it.

Speaker: You're excited about it?

Speaker: I was excited about it because it's like, I'm gonna work at Microsoft. I'm gonna work at all these tech companies. And I get there and just like what you said earlier, it's like you're just a small nobody Mhmm. In a big company. Yeah.

And, I started... When when you have that experience of being entrepreneurial Mhmm. And you go into corporate America and you're like, the last thing I wanna do is just be in a cubicle. Yeah. And so 2001, I walked away at 32 years old from corporate America.

Speaker: Mhmm.

Speaker: That was my last job, and I never looked back. And so that was twenty six years ago, twenty five years ago. Mhmm. And, but when you have it in your blood, you know, being entrepreneur, you really wanna you wanna go out and and Yeah. And experience that life too.

Speaker: However... Oh, before we get there, so we're talking offline before we... You're recording. So we're sharing how we're both engineers. Yep.

Right? And and and George is asking, like, well, you know, you're an engineer. So, like, what happened? Yeah. And I was, like, well, when I was studying to be an engineer, this was great.

Yeah. I was excited. Right? I'm going to, like, change the technology, this and that. And then I worked at Intel.

And if you're working at a five person company, your voice matters. Exactly. And you are

Speaker: impactful. Exactly.

Speaker: Working at a 80 to a 100,000 person company, I was a freaking nobody, and my voice just didn't matter. Screaming into into, into dead air.

Speaker: Exactly. Yeah.

Speaker: So anyway, that's what we were talking about before here.

Speaker: So what happened is in 1996, I was working at Intuit. Mhmm. And I was working

Speaker: A big software company Software company.

Speaker: Correct. Yeah. And as you know, they had the number one personal finance software, Quicken

Speaker: Mhmm. A

Speaker: Quicken Financial Planner, QuickBooks, all of that stuff. So one of the products I was working on and I worked on a number of their products as a developer, I found an equation. Now you remember, as a developer you have to test everything.

Speaker: Mhmm.

Speaker: I try to understand the math. Yeah. And this is software being used all over the country. Millions of people, 20,000,000 people. So here I am thinking about this formula here, this one equation and it proved mathematically that most people will never be able to reach their financial goals.

Let that sink in. Okay? It proves mathematically, we call it the secret formula Mhmm. That most people cannot reach financial... Their financial goals at the pace they're going.

Right? With with with the things that's traditional investing. So here I was looking at the software and this math I'm thinking, doesn't... Shouldn't everyone know this?

Speaker: But was this like, it wasn't baked into the software.

Speaker: It was baked into software. It was

Speaker: baked into software. Yes. So they knew.

Speaker: Everyone knew. Everyone. In in there. Right?

Speaker: Okay.

Speaker: And because we have to do certain calculations. Right? Mhmm. And so here we are thinking, wait a minute. The whole world needs to know this.

The problem is no one knows how to solve it. Okay. So I spent years trying to figure out trying to figure out the code. How do you crack the code on that? And that led me to what I'm doing today.

Took it took me years. But then when I left Intuit, I started really studying that just to get to the point where you have to figure out how to crack the code and we finally did. And we'll talk more about that. But that's really what got me to decide I need to share this with the world because there is a solution, and it's not what you think.

Speaker: So kinda like Moses, you got your... You got a message Yeah. That you felt like you needed to share Exactly. And you cannot keep a secret. Exactly.

You could not continue... You cannot in good conscience, good faith, continue working at a corporation knowing there's a way to create wealth that nobody knows about. Exactly. Pretty good orange story. Okay.

So then what... So you quit

Speaker: Yeah. Into it. 2001. Okay. What'd you do?

I was in... I had started doing investments, investing. And I got to a point where I was getting into more and more into real estate and apartment buildings and all that stuff. And by 2006, I had gotten at a good place financially. And people started asking me at my real estate club, what exactly are you doing, George?

So I started showing people, here's what I'm doing. Here's what I'm doing. Art and building this, this, this, this. And... But I'm always pushing the envelope on how can I go faster?

Speaker: Mhmm.

Speaker: Because one of the things we'll talk about is the speed your goals is critical. Yes. And we'll talk about that more. And, people started asking me, so I started sharing, do this, do this and people are seeing results. This was two thousand six, two thousand nine, ten and...

Even through the bad financial times. Exactly.

Speaker: Okay. So it's it's a very robust system.

Speaker: Oh, yeah. 100%. But again, it built over time too. Mhmm. Right?

And, and I never looked back. And, from there, I started writing books. I wrote my first book and I told my wife, you know, something is wrong with me. I said, I hate writing writing in general. Mhmm.

But for some reason, I feel like writing. And in six weeks, I cranked... I I I wrote the book, the the first book, The Wealthy Code. And, I put it on Amazon thinking there's no one on the planet who's gonna read that. Yeah.

And it just took off.

Speaker: Okay. And

Speaker: I wrote another book two years later, it just took off. So it's just been awesome just seeing people using those, reading those books. Mhmm.

Speaker: What was the Wealthy Code about? So

Speaker: most people think that the asset, whatever the asset is, does the heavy lifting. So here's what happens with most investors. They say, I'm gonna do stocks, or I'm gonna do crypto, or I'm gonna do, real estate, whatever it is. They think the asset does the heavy lifting, and that's wrong. That's not true.

Turns out, the way you match capital and the asset is the magic sauce. That's the power source. So you have to match them correctly. That's what's called the capital structure. So most real estate investors, for example, and I'm using real estate because, you know, of your background.

Think I'm gonna buy a rental property and it's gonna get me rich. That's not true. Let's start with that.

Speaker: I mean, that got so many people to quit their jobs or, like, the the the the Rich Dad Poor Dad loved what Kiyosaki did.

Speaker: Yeah. Loved

Speaker: it. Got me to quit my job. But, man, that book was not accurate. There were there were a lot of promises in there that that did not quite get fulfilled.

Speaker: So let me say this about the book. As you know, it was about mindset. But most people that say exact same thing you said. Yeah. And so given being my background as being very skeptical Mhmm.

Numbers person, I'm like this cannot be true. Yeah. Right? So I actually use spreadsheets and stuff to prove someone is wrong Mhmm. Because I don't wanna waste my time.

Yeah. And I realized that he's a 100% correct, but you have to study the details. That's what's missing. Right?

Speaker: As an entrepreneur in a visionary, that's not really my strong suit.

Speaker: So, so the Wealthy Code is really about how do you match them. Mhmm. Right? So that you actually move faster towards your goals. Yeah.

Because if you have... If you match them incorrectly, you actually take on too much risk. You match them incorrectly, too little debt for example, you actually slow down.

Speaker: Mhmm.

Speaker: So the speed at which you're moving is based on the capital structure, which is fascinating. And capital... Let's just take an example in real estate. If someone says, I'm gonna use a fifteen year mortgage because it's less interest versus a thirty year mortgage, which is more interest, that one decision, which is what most mortgage brokers are pushing this fifteen year, is actually one of the worst things you can do. A thirty year allows you to create a spread Mhmm.

Which improves your speed, which is your return on equity. Yeah. And so you have to know how to structure it. Not too much debt, not too little debt, and have the right spreads. Optimal.

Optimal spread. And that is the key. It's not the real estate. It's how you match it with the with the with the financing. Mhmm.

That is the secret sauce. That was the the first book.

Speaker: Okay. So we're talking about the formula that, apparently, everyone Intuit knew.

Speaker: Yeah. Well, the the people working on that product knew.

Speaker: Okay.

Speaker: Yeah.

Speaker: Do

Speaker: you wanna talk about it here or you wanna talk about it later? What that It's

Speaker: up to you. I can...

Speaker: Alright. So what is that that formula?

Speaker: Okay. Let me write it down. Yeah. Okay. So it's b, which I'll tell you what it is in a second.

Mhmm. Equals one... I mean, sorry. I, which is inflation. Inflation divide by one minus r.

R is the effective tax rate for state and and and federal.

Speaker: So

Speaker: what you do when you plug these numbers in So let's just say your your your effective tax rate is 30%.

Speaker: Mhmm.

Speaker: And your inflation let's just say it's we know it's more than 2% or 3%. Let's just say it's 5% or 6% whatever it is. Mhmm. That gives you a number. That's your break even number.

What does that mean? That means your whole portfolio... Let's just pick a number as an example, 8%. That means your whole portfolio, not one asset, your whole portfolio must generate 8% per year Mhmm. To maintain your purchasing power.

Right. Now think about that for a second. That means you are not actually moving forward. The best analogy I tell people is imagine you're in a race and the finish line is actually moving away from you.

Speaker: Mhmm.

Speaker: And you're running towards it. The first question you think of is how fast is moving is the finish line moving? What's the speed? The speed is this. Mhmm.

In this example 8%. Now you have to actually move faster than the break even. So now you have to move say 10%, 12%, 15% to actually be catching up to it. Mhmm. Well, it turns out most people, if you look at their whole portfolio, aren't coming anywhere close to that.

Speaker: Right.

Speaker: Because they might be looking at one stock or one property here or whatever, but you have... We're talking your whole portfolio. And that's very difficult to beat. Mhmm. Very.

Speaker: Yeah. So, those of you guys that are listening, we will have a link. We're We're gonna scan this later on, and we'll put it on the on the YouTube channel at least, where you can find it there and make it easy enough. So, basically, what we're talking about here is, what I'm hearing when I'm processing here is your relative net worth has to be increasing or competing at a rate to beat this particular number. And if your relative net worth is not increasing at the same rate Exactly.

You are falling behind.

Speaker: Exactly. Even though you're making money, quote, unquote, making money

Speaker: Mhmm. You're you're you're worth more on a dollar basis. Exactly. But you're worth less relatively speaking.

Speaker: Exactly. Your purchasing power, your ability to buy the same things you're able to buy last year now goes down even though you have more dollars.

Speaker: I mean, a lot of people have been feeling this the last five six years.

Speaker: Exactly. Exactly. And when you plug in the actual numbers for inflation

Speaker: Mhmm.

Speaker: It's disheartening.

Speaker: I mean, it's been like...

Speaker: I think

Speaker: it was like 20% for like three straight years.

Speaker: Yeah. Exactly.

Speaker: I've been on those lines.

Speaker: That's exactly correct. Yeah. Exactly correct. And and to be more accurate, you really should be plugging in what's called your personal inflation rate, which is every single one of us has a different... And it's easy to calculate.

But when you actually plug in your numbers and when you're young, meaning, you know, before you retire, your inflation rate is much higher than what's the... Than CPI.

Speaker: Mhmm. And it

Speaker: gets more depressing. But that's that's the race we're in whether we like it or not. That's the system. Mhmm. So the question is how do you beat that?

