– Hi everyone, this is
Chief Wealth Architect, Garrett Gunderson. Thanks for joining us today. I’m so glad that you’ve taken
the time out of your life to invest in yourself
and to make sure that you keep a lot more of what you make and that we really dissect
the world of investing. I was recently having a conversation over the holidays at my cabin, and this was someone
who is very intelligent, but as we dove deeper and deeper inside of how the stock
market really works, how our money really gets moved, and how they talk about money being lost, that it never really gets lost. I just saw light bulbs going off and so I got a hold of the
team here at Wealth Factory like Matt and Tom and we
had a great conversation and decided this would be a great topic, especially a timely topic. Timely because everything that’s going on in the economy right now, we’re seeing it starting to have a lot
more ebbs and flows. We saw that we had a downturn
last year in the stock market. Now it’s hard to get this
message through to people when times are so good, just
going up every single year no matter what happens. And when that happens
a lot of times people get kind of lulled to sleep, they feel really comfortable with it. And they go, well I can afford
to lose a certain amount. Bt the reality is when we
start to dissect what’s happening now and what’s going
to happen moving forward, and really get clear about how
the stock market truly works. I think it’ll open up a lot of eyes to help you protect your cash
in a lot more profound ways and look at other options of investing because here at Wealth Factory we truly believe in investor DNA. Investor DNA is your values. It’s your competencies, the
things that you’re very best and knowledgeable in. It’s your drivers, those things
you wanna pay attention to, you find yourself talking
about and studying. And when we combine that for focus, it’s really about understanding
that risk is in the investor not the investment. So how can you become a better investor? See, the right investments
for you might not be the right investments for someone else. Someone who’s good at
real estate might not be good at the stock
market and vice versa. Someone who’s really good at tax liens might be, someone else might be better at let’s say commercial
paper or hard money lending. And so as we start to look at this world and universe of investing, it’s almost become synonymous
because of marketing that investing equals stocks and bonds, that investing equals the stock market, and a lot of people have
just handed their money over, being told things like Albert Einstein said the compound interest was the eighth wonder of the world, but the reality is Steven
on our team found out that it was Security
National Life misquoting him in the 1920s from a conference in Austria, that he actually said it
was compounding numbers, and that is very different
than compounding interest. And so really I feel that the game is rigged against a lot of people, because we’re being trained,
taught, and educated that high risk equals high return, that we should be in it for the long haul, that one should dollar cost average. We’re gonna look at what
these things really mean and what most importantly
what they mean for you. So for those just joining us
this is Garrett Gunderson. I look forward to taking
you on this journey today. I’m just dissecting what’s
going on with the stock market, give you a little insight on what’s going on with the economy, how it’s gonna be reported, how that more importantly impacts you, and what you can do to make
sure this transfer of wealth ends up in your pocket,
not leaving your pocket to someone who’s in the know. See, there’s an ignorance tax out there. And that ignorance tax is when we just don’t have an
understanding about something and we end up losing. And that loss ends up
being a compounded effect because we lose the value
of that money over time, and where it becomes especially compounded is if we start to have a
negative outlook on life. We start to become bitter. We start to invite in scarcity because those losses
become lost abundance. And that scarcity starts to move us towards this negative thinking that destroys wealth rather than embraces it. So thank you once again for joining us. At Wealth Factory we’re here to help one million entrepreneurs achieve the economic independence through the right financial insight, through increasing their financial savvy in an educational way,
hopefully in a fun way, in a practical way that
on things you can put right there on the ground. And what I see that doing is changing people’s financial future, changing their family’s destiny, making sure they can
build a legacy that lasts, and most importantly have
quality of life along the way so you can live a life that you love. Now for those of you
who don’t know me well, one thing I gotta warn you is it sounds like I’m yelling half the time. That’s because I just get
excited about these topics. No one’s in trouble. But I think especially
on a webinar it’s good to bring a lot of the energy to a topic that normally can be
dry, drab, and boring. So I see more people hopping on right now. I know that we are recording this, so if you wanna listen to it a second time we’ll make sure you can
get your hands on that. And really we want to help you
become that better investor. Let’s look just for a
minute at the beginning, the difference between
losing and transferring. And the semantics really matter because we’ll say things
out there in the world like I’m in debt when the reality is we just have a loan but
we might be in equity. That’s something we really cover in the Avoid Debt Like the Plague chapter of Killing Sacred Cows that we cover in depth inside of our Build newsletter and weekly publication and in the Curriculum for Wealth course. I’m not gonna go that into depth today. We’re gonna look at this
