00;00;00;01 - 00;00;32;13UnknownWelcome back to some finger flipping podcast. And hey, before we jump into today's episode, I want to let you know something. We're really excited about that's coming up this Thursday, December 18th at 5 p.m. Central Time. That's this. Thursday, December 18th at 5 p.m. Central Time. If you're listening to this the week the episode releases, that is this week, December 18th at 5 p.m. Central time.00;00;32;13 - 00;00;57;09UnknownSo, you're going to be able to jump into this one if you're flipping houses or running the BR strategy, you already know that growth is almost always limited by your access to capital. This Thursday, we're hosting a free live zoom webinar with the team over at Unified Wealth, where we're going to break down how real estate investors can use self-directed IRAs and solve for one case to fund more flips.00;00;57;15 - 00;01;23;22UnknownAmbers the right way, and compliantly. And I'm sure many of you have heard you cannot invest out of your self-directed IRA or 401 K. If you've heard that before, you definitely need to come to this, and I'm going to tell you exactly how to get involved at the end of the episode. So stick around.00;01;23;24 - 00;01;55;11UnknownIt was a Thursday at 5 a.m. that a phone call came in that changed the path of my life forever. Here's my brother calling me to let me know that our mother had passed away in the middle of the night. See that? It makes sense to me because I just talked to her 12 hours earlier. She just said that she wasn't feeling well and that she was going to go to bed early, and that she'd call me the next day.00;01;55;13 - 00;02;17;13UnknownYou see, my mother hadn't been feeling well for a while about a year prior to this, she showed up to work on a Monday and the doors were locked. She got a phone call shortly thereafter, letting her know that her entire life savings had been wiped away in the stock market. Now, this was 2008.00;02;17;15 - 00;02;29;21UnknownAnd I'm sure some of you that have lived through that, or some of you that are aware of what happened, happened, but it was a complete financial meltdown.00;02;29;24 - 00;02;58;28UnknownThis was a woman who spent his entire life planning for retirement. Man, I remember that. I turned 18, and the first thing she wanted me to do, to do with me is take me to the bank and open a savings account. And she just instilled in me get a good job, Carter. Save your money and preferably get a job that has A41K plan that they offer that and put your money into a retirement account and and build and plan for your future.00;02;59;00 - 00;03;21;17UnknownYou see, my mom, she studied, all the professionals back then that taught her how to invest in the real estate. So my mom had four properties. She had almost $1 million saved in a retirement account. She was 62 years old, and she was planning on retiring 18 months.00;03;21;19 - 00;03;46;03UnknownShe lost everything. Now, the hard part, one of the many hard things to go through at that time was realizing that I wasn't a guy that was able to help her when she had lost everything, so I was also a W2 guy. I also had A41K plan. I was also trying to save my way, and there was nothing that I could do to actually help her.00;03;46;06 - 00;04;04;08UnknownAnd so here I am standing at her funeral, and it dawns on me that I'm living this financial untruth. That a job wasn't going to be the thing that was going to save me. Saving my money wasn't going to get me to the destination. A41K plan may or may not be the thing that's going to actually help me.00;04;04;11 - 00;04;22;02UnknownAnd so what I ended up doing is I ended up, which is every single person in this room is doing the same thing. I started to reach out to mentors. I started to find people that had what I wanted, and I wanted to understand finance and business and retirement and savings and real estate. I'm also a real estate guy.00;04;22;05 - 00;04;30;22UnknownBut I wanted to understand how to protect it and how to actually scale it for the future so that I would be able to control it so no one could take it away from me.00;04;30;25 - 00;04;47;24UnknownAnd so what we're going to do today is we're going to talk about and Bill mentioned it was a great segue. We're going to talk about a very specific type of retirement account. And there's a few different types. But I'm going to talk about the ecosystem and really a 30,000ft view of what these things do and actually how they can help us.00;04;47;26 - 00;05;15;02UnknownAnd so everything that we're going to talk about today can just be summed up in one simple visual. And that visual is a financial statement. And so a financial statement, is basically just kind of a snapshot of everything that has ever, well, really an individual's interaction with money. So how you've operated with money, how you've treated money and it's basically all financial statements.00;05;15;02 - 00;05;35;06UnknownLook differently. And that's not the point. Some of them are good, some of them are bad. But we're just going to talk about the overall, concept of a financial statement. So I'm just going to write