Right. And that's the challenge. Mhmm. And is

Speaker: this is this what seeded the, the wealthy code?

Speaker: That was one of the pieces. Yeah. So Okay. Every book, I would learn more and I would... So capital structure is one way to beat this.

Mhmm. Right? Which is what I was talking about. Matching your your financing

Speaker: Mhmm.

Speaker: With the asset, whatever the asset is. That's the secret sauce. It's not the money alone and it's not the asset alone. It's how you match it.

Speaker: So it's not necessarily equity. It's not necessarily cash flow. It's not even necessarily what the property is worth, which I think... Well, we generally count. Right?

When you talk to real estate investors is how many doors I have, here's how much equity I have, here's what my cash flow is, here's my rate. And you're saying none of those really matter.

Speaker: They they matter. K? But Indirectly. Indirectly. The first thing you have to ask yourself is what speed Mhmm.

Am I moving at? Yeah. That's the first thing. Because you don't wanna get to a point. Let's just go back to your goal with a 100 millionaires.

Obviously, becoming a millionaire today versus twenty years from now is very different.

Speaker: Yeah. It was a lot of money in the eighties.

Speaker: Yeah. Exactly. Exactly. And so when you said five to seven years, that was that was great. Mhmm.

Because you're giving them a timeline because a million dollars is gonna be worth something next few years. Right? But twenty years from now, it's not the same. So going back to the speed at which you move is critical. So it's not about the number of doors.

That was the biggest mistake I made when I first started. I was walking into it. It. I had so many doors and so many doors, so many apartments. Exactly.

Yeah. And it was not the best metric. Let's put it this way. K? Mhmm.

And we'll talk about what the right metrics are. But I highly recommend for everyone measure the speed at which you're going. And I'll give you the the formula. It's simply... And this is what we call the speedometer.

Everyone should have a speedometer. Because if I'm gonna make a deal, I wanna know is this actually moving me faster or slower. Right? So the speedometer essentially is your net worth today minus your net worth last year divided by your net worth last year. That's the delta...

That's the the speed at which you're going. Yeah. So everyone should start with measuring that.

Speaker: Okay. Is there like a simple thing you use? Like do I start with my personal financial statement or...

Speaker: Balance sheet. Yeah. Start with your balance sheet. Where are you today? In fact, what I tell people is if you're not sure you have a brokerage account for example or real estate, what was your net worth last year or this year versus last year?

And just look or look log into your brokerage. Look at what was the value.

Speaker: Mhmm.

Speaker: So 500,000. Last year, 480,000.

Speaker: Mhmm.

Speaker: Right? Subtract those divide by the $4.80. Right? Yeah. And that's a simple way to start.

Speaker: Yeah. So it's not rocket science. No. It's just assets minus liabilities Yeah. And your balance sheet.

Speaker: Exactly. Okay. Exactly correct.

Speaker: Make it sound really simple.

Speaker: But you know what? Here's what it does. It gives you visibility into every single decision you make.

Speaker: Mhmm.

Speaker: Because every decision either moves you faster or slower.

Speaker: Mhmm.

Speaker: And

Speaker: when you know this decision is gonna get me faster, right, then it it gives you the confidence. The problem is, Steve, is most people own assets for five years, ten years, fifteen years, and it is moving them at, like, four miles an hour. Mhmm. It's actually hurting them.

Speaker: Yeah. It's an anchor in a way.

Speaker: Exactly. So they have to be... To have visibility into the speed of money.

Speaker: Mhmm. I

Speaker: mean, is this where, like, I hear people talking every once in a while, like, you know, your return on equity.

Speaker: Return on equity is very important.

Speaker: So you're turning here... I'm just talking about here. Return on equity.

Speaker: That's one of the... Yes. Okay. So you look at the return on equity. But how do you increase the return on equity?

We can talk more about that too. So return on equity per deal

Speaker: Mhmm.

Speaker: Really, really folks... Really helps your net worth... Increase your net worth.

Speaker: Yeah. So then, potentially speaking, right, like, if I'm running a a wholesaling business, I'm moving a lot of houses Yeah. You know, whatever, Should I be focusing then, like, what's my return on capital on this deal? Or, like, you know, as a business owner, I say, like, my monthly expenses, let's call it 50,000 a month. Right?

And I wanna make 150,000 a month, potentially, right, wholesale revenue, this and that. Is that okay to look at it that way, or we're saying we need to look at it differently because there's... Or is there, like, active income versus net worth?

Speaker: Exactly. So excellent question. Excellent, excellent question. We have a lot of entrepreneurs Yeah. In our community.

So the key... What what I love with with your question is, so you generate this dollar amount in your business.

Speaker: Active income.

Speaker: Active income. The question is when you put it to invest it

Speaker: Mhmm.

Speaker: At the passive side, how fast is it going? What's efficient? Here's why I I say that. Is we are working today. We're busting our asses today.

Right? Mhmm. Because we want something to take care of us, meaning our assets in the future. So what you do is you focus on, improving your your... What we'll call...

We'll talk about it later, your capital base. But you wanna improve your assets in such a way measurably so that this thing takes care of you in the future. The question is what should you look for? And that's what we're talking about here is efficiency. I want to put my money into something that grows much faster.

The challenge is everyone thinks, is it real estate? Is it, stocks? Is it whatever? I don't care what it is. It's not about the asset.

It is about how fast are you moving, what is stable, and how do I match this thing so I can measure the speed and move faster.

Speaker: Mhmm.

Speaker: So a lot of people are so stuck like I was in real estate. And I was hardcore real estate, real estate, real estate. But guess what? I had no liquidity. So I started structuring things for liquidity, for this, for this.

And, I would love to talk more about that, as we progress. But that's what people should be doing. Because it's not about it's not just about your business. It's about build this thing here

Speaker: Mhmm.

Speaker: That every single day it grows. There's one last day you have to worry about, you know, work in the future.

Speaker: So the active income is active income. It is what it is. Doesn't matter what business you're

Speaker: in. Exactly.

Speaker: Because when you're taking the chips off the table Exactly. Where are you putting those chips?

Speaker: Exactly. Okay. Exactly.

Speaker: Alright. So then, you know, you're saying that, you're saying earlier that it's not about the asset. It's not about the vehicle per se, but it's about the structure. The capital structure, I think, is the word you used.

Speaker: Correct.

Speaker: Okay. So what does capital structure mean exactly?

Speaker: So let's go back to real estate. Mhmm. Capital structure is nothing more than how much debt and how much equity. Let's take real estate for example. Should you do an 80% loan or a 70% loan?

Should you use a fifteen year mortgage or a thirty year mortgage? And how do you measure the spread? So these... So at the end of the day, capital structure gives you two things. How much debt and how much spread?

So you don't wanna have too much debt if you don't have the right spread. Spread is nothing more than how much is my asset paying me, essentially your cap rate

Speaker: Mhmm.

Speaker: In real estate versus what am I paying the mortgage, what's called the loan constant.

Speaker: Mhmm.

Speaker: We need a spread on that. Right. Because this improves your ROE, your return on equity. Mhmm.

Speaker: And

Speaker: now you start moving faster. But when you take a fifteen year mortgage, it puts you in a negative,

Speaker: Right.

Speaker: Negative spread. What most investors say is, but I'm still cash flowing. It's extremely inefficient. It's actually slowing you down. Mhmm.

Even though your cash flow... So the idea of just having cash flow coming into my pocket, $200 a month, $300 a month, doesn't actually doesn't actually allow you to move faster. It... It's it's it's, it's it's not, the true metric. Mhmm.

The true metric is I wanna get to my goals fast. Yeah. I wanna get to a point where I don't have to ever work again. None of that cash flow right now. And so you have to use the right capital structure.

Again, capital structure is nothing more than how much debt and what's the spread between the asset and the debt.

Speaker: Yeah. I think it's something important you said here was that the real goal is to retire as fast as possible. Exactly. But the goal... The real goal is to retire as fast as possible.

You ask different questions. Exactly. The questions you're asking are very different.

Speaker: Exactly.

Speaker: Because what we typically ask are, like, you know, how much can I make in this deal? What kind of discount can I get on it? Where am I gonna get the money from? I'm gonna raise capital. I'm gonna use my own money.

All these other questions, but without the, the North Star, you're not necessarily gonna come up with the most effective answer.

Speaker: That's exactly correct. Yeah. And the question is what are the... What is the North Star?

Speaker: Right.

Speaker: So let's talk about it. Do you wanna get into that?

Speaker: Let's get into North Star.

Speaker: Okay. So let me tell you what I was doing before. Mhmm. And, I'm gonna draw it out for for the listeners here or for the audience. So it turns out, and this is very logical now, but I never got this when I was in in in in real estate.

And the reason I say this because I I wanna share the mistake I made for for your audience. Here's the mistake I made. How many doors do I own?

Speaker: Well, you're probably in your twenties.

Speaker: Yeah. A little more ego. Exactly. Exactly. And so we're constantly fighting.

Right? How many doors? Yeah. But I started noticing something is we're so attached to the asset thinking the asset's gonna do the heavy lifting. Mhmm.

And... But, and so the North Star was the wrong one.

Speaker: Yeah. When I say this, because, like, I met a handful of individuals who just have a whole bunch of properties just fully paid off, which some might say, oh, well, that's a dumb return on money. Yeah. But they're older.

Speaker: Yeah.

Speaker: And they're living the life that they want. Yeah. And then you got other guys who have, like, thousands of doors. Yeah. And, man, they look stressed.

Speaker: Yeah. I'm gonna explain this. Yeah. I love what you just said there because that's exactly what I noticed. Here, I noticed a lot of people are saying, get out of debt, get out of debt, get out of debt.

And others are saying, get into that, into that, into that. And it's like, wait. What What's

Speaker: the right answer? What's the right answer? Yeah.

Speaker: And it turns out there is a right answer and explains both sides. Yeah. Like mister wonderful on Shark Tank keeps saying get rid of your pay off your debt.

Speaker: Mhmm.

Speaker: And you have a lot of people we know, that are saying pay off your debt, pay off your debt. And I'm gonna explain why.

Speaker: Mhmm.

Speaker: And this will make sense. But let's start with the first the first North Star. Your North Star for everyone is your capital base. What does that mean? Your capital base is nothing more than how much productive assets in dollars, not equity total, do I have.

Speaker: Mhmm.

Speaker: K. So let's just say you have 50,000 versus 3,000,000. Now if you have $50,000 and you said I'm gonna make 10% return. That's $5,000. Doesn't make it per year.

Doesn't make a dent in your life. No. But if I have $3,000,000 for $5,000,000 and I make 10%, that's gonna make a dent.

Speaker: Yeah. Pretty good life.