other piece of semantics that really harms people. Like, this whole notion that
we’re in it for the long haul is one of the greatest ways
to abdicate responsibility in the financial world
and really shirk that to the point that it starts to harm people because we think, okay, well
that’s a temporary loss. Well, let’s start with that. What if you have $100,00 invested and then you lose 10%, right? That’s gonna be set it as a loss, but once again we’ll get
into how that’s a transfer. Now you’re down to $90,000. Now if you turn on the news and they say there’s been a market rally, it’s back up, we’ve got that 10% back. Well the reality is,
your $90,000 earning 10% only grows to $99,000. And it doesn’t take into
account a few things. Number one, time value of money. You lost the opportunity to
earn over that period of time and you’re not even back to square one. So $100,000, losing 10%, you’re at 90,000. You now hear that it went back up 10%, you’re only at 99,000, but you
lost that time along the way. Now they didn’t stop charging you fees, and if you’re not in just index funds and now you have money managers or if you’re inside of a retirement plan like a 401k, 403b, there’s Keogh plans, traditional IRAs. There’s all sorts of, there’s all sorts of
things even in Canada, depending on where you’re
watching this from, that are all of these kind
of government qualified plans that are seductive in telling
us that we’re gonna save tax where we’re just
deferring and delaying it, and those have admin fees and legal fees and a myriad of fees that can actually be non-performing fees that would not, not only would you be at 99,000, depending on your expense ratios, which pay for the fund management, or your 12b-1 fees inside of the funds, which pay for marketing
fees that go towards that fund marketing to
acquire other customers and all the admin and legal fees, what if you’re at 3.3%, now you lost 3.3% during that time as well if it’s just one year
where the first six months went down 10, the last six
months it comes back up 10. Well you’re now only at
like 96,000 and change. So here we have a situation
where we’re being taught that we just should be
in for the long haul which has us to stop thinking, just hope that it’s gonna work out. But the problem with that is it comes from an accumulation mindset,
an accumulation model. That accumulation model states that wealth is a function
of three factors. Number one, how much
money do you contribute or do you invest? Number two, how much risk
are you willing to take in order to exchange that
risk for a rate of return? So if now all of a sudden
you’re going, okay, well, I’m gonna take risk. Risk actually increases
your chance of loss. And then the third component is time. Time is this major factor. ‘Cause if compound interest is the miracle that they say it is, it takes 30 years to work out. It doesn’t work out over 10 years. And unfortunately what if
you’re on that 30-year path, but then right when
you’re getting close there there’s major downturn or drop like there was in 2000,
2001, 2002, 2008, 2009, or even last year in 2018. Now that’s a major setback. Regardless of your age or when
you put that money in there, there’s a cost to that. See if you have 100 grand and
we invest that for 30 years and we see compound interest and we can earn 10% and it never goes down and there’s never those
fees that we talk about, that can grow to $1.74 million. That’s exciting. Now if someone came to you and said, look, over the next 30 years
you just have to have one year where you get a negative 10%. Can you pick that year? We’ll let you do it. Do you want it the first year? Do you want it in the middle? Do you want it at the end? You know the bottom line
is it doesn’t matter. Because even in the first year it’s less money losing 10%. You have 100 grand you lose 10%, that’s a $10,000 loss. But that $10,000 doesn’t
grow for the next 29 years at a compounded rate. Where if you lose it in the last year, yeah, it’s on a bigger piece of money, but we’re not looking at it
as growth over into the future because that’s kinda the endpoint. So there’s this thing
called opportunity cost. And opportunity cost states
that when you have a loss it’s not just the loss of the money, it’s what that money could have become. It’s kind of an economic concept, it’s a reality to our bottom line, and at Wealth Factory we’re specialists at making sure that you don’t lose or have that opportunity cost or that we minimize it
to the highest degree by a, protecting the downside, by b, making sure you’re more informed and you are utilizing your investor DNA, three, that you become
economically independent and create enough cashflow
to cover basic expenses so you could invest all
of your active income rather than just trying to scrimp and save 10% of that income
and trying to earn 10% in a risky way that you’re gonna find out just how risky it is
as we go through this. So I’m Garrett Gunderson,
Chief Wealth Architect. We’re talking about the perils and the issues within the stock market. The marketing and the misreporting, the missteps and mishaps of why is it that people aren’t further ahead even though we’ve had
people generations before me that invested their whole
life in the stock market, yet the people that got rich weren’t them. It was the people that took
the fees along the way. It’s not, the people that tell you it
takes money to make money, doesn’t take their money to make it. The people that tell you
high risk equals high return, they’re not the ones
taking the risk like AIG. You’re the one that’s bearing the risk, and even if they fail then