the letter. You guys can write the words if you guys are writing some notes, whatever the the case is. But so in a financial statement you have I stands for income.00;05;35;09 - 00;06;10;09UnknownOkay. So you're paying attention. What does I stand for. Income. You know that is correct. But this E stands for expenses okay. So if you take your income and you minus your expenses, you're going to get your cash flow. Okay. Box for a stands for assets. What they stand for assets. If you take your assets and you minus your liabilities you're going to get your net worth.00;06;10;12 - 00;06;34;09UnknownOkay. Now here in America, what's the number one way that most people generate income? Job. Right. Well, okay. Now before you receive any of your hard earned money, what's the number one expense that comes out? Taxes.00;06;34;11 - 00;06;44;00UnknownOkay, now everybody's taxed at a different rate, but let's just call it 35%.00;06;44;02 - 00;07;12;11UnknownOkay. So what happens to most people is money. So. Well, real fast before you get your money, they take the big tax out. And then what do most people do with the money that's left over? Well, our chance. Oh Bill. Dead bills. We're going to get to that here in a second okay. So we work super hard. They take some money out, we get what's left and we pay our bills.00;07;12;13 - 00;07;39;08UnknownAnd then we try to save in the asset column. What are some of the ways that we're taught to save money. But what's that bank. So savings coffee can mattress. What are some of the retirement accounts that we're taught to do for one k? I read what else? The mutual fund can be inside of an IRA or outside of an IRA.00;07;39;11 - 00;08;09;26UnknownMilitary. What kind of military plans? Spouse. Right. 403 529 okay, cool. And the list goes on and on and on. So these things not a lot like my mom tried to save in these things, right? Not a lot of folks are real good at this column, but they're real good at this column. What are some of the liabilities that that a lot of folks have?00;08;09;29 - 00;08;43;01UnknownWhat's that or what do you say? Pause. 180 grand above our house, right. House, car, credit card, credit card, credit card, credit card, credit card. Right. But there's debt, right? There's debt now, I before I learned this stuff, I wasn't taught that, you know, a liability could actually be an asset if I'm using debt the right way.00;08;43;01 - 00;09;02;18UnknownBut that's not the point where I want to talk about that. But when we're taught and I was taught the same thing, saved my money, put it in a savings account, I might make, you know, 25 basis points if I'm being generous. Right. I'm going to try to save my way into the future, or I'm going to put it into one of these retirement accounts that all they do is they put it into equities.00;09;02;20 - 00;09;24;13UnknownAnd we're going to talk about what that looks like here in a second. So I guess my question is why do you think for most folks this isn't a real strategy that works so well as a government. But what's that. There's nothing left over the whole yeah. Do we know what actually goes on in these things? Oh, okay.00;09;24;14 - 00;09;43;19UnknownDo you guys want to know what goes on in these things? Cool. Who's heard of the. Who's heard a guy named Jack Bogle? Yeah. Cool. So those of you that haven't heard of Jack Bogle, who's heard of Vanguard. Yes. Awesome. So Jack Bogle created Vanguard. And when he started Vanguard, he's like, look, man, I'm going to create like this.00;09;43;21 - 00;10;02;08UnknownI'm going to create this system and I'm going to help people actually put their money into these retirement accounts that the government has created. And then I'm going to actually invest that money so that it's going to get people to the destination of financial stability and financial success. So that's what I'm going to do. So he creates he starts going on with this thing.00;10;02;08 - 00;10;25;07UnknownHe starts helping people. And then here comes Wall Street doing what Wall Street loves to do, which they bastardize this thing that was meant to be good and they turn it into this thing that's actually for them and not for the people that it was supposed to help. And so before Jack Bogle passed away, he he was like the biggest voice.00;10;25;07 - 00;10;40;27UnknownHe was so vocal about fees inside of retirement accounts. And right before he died, he went on this news program and he did an interview. And I want to play this interview with everyone. But before I play the interview, I want you guys to pay attention to three things.00;10;40;29 - 00;11;15;07UnknownWho puts up 100% of the capital? Who takes 100% of the risk, and who only receives 30% of the return? To understand this business, I went to talk to someone who has thought long and hard about it. Jack Bogle, the founder of Vanguard, a company that offers some of the lowest fee products on the market. He says that if you want to improve your retirement outcome, make sure to minimize Wall Street's take.00;11;15;09 - 00;11;40;27UnknownCosts are a crucial part of the equation, and doesn't take a genius to know that