3 Things I’m Investing In Right Now For Passive Income

You're listening to Freedom Fast lane presented by capitalism.com this is the show about building businesses and investing the profits so that you can live life on your terms. And now your host, the future owner of the Cleveland Indians, Ryan Daniel Moran.

Hey fastlaners, Ryan Daniel Moran here. Today we're going to talk about investing, specifically investing when the market is at all time highs like it is right now. And the reason I wanted to chat with you about this today is mostly to scratch my own itch as I have talked about in our email list and here on the podcast now. I recently sold a business really, really happy with that process and now have a different set of problems which is where am I going to invest the money? Because I have said as long as I don't do something stupid, I'm good, I'm set for life. So I need a good strategy for being able to that and I have one. I have a really solid strategy. I talk about it in our Investing for Entrepreneurs course. We have this training class that is about positioning entrepreneurs for increasing their business cash flows, their personal cash flows, setting themselves up for long term wealth, developing strategies to pay less taxes. And I know all of that. I follow those strategies. Obviously I teach those strategies. But things are a little bit weird in two ways. One, I've never received a cash windfall this large and at the same time the market is at all time highs. So what do we do about those two things? You know, where do we invest when we get a large amount of cash and where do we invest when the market is, in my opinion, way too expensive. But who am I to say? Me saying it's too expensive doesn't change the market, doesn't change anything about the situation. So what do we do in this case? I was speaking with my buddy Kamal Ravikant. He's the author of the book Love Yourself like youe Life Depends on it and Rebirth. He's also been on the podcast. He's kind of a celebrated investor in Silicon Valley. He's actually a big investor in cryptocurrencies. So we've had some fun conversations on that. And part of what I'm going to say in today's episode is why I'm not using any of the money to buy cryptocurrencies. So he gave me some of the best advice that I've received on this. And when I asked him, you know, I said, Kamal, you're an investor. What would you be investing in right now if you had just gotten a large check and you wanted to ensure that you were going to be taken care of, and you didn't have to worry about money for the rest of your life. And he said, the best thing that you can do with that money for the first year is nothing. Let it sit there. Normalize the idea that you have that money in the bank. If you want to take a small amount of money and blow it on some fun things or some investments that you're excited about, go for it. But for the majority of that, sit on it. Let your brain normalize having that amount of money in the bank. And you know what was funny is I found that he was right, because as soon as I got the cash, there was a temptation for me to find something to buy. For some reason, some not waste, but actually invest in. Like, I want to go find my cash flow. What am I going to invest in? But the longer that I hold onto it, the more than I normalize it, which means that I think I'm making better decisions. It means now I'm attached to that money, and it hurts a little bit to invest that cash. And that's how investing should be. You should be careful and cautious with the cash that you put into anything, because behind every investment is a business. So the way that I am looking at this right now is I am very slowly courting different investments right now. The market has a lot of what I would call dumb money in it being invested. There's things that are soaring in value, and there is a bit of a herd mentality right now. The reason why I am so publicly down on investing in things like Bitcoin is because the majority of people who. Who are investing in cryptocurrencies know nothing about cryptocurrencies. They're doing it because it's going up well. It's gone from 5 cents to 5,000. Of course I'm gonna buy it is the mentality. But by doing that, you are attempting to capture returns in reverse. And that never goes well. By trying to catch a trend after the trend has happened is a recipe for disaster. Now, I tend to think that cryptocurrencies are going to be fairly impactful over the next few years. Bitcoin might go to $10,000 a coin, but I'm still not going to buy it. And the reason I'm not going to buy it is because I don't understand it. I don't have any stake in that world. I can't affect it, and I'm really good at other things. And since I can't predict it, it doesn't provide cash flow and I can't affect it. Why would I put my money in it? Just to try and capture a trend. So that is my position on those types of investments. So I feel that way about the market as a whole right now. And full disclosure, you should probably not listen to anything I say on investing because I am not a financial advisor and I've been wrong on the economy and the market for the last several years. My strategies, the strategies that I advocate have done well, but I have been wrong on the economy since like 2013. So you probably shouldn't listen to a thing I've said or that I have to say about it. But I do have a very predictable strategy that I've shared on the podcast and I'll recap here. My