your tax dollars come back and that’s one that pays
those big institutions back because we feel like
we need them so heavily to make this economy work. So it’s kind of a bad system. That if all of a sudden
I’m investing money and then I have some federal government protection on that money
and that company fails, well it’s through taxation
that that money comes back. So we’re actually rewarding bad behavior and saying, hey, this company
that was either irresponsible, had a lack of knowledge, or did something in
the derivatives market, they imploded and now tax
dollars are gonna come back to preserve the people’s dollars that put it in in the first place. What about those companies? I mean AIG had 70 people get seven-figure bonuses after the meltdown. That was even after
George Bush left office and Obama’s in office, a completely different
political factor that doesn’t matter what side you’re on, there’s some problems here. And so investing in the
market is a little bit like going and playing poker in Vegas. If you hear in the upcoming months and in the upcoming
years that there’s been a trillion dollars lost
in retirement plans or a certain amount of money
lost in the stock market, it doesn’t disappear. It doesn’t end up in the
woods buried somewhere where no one knows where it’s gone or it doesn’t evaporate into thin air, the reality is when we hear the word loss we must recognize it
actually means transfer. Transfer via the ignorance tax. And look, when we watch commercials, like I was on CNBC and they’re talking about technical analysis, it’s overly complicated,
they’re using a ton of jargon, and they really don’t know what’s gonna happen in the market overall, they’re just doing their
best guesswork with data, but there’s so many moving
pieces and variables from consumer behavior
to war to interest rates to you name it, right? Like lies within companies. There’s just a numerous number
of things, several things. So when they’re saying the money’s lost what’s really happened is the
money’s gone to someone else. And by the way, that someone else probably had a team of analysts, probably their entire expertise, probably dialed in with their investor DNA like some of these hedge funds. Because if they’re choosing
to use calls and puts, otherwise known as options, well one person’s betting
the market’s going down, the other person’s betting it’s going up, one person’s right, one person’s wrong, one person ends up with the money, the other person loses their money. That’s a very rudimentary look at it, but it’s a very win-lose scenario. And for some people the stock market’s kinda the greater fool theory. It’s saying, hey, did I
buy at the right time? ‘Cause when I bought
someone else got the money, and did they sell at the right time? Who was right and who was wrong? And a lot of the value of the companies isn’t based upon what’s going
on exactly in the company. Yes, the news helps it,
there’s hype around it, there’s certain reporting around it, but we’re looking at levels
right now in the stock market that are before 2008. I mean, would anyone
actually pay for this company what we’re buying in stock? It’s not like we’re analyzing
one individual business as an entrepreneur and saying
should I buy this business and acquire it ’cause it
helps my existing business? Or do I wanna make an investment
where I own the business? Like, we do completely
different analysis on that then people actually
do in the stock market, ’cause the numbers in the
stock market are astronomical. Price to earnings ratios. What we’re paying versus
what they’re actually earning and how much they would have to earn to actually pay that off is so massive, massive, that how is that sustainable? Well part of the reason it’s sustainable is because people are
automatically making deposits every single month. People are putting money into their 401k’s and retirement plans whether
the market goes up or down. That’s otherwise known
as dollar cost averaging, which says, hey, the market’s
up, sometimes it’s down, sometimes just buy every month and you’re gonna buy at an average price, not at the peak, not at the bottom, it’ll kinda happen over time. But who’s here to be average? Right, who’s here to be average? I never understood that
notion when people’d say, oh the market’s on sale. Well, look if you bought
before it went on sale, that’s really bad news for you ’cause you’ve already got a product that’s worth less than
what you paid for it or with less than it was
valued at before at a minimum. And so that notion is
crazy that people say that. I feel like it’s more
marketing than it is strategy. And it became wildly accepted because billions of dollars
and plenty of voices that were pundits for that, had that become
indoctrinated within people, within their minds. Like when I was on CNBC in
2008, December 24th of ’08 I said now is not a good time
to invest in the stock market. People should stop investing
in the stock market. And actually the majority
of people investing there don’t know anything about these companies. They’ve never stepped
foot in their boardroom, they’ve never heard a report, they’ve never met the fund manager, they’re just handing their money off because that’s what you guys
are having them believe, and I got kicked off and
never got to go back on again because it was a little
bit too close to home, and that’s not what the advertisers want them to have experts come on and say. So that’s fine. But back to this notion of money isn’t lost it’s transferred. (sound cuts out) there’s what one person’s shorting, expecting it to go down, right? So they’re basically doing a put. Other people are doing calls because they expect it to be more long or it’s gonna go up over time, and so one person’s