the bigger the profit of the management company, the smaller the profit that investors get. The money managers always want more, and that's natural enough in most businesses. But it's not right for this business. Bogle gave me an example. Assume you're invested in a fund that is earning a gross annual return of 7%.00;11;41;00 - 00;12;07;23UnknownThey charge you a 2% annual fee over 50 years. The difference between your net of 5%, the red line, and what you would have made without fees. The Green line is staggering. Bogle says you've lost almost two thirds of what you would have had. What happens in the fund business is the magic of compound returns is overwhelmed by the tyranny of compounding costs.00;12;07;25 - 00;12;35;17UnknownIt's a mathematical fact. There's no getting around it. The fact that we don't look at it too bad for us. What I have a hard time understanding is that 2% fee that I might pay to an actively managed mutual fund, is going to really, have a great impact on my future retirement savings. Well, you have to rely on somebody to get out of compound interest table and look at the impact over an investment lifetime.00;12;35;19 - 00;13;02;08UnknownDo you really want to invest in a system where you put up 100% of the capital? You're the mutual fund shareholder. You take 100% of the risk and you get 30% of the return. I wanted to know how others would react to bogus claims. JP Morgan Chase offers more than 100 mutual funds that charge anywhere from less than half of 1% to more than 2.5% annually.00;13;02;10 - 00;13;32;17UnknownI want to get your reaction to an example that, Jack Bogle gave us, and that is that if you invest over a 50 year investing lifetime in a mutual fund, making 7% a year on average, but you're paying 2% in fee for that, that that 2% will erode. Something like. Two thirds of your gains. So the.00;13;32;19 - 00;13;56;23UnknownLower fees relative to in to any given investment will always result in higher accumulation. But is his example correct? I mean, it's it's shocking that you would be giving up two thirds of so so I don't know the math behind the example, but does it sound exciting? It sounds. But it sounds high.00;13;56;26 - 00;14;31;20UnknownIt it sounded high to me as well. So I took Vogel's advice, found a compounding calculator online, and used a simple example in order to isolate the effect of fees, take an account with a $100,000 balance and reduce it by 2% a year. At the end of 50 years, that 2% annual charge would subtract $63,000 from your account, a loss of 63%, leaving you with just a little over $36,000.00;14;31;22 - 00;14;54;24UnknownHow do you guys feel about that? Yeah, if you say that out loud, it's robbery, robbery, highway robbery. So in all of these things, it's it's the exact it's the exact same strategy. Shotgun. Blast it out into equity or bonds. Nobody's managing that money. Nobody's actively managing that money. When it goes up, it goes down, it goes up, it goes down.00;14;54;27 - 00;15;21;13UnknownYou participate in all the losses. They participate in losses and gains and losses and gains. And it just goes round and round and round and round. And you're averaging about the just so you guys know, the average retirement account over the span of the lifetime of it averages about 5.6% a year. And then we have to take into evaluation the devaluation of the dollar at about 2% and inflation about 3%.00;15;21;13 - 00;15;28;18UnknownSo really at 5% you're making zero money. You're better stuffing that under your mattress.00;15;28;20 - 00;15;59;15UnknownSo what's what's a what's the solution? Okay. Well the solution is and there's no market up here. So I'm use my hand here. I mean there's no eraser. Oh you're the best. Thank you. Sorry, Bill. I'm ruining the hotel stuff. All right, so here's the here's an option. An option is what if. You could have inside the asset column.00;15;59;15 - 00;16;23;03UnknownWho in here is has a business like corp escort corp. Perfect. I'm going to I'm going to suggest if you don't have them go out and talk to ATG, they'll help you set it up because you absolutely need a business in the space that we are all in. So now here's the cool thing. What if inside of the business or excuse me, inside of the asset column you had a self-directed retirement account.00;16;23;06 - 00;16;45;27UnknownNow there's all different kinds, and I don't have time to go into all of them. But there's a specific type of retirement account for business owners like ourselves. It's called a solo 400 and K. And what if those of you that have retirement money, I don't know, in a TSP, a 457 or 4 03B or 400 and K a traditional IRA, the list goes on and on and on and on and on.00;16;45;29 - 00;17;14;12UnknownBut what if you could take the money that you had in a different retirement account, and you could roll it over into your business's retirement account? And because the self-directed retirement account is exactly the answers in the name, it's self-directed. You took that money and you invested in things that you're already learning how to invest into any alternative asset, anything that you're already