strategy overall is to look for cash flow first, then to look at long term wealth. My way that I implement that is backwards though, because on a regular month to month basis I recommend putting a little bit of your take home cash into long term cash producing wealth, accumulating assets, specifically things like dividend paying stock or insurance, in some cases government bonds. And doing that on a regular monthly basis without thinking about it, just parking it away every month and at the end of every quarter or at the end of every year, taking your profits from your business and putting that into specifically cash flowing places that hopefully have some tax advantages as well. That would be things like real estate. So for me I have always looked for investments in real estate, dividend paying stock. I have some other places where I park cash like whole life insurance and I buy businesses which I'll talk about here in a second. But right now my strategy has shifted just because of the state of the market. So what I want to do for you today is give you three places that I'm looking and I'm actively investing for both long term wealth and for cash flow. And this is just what I'm looking at within my skill set and you know, within my criteria. So if, if you can find some benefit here. Awesome. So I have three goals that I'm looking for with investments and they are to impact my business, grow my long term wealth. And that's where I'm parking cash. Regularly expand my cash flow, which is where I invest when the time is right. And then among all of those three things, I'm looking for tax efficiency. So by growing my business I get more write offs. When I invest in certain things I want them to grow tax free. And if I'm getting cash flow, I'm hopefully getting some sort of depreciation to create an additional write off so that I don't have to pay tax on that cash flow. Now, of course, if you are not at the point yet where you have a business that is full time paying for your life, the number one and maybe even the only thing that you should be investing in is your own business. Because my strategies assume that your cash flows are coming from the cash flows of a business. So if you are working a full time job or you're not full time in your business yet, my suggestion would be to look at areas to expand your business and nothing else. You need to have some dry powder that's at risk in your business in order to get that to the level where it is producing the income for you to be in full control of your life. So I'm assuming that your cash flows are coming from your business. So I just received a big check from the sale of a business. Where am I looking to put it? Besides nowhere and besides a new Tesla and besides a lake house that I will use as a business asset which will create additional write offs. It will produce cash flow from workshops and from the other things that we house at the lake house. And it will create some wealth if it appreciates. Besides those two things, where am I looking? And by the way, I try to look at everything that I buy as an asset. So rather than go buy a big house just for nothing, I look at how can I turn this into an asset. And if I turn it into a business asset and use it to host masterminds and networking events and host, you know, business functions, there, now it's an asset that could actually grow my business and I can write things off and it'll also go up in value. So just a little tip for you. If there's anything that you actually want to enjoy, can you use that as an asset rather than treating it as a liability? Okay, so where am I actually looking for investments? Number one, I'm looking at cash flow funds and syndications. So what that means is in down markets like in 2008, 9 and 10, I bought a lot of real estate. I bought a lot of single family houses because they were super cheap. I bought single family houses and then rented them out. My first deal in Barberton, Ohio, I still own the house. I bought it for $40,000. I put 15,000 into it. So I was in it for $55,000 and that rents for $950 a month. So it's got really positive cash flows. It's now worth around 90, $95,000. And it's been a really great investment. I've done that same strategy over several different houses. I have a nice portfolio of single family houses. That's great when the market is weighed down during buyers markets. But in today's market, going in and buying apartment buildings or buying single family houses is a lot harder because we have all of these other investors and speculators bidding up the price of these homes. So when times are good, I don't try to compete with full time real estate investors. That's not my business. My business is physical product brands. My business is Internet marketing. So I leave my real estate investing to the professionals. So I have connections with people who are full time real estate investors. They buy big apartment buildings that buy commercial buildings and I will invest with them to participate in that deal and let them be the professionals. But I get to participate in some of that cash flow and some of that upside. So I'm not going to compete with those big time institutional investors, but I can join them, which is my strategy when times are really good. Now, if you don't have those connections or you've never done this before, there are other ways that you can do this. There are funds that pool resources and then do big purchases together. We've had a few of them here