right, one person’s wrong. And one person ends up with the money, the other person loses the money. Once again, a rudimentary look at that, and that’s how the money
doesn’t just disappear. When you buy a stock someone
ends up with that money. You bought that stock
that someone else owned. They now have the cash. If that stock goes down in value it’s because the perceived value of that by he marketplace is less. Like, Enron was valued
really high at one point because of hype, because of lies, because of misinformation
and misreporting. But the reality is people
were willing to pay for it because it seemed exciting,
it sounded like a good story. They didn’t know. Even the people in Enron that
didn’t want that trading ploy that didn’t know that
things were being sold that didn’t actually exist, they were putting money in that stock, and they were close to it. So hype can really blind us
because the higher the emotion the lower the financial IQ. And so in those situations
when the news comes out and all the sudden the
story’s told properly, the stock isn’t worth anything anymore ’cause who wants to buy
it ’cause the company didn’t have a real product. This happened a lot in the bomb, right the .com era where companies didn’t have fundamentals, they
didn’t have good financials. They were just buying,
having people buy on hype, and we saw that with the crypto craze, with these ICOs, initial coin offerings. That there was tons of companies, there was a company
that changed their name. They changed their name to sound like a cryptocurrency company, even though that’s not what they did, and they skyrocketed and then they tanked once the information got out there. So we have to be careful
of these hype markets. There were things like tulip mania where that was like the most
expensive thing you could buy was a tulip and all the
sudden when that crashed some people lost their life savings. So that’s the extreme side of this. But I feel like the stock market has continually been a part of that lie and that information
that’s been misleading because people will say the
stock market always goes up. Well what they’re not telling you is that it doesn’t always go up when a company goes out of
business permanently. And so that’s another piece
we’re gonna talk about. So where are some other pieces in how money is transferred not lost? Well it’s kinda like going to Vegas and you’re playing poker
and you’re winning. You’re feeling really good about yourself, and you don’t know the
players at the table, but all the sudden you
start playing more and more because you get this
false sense of confidence that it’s about your
skill and you’re on a roll and you can’t get any luckier,
you just gotta keep going. But the reality is what if you’re playing with the world
series of poker champions? And they eventually know that you now have enough false confidence and enough of that information
that is misleading you that they decide to
finally play their cards and they take the chips. You’re gonna tell people you lost money when you went to Vegas. The reality is you transferred to someone who had more knowledge and was in the know and this is what happens every 10 years that people start getting
this greed line that kicks in. I gotta get in, the
market’s always going up, and everyone else is making
money, I’m missing out, and there’s that fear of
loss that comes with that, and then eventually the
swipe happens, right? The hedge funds take a ton of that money. Like when it really collapsed in 2008 there was someone that
made 25 billion dollars basically buying insurance
or buying options on the housing market. So when the housing market went under, they had people that
had bought these notes, these loans, as an investment,
mortgage backed securities, that money ended up being in the pockets and hands of people that
said this isn’t gonna work, it’s gonna collapse
because we’re overextended, people can’t make those payments, it can’t survive. They’re only doing this
based upon the speculation and hype of the market going up, but eventually no one can afford ’em, no one will lend on ’em,
and they made a killing. But everybody said, oh I
lost money, I lost money. No, you transferred money. The money still existed, it just went into someone else’s hands. So in this game are you
equipped to win that game? Do you have the knowledge,
the resources, the team? And to make matters worse, if you’ve read the book Flash Boys, you also have flash
trading that’s happening, that some of these flash crashes happen, and that every time there’s
a trade that’s going on there’s these super
computers, essentially, that are so quick that they’re skimming and they’re boosting the
price as you go to purchase, and then they’re pulling that
and then selling it to you for just a little bit more. And the money that you’re holding, that’s happening to it all the time. So there’s a hidden fee. There’s a nonperforming fee that’s costing you in the market. That has nothing to do with fundamentals, whether a company’s gonna make it or not, whether a company’s a
right company or not, and even when we looked at
people like Warren Buffett, that people love to
hold in such high regard and say look how well he’s done. When he’s investing it’s a completely different
scenario than anyone else. He’s buying the company out. He’s infiltrating with
his investment philosophy and his management philosophy
and putting a team in there that’s gonna increase the production by putting more on fewer employees, doing a lot of cut and firing. There’s a lot that goes on there that we’re not hearing
about when we watch the news and we hear all these
great sayings and quotes. I love his quotes. I’ve learned a ton from Warren Buffett. But there’s also a very