Speaker: Exactly. Right? So it turns out how you build your capital base is critical because returns early on sub 300,000 will make a big dent. Right? So why are people putting money into mutual funds when all it is is driven by returns as an example?

So so the key is to build your capital base to a certain number. Let's just say, for example, $3,000,000 and this has some debt. Okay. Let's just say the debt is about $1,000,000, one third. Okay.

Now, so capital base 3,000,000. Your your your debt in it is 1,000,000. Now what happens is at that point, let's just say it's 3,000,000 just to keep it simple. You are increasing your your your, let's let's say a return. Your return on 10% on 3,000,000 is 300,000.

Mhmm. For some people, that's awesome. You take some of that, you pay down your your 1,000,000. Right? But at that point, you're generating enough capital.

Right? Extra capital. Extra capital. So the question is how fast do I get to that number? So the first thing is know your number.

Second is measure the speed at which you get to this number. Mhmm. Right. So that's the that's the North Star for every single person. That's the North Star.

Now it's not just the real estate, but you have to have different assets that that that that serve a different purpose. Right? And so that's your your North Star. And we'll talk about how do you build it because we'll talk about the fastest way to build this too.

Speaker: Yeah. But obviously, that 3,000,000 is very dependent on the person, personal preferences

Speaker: Exactly.

Speaker: Demographics That's

Speaker: exactly where they live Exactly.

Speaker: How old they are That's exactly kids, married, all these other things.

Speaker: That's exactly correct. That's exactly correct. That's why they have to pick this number. Mhmm. And they have to pick the maximum debt, typically under 40%

Speaker: Mhmm.

Speaker: Debt. And the reason is once they get to this... Now this thing is growing so fast. And what happens when you have $3,000,000 growing so fast and your debt is not going down or is not, going up? Your debt ratio goes down.

Speaker: That's better.

Speaker: Right?

Speaker: Mhmm. And

Speaker: so you might start, I'd say, 30% or 40% every year. Now your debt ratio is going down. Mhmm. So what's actually paying down your debt ratio? Right?

And I'm using the word debt ratio specifically, not debt. Right? But debt ratio. And that is...

Speaker: That's interesting because people don't talk about debt ratio.

Speaker: Exactly. They don't

Speaker: talk about debt.

Speaker: Exactly. So what happened is time and growth are now working for you. Yeah. So your debt ratio starts going down. Mhmm.

Right? And you can always take some money from the top and pay it down. But it's the asset now that's paying down your debt. So it's almost like with the rocket. You need you need the boosters to get to escape velocity

Speaker: Mhmm. Like,

Speaker: which is your debt. Once you're at a certain point, let's say 3,000,000 for example, you are done with the boosters with the debt. Let it go. Yeah. Because now you have so much appreciation or or return in terms of dollars that you can let it go.

Yeah. And so what happens is the people that tell you no debt, instinctively, they've already reached that number and beyond that.

Speaker: That doesn't matter. Like, mister wonderful, it's like don't have debts. Like, what exactly when you're worth hundreds of million. I don't know what he's worth.

Speaker: Exactly.

Speaker: But I'm guessing it's in multiple eight or nine figures.

Speaker: Exactly. Exactly. And guess what? Every single person that tells you don't use debt

Speaker: Mhmm.

Speaker: Instinctively, they've already passed that number. But guess what? You need that booster Mhmm. To escape velocity. Yeah.

Right? And so the people telling you use debt are the ones early on. And then a lot of gurus that tell you, oh, I used that, but I'm not gonna use that anymore. And Dave Ramsey was right.

Speaker: Mhmm.

Speaker: What what are they telling you? Instinctively, they've passed this number. Right. You get it? Mhmm.

Because now you have 500,000, $1,000,000 every year coming in. Why would you need debt anymore? It's done.

Speaker: Yeah. You got 50 properties paid off. You don't really have... You have no more financial problems.

Speaker: Exactly.

Speaker: If I have other problems Exactly. No more financial problems.

Speaker: That's exactly correct. Yeah. The problem is if they pay off the debt too soon Mhmm. Right before they hit this number, they're slowing down. Yeah.

The speed goes down significantly. And as you know, your ROE in real estate goes down as your debt goes down

Speaker: Mhmm.

Speaker: As you pay it down. So that's slowing you down.

Speaker: As you pay your debt down, your return on equity goes down.

Speaker: Correct.

Speaker: I haven't thought about that. Yeah. Think about it. I feel it though as you pointed out. It's like I...

This is a pain I didn't know I had, but now that you pointed it out, I was like I Yes.

Speaker: Yes. Exactly correct. Uh-huh. And that's why a fifteen year mortgage in every way is bad because negative leverage Mhmm. And your speed is going down.

Yeah. That's why early on before you hit that number, you have to refinance every five years

Speaker: Mhmm.

Speaker: As long as you can structure it correctly because it keeps your speed high. Yeah. Again, we're only talking about real estate here. You can do this with any asset.

Speaker: Yeah. Well, as... Before we talk about other assets, and I might be a weirdo. Right? I I don't believe in stocks.

I think it's all imaginary. But, like, I remember when I was at Intel, you know, and, you know, you're you're brand new and, you know, like, your first year or first six months, they bring in some financial advisors. And this is where I learned about, like, was it, market cap and, like, was it, low? There's low, medium, high. I can't remember what it was.

But they're talking about blending. Right? Like, you wanna have, like, a blended... Oh, it's low cap, medium cap. Small cap, medium cap.

Yeah. Large cap. Gonna blend those. You wanna have a mix between bonds and stocks and this and that. And, like, if you do everything right, then you're gonna make, like, six to 8%, right, on your, growth in your stock value.

And as, not to mention the 2% in mutual funds fees, they don't

Speaker: talk about. Exactly. Right?

Speaker: So that's backed out. They don't mention that at all. And then if that's the case, I'm making 60,000 a year because that's what I started at at Intel. Long time ago, that wasn't that wasn't a good amount of money a long time ago. You're making 6,000 a year, and I may try to make 80% of money.

I'm not getting out of that, that, that rat race.

Speaker: Yeah. And when you compare yourself to this race, the speed Yeah. Break even, it is... You're barely keeping up with the finish line, which is moving.

Speaker: And that's what you figured out.

Speaker: That's exactly correct. That's the problem. Mhmm. Is the six to 8% that you're talking about, which every person out there is excited about.

Speaker: Yeah. And they're like, man, you can get a 10%. Like, that's awesome. Exactly. But it was like, yeah, like, you know, really, it's probably gonna be like target six to 8%.

Maybe 4% are lower... In this lower market.

Speaker: Exactly. Exactly. And what... But they have to look at the finish line.

Speaker: Mhmm.

Speaker: And it's moving faster.

Speaker: And worse.

Speaker: Yeah. Exactly.

Speaker: Yeah. Okay. So then you're saying this is, like, you know, real estate, but this bar graph that you drew here is the same with stocks?

Speaker: So let's just expand. Yes. It's the same with stocks. Let's expand on this. So the question is, what are the drivers Mhmm.

That actually build this? This is the problem.

Speaker: Actually, before you continue Yeah. We've thrown out a lot of terms here.

Speaker: Yeah.

Speaker: What is return on equity? Because I don't... We we didn't... We we we threw these things around. I'm kinda getting enamored here, so I'm sorry.

I'm getting really distracted because this applies to me. Yeah. What is return on equity?

Speaker: So let's just say you buy a property.

Speaker: Mhmm.

Speaker: And you put 20% down. So let's pick $200,000 per a property. You put $40,000 down and you're gonna get a mortgage

Speaker: Mhmm.

Speaker: For the rest. So the question is, what's the return on the 40,000? And how fast is the 40,000 growing your equity? Mhmm. So think of it as you're looking at the return relative to your own money.

Mhmm. Because that's what's most important. And that's, again, what we're talking about part of the speed of how fast your money is growing. Yeah. So a return on equity of 10% means my 40,000, not my 200,000, my 40,000 is growing at that rate 10%.

So if you had no mortgage your return might have been let's say 8%.

Speaker: Mhmm.

Speaker: Even less than that but let's just say 8%. By adding a mortgage and you're putting less money and it's structured correctly, your 40,000 now is growing at 10% in the example. But if you didn't put the mortgage, it would have been growing at 6%. Your whole 200,000. Mhmm.

Does that make sense? Yeah. So that's the speed at which your money is growing.

Speaker: There were... Yeah. So that's return equity. And I'm touching on that because, like, we kinda threw that around. We just assume everyone knew what that was, but not everyone necessarily knows what that means.

And so I had... Here's my little journey. So I probably wish I met you, like, fifteen, twenty years ago. So, you know, when I got into real estate, I read all the investment books. And all the investment books, like, put down as little as possible.

Right? 10% down, so you have maximum leverage. Because if the property appreciates 10%, you really get a 100% return on your 10%. Right? So I was like max leverage, max leverage, max leverage.

And then two thousand seven, eight, and nine happened. And when that happened, at at this point, I went... I transitioned from engineer to realtor. I looked around, and everyone got decimated.

Speaker: Yes.

Speaker: Everyone that was preaching leverage

Speaker: Yes.

Speaker: Lost everything. Yes. Right? And I watched this over and over again, friends, some family. I mean, this is a time...

It was a dark time. Like, people think real estate is hard right now, but, like, that was a dark time.

Speaker: Yeah.

Speaker: There were realtors that were getting divorced. Yes. There were people committing suicide. Yes. And the same thing with the contractors.

Right? Contractors getting divorced. Exactly. I mean, suicide. So I saw that part.

I saw the other side of it. Again, as a realtor, I saw what true wealth looked like. And I saw people coming in. Millions and millions of dollars. Right?

I saw a member seeing a proof of funds with $80,000,000. I was like, man, that's nice. I would love to have

Speaker: $80,000,000 with a

Speaker: bank account right now. Right? Now I'm seeing this, and they're just picking up properties left and right. 30,000, 50,000, 80,000. And then this is the condition I have, which I didn't know these return equity language here.

This is where I start seeing is like, okay. So True Wealth doesn't actually believe in leverage. You just buy things cash. But reality, this lesson you just taught me here was that was what was going on. For them, it made sense to buy properties cash.

But while I was still broke, did not make sense for me to buy properties cash?

Speaker: Exactly. It doesn't make sense when you're early on Yeah. Before your your North Star. Yeah. Now let's take that which you just said a step further.

The biggest thing I learned is because when I was in real estate and only real estate, keep in mind that's all I bought are apartment buildings, single family rentals, duplexes, you name it. I kept noticing one thing. And I'm sure you can relate to it. If my roof blows up, the rent for the next three years is gone. Right?

Liquidity. Yeah. I had no liquidity. So I met someone who was very wealthy and said, you need liquidity, George. And I'm like, well, the cash flow is liquid.