on the podcast. We had the episode with Jonathan Twombly and we had the episode with Mauricio Rauld, who both run funds that raise money and then put that into real estate. There are also some publicly traded companies that you could look into. They're called real estate investment trusts. Full disclosure, one of them I invest quite a bit in. It trades under the stock ticker gnc. So that's one of the ones that buys a lot of multifamily real estate. And you can on a public fund, put your money in the stock market and it gets like a 10 to 12% dividend. The whole point of investing in these funds or these syndications is for the cash flow at this point. When markets are this high, I'm not hoping to get a lot of appreciation. I would be surprised if we did not have a market pullback at this point. But if we buy and can get cash flows now, if the market were to come down, cash flows are probably going to hold steady. So that's why I'm looking at syndications, I'm looking at funds and I'm looking at real estate investment trusts at this point because I am probably not going to have upside, but I can have the cash flow that comes from those different areas. So that's the first place that I'm looking at investing right now. The second investment source that I'm looking at is good companies at good prices. And I kind of laugh when I say this because it's always a good idea to buy good companies at good prices. But the source of those good companies at good prices comes from different places when the market is really high. For example, right now I'm really fascinated by a handful of blue chip retail stocks. I'm not looking at the best buys of the world, I'm not looking at the Kohl's of the world. I think those businesses probably have seen better days. But if you look at long term companies that are well run companies like Costco, Walmart and Target, all of which I own, full disclosure, they're well run companies that are being overlooked by the media and a lot of investors. Part of, part of the reason for this Costco just got absolutely slaughtered when the news came out about Whole Foods being acquired by Amazon. And when Amazon is going really, really high and doing really, really well, then its competitors like Costco and Walmart are going to get beat up. But if they're still well run companies at good prices, then it might make sense to add them to your portfolio. I judge a lot of my decisions based on a company's data dividend. So I also look at companies like IBM. IBM has gotten just really beat up lately, but its dividend is still really solid. It has gone up over the last, I think it's been over 20 years. They've raised the dividend and it's still a well run company with a lot of assets and has the position to still be a market player. So I am buying all of those companies right now because they're being overlooked. They are getting beat up a bit right now and they still have strong cash flows specifically in their dividend. I also like to buy companies that are experiencing bad news. So right now there's a lot of bad news about Chipotle. Chipotle has had a couple of health scares recently, so their stock is down a good 20% or so. But it's still a fantastically run company that does a good job and that's still a company that is on an upward trend in terms of its customer base and in terms of its position in the marketplace. So I still like companies like Chipotle that are essentially blue chip well run companies that are experiencing bad news. So I will buy a company like Chipotle while it's getting completely beat up. So you might call me a glutton for punishment. But I really like to buy those companies that have strong track records but are going through difficult times right now. Another example of good companies at good prices would be companies that you like but that haven't gotten a whole lot of adoption right now. For example, the first time that I rode Southwest Airlines, I started researching their stock because I had a really good experience on that airline and that ended up becoming the most profitable airline in history. So companies that you like that don't have a whole lot of noise about them right now, Southwest has had a nice run over the last few years, but when I was looking them up, they were still kind of an up and comer. But there are other brands, other companies that would fit that criteria. For example, I bought a lot of Whole Foods when Whole Foods. Actually, I've owned Whole Foods for a long time. I live in Austin, Texas, where the headquarters are. The founder, John Mackey is an acquaintance of mine. Just saw him at dinner the other day actually. Super awesome guy. And I believe in that company and what they stand for. And when they were acquired by Amazon, I bought a lot more. I really believe that the future of retail is going to be a merger of Amazon and retail. So I bought a lot of Whole Foods with that news. I also continue to buy companies like JetBlue. Every time I want to fly, I. I prefer JetBlue. I just have wonderful experiences on JetBlue. So companies that you like that are not necessarily household names are oftentimes good investments because you're gonna hold them for a long time because you believe in them. And if you hold a company for a long time, you're probably gonna be okay. The next way that you would get good companies at good prices is buying businesses that you can impact. This is the best investment advice I could give anyone. Buy companies that you impact. The