currently doing.00;17;14;12 - 00;17;33;16UnknownIf you want to do wholesale deals, if you want to do rehab deals, if you want to loan money out of hard money, if you want to be a gap fund, or if you want to buy land if you want to, like Bill talked about, you want to start a business. The only thing that you cannot invest your retirement money in inside of a self-directed retirement account is you just can't buy life insurance with it.00;17;33;18 - 00;18;10;09UnknownAnything else you guys get to go do and build number one, pull it out of someone else's control because they're making a lot of money. Remember what was does anyone remember what return that you actually will receive over the lifetime of your money in a traditional retirement account, about 30%. That's absolutely bananas. Or you can control that money in your own account and go and divest into things that you know, believe in and trust, which is real estate, which is all the stuff that bill in seven figure flipping in the organization hold your hand and walk you through so that you can actually acquire the assets that are going to number one, build.00;18;10;09 - 00;18;40;19UnknownAnd number one protect them. And then also build for your family. So you get to keep the returns. Now here's the cool thing. Those of you that do not have retirement money, I'm going to. Well how much time do I have. I got a few minutes. So let's just let's do a visual here. Now, those of you that have a business structure, they may look, you know, somewhat similar to this.00;18;40;19 - 00;18;55;21UnknownThey may look different. But I'm going to use just one simple LLC structure as the example. Okay. So a lot of hands went up. You guys are business owners. Let's say that this is an LLC. Now you guys may have holding companies that owned subsidiaries. That's not the point, but I'm just going to use one LLC as the example.00;18;55;24 - 00;19;19;02UnknownOkay. So everyone in here has a business. I'm assuming their business is doing the investing right. So the businesses buying real estate. And obviously as you make money goes back into the business. You guys haven't paid any taxes on that money yet right. And then you get a bunch of business expenses and write offs and deductions and whatever that looks like to you and talk to your CPA.00;19;19;02 - 00;19;40;07UnknownAnd if you don't have a CPA, talk to a ATG. And that will help you out with that. But as the business makes money, what you get to do when you file your taxes is your business can also have a retirement account which is called the solo 400 and K.00;19;40;10 - 00;20;06;19UnknownYour guys's business can contribute up to $77,000 to its retirement account. And because it's self-directed, you guys get to go buy more real estate and create more wealth and more assets. They're going to get that. Does that sound like a better option than paying a bunch of taxes and losing a bunch of money in the stock market to some financial advisor that doesn't know your name?00;20;06;21 - 00;20;34;22UnknownYeah, I'd say so very unlike Bill, it takes a lot to get these people excited. Or angry with me. Yeah. It's like, tell me more. So yeah, the idea is so here's the thing for me, and I'm assuming like the kind of the story is the same, like something wasn't working in the lives that we had financially. And so we pivoted into real estate to actually solve a problem.00;20;34;24 - 00;20;56;20UnknownThis is a tool to solve the problem. This is another tool inside of your business. Those of you that have IRAs can be rolled into self-directed IRAs. Those of you who have these other accounts can be rolled into these types of accounts. And the sole purpose is control your money, build and invest into things that are going to make you money in and create your family's financial stability.00;20;56;22 - 00;21;14;16UnknownAnd also inside of this retirement account, it is protected. And I'm not going to dive into the weeds about how we build this account. But there's a trust component and all that stuff. And so I am coming up on time. So let me just kind of walk you through real fast how what it would look like for you guys to create a retirement account.00;21;14;16 - 00;21;36;04UnknownOkay. So there's, there's a couple, there's a few different, steps involved. So to create a retirement account, number one, you're going to need to find out which retirement account that you guys need. And there's a few different types out there. So make sure that you understand, you know, is it a self-directed IRA. Is it a solo for one K.00;21;36;04 - 00;21;54;16UnknownIs it a traditional IRA. So there's a few different types. So you need to find out. Number one what is the retirement account that makes sense for you and your business. Number two you're going to need to find a custodian. And a custodian is basically the company that will hold or control that money. And there's a bunch of custodians out there.00;21;54;18 - 00;22;13;05UnknownSo I suggest do your research, find the custodian. That makes the most sense. And then I'd also really dive into the fees that they're going to charge. You know, different