Mhmm. Like, no. That's not liquidity. That's a portion, a part of liquidity. You need liquidity, and you cannot go too high on the on the leverage.

So get rid of this 90%, a 100% leverage because that can hurt you. But turns out lever... Too much leverage, you've taken on too much risk because the uncertainty, right, goes high.

Speaker: You try to verify you to put money down.

Speaker: Exactly. The bank is actually there to protect themselves, but also you. Right? And so the idea is you put so much money down to really protect the the speed. It's almost like you're driving on the freeway and you're going too fast.

If you crash or if you... Something, you know, you see something on the freeway, you're gonna crash. So as long as you're in control.

Speaker: Mhmm.

Speaker: So here's what we do in real estate. There's a maximum leverage. Let's just say 80% just for now or 70%. You have to have liquidity and you have to have a certain amount of liquidity and you have to have spreads. And the reason is because you want to have this fluctuation happen in the market, but you also wanna have the liquidity to cover anything.

And, and that's how you use leverage to get to your goals much faster. Mhmm. And, again, we're only covering leverage right now. There's other things we can talk about too. But, yeah, you're a 100% right about...

I I was doing... Making the same mistake. Jumping in 100% whatever financing.

Speaker: Mhmm.

Speaker: 90% financing, big mistake. I'm glad that nothing happened. Right? But I've seen people get destroyed with that.

Speaker: Yeah. I mean, there was a period of time where, like, the, was it house hacking. Right? Like, you get FHA mortgage 303100% down. To maximize leverage Yeah.

Right? Yeah. You get a fourplex FHA financing. Actually, back then, it was 3% financing, and you get the seller to pay your down payment. Right?

Back then. So, really, you're buying a house for a 100%. And then after six, twelve months, whatever, you try to do it again. Max leverage.

Speaker: Big mistake.

Speaker: It's a big mistake. You would not recommend that?

Speaker: No. No. I've I've seen people see the problem that was happening back then. I remember it so clearly. We fell in love with the idea of owning real estate.

Speaker: Mhmm.

Speaker: We fell in love...... Dream. Exactly. And we fell in love with the idea that real estate is the savior for our wealth building. We never understood that it was a capital game.

And real estate is nothing more than a container to allow us to move faster. Mhmm. But the question is, what is the right container? Like, in this market right now, you have no spreads. Right?

Buying real estate right now is for the future. It's not for now.

Speaker: No. Yeah. It's a long game right now.

Speaker: Exactly. And so the question you have to ask yourself is, how do I get to my goals faster? And this is a different question that I was asking when I was starting out. I would always say, what should I invest in?

Speaker: Mhmm.

Speaker: Where's my next deal?

Speaker: Where's my next deal? Wrong question. Right?

Speaker: Mhmm.

Speaker: It's how can I move faster? That means, if I'm gonna put money into this thing, how can I get money back fast that can buy the next thing?

Speaker: Mhmm.

Speaker: Right? And, fascinating fascinating how the journey we all went on is the same journey too, right, for most investors. Yeah. They see the mistakes. Right?

Oh, yeah. But they experience them and it hurts.

Speaker: Mhmm.

Speaker: But that's what makes us better investors. Yeah. Right? So...

Speaker: Okay. So so then was this... I'm not trying to, like, simplify it or, you know, like, poo poo on that. Yeah. But is this basically the formula?

Speaker: This is one formula. The question is how do you solve it?

Speaker: Right.

Speaker: So... But this is the main one that was, like Correct. Buried in your mind.

Speaker: That's correct.

Speaker: Okay.

Speaker: This highlights the problem. Okay.

Speaker: So now this brings awareness to the problem? Brings awareness. Okay. And

Speaker: tells you mathematically how are you gonna solve that problem.

Speaker: Okay. So now Now How do we solve it?

Speaker: Solve it. So so let's go back to the North Star. Yeah. It turns out... Just this here...

So let's just say you have... Let's pick a number. Let's just say you have a 100,000 that you have invested.

Speaker: Mhmm.

Speaker: Right? And you generate 8% return. And this number is eight. Mhmm. Right?

You're not making a dent. Right? But what if you actually increase your assets somehow? We'll talk about how in a second. And now you have 200,000.

This break even is based on your own money. It turns out... Again, I'm not gonna add for the for the engineers, you have to multiply by how much your money is. Right? Let's say a deferred down payment as an example.

Okay? You can lower your effective break even from 8% down to 2%. What does that mean in plain English? Okay? In plain English, let's go back to the capital base.

How do you go from where you are today to let's pick 3,000,000 as an example. There are five drivers that affect this thing. K? If you understand those five drivers and how to manipulate them, which we'll talk about, you can get your goals significantly faster for many people, three to seven years, depending where they're at. So here's the five drivers.

The five drivers are... I'm gonna write them down here. Capital. Now I'll go through what they mean in a second. Return.

Leverage, which is a percentage. Capacity and re recycle. Let's call it recycling. Let's talk about what does that all mean. So that this bar grows with three things.

Every month... By the way, we're able to grow this thing every month literally. We'll see how in a second. So you have a base over here. Yeah.

Whatever that is. Let's just say it's today is 100,000. The three things that actually increase your base are your contribution. That's your capital. Let's just say you're contributing a thousand a month.

K. The next one is leverage. Right. As every time you borrow, you're increasing your capital base. Mhmm.

Right. And third is return. These are the three things that...

Speaker: The leverage is borrowed capital?

Speaker: Borrowed capital. Okay. And then you have to recycle.

Speaker: Mhmm.

Speaker: Every time you get cash flow, you buy more. Right? These are the four drivers. We'll talk about capacity. We'll skip capacity for now.

It's more advanced. So what happens is these are the four, four things that affect how fast you grow your capital, your base. Mhmm.

Speaker: Now

Speaker: let me ask you this. We talked about this earlier. If your capital base is 50,000

Speaker: Mhmm.

Speaker: 10% return doesn't make a dent. Right. So you shouldn't emphasize that return.

Speaker: Mhmm.

Speaker: Don't even care what return at that point. Yeah. Forget mutual funds. Right? What you have to do is your contribution has a bigger impact and your leverage.

And as you progress, let's say you get to 300,000 or 400,000, leverage... I mean, so return now makes a bigger impact. Mhmm. When you're at 3,000,000, for example, these are the only five drivers. They will talk about how you you activate them.

So when you get to 3,000,000, you care about leverage. No. You don't care. What happened is throughout your journey, all you're doing is you're controlling those levers... Those drivers.

And by focusing on the right one

Speaker: At the right time.

Speaker: The right time. Exactly. You can actually maximize your your capital base.

Speaker: You're kinda like in the, you're in the cockpit here. Exactly. And you're just tweaking the levers, the gears based off of where you're at.

Speaker: Exactly. Exactly. And when you look at... One of the things I talk about in my book, Rig, is I I call it the twenty year traffic jam. So everyone talks about compound interest.

It's so awesome. You were to start with something like this. It takes you to to go from, say, $10,000 to, say, 300,000 at 8% reinvested only return

Speaker: Mhmm.

Speaker: Will take you thirty five, forty years. Yeah. But if you say, I'm gonna ignore return because it doesn't make a dent. I'm gonna use leverage. I'm gonna use capacity and different things.

You you can literally go from a forty year journey down to three years.

Speaker: Mhmm.

Speaker: Think about that. So my daughter just graduated, college. She's doing this. And I'm saying, okay. Forget return.

She's only starting with, you know, few in a few thousand dollars. She went from 7,000 to 45,000 relatively quick Yeah. Because she knows how to control the right drivers.

Speaker: You know, I'm just thinking about this, like, every argument I have with my wife. Right? I am, an infinite risk person. Little different at 47 years old. The risk tolerance goes down a little bit.

Yeah. Right? But for most of my life, I was the riskiest person I knew. Yeah. And my wife is the exact opposite, probably even more so.

We probably push each other even further because of how different we are. And so she's the one that's always focused on, like, hey. We need to save more money. Yeah. And we need to, we need to get a better return on our money.

Yeah. And I'm over here saying, like, I need to make more active income, and we need to increase our leverage. Yeah. And this is, like... I'm looking at here.

It's, like, we're arguing about different parts. Exactly. My two parts, her two parts on this exact chart you drew here.

Speaker: Exactly. It's all, it's just a matter of knowing where you're at

Speaker: Mhmm.

Speaker: And controlling leverage. So just to add to what you're saying, we're not saying go out crazy on leverage.

Speaker: Mhmm.

Speaker: We're saying match the right amount of leverage to the asset. For example, in real estate we know 80% or 70%. In... With an ETF, we might go 30%.

Speaker: Mhmm.

Speaker: Right? So every asset can only carry so much debt. Know that amount and don't go beyond that. Right? And...

But what happened is the key is to increase your capital base fastest in the... Where you're at, going back to what you said, in the right time.

Speaker: Mhmm.

Speaker: And then shed some of these drivers or lower them as you progress. That's why when you get to see a 5,000,000 or 4,000,000 capital base, you start saying, I don't care what leverage. Because now return is generating 300,000, 400,000 a year. I don't care about leverage. It started deleveraging.

Speaker: Also leverage inter... Introduces risk.

Speaker: Exactly. Exactly. Yeah. And so so the key is this is the whole thing. Mhmm.

Five drivers that control the whole thing and know when to control them. The question is, how do I do that?

Speaker: Well, before we do that, what's capacity? I know you said it's an advanced topic, but I guess pretty smart listeners and smart watchers.

Speaker: So capacity. Are you familiar with, Antifragile?

Speaker: Yeah. Yeah. Great book.

Speaker: Excellent book. So the key is in certain markets, you wanna be always be ready with capacity. Mhmm. Money sitting aside, not cash necessarily, but money sitting aside, lines of credit, different things like this or equity or HELOCs.

Speaker: Dry powder.

Speaker: Dry powder. That's exactly correct. So you take advantage of situations. Mhmm. So you always have to have capacity.

If you think about a scale. Right? If you are leverage here, you have capacity here. So what's happening is as you move more leverage, you have less capacity.

Speaker: Mhmm.

Speaker: There's a scale that goes back and forth. Mhmm. Right now in this market with with the stock market, for example, everyone is expecting a big drop.

Speaker: Mhmm.

Speaker: So what we have our members do is, like, lower your leverage, take a defensive position, and add capacity so that you're ready to buy when the market goes down.

Speaker: Mhmm.

Speaker: That's what capacity is. It's based on on the book, Antifragile.

Speaker: Gotcha. Yeah. It's a fantastic book. And just for quick reference Yeah. You wanted to find what antifragile means.