cut-throat philosophy that goes along when he acquires a company and he’s buying it to
hold it for the long haul because he now owns it. He has a degree of control. When I invest in mutual funds or a stock I have no control over that board. I have no control over those
employees or those executives or the direction of that company. I’m merely a bystander hoping that I’m making the right choice, hoping that that company is
gonna make the right decision, they’re gonna make the right hires, there isn’t embezzlement. There isn’t some scandal,
there isn’t pressures of improving their stock price and so they do things that are
less than ideal or unethical and all the sudden when it comes up you start to see something take. But where my bigger concern is, and once again this is passion, not anger, but where my bigger concern is, is here’s where we’re most
mislead in the market. So let’s say that you’re
investing in a mutual fund, and it’s even an index fund, because yes, index funds take care of
some of these fees, right? That’s not some of the problem
that I was mentioning before, because you addressed it. But when you have that happen, that you’re holding
that for the long haul, for the long term, there will be companies in the S&P 500 that go under,
that go out of business. When they go out of business
our account should show that company being zeroed
out and the loss we have, moving forward permanently. What they do instead is they take one of these rising star companies that now gets to move into the S&P 500, and they say okay, now
that company is gonna grow and that’s actually gonna
boost the performance of the S&P 500. The problem is all the
money you put in the S&P 500 before that company went under was lost for 1/500 of it for that company. And the new company that comes in, it’s only your new
dollars that actually get to benefit from those games, but when they report the average returns, see averages don’t include all the fees, they don’t include all the volatility and the impact that has,
and it doesn’t include those companies that go under
and they’re gone forever, and I believe, based upon all the research that our team has done at Wealth Factory, that I have done personally, from the conversations I’ve had, from the best thought leaders on this, we have a world where we’re gonna see more Fortune 500 and S&P 500 companies get annihilated and disseminated
over the next decade because technology moves so quick. Someone could be in
their garage right now, working on an idea that
could start to become one of those companies
in a year, three years, five years, where before you
had to have so much money in capital raised. You had to have so many relationships and be so in the know, it was
reserved for only the elite. Now it’s really about
knowledge, it’s about value, it’s not so much about these oligarchies that were basically, okay, did you, were you part of this
group that was well funded? And part of this group that
had all of the resources. You could be resourceful in today. And so we see companies that are gonna start
going out at a higher rate because these bit companies,
they can’t move quick enough. And when they do, like
GM shuts down plants, they get this outward
pressure from the government saying don’t shut down those plants. We need those American jobs. We’re gonna take away your
subsidies if you do that. And they’re going wait, but now there’s driverless
cars coming out. And we see the future
and some of these cars just aren’t gonna be able to compete. Well guess what, there’s
new car companies coming up, like, look how new Tesla is, but how much of a meteoric rise it had. In the scheme of things, look how new companies like Apple’s kind of an older kid on the block, but that’s still relatively new compared to these old companies like GE. And when they need to
get rid of employees, it takes a long time. Small companies are more
nimble, they’re more quick. We can have companies like
Airbnb and Uber and Lyft, that they don’t own hotels, they don’t own cars or transportation, yet they can completely
disrupt that entire economy in those entire sectors because
technology moves so fast. Technology is gonna be one of the things that disrupts the stock market massively. And for those people in
the buy, hold, and pray, long-term strategy,
you’re gonna get impacted. One, because volatility lowers your actual experience in return, two, because you have all
these nonperforming fees that are going on, whether
it’s expense ratios, 12b-1 fees, legal admin
fees, all the kinda stuff that goes on with retirement plan if you have it inside of those programs. That becomes an impact. Then you have companies go
completely out of business and then that shows a different average because they replace it
with a different company, rather than zeroing it out into the future with your existing money. So we’re being mislead. Averages in the market are
like revenue in business. You can have a business with great revenue like $100 million but if it’s costing ’em $110 million dollars to get there, they’re not getting ahead. Averages don’t tell us
the impact of volatility, the impact of loss, the
impact of nonperforming fees, or even performing fees for that matter, because it’s not accounted for. And think like a business owner. We would never run a business on that because it ain’t what you
make, it’s what you keep. So this is why there’s people
that have invested money, which we did research from 2000 to 2014. The stock market did 8.4%
total adjusted for inflation. You’re risking your money. You’re setting it aside, but the reality was 8.4%
because we’re accounting for companies that went under, we’re accounting for the
fees that were coming out, we’re accounting for