example I like to use is when Oprah got equity in Weight Watchers. Weight Watchers soared. Why? Because when Oprah talks about companies, they go up. So her net worth is literally affected by her actions. So when Tim Ferriss invests in wealth front, you should pay attention. Why? Because he can talk about that company on his podcast and it will go up in value. I recently bought a physical products brand called Foxbrimm because it was well positioned on Amazon, which is my expertise. I got a good company at a good price. That was within my skillset and I can directly impact that company. This is why my wealth strategy is to teach and incubate physical products brands. Some people on the Internet think that my long term Strategy is just to sell info products. That is not my long term strategy. My long term strategy is to be like a shark on Shark Tank or I'm investing in my students because I know that I can impact those businesses. That's how I'm going to get the Cleveland Indians. Because if I can directly impact a student's business and I have the expertise in that field, then I am literally rewarded for my actions in the form of net worth. So that's my strategy. If you can impact a business, then it doesn't matter what the economy is doing, it matters what you are doing in the midst of the economy to impact that business. So the second place that I am investing is good companies at good prices, both public and privately. The third source of cash flow where I'm looking to invest right now is, is advertisements. Yes, ads. When times are really good, money often flows out of your business rather than into it. But it's my opinion that when things are really good, that's the time to double down on getting your customers, getting as many customers as possible and getting as much of an audience as possible. Here's why. If you double down now on getting exposure, influence and customers, if the economy goes way down, you'll still have an asset in the form of an email list. You will still have an Instagram following. Your Instagram or Facebook following doesn't care what the economy is doing, they're still following you. That is an asset. And once you own the media, it's free for you. When you have an email list, it doesn't cost any additional money to email that list. So that's an asset that you can use forever and ever. Amen. So when times are good, double down, take your profits and put as much as possible into getting more customers. Because when times are not as good, you will need those customers in order to maintain cash flows. So when you have profits spitting off your business, use that to go get more customers. So when the rainy day comes, you can send an email or launch a new product and you can still be in business. That is why I'm so big on advertising as much as possible, growing my influence as much as possible right now. Because if anything were to change, I would really regret not having the customers and the influence when the times are bad. Because attention and audience is currency. It's an asset that can be turned into cash flow. So the third place that I'm investing right now is into more ads and more exposure. So I can build up the following that will be in long term asset forever and ever. Amen. So the three places that I'm investing or looking to invest right now, our cash flow, funds and syndications, good companies at good prices and advertisements. All of these things provide long term wealth, cash flow and some sort of tax advantage, either in the form of write offs or they can grow at a tax efficient rate. So while I am waiting for the economy to come down to more reasonable levels, these are the opportunities that I'm pursuing right now. And depending on what the economy does, the strategy will change a little bit. But I am always regularly putting capital, regularly putting savings into long term wealth producing assets and I am always taking the profit to the end of every quarter or at the end of every year and putting them into sources of cash flow that can be tax efficient. I hope you found this podcast valuable. If you want to hear me talk more about investing, I talk more on my YouTube channel about investing that I do here on the podcast. So if you head to freedomfastlane.com YouTube, you can subscribe to the YouTube channel and also see some of the stuff that I talk about about my investing strategy. So if you find value in this, share this with another entrepreneur. You know, because entrepreneurs are really good at making cash, they're really bad at keeping it and growing it. And I think we need to have more conversations about how entrepreneurs can keep and grow their cash flow because I know way too many entrepreneurs who make it and then lose it because they don't have a good strategy. That's why I made the Investing for entrepreneurs course and that's why I talk about this stuff. I think it would be wise for entrepreneurs to get a basic education in where to put their cash flow to minimize their tax hit, to maximize their wealth and to maximize their cash flow so they actually can enjoy their life and define life on their own terms. That's what we're all here for anyway, so I hope you enjoyed this episode. Feel free to share this with an entrepreneur, you know, who's not as good with their money as they should be. Hey, if you enjoyed today's episode, make sure you subscribe on itunes@freedomfastlane.com iTunes. Thanks for listening and I'll see you guys on the next episode.