Speaker: So I love this book. Antifragile simply is when markets go down, everyone thinks I'm taking a weaker position. I've lost money. Antifragile says, create the environment where your your your your portfolio gets stronger because of this dip. Yeah.

Right? Just like... And the example he gives is when you go to a gym and you work out your muscle Mhmm. You're hurting your muscle, you... Whatever.

To grow the muscle. Mhmm. Right? That's the idea is build a portfolio that's resilient, but at the same time beyond resilient is actually ready to actually grow as the market goes down. It's getting stronger.

Speaker: Yeah. So what I loved about the way he described it was like... Because I think it was like the first chapter, maybe the second chapter was, like, you know, people think antifragile is something that's, like, strong. Right? It doesn't break.

But reality, it's not that it's strong, it doesn't break. It actually gets stronger every time it breaks.

Speaker: Exactly.

Speaker: Right? Exactly. And so, we... When you're talking about capacity, I'm still salivating for the next crash. Do I have a ton of capacity right now?

Not really. Right? But I also know that if the market crashes, I'm just a few phone calls away

Speaker: Exactly.

Speaker: From all the relationships

Speaker: Exactly.

Speaker: To just, you know Exactly. Capture the opportunity. Because, like, I've been waiting since two thousand nine. Yeah. Because I was a realtor.

I was an idiot. Yeah. You know? I'm showing George these $3,050,000 dollar properties, and I'm getting paid, like, $900 commission because that's what 3% of 30,000 is. I'm happy getting my $900 commission.

You're over here buying these properties for 30,000. They're now worth, like, 300,000. I'm salivating for this opportunity. So the capacity, I don't have today, but I got the relationship. I know Exactly.

The, I mean, not leverage capacity, but leverage the capacity.

Speaker: Yeah. That's exactly correct. I mean, that's... Part of capacity is is access to to to capital Yeah. Is what you're talking about.

Yeah. So that's exactly correct. That's huge. People that focus on this is huge and it's exactly what you're saying. It could also be people Mhmm.

That trust you,

Speaker: that

Speaker: are willing to invest with you.

Speaker: Right.

Speaker: The relationship capital I've been over the years.

Speaker: Yeah. Exactly. Yeah.

Speaker 3: I think it went live I think it went live like technically Saturday. So it's a lead that's been in our CRM over a year and it reached out Tuesday, so just a couple days ago, set an appointment, do the, follow-up cadence and, signed contract yesterday. So four or five days in it's already working, like literally a contract from a year old lead. Should be 20 to 25,000. It's a cheaper home, but, you know, $20 on a $80,000 house would be nice.

Well one, our team is horrible at following up with old leads. And obviously, with the AI, there's no fatigue. They follow a cadence, like, perfectly 10 times out of 10. One, just listen to one of the thousands of calls that are recorded from the AI. Like, we have overseas employees and I think the AI sounds more human than some of our overseas employees.

Yeah, I mean it's it's legit.

Speaker 4: What's the situation with the property? Living there, vacant, or rented?

Speaker: What is my age? I'm a... I'm 75 years old, and the property is approximately 200 miles away, and it's stressful trying to drive that distance every time something breaks down.

Speaker: I hear you. That sounds like a lot to manage from that far. How's that been wearing on you?

Speaker: Well, it's just the last couple of years. You know? After I've turned 73, I got a low. The 70 seem to give you a newer outlook on what you can and cannot do and what your limitations are.

Speaker: Got it. So at least you'd wanna see what options are out there. Would you be open to a quick conversation with one of our specialists to map that out for your situation?

Speaker: I would.

Speaker: And if you wanna hear for yourself exactly what this sounds like, text AI caller to the phone number 33777. Okay. So we talked about that. So was there anything else in the... I mean, we spent a lot of time talking about the wealth code.

Is there anything else in the wealth code?

Speaker: Oh, this is... I I... This is actually getting into this too.

Speaker: Okay. Gotcha. Gotcha. Okay. Because I wanna bring up, banker's code.

So we had someone on the podcast. I can't remember who, unfortunately. Sorry. But there was a gentleman on the podcast sitting in that seat talking about how, he read the Banker's Code. So, I had Gary Harper in the previous episode.

He's been my coach since December 2020. And with it with Gary Harper, we got Sharper Solutions. So it's Gary Harper, Susan Harper, Brandon McCurdy, Austin McCurdy, and Amanda Dean. I've been coached by all of them. And so Brandon was coaching somebody, and while he was talking to him, he's like, you know what?

We're not making any progress here. You read the banker's code, and then you get back to me. And so you read the banker's code. And after reading the banker's code, he changed his entire business model where he went away from doing real estate and just lending for real estate because what he figured out was, like, no matter what's happening... I can't remember the three different things, so you'll have to, you'll you'll fill in real quick.

But no matter what's happening, the bank makes money. Right? And after that, he's like, okay. Well, then screw all this. I'm getting into lending.

So you wanna touch on that real quick?

Speaker: So... Yeah. So so I wanna say this about lending. So a lot of people... So, yeah, lending is awesome.

Mhmm. And being the... On the banker side essentially is...

Speaker: Well, the bank banking is awesome.

Speaker: But, yeah, banking is awesome. Let me say this. The the secret sauce isn't the actual lending itself.

Speaker: Mhmm.

Speaker: The secret sauce is exactly what we're talking about. It is the right structure. The asset that's paying you happens to be a loan.

Speaker: Mhmm.

Speaker: But it could be anything at cash flows. Right? Anything that you can control, stability.

Speaker: Mhmm.

Speaker: And so the key isn't necessarily... Because a lot of people... So I wanna just be careful how I say this. A lot of people have become lenders because of that book a lot. Like, even other countries.

We're hearing that book amazing stuff. And we love that it does that.

Speaker: But it wasn't necessarily the right lesson.

Speaker: The lesson is the lesson is that happens to be a product. Your deed of trust or your mortgage that you're receiving, that's... You have collateral. The key is what you do on the capital side.

Speaker: Mhmm.

Speaker: Velocity and turning money and and spreads. All of these things are incredible when you look at the metrics. Incredible. It just happens to be that lending, in that case, is giving me the right spreads, the right structure.

Speaker: Mhmm.

Speaker: Does that make sense? Yeah. But it's not about the actual lending.

Speaker: Mhmm.

Speaker: So I've had a lot of people say, I've given up everything. I'm doing lending. I'm loving it. It's doing it. But they're missing that.

It's actually the the structure Mhmm. That we're talking about here. The structure is the gold. Okay. Structure is the gold.

People don't get that. Okay. The structure allows you to move so fast. So some people that are doing lending are actually not doing it incorrectly.

Speaker: Mhmm.

Speaker: Again, they measure their success by the cash flow. It it... It's equivalent to how many doors.

Speaker: Mhmm.

Speaker: Because they're using their own money. But they're not using well structured on the back end. Yeah. And so they're actually moving slow.

Speaker: Mhmm. Interesting.

Speaker: Yeah. So here's what I tell people. Money has speed. Mhmm. Money has speed.

No matter what you do. Right? If it's sitting in your in your in your checking account, it's moving at 1% or whatever it is.

Speaker: That's very fast.

Speaker: Money has speed. The question is where is the fastest? Lending just happens to be great with... In terms of... But anyone can do things without actually even lending.

Mhmm. It's about the structure that allows you to move faster. That makes sense.

Speaker: So what's the right question? It was not lend. Because you're saying maybe lending may be the right answer. Yeah.

Speaker: But

Speaker: it's not necessarily the right answer.

Speaker: It's the speed Okay. Of money.

Speaker: Right.

Speaker: Let me give you an example. One that you can relate to and everyone here can relate to. You said something earlier, which is awesome. You said, if I was to buy a property, for example, with my HELOC, I buy a property, I fix it up.

Speaker: Mhmm.

Speaker: Right? And I sell it and I get it back. I pay off this and I keep it because I refinance. I... Not sell it.

I refinance. Kept the property. I I use my... And then I do it again.

Speaker: Mhmm.

Speaker: So let's just say every six months using the same capital to buy a property, refinance, keep the property as an example. What if you can do this every single month automated and it's not necessarily real estate? But real estate could be one. Right? What you just described there is the speed of using the same money over and over again.

Here's what I tell people. More assets, less time, same amount of money. Mhmm. More assets, less time, more... A same amount of money.

That example you mentioned earlier briefly, being able to buy something refinance. Obviously, there's there's a lot of things that could go wrong with with the the market and all that stuff. But what if you could do it faster? What if you could do it with different assets? Again, I'm not attached to any one asset.

Yeah. What I'm attached to is the structure. So I would do this with real estate all day long once I have the right when interest rates go down. I have the right structure. Does that make sense?

Speaker: Mhmm.

Speaker: It's the speed at which you do things. Lending happens to have that.

Speaker: What is an example of someone who read the book Yeah. And became a lender because because of it. But you think lending was not the right answer for their situation?

Speaker: Because they were using cash.

Speaker: Mhmm.

Speaker: So what happened is one of the key things is to actually use, let's say, a HELOC, for example. The cash... See, here's what happens. Let me point out a a problem. There's something called principal erosion.

K. I'm gonna give you an example of of a bad loan and of a good loan. Okay? So imagine I lend you a 100,000.

Speaker: Mhmm.

Speaker: And you're paying me and for it's five year interest only loan. So I get my 100,000, lend it to you, and you do whatever you do for five years, and then you're paying me interest the whole time. Then you pay me back my 100,000 in five years. I was like, great deal. I got my interest, and I got my principal back.

Now let's just say when I first lent you the money, coffee was a dollar.

Speaker: Mhmm.

Speaker: By the time you paid me back my my 100,000 coffee was $2 as an example. Well, that 100,000 you paid me back, that was worth 50,000

Speaker: Right.

Speaker: In terms of purchasing power. So what happened is if you are lending money, the person who puts up the principal in a deal, any deal, mutual funds, real estate, whatever, person who puts up the majority of the deal of the principal automatically is losing purchasing power. In that example, when you paid me back my 100,000, you benefited the whole time.

Speaker: Mhmm.

Speaker: Right? And I lost because... But I didn't know that.

Speaker: It's back to this bee in the beginning. Exactly.

Speaker: This is it. Yeah. Right? This is it. So I talk about in the book.

It's called principle erosion and it's happening to 99% of investors.

Speaker: Mhmm.

Speaker: So what you have to do is when I lend you the money, I'm I'm lending it from a from a HELOC. When you pay me back, I'm paying back the HELOC. But who put up the deal? Who put up the cash in the deal?

Speaker: Bank did.

Speaker: The bank did. But the bank actually got it from depositors. Mhmm. So the depositors lost purchasing power. That's why Robert Kiyosaki says they're losers whatever he says.