some of these factors. And look, savings accounts
did better during that time. That’s the notion that drives me nuts. And so rather than get so caught up in just handing your money over, I don’t want you to
transfer your wealth there. As a matter of fact if you are gonna keep your money in there, look
at ways to add collateral, look at anything from, can
you add a trailing stop loss, that if the market goes down
further than your comfort you move the cash. Because people and cash
are gonna win the game. People that are heavy in cash right now will capitalize on the opportunities when people need liquidity. When everybody started to see losses, and they’re scared, should
they sell or not now because now it’s a realize
loss versus a paper loss. Other people are gonna say, I have cash, I can buy businesses for cheap. I can buy real estate for much cheaper. I can make money on the
buy rather than speculation on into the future. Or people here at Wealth
Factory have these resources and insights and tools that we give you so that you can be more efficient and get your return by saving tax, by saving on interest, by
saving on insurance costs or duplicate coverages
or improper structure or saving on all these
nonperforming investment fees and protecting your downside. That’s the key, how do
you protect your downside and how do you build liquidity? This is how you can combat what’s gonna happen in the economy. So to recap, we’ve got volatility that impacts our actual return versus what’s reported as an average return. We’ve got companies
that go out of business, and that’s gonna happen
at an increasing rate on my opinion because of
exponential technologies and because of maneuverable companies that can disrupt entire industries. And then in addition to
that we have all these nonperforming fees that create drag. But ultimately if you hear
about money being lost you’re transferring it to someone else. Are they more in the know? Is it more aligned with
their investor DNA? Is their expertise? Do they have a team behind it? Do they have unfair advantages
over you that ultimately, like super computers
are an unfair advantage. We don’t know what they’re doing. They’re just going in there
and doing a trade really quick and then trading it right back
to us and skimming the top. Read Flash Boys. It was so eye opening and
frustrating at the same time. That’s why I have so
much passion for this. I want you to keep your money. I want you to build a legacy that lasts. I don’t want you to have
your mind go in the toilet when the market does. It has to. We’re in the second longest period of time in the history of the United States since we’ve had a recession. When that happens you don’t
have to have the downturn. Look, I participated in
some of the downturn in 2008 because I had so much real estate. Real estate I wasn’t being mindful enough, paying enough attention,
I was just enjoying the rise when everybody was in the rise versus looking at the cashflow. When you build your stability you have plenty of liquidity,
plenty of cash on hand, whether that’s in your
cash value insurance, whether that’s in savings accounts, or that’s in business accounts. And then you have good cashflow coming in that doesn’t require your
daily management and attention. That recurring revenue that
builds more stability for you, and then you can really start focusing on this major opportunity
when the economy turns. We made more money at Wealth Factory, at that time it was Freedom Fast Track, the precursor, in 2010 than any other time in the company’s history, which started in 1998. Why? Because we were positioned
and poised for it. We knew what was happening,
we knew how to explain it, and most importantly we taught
people how to navigate that. And with the resources we give you, make sure that you’re in the know, that you’re not playing a game through just handing things over, a mindless game that
everyone else is playing, and they go yeah, but
everyone else is doing it. Well 50 million people
are doing a foolish thing, it’s still a foolish thing. There are societal norms and myths that actually destroy wealth. And unfortunately the stock market is one of the main culprits
that confiscates wealth through the factors that
we talked about today. Don’t be sitting here unintentionally, unknowingly, at the poker table because right now the poker table consists of hedge fund managers. And the hedge fund manager
of that poker table, that’s the game of the stock market. And if you’re just
handing your money over, you’re not thinking anything about it, and then all of a sudden
there’s a month where it goes up and you feel great about it, well there’s gonna be a lot
more months that go down and I don’t wanna see you lose or transfer your wealth or money. All right, this has been
the State of Wealth, Garrett Gunderson. I’m gonna see if there’s any
questions that have come in. Tom, anyone that’s on here
that wants to ask any questions that’s live, feel free
to ask those questions. Hopefully the things that
you now know to do in action. Build up cash and liquidity. Stop funding things that are a gamble, you don’t have control over, there’s no exit strategy, there’s no cashflow coming from it. Focus on economic independence first before you speculate with your dollars. Become economically independent. Before you speculate with
your dollars, save on tax. That is a major return for people. Then you can invest
that back into yourself, into your business, increase
your knowledge and your IQ. Figure out ways you can deliver more value to the marketplace,
serve more people, have a greater impact of depth and reach. So these are the kind of things