custodians charge different fees, find out what their fee structure is, what makes sense to you, and find the one that offers the lowest fees inside of their their retirement account.00;22;13;07 - 00;22;34;03UnknownAnd then if you guys want check book control or check writing ability to control your money, you're going to need to create to t so make sure that you understand what entity makes the most sense for you. And there's different types, trusts, LLCs, those types of things. So make sure that you, you pick the right entity and set up that entity.00;22;34;06 - 00;22;53;07UnknownAnd then because it's you want checkbook control, you're going to need to find a bank that understands this. So there's there's tons of banks out there. Make sure that you find a bank that understands the self-directed space that will allow you to attach, an entity to a retirement account. It takes some time. But again, be patient.00;22;53;07 - 00;23;16;03UnknownYou can find the right one. And then comes the rollover process. You know, you're going to need to go to your current custodian, whether it's fidelity or wherever, and you're gonna need to start the rollover process. So there's a lot of paperwork involved. Some of them are going to request wet signatures or medallion signature, remember. Do you think they're going to make it easy for you to roll their money, your money out of them?00;23;16;06 - 00;23;33;21UnknownNo. Like they don't want it to make, you know, make it easy for you. They make they make money off of you. But it can be done. So just be patient with it. Once you get the paperwork done, then you're going to have to actually initiate the rollover into your new current bank, which again is a process, but it can be done.00;23;33;23 - 00;23;57;05UnknownThey bank on you not doing it, giving up. It could take months. The other option is who likes the easy button? I'm kind of a cookies on the bottom shelf kind of guy. The easy button is we can just do it for you. It takes us two days to do it. But the point is, is that we are,00;23;57;07 - 00;24;22;14UnknownWe're going to give everyone here, an actual, well, session. We're going to take a deep dive on your specific situation where you guys are starting at now, what it is that you guys are, heading in the direction for, and we're going to sit down and we're going to systematically plan out what is the best plan for you, what is the best account for you, how it interacts and operates with your business structure?00;24;22;16 - 00;24;38;15UnknownWhat are the tax advantages. And so we're going to take a deep dive on a well session with everybody in this room. That is our gift to you. The one thing that I mean, man, there's so many things that I love about what Bill has created, but it is the giving component inside of what you guys do.00;24;38;19 - 00;25;00;19UnknownYeah. Success is cool, stuff is cool. But, like, what are we doing about it? How are we giving back and how are we helping? And so my gift is I want to help as many people. I want to help you. I want to help your families. I want to help your friends. I want to talk to as many people that want to talk and learn this stuff, so that they can put themselves in a financial position to not have to look over their shoulder and be afraid.00;25;00;19 - 00;25;22;05UnknownThat man, I don't know if the market goes down or if I lose this or whatever, because there are things that we can do to solidify our own financial well-being. All right. I hope you got something out of that. If you want to learn more and even get the opportunity to ask specific questions around this concept, I want to remind you about the free live webinar happening this Thursday, December 18th at 5 p.m. Central Time.00;25;22;05 - 00;25;44;08UnknownLook, just put it on your calendar. We'll send out a link to it. There's no opt in. You just jump into this call. So we're going to be joined live by my friends over at Unified Wealth, where they're going to walk us through how real estate investors are funding their flips. And BRS and other things using self-directed IRAs and or 401 K solo, 401 KS to be specific.00;25;44;08 - 00;26;02;16UnknownAnd they're going to cover how these accounts actually work and how they interact with your business, and most importantly, how to use them correctly. And compliantly, which is a huge deal in this space. Now, this is a live zoom training, which means you'll also have you'll be on there with them. So you have the opportunity to ask direct questions and get clarity.00;26;02;16 - 00;26;28;23UnknownIf you have like specific nuanced situations. So registration is completely free. You can find the link to sign up in the show notes or wherever you're listening to this episode. Be on the lookout for a zoom link. There's probably a sign up so you can get automated, send a zoom link, watch your emails. And honestly, if you're serious about scaling your deals and not just relying on banks and hard money, this is something you're going to want to be on.00;26;28;23 - 00;26;31;18UnknownSo I'll see you guys this Thursday.
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