Right? He got it. The person who puts up the money in a deal, the majority of the money, the principal Mhmm. Is always in a in a losing situation. Let's go back to lending.

You lend cash versus you lend from the HELOC and you keep your cash for liquidity to handle different things. That's different. Very different

Speaker: So you gotta be doing arbitrage? Arbitrage. If you're not arbitraging

Speaker: Exactly.

Speaker: Then you got principal erosion.

Speaker: Exactly. And you're

Speaker: not doing it the right way.

Speaker: Exactly. And you're passing all the negative impact of inflation to the person who is actually

Speaker: Where the money came from.

Speaker: Money came from. Boom. That's just one thing.

Speaker: Okay.

Speaker: Now I want you to look at all the people doing deals out there.

Speaker: Mhmm.

Speaker: They're using cash. Yeah. Across the board. Mhmm. Like, mutual funds and every time.

And they have this happening to them. They don't see it.

Speaker: Yeah. Interesting. It's a very different perspective here.

Speaker: Very different. And you can measure that. The speed, that's moving less slower than the finish line.

Speaker: Mhmm. Okay. So that's one of the ways you crack the code.

Speaker: Yeah. One of the ways. Yeah.

Speaker: Alright. So don't be the money

Speaker: guy. Don't be... Well...

Speaker: Be the source of... Be the be the guy that moves the money, but don't be your money.

Speaker: Exactly.

Speaker: Right? So be the money guy without your money.

Speaker: Exactly.

Speaker: One way to crack the code.

Speaker: You have to have liquidity though. So your money has to stay liquid.

Speaker: Mhmm.

Speaker: Right? And, because liquidity is critical.

Speaker: Mhmm. So then what was some examples? So we're gonna talk to more about cracking the code. Right? Yeah.

But one of the things, you know, you hear, like, Grant Cardone, he went viral for this.

Speaker: Yeah.

Speaker: He said never buy a house. Always rent. Always rent. Any perspectives on that... That perspective?

Speaker: It depends who is on the other side of that.

Speaker: Mhmm.

Speaker: If it's an entrepreneur, right, that would be awesome. But guess what? There are a lot of people who are happy with their job and we thank them for their work. Right? And they don't wanna invest a lot.

Those people will benefit from owning homes.

Speaker: Mhmm.

Speaker: I made a lot from owning my property, right, over the years. But what Grant is referring to probably is what is the speed at which you're building wealth?

Speaker: Mhmm.

Speaker: And if you if your money is tied up in your property and you're not using it for... Like, if if you own the property free and clear and you're not using a HELOC to move the money, it is so slow. And when your money is slow, you're not moving towards your north star fast enough.

Speaker: Mhmm.

Speaker: That's why most people are on a four year plan. But anyone can get to a ten year or or shorter plan by understanding the speed of their money. And it's not attached to any one asset. So going back to Grant Cardone's question is your average person... Perfect.

I love owning my property, but I use the equity to make sure I move money. Gotcha.

Speaker: Alright. So you wrote a book, Rigged. Mhmm. Rigged generally has a very negative connotation.

Speaker: Yeah.

Speaker: Was that by design?

Speaker: Yeah. So so rigged is about when you don't know the rules.

Speaker: Mhmm.

Speaker: Right?

Speaker: So I

Speaker: want you to imagine making a decision. Right?

Speaker: Mhmm.

Speaker: And you are unaware of the rules, really the math.

Speaker: Mhmm.

Speaker: Right? And so most investors are making decisions around money just like I shared with you here a little bit. Right? The principle erosion is one of them. And when they actually look at the math, they can measure the...

What we call the bottlenecks. What's holding you back from moving faster is you've got all these bottlenecks in in in your life financially. And you think you're doing the right thing because we've been conditioned to think a certain way. Yeah. But no one told us the rules.

Mhmm. This exposes the rules which are math.

Speaker: Well, the people that told us the rules didn't understand finances.

Speaker: Well, some of them want us not not to know the rules. Right? Yeah. You know what I mean? So...

Speaker: Yeah. It's better for us to be working forever.

Speaker: Exactly. Yeah. Exactly.

Speaker: Okay. So there's seven invisible math laws quietly costing decades of freedom. Correct.

Speaker: That's

Speaker: the header here. So what are the seven invisible math laws?

Speaker: So I'm gonna say for everyone, read the book because here's the problem. Is they're so invisible. Like, the one I just told you right now, Principle Erosion. This is happening to ninety nine percent of investors. Yeah.

And when they read it, they're gonna be extremely uncomfortable. Mhmm. Because they're gonna realize they've been doing it for twenty years, twenty five years, thirty years, depending on... And it is so uncomfortable. But it's important that they see it.

So what happens is this book gives them sight. Yeah. What they're doing right now and what they shouldn't be doing and the math behind it. So, pencil erosion is one of them. Here's another one.

If I told you there's two different transactions, transaction a and transaction b. If you did transaction A because then everything looks good, great. And then later on you do transaction B. But if you simply switch them, the sequence in which you do them makes all the difference in the world.

Speaker: Mhmm.

Speaker: The first sequence could be twenty years. If you switch the sequence correctly, it could be five years. Where the first one now helps you buy the second one. Yeah. I'll give you an example.

My son wants to buy a product. He lives in, San Francisco. His down payment

Speaker: Expensive right now.

Speaker: Or very expensive. His down payment is, like, at least 300,000 or 400,000.

Speaker: Down payment.

Speaker: Down payment for the record. Okay? And he's like, dad, like, this is his first home. He knows how much I love real estate. And he was excited about buying it.

And he said, but, you know, this is, like, gonna be a big big deal. That's, like, everything I have plus I need more. Mhmm. I said to him, you know, I love real estate, but you never start with real estate. The sequence matters.

I said, why don't you do this, this, this? And then after that, that thing, the process we'll talk about if you want, will help you buy the real estate.

Speaker: Mhmm.

Speaker: The sequence matters because with the first transaction, as money is getting locked up for at least five years

Speaker: Mhmm.

Speaker: At least. Right? Maybe more before you can refinance, get any money out. So trapped capital. Right?

Mhmm. On the other hand, if you put it into a process, like some of the things we'll we'll... We can talk about, where it can move faster, that can generate capital to help you buy the the property. Well, we

Speaker: see this in real estate. So, like, you know, someone new gets into business, and there's the active part and there's the passive part. And for every dollar they make, they put in towards the passive part. The problem is the market slows down in the liquidity

Speaker: Exactly.

Speaker: Because you have all the money locked in the passive assets.

Speaker: Exactly. So That's exactly Alright.

Speaker: So then what'd you tell him? What's the secret? Everyone should... Definitely, this is the part we're gonna clip for everyone to watch. Okay.

Speaker: So, let's go back to to the capital base. Mhmm. The question is, what is the fastest way to activate those drivers Yeah. In the right time? And how do I make it so that it's fast?

Mhmm. So the first thing I'll say is for all of these drivers, when you ask what asset to buy, the key is you have to ask what asset will activate the right the right, the right driver.

Speaker: Mhmm.

Speaker: For example, if you're beginning and you're buying mutual funds, that's the wrong move.

Speaker: That's what they taught us at Intel.

Speaker: Exactly. If you're gonna buy mutual funds when you have 5,000,000, $10,000,000, go for it. Because return matters. Yeah. Right?

Right now we need leverage and contribution. So at the very core of to move faster is a process. And the process is called the capital creation process. And I'm gonna walk you through the exact steps. It's four steps.

I'm gonna draw it so that you can share it. So I'm drawing, essentially a circular diagram with four circles. Mhmm. Step one. Buy the right asset.

I'm going to underline right asset. We'll explain why in a minute. In the right sequence. Right sequence we we just explained.

Speaker: Mhmm.

Speaker: Right? You buy the right asset in the right sequence. Again we'll expand on that. Number two. You borrow immediately borrow against the asset with the right leverage, the right loan, we've talked about before.

Speaker: Mhmm.

Speaker: Right leverage, you know, with the right structure. Structure means capital structure. That means I wanna create a spread. Mhmm. I'll give you examples of spreads worth doing right now.

Number three, make sure the asset pays for its own debt, for its own leverage.

Speaker: Mhmm.

Speaker: Right? I'm gonna give you the exact you're familiar with debt service coverage ratio.

Speaker: Mhmm.

Speaker: So apartment buildings, you know, 1.25 to 1.5. All that means is the assets gonna pay for its own debt. Yeah. Well, we start at two that service coverage ratio and we go to three and four.

Speaker: Really?

Speaker: Yes. That means the asset is more than paying for that. It's putting money in our pocket as well. Okay. Number four, repeat.

What that means is I'm gonna just say make sure the asset you just purchased which is paying for its own leverage helps fund the next one.

Speaker: Mhmm.

Speaker: Okay. So make sure the asset... I'm gonna have to fix this for the pays or helps fund the next one.

Speaker: Mhmm.

Speaker: So let's go through this. You buy an asset in the right sequence. That means the asset has to be stable

Speaker: Mhmm.

Speaker: And liquid in the beginning. We always begin with liquidity. Because we don't wanna buy real estate that's illiquid if you don't have liquidity in your portfolio. Liquidity comes before illiquid assets. Real estate helps us go like this Yeah.

Structured correctly. But you have to build the base of liquidity. So buy the right asset, in this case, something liquid like an ETF in the right sequence. Now the right asset also gives you stability... When we're talking about stability, nothing that fluctuates too much.

The reason is because we're gonna borrow against it. You cannot borrow against something that fluctuates too

Speaker: much. Mhmm.

Speaker: You're

Speaker: gonna borrow against it and with the right structure. You're gonna create a spread. Here's an example. With the ETFs that we're buying right now, I'm borrowing at, say, 5% or four and a half percent. I'm buying something that pays me eight or 9%.

The spread is five or 6%.

Speaker: Mhmm.

Speaker: With real estate, the ones I buy is 1% spread. Not now. And I was like 0%. Right? But does that make sense?

One one and a half percent. So I buy with four or 5%. That means now my DSCR is large enough.

Speaker: Mhmm.

Speaker: So it actually... The asset pays or the cashier pays for this. Now I have enough money from the the transaction to fund the next one. Yeah. This is the core loop.

It's called capital creation and as you buy a whole bunch of assets to get you to your capital base. That's why you end up with 40% or 30%. Whatever it is in in debt. But you're always activating the right drivers.

Speaker: Mhmm.

Speaker: So early on when we're buying, assets, we're like, I don't care what's returned because my base is too small. Later on, some of this as I'm buying might be real estate. Because real estate allows me to use 80% debt. Mhmm. Right?

So that sequence in which you buy things can get you over here super fast. Yeah. Super fast.