that are the true solutions. Don’t think about synonymously investing, that that means the stock market. There’s plenty of investments out there. Tom, one of our writers, wrote a huge list of all the different
investments that are out there. It was a lot of investments
that are available. I mean, I just endorsed
a book that was about how you buy and acquire companies. I thought it was a brilliant
investment strategy. We’ve had tons of clients
that they just buy businesses in their sector so they
can improve their reach or their impact or they
know how to monetize it in a way that the other person doesn’t because they coordinate that. We have other people who
are good at real estate. There’s a few people we work with that are good with the stock market, but the majority of them are not. So get really clear, is this
part of your investor DNA? If it isn’t what could you do differently? What difference would
that make in your life? And what are you gonna be
poised and positioned to do because you built this liquidity, you focused on cashflow, you plugged the lease and
saved a bunch of money. So Jeff asked are whole life policies what we should be focused on? What I liked about whole life is it doesn’t participate with the downside. You locked in your gains
once they’re earned. The downside might mean
you get lower interest but you have a minimum guarantee. And it’s accessible and available, so if there’s a good investment
or the right opportunity you can capitalize and pounce on it. What book was that? Paul, I can’t remember what
book I mentioned, Paul. So if Tom can type that in. I have a huge amount in annuity with an insurance policy attached, would I be better off to cash that out and pay off my commercial
real estate or trust? Well, it depends on
what’s the interest rate you’re paying on your real estate or trust versus what are you earning
inside of that annuity? That’s the first consideration. The second is what are
the tax ramifications of cashing that out? So if you could figure that out, everybody needs to know
their cost of money. Your cost of money is your highest net sustainable rate of return, highest net sustainable rate of return, or your highest price that
you paid to borrow money. And so when you know your cost of money, what kind of investor are you? If you don’t know what to invest in maybe you’re just best paying things off. It’ll help you improve cashflow, have less stress and worry. On the other hand, if you
knew you could put that towards something in your business and you’ve grown
exponentially in this year, maybe that’s right for you. See, the bottom line is what is your own personal peace of mind and what are your personal
options and opportunities? For a lot of people, and
the majority of people, just paying those loans
off frees up their mind and they feel more abundant. It improves their cashflow bigger than any investment they could make. And for others, having that
cash, that might be even better. So you really have to get really, oh the Flash Crash was the
book I was talking about, Flash Crash. It’s got like a red cover. I read it several years ago but pretty fascinating read overall. So Tim, you just need to look, sorry, it’s Flash Boys,
yeah, sorry Flash Boys. I read it so long I just know that there’s flash in the title. And I read it page by
page, the entire thing. I got the physical book,
I read the entire thing, it was that kind of fascinating, so check out Flash Boys. That’s the book that you wanna grab. If you wanna learn more about just some of these external factors and then just taking in consideration what happens when a company
goes out of business and what the impact is
on your investments. So looks like there might be a
few more questions coming in. I just wanna say thank you
so much for taking the time to invest in this and to really hopefully take action on this and do something. Like we said, we’re not
selling anything today. We’re just sharing this information. We wanna build a relationship. We wanna get people to
economic independence, and we can’t do that with everyone in the world that hires us, but we can do that with more than them just by reaching them and
some of these resources here. Let’s see, Amberleigh says I
have a wealth capture account emergency fund and living wealthy account. I stopped investing in
my 401k with my business. Is it okay that I’m not doing my match and how should I place
this money in whole life? Well once you get at
least three months of cash in that wealth capture account, then you go to cashflowbanking.com and you can talk to a
cashflow banking specialist and they can tell you
about how to properly fund cash value insurance so
it has less commission and more cash, that’s
an important part of it. What do you think about
cashing out an inherited IRA to pay off debt? Well Susan, once again,
what’s the tax ramification of cashing that out? And what are you earning in the IRA versus what are you paying in the debt? For me, I think it could be a really viable situation for you to do that and simply have that gone. One of the ways that you
might wanna do it, though, is consider moving a traditional IRA into a one-time conversion
to a Roth if you can. And if you can do something
called a rescue strategy or you can have a kind of proper valuation that would lower the valuation inside of the IRA a little
bit on that conversion then you’ll pay less tax
and then you can use that to pay that off. I’m listening to you, I moved everything I had
in my retirement accounts to cash before the drop in stock market. Matt, bam, so glad to hear that Matt. Is there anywhere I can move my money to avoid all the fees
that I continue to accrue even while in cash? Well, I think the best
savings account I’ve seen is like 2.7% that’s out there, and there’s a minimum amount