Speaker: Well, and so one of the things I liked, Keith Cunningham, we're talking about him, I think, before we started recording. One of my favorite things he says is that if you can look back and undo your three dumbest financial decisions, where would you be? Right? And I think about that. And if you're putting all your money in real estate

Speaker: Yeah.

Speaker: And it's all locked up

Speaker: Exactly.

Speaker: Then you've lost a lot of opportunity cost.

Speaker: Exactly. That's That's exactly what we're talking about. Opportunity cost. You're right.

Speaker: Yeah. So okay. So let's go back to cracking the code. Yeah. Alright.

So we talked about how many pieces are there in cracking the code and how many have we talked about?

Speaker: So so we've talked about quite a bit. But this is really the whole thing is, the big thing I tell people is under rigged in the book Mhmm. You have to know the bottlenecks first. Because the bottlenecks are the problems that holding you back. So...

And they're invisible to most people. So the first thing you need to do is understand the bottlenecks, start addressing them. That unlocks more capital that allows you to put into a process like this. Right? Mhmm.

This process is what gets you to your north star. Right? And that's the key. But you have to understand the bottlenecks first. Because that's the thing that allows you to unlock money.

Yeah. Right? For example, this is gonna sound really weird, but, how do you pay for lunch? Right? The way you pay for lunch is a pattern.

It's not about the $20 you paid. It's about the pattern you use, but maybe you're paying for lunch incorrectly. For example, are you paying cash? Right? Every day, every day, every day.

What if you have... You put in, for example, on cert... In a certain way, there's different ways to pay for it, and you put the cash here. Cash in the... Before you get to your capital base is pure gold that you have.

And so we make sure you are using your cash for the right thing and have this thing pay for your for your for your lunches and your credit cards and all that stuff. So these small decisions that might seem seamless actually make a big dent.

Speaker: So it's kinda

Speaker: like,

Speaker: in some ways, what you're talking about... And I don't know if this is where you're going with this, but as you're talking about, I'm thinking, like, infinite banking and insurance policies and, like, putting money into your insurance policy, and then borrowing against it.

Speaker: Yeah. So let me say something about that. So that's a product.

Speaker: Yes.

Speaker: Yes. The problem is a lot of people with infinite banking are selling you a... Again, I I have nothing against that. They're great and everything. They're selling you a product, but what we're talking about is a process.

Mhmm. This... There is no product here.

Speaker: Oh, not a product.

Speaker: Yeah.

Speaker: But that's that's one of the promises Yes. Of independent banking. Exactly. Right? Like, you put 20,000 in and then later on, you borrow 10,000 of it to put a down payment for your car Correct.

While it's still growing at the

Speaker: forklift. That's... Yeah.

Speaker: That's correct.

Speaker: Is that kind of what you're talking about here?

Speaker: It's it's kind of... There's more to it. Like, you could buy real estate and use a HELOC to do this. Mhmm. So it's not about

Speaker: it's

Speaker: not about the product.

Speaker: Mhmm. It's

Speaker: about the process. So the process itself, what you're talking about is exactly correct. Yeah. But it's not about the product.

Speaker: About borrowing against something.

Speaker: That's stable.

Speaker: Borrowing against an asset.

Speaker: That's stable.

Speaker: Yeah. Yeah. Those are kinda like, so here's my dreams. Yeah. Right?

See where we go with this? Yeah. Right? Like, my company's worth a $100,000,000.

Speaker: Yeah.

Speaker: Right? It's a publicly traded company.

Speaker: Mhmm.

Speaker: And I never have to pay myself again. Yeah. And I just borrow against my stocks. Exactly. And that's how I pay for everything.

Speaker: That's exactly correct. Yeah. That's your buy, borrow, die philosophy.

Speaker: What?

Speaker: Buy, borrow, die.

Speaker: Oh, yeah. Yeah.

Speaker: Yeah. Incredible. Right? That's exactly what this is talking about. Is buy assets...

I don't care what the assets are.

Speaker: Mhmm.

Speaker: I'm not attached, but they meet the criteria. Liquid, stable, all that stuff. And borrow against it and do whatever you want, you know, buy the next one or pay for your bills, whatever it is. Mhmm. That's the key because you have to have...

Let's go back to the capital base. You wanna get to a number, 3,000,000, 5,000,000, 10,000,000, whatever that is. Once you hit that number, you you don't have to work anymore because that thing is doing the work for you now. Mhmm. Question is, what's the fastest way to get there?

And so your ability to borrow against it and pay for your bills Mhmm. Is incredible.

Speaker: So let's just say, hypothetically Yeah. Right? I got my house. Say it's a million dollars. And I put HELOC on it, $500,000.

I should be living off of that while I use active income to acquire more assets?

Speaker: I might

Speaker: It depends.

Speaker: I might

Speaker: I might be completely butchering this. Yeah. No. No.

Speaker: No. You're you're a 100% correct. The the reason I'm pausing is because because of the spread. So let me get... Tell you...

I'm gonna dig into... There's no spreads on lunch. Exactly. Here's here's the, I'm gonna give you something that's gonna...

Speaker: We're gonna talk about opportunity cost of sandwiches.

Speaker: It depends on... Let me give you, I'm gonna draw a...

Speaker: I hope everyone is enjoying this as much as I am.

Speaker: So I'm gonna give you a a, I'm drawing what's called divergent lines here. So imagine this is your debt. Mhmm. Because I wanna answer your question in a way that it clicks with you. And let's just see this is your asset here.

Mhmm. So imagine your asset is growing like this.

Speaker: Mhmm.

Speaker: And your debt is growing like this.

Speaker: So that's still linear growth but slow.

Speaker: It's slow but but it's comp... You have to compare to this.

Speaker: This is... Relative is very... This is the way you said the debt ratio Exactly. Is lower and lower.

Speaker: It's your divergence here. Right? Yeah. Now what if your debt is growing like this? What's the problem?

Speaker: It's it's it's

Speaker: you know. Convergent, right?

Speaker: Mhmm. It's it's no good.

Speaker: It's convergent. So if you were borrowing money from your land... So over here, the debt. We have people borrowing money as long as this is divert this is going higher than this. So if this grows by $1 and this grows by $3, you can go forever.

Speaker: Mhmm.

Speaker: So let's go back to the to the so the the money that you were gonna so let's just say your asset is generating 10%. And your debts costing you 6%. If I'm gonna pay for lunch $20 and I'm gonna borrow from here. So I'm gonna put it on credit card and pay from here. This is only gonna cost me 6%.

But the same $20 that I would have paid for lunch has to come into buying more assets. Mhmm.

Speaker: You see

Speaker: what I mean? Mhmm. Because I'm making more money with that. So what happened is it always diverges. So the key is how how much more is it diverging?

So we measure that.

Speaker: Right?

Speaker: It tells you based... We we have the technology for that. It tells you, if you wanna take money out, you can take a 100,000. You can go to Las Vegas because it is always diverging. You can you can invest it.

You can do whatever because the amount of assets is it's growing faster. Mhmm. That's where you wanna get to. Yeah. Right?

And so going back to the lunch,

Speaker: it

Speaker: depends on the interest rate on the debt. Mhmm. So typically these are, lines of credit against assets. And so... And you have to ask yourself, how fast is my my asset growing?

It's all about speed. Right. It's all about speed.

Speaker: So never thought I'd be talking about opportunity cost of sandwiches. Yeah. So, but for someone that's listening, you know, let's say they're a w two.

Speaker: Yeah.

Speaker: They don't really have access or they're not in a situation where their assets are outpacing their debt because they're not... Their, earned income isn't there yet today. So in that situation, they should still be paying off their credit card every month. And I guess that's step one probably. And then step two is they have to find assets, vehicles that can help them start doing the, recycling, capital

Speaker: Exactly.

Speaker: Interest leverage. Yeah. Yeah. Or return leverage. Exactly.

So they have to go find this while they're still

Speaker: It starts relatively quick.

Speaker: Yeah. So where's... So you... I've heard you say this. So walk me through.

Right? So right now, $80,000 salary. Not a lot of money today. It was. I remember I remember being a lot of money.

It's not today. Yeah. Making 80,000. How do you get started down this road? So

Speaker: I'll give you an example of my daughter. So my daughter just graduated college. Mhmm. And she came to me and said, okay, dad, what do I do? I only have this much savings.

Speaker: Awesome that she came to you. My kids will listen to me.

Speaker: Honestly, it's the greatest gift when your kids listen to you. Yeah. And that was, like, I told my wife, the happiest day, the fact that she asked me Mhmm. For my opinion. Okay.

So here's what I say is open... Start with a brokerage account.

Speaker: Mhmm.

Speaker: K. So she wanted to dive into real estate, all that stuff. I said, hold off. Start with a brokerage account. Make sure they have margin account to start with.

K? And make sure you know the interest rate. And so let's just say, there's many brokerages out there, but let's just say it's 5%, k, the margin. So I say start putting in whatever you have into the brokerage and learn how to borrow against it. And start putting in every month.

But start using leverage, but keep it under a certain amount. We're trying to get her to build muscle memory. Before you know it, she's at 40... 40. Right?

And it's growing like this because I said, I don't care what's return. Don't focus on return. I explained these drivers.

Speaker: Yeah. Return's irrelevant. Not relevant, but not not critical.

Speaker: Exactly. It doesn't make a dent. But if I can use leverage to get to the 100,000, that's the first thing is get to your $100,000 total, not equity total. And don't worry about the debt. As long as you maintain and you have a spread, it's under a certain amount.

That's all you do. And then I said, what you're gonna start doing is start paying some of your bills. So she now has a line of credit. So what we're gonna do, we're gonna start paying some of the bills. So we pick a small bill, few $100.

So that few $100 that you're gonna pay every month, I want you to take that same few $100 and you're gonna put it into your assets. That's all you're gonna start by. Now she's contributing, let's just say, a thousand dollars a month, and she's gonna add $200 for that bill.

Speaker: Mhmm.

Speaker: Now her line of credit is paying that 200 as an example. Now her capital base is growing. Right? And I'm showing her how this relates to compound interest that would have taken her, whatever, eight years. She did in a few months.

Speaker: Mhmm.

Speaker: Right? Speed is critical. Then I said, as you progress, you're gonna take another bill. You're gonna start paying that bill. And the money that you would have paid that bill, you're gonna put it over here.

Simple steps. And we we map this out for her, and she's gonna have... Our our goal for her is $1,000,000 capital base Capital base, not equity by under... Before 30. She's 22 right now.

Okay? And so... But it's very methodical. Every step is methodical. That's my background as an engineer.

And I'm sure you know what I'm I'm saying. Mhmm. Everything has to be calculated. Right? Yeah.