you have to put into it. So overfunding a whole life
is the best storage tank that I found for money. I could talk about other things, but that’s the best storage tank. Let’s see, Steven says I have a portfolio, by the way I’m just, I have
another screen behind me so I’m looking over it
to see the question, so hopefully it doesn’t look too funny up here on the screen. I have a portfolio of
moderately aggressive risk tolerance currently, I’m about to start a new
business, medical practice. I’m selling an investment property. So I’ll be having an
influx of cash from that. I’m planning on keeping the proceeds from the real estate in cash. Would your view be also to convert my investment portfolio to
cash includes my SEP-IRA? Steven, look, I’m not
an investment advisor. At Wealth Factory we’ve got
people on our accredited network like Ryan O’Shay, that
are investment advisors. So don’t know that I’m
truly allowed to just say yes you should move that to cash. I’ll just say this, if it were me I’ll remove the cash, if it were me. That’s what I would do. 401k, can it be transferred to Roth IRA? Yes, there’s a one time
where you can move a 401k unless you’re currently
employed at that place, and depending on the provisions, but most of the time, yes, you can move a 401k as
a one-time exclusion over to a Roth IRA. Is it better to pay off debt
with a low interest rate loan from insurance or better keep the money and add to the policy? When you pay off debt versus not. Well, Phineas, it just depends
on if the policy’s earning 5% and the loan’s less than 5%, then, and the loan doesn’t bother you. Like my mortgage, I don’t pay, I didn’t pay off my mortgage
on my primary residence, and the reason is because
the interest rate’s like 4%. I can do better than
that in my cash value. I could always pull out the
cash value and pay it off if I wanted to. But I liked having that flexibility. I liked having that money when the right opportunities come my way. Other than higher costs on universal life are there other reasons
you don’t like the product? Dwayne, I don’t completely
dislike the product. I have some concerns
with the product, Dwayne. Universal Life has a few issues. Mortality expenses. The older you get the
more the cost of consumer because it’s built on a term chasse. There’s a bundling effect as well, based on the debts per
thousand and a bundle of people that are in the similar situation to you, if those increase they can
increase the cost of insurance. So they have a flexibility
as an insurance company to increase the cost of insurance. If you go in universal life illustrations, and you look at the guaranteed cost side, that guaranteed cost
will destroy the policy. It will eliminate the cash value. Those policies look good if
there’s plenty of cash in there, ’cause the cost of your
mortality and cost of insurance is only the difference between the cash value of that benefit, known as the net amount risk. But the problem is what if
you’re in a bad health situation, everybody jumps ship to a better policy, now you’re moving to the
higher cost of insurance and so you have a risk of
losing the debt benefit. I’ve seen some good
universal life policies that have high liquidity. I’ve even recommended them in a few cases. But whole life gives
me stability, security, they can’t increase the cost of insurance, they can’t increase my premiums, they can’t take away death benefit, and there’s a minimum guarantee. Universal life only has
two of those four benefits. Yes you can add riders to
make it look closer to it, but look, even I have
a lower health rating because of some kidney things with one of my whole life policies. I compared a table eight whole life policy properly funded to the very
best out there with the company, advisors, Excel, they were showing me several different
universal life policies. And it couldn’t compete because I was looking at what
the risk factors are. And even after that I was
still going to have more cash in the future even
though the universal life gave me more cash upfront. And I was looking at, not only midterm but longterm and the value
of the death benefit. Where’s a list of possible
investments that Tom wrote. You know, we’re gonna
actually, when we do a wrap up and we do the recording, we’ll make sure that
everybody has that list so you have that since we built it, so, Tom let me know, we’ll
put that in the wrapup. Sorry to join late, not
yet financially independent so what should be my one thing goal heading into the new economy. Thanks. Heading into the new
economy your one thing goal is to get your financial house in order so that you have enough
cash and liquidity. Just find where the leaps area, set up a wealth caption account and start saving more
money in a very safe place. How will insurance be a good
hedge if the dollar’s devalued? Phoenix, you know what,
if the dollar’s devalued, we’re all gonna face that. You’re gonna pull your cash value out and move it to other currencies, other denominations, other opportunities. So if you start seeing that devalued you have that opportunity
to access that cash. So that’s the only way that
it’s a really good hedge. All right, let’s see if
there’s anymore questions. That’s it, hey thanks so much everyone. It was so great to be with you today and to share all this with you. Hopefully this has been of value. You’ll be able to practically apply this. Look for the resources we’re providing here at Wealth Factory so you can take charge of your financial
life, take back control, make personal finance personal once again, and make sure you have
those practical steps to plug the leaks, build more wealth, get economically independent, and have that life that
you absolutely love. Garrett Gunderson signing off.