And what happens then is she sees the progress. And that's what I would tell every single person. Start with that and start with liquid assets because later on, when you start buying real estate, real estate will help you move so much faster, but it's illiquid. And it's fine as long as you have the liquidity.

Speaker: Mhmm.

Speaker: Right? So that's that's that's what I would tell people. Start with a simple brokerage.

Speaker: And then so you do this. You get to... Let's say, for example, a million base. Not not not all yours, but a million dollars worth. And from there, you borrow against that to put as a down payment for real estate.

Yes. So what happens...... Where sequence matters.

Speaker: Correct. You can actually start before a million. Mhmm. You're gonna get to a point. So what happens at roughly 300,000 and depends on on certain things, but around 300,000 returns starts to matter.

You're gonna change your... What we call the engine or the asset. It starts producing more more return, but you have to keep an eye on volatility which is uncertainty. Mhmm. So what happens now is we are growing with return.

Leverage is still up there. Right? And, at some point, again, depending on what their goals are, if a million dollars is, getting closer to their... You're gonna start buying real estate if you choose to. Real estate for 20% down gives you now appreciation on the whole thing as you know.

Right. That is incredible. Mhmm. That speed, if you will, is about 25%. That means you're moving now at 25% per year just from that one asset.

But don't pay it down. But your your r... Your return on equity and real estate goes down naturally with times. So every five years, you refinance

Speaker: Mhmm.

Speaker: Until you get to that number. So now you get to your... That that number, let's just say, is 3,000,000. Pay off... You start...

You can start paying off the the the debt. But you pay it off by... Like we talked about debt ratio. Don't increase debt. If you wanna use some cash to pay it down, go for it.

We are done with the booster. It served its purpose. Let it go. Yeah. Right?

That's how I would do it. So every stage, you have very specific, assets that have to serve a purpose. Mhmm. And real estate is a container that can move faster but it's illiquid.

Speaker: So several years ago

Speaker: Yeah.

Speaker: I I remember listening to Tony Robbins' Money Master the Game. And I wish I learned this stuff in there. All I got was just anger, right, and finding out, like, how criminal Wall Street is. Yep. But they didn't talk about this stuff.

Yeah. And, honestly, outside of my friends, that's how I want infinite banking. No one has talked about anything. And and when they talk about it, it's not even to this depth. It's like it's kinda like shallow.

It's like 20% of this. Yeah. So let

Speaker: me say something about infinite. I think people that understand how to use the whole life or IU, whatever it is they're selling can be incredible. Mhmm. But it has to be used correctly.

Speaker: Right.

Speaker: I'll give you an example of what people have been doing. I'm like, don't do that. Okay. And the reason is because it ties in how to think. They get a whole life I owe whatever it is.

They borrow against it and then they put it as down payment on property. They just took something that needs to be liquid, and they bought something that's illiquid. Property go... Goes down in value. Now the money's tied up.

They have to wait. Meanwhile, this money's sitting here doing nothing.

Speaker: Mhmm.

Speaker: Right? And so what happened is certain assets have gone down in value or, they're not making payments or whatever. So the debt is now climbing because it's accruing. That's a bad recipe for disaster. You always use the lines of credit to buy liquid assets that you can get rid of if you have to.

Mhmm. There's all these things that... That's why I said, infinite banking, they make it sound like the... You're gonna have nothing. I think it's an incredible product.

It's like a Ferrari that is sitting in the garage doing nothing.

Speaker: Mhmm.

Speaker: That's the problem. You have to know how to use it. It's the process. Yeah. Right?

So these are things that people need to know depending on where you are in the journey.

Speaker: Yeah. So all I gotta do is read... Was it the wealth code?

Speaker: The wealthy code.

Speaker: Wealthy code, bankers code, and then rigs.

Speaker: No. There's debt millionaire too.

Speaker: And which one?

Speaker: Debt millionaire.

Speaker: I'm not... But you know start with this. Start with rigs. Rigged. It will open your eyes to something that most people are are not seeing.

Speaker: Mhmm.

Speaker: Start with that, and it will help you start seeing the world differently. Yeah. It's about the game more than... This is not about some secret asset. Mhmm.

It's about seeing the game for what it is.

Speaker: Yeah. Yeah. Because I'm trying to... Again, like, I don't know very many people that talk like this. So, I gotta ask one question because, I remember, you know, I I mentioned earlier Brandon McCurdy, and he's the only person I've had, you know, brought up, that I could recall, bring up your book, The Bankers Code.

I was like, hey. Like, you know, Jordan Anton's in my office today, and you're the one that, only person I can remember, like, referencing him. So you read his books. What question would you like me to ask him? And his question was, like, how did you come up with your creative writing style?

Speaker: So the books that impacted me the most were all, almost like fables, stories. Because it's hard for me to read any book. I have a criteria. Any book that's more than 200 pages

Speaker: Mhmm.

Speaker: That doesn't have pictures. Because finance is very conceptual. You have to think certain way.

Speaker: Mhmm.

Speaker: And so I noticed that the books that really impacted me like Robert Kiyosaki's books, Rich Dad Poor Dad and other books.

Speaker: One of the most impactful books of all time.

Speaker: Seriously, it's incredible. But it's because of the story. Mhmm. Right? And the stories always impacted me.

Always. So I decided... And I'm trying to remember the the first one, that I read. There's quite a few books I read. They're all story to...

And those were the the wealthy barber, I think, was called, and, all stories. And and to me, that was important to to to do that, but also to put pictures. I'm a very visual person Mhmm. And it's hard for me to memorize stuff. Yeah.

So I always always drew pictures for myself to try not to understand a a lesson. So all my all my books have pictures and people think it's kinda weird, but, like, this is who I am.

Speaker: Mhmm.

Speaker: Exactly. So...

Speaker: Well, you wrote it for yourself.

Speaker: Exactly. Exactly. And for the kids too. For my kids.

Speaker: Well, because, like, when I do this podcast, people would say, well, you ask really insightful questions. Like, no. I'm I'm asking for me. Like, I wanna understand.

Speaker: Yeah.

Speaker: Now I'm a little bit further along the game. So, like, maybe I'm asking questions for the benefit of the listeners, but Yeah. For a long... For the longest time, I'm asking questions for me. Yeah.

They just get to listen to the conversation. And today, definitely, a lot of these questions were for me. So this is this is awesome. This is this is incredibly, valuable. So a few quick questions here.

So, you know, when everything is said and done, you know, what would you like to be remembered for?

Speaker: So

Speaker: I have always wanted to challenge or figure that the code. What's the code to actually build wealth?

Speaker: Mhmm.

Speaker: And I realized that's really there's two games. And I just wanna be the one to help people see the real game. And here's what they are. We're told to play a certain game, what I call the asset first game.

Speaker: Mhmm.

Speaker: The asset first game is this belief that there's some secret asset that's gonna make you rich. And so they're telling us real estate or, stocks or crypto, whatever it is, asset first because they believe it's the asset. Fin... Or the capital first or finance first world is where the banks play.

Speaker: Mhmm.

Speaker: And the the big companies, the CFOs of big companies. The capital force is when you recognize that the capital and how you structure it relative to the asset is the... Where the... Where you play the game. And it turns out that if you play the capital game, you can move so much faster.

Mhmm. And to move faster towards your capital base, you have to you have to learn the capital game. Yeah. And that's the whole thing. Is I wanna help people understand the capital game.

And it's not about the asset first. That's why a lot of people keep asking me, George, what's what's the asset? What's the asset? Is it real estate? Is it is it stocks?

Is it... Nope. It's about the capital.

Speaker: I must say it's a lot more boring. It's the math.

Speaker: Exactly. Exactly. Exactly. That's exactly correct.

Speaker: What would you say is your superpower?

Speaker: Questioning everything. Mhmm. Being skeptical, and trying to connect dots to to better understand the world of finance.

Speaker: Yeah. So, I mean, wrapping up here, are there any last thoughts, messages you'd like to leave all the listeners and watchers with?

Speaker: So here's what I tell people, is we are pioneering something called wealth acceleration. So if you imagine the world of wealth building Mhmm. That we're used to buy this, buy this, buy this. Within a subdomain, there's something called wealth acceleration. And this is the part that we're pioneering, which is how do you get your goals much faster?

So the main metric was called time to freedom. Every transaction I do, I need to know what's the time to freedom. How much is it saving me? We're building technology for that. We're building all kinds of stuff.

But wealth acceleration is a new domain, and I want people to start asking, how can I tap into that? Start opening your eyes and learn from the book I just, shared with you, Rigged. This is the beginning of the conversation because this is a series. This is book one. And start a new conversation around how can I get to my goals faster?

Yeah. How can I get to my goals faster? That's the question. And every asset you look at, ask yourself, how much faster is it moving me towards that? Mhmm.

Speaker: A different question. Different question. Different game.

Speaker: Exactly. It's different game.

Speaker: What's the software?

Speaker: The software we're working on right now, it's it's, we're only... Our members have access to it. And we're gonna be releasing it to the public, hopefully, 2027. So it's Gotcha. Incredible.

It is it is actually incredible. It is stuff that will actually show you what to do Mhmm. Every day, every month and tell you here's your best next move.

Speaker: Mhmm.

Speaker: But what it's doing is looking at all your financials and you say, you know, I wanna buy real estate or I wanna do this or I wanna do this. Should I pay for this car? Should I pay off my loan here? Should I do this? It will tell you what to do and it will show you the impact on your trajectory.

And it will explain why you can learn from it. It's constantly working in the background, analyzing all... Every single move you have and telling you why you should do it, you know, what you should do.

Speaker: That would be extremely impactful. Yeah. Especially for, I was gonna say a country, but probably a world. Yeah. A world that does not understand how money works.

I feel like I understand money pretty well, but, but, man, like, you really gave

Speaker: Thank you.

Speaker: A a

Speaker: a dissertation today.

Speaker: Thank you. Thank you.

Speaker: So I wanna connect with you, work with you, whatever it is. How can they, reach out to you?

Speaker: So the book is, can we look at it at, in the show notes, the theriggedbook.com, theriggedbook, riggedbook.com or on Amazon. The, I will put something on the show notes. And then my company is called finance, fynanc.com. So there's no e in the end, and we're using a y instead of an I.

Speaker: Gotcha. Yeah. Awesome. Well, this is an absolute pleasure. I learned a whole lot here.

Speaker: Steve, thank you so much for having me. I really, really enjoyed that. We had... People were telling me all kinds of awesome stuff about you. They're, like, you're gonna love being here.

Speaker: So Well, I wish I'd met you fifteen years ago.

Speaker: Thank you

Speaker: guys for watching. We'll see you guys next time.

Speaker: Steve train.

Speaker: Jump on the Steve train. Disrupt us.

7 Invisible Laws The Wealthy Know That You Don't