How To Invest In 2019 (Passive Income, Cash Flow, and Long Term Wealth)

What should the average business owner be doing in 2019 in lieu of or in note of the fact that market's very volatile? We both think it's going to go down. We don't know. We might be wrong. But we both. I think Dow is going to 20,000 in the next quarter.

I like another bold prediction accompaniment you.

Before I won't shy away from them. And Amazon's going to make another acquisition. That's my other bold prediction for the year. Uh, we've got a new tax law, we've got uncertainty in D.C. we've got all kinds of uncertainty. What should the average business owner be doing right now? Average business owner in order to maximize this year and this time? I love and acquire passive income.

I love general questions like the average business owner because we all know that average business owners fit in this perfect little box.

So no, I think. And when you think of average business owner, it's really what should they do, Sam? I'm gonna get.

What should they do, Sam? No, what do they do?

I'm not gonna allow you to get there. I'm just kidding. No. So we will, we will. I will get there. But what I say is the average business owner, when you think of business owners, there's different stages they go through. So if we're gonna define average as a business owner who has passed the point of putting every dollar they possibly can, you know, they own and every dollar they can borrow and every dollar they can make about borrowing into their business, they're past that growth stage. They're into the point where they actually hold and run reserves. That's the average business owner. So just kind of use that as your metric is if you are not at the point where you are consistently holding reserves in your business, this is probably the advice I would give would be different for you. You should be still in growth mode. You keep working on that. That's, that's your job. Come talk after this. But for where we're at right now, if you're the average business owner, you have those reserves. What, what I use personally and what I think makes a ton of sense is the capital warehouse strategy. So we use the capital warehouse strategy when we're in a coin flip environment where things might go up, things might.

Go down now, which is right now.

We can play both sides of the economy and what's so beautiful about this? Like this last year, for example.

And that's, that's where you park cash.

Park cash.

And it's tied to index funds. So it'll go up, but it doesn't go down correct.

So it's tied to stock indexes. And when the market goes up, we gather the upside. When the market goes down, you just get a 0% credit. And so there's some mechanisms for how they get that done. But basically what we're doing is we now have a place to store capital. When you don't. When you don't have the headspace to go figure out exactly what you want to invest in or you're not positive, you can tie that capital up. You really need a high level of liquidity. If you say, I don't think I'll need this capital, but what if. And then if that's your thought, if you.

Or what if the right opportunity comes, I can buy up wells that produce cash flow.

I don't care what your what if is followed by if you think I would like to invest money. But what if. If that is the way your mind works right now, then you need to talk and look at a capital warehouse. And that's, that's common because your what if could be what if my business needs it. What if the better investment opportunity comes along? What if? You know, I list any list of the what ifs that are out there. This is a great stepping stone because what it lets you do is it lets you invest, lets you have the upside but maintain all the liquidity. So it's kind of the, it's the friends with benefits of investing because we're able to, you know, go have all the upside, limit the downside, but stay liquid the entire time. So that's where I would start with on that. That side of it is.

So should you say full disclosure, like honesty Transpar, that's part of your business of what you do for people. And I'm a client of Sam's using that strategy. With Sam specifically, I've told my nightmare story of hearing about it on the interwebs, thinking it was cool, and then having a salesman kind of take me to the ringer and take all kinds of fees and commissions and I thought I was doing something financially healthy and it wasn't.

The story of what is your goal? Well, here's my goal. The best way to get that is to buy whole life insurance.

I do not ascribe to that theory in the least.

That was a joke, ladies and gentlemen.

In case we didn't catch that is very much a joke. And the thing is, insurance is very useful when it's structured properly. What it does, it helps you manage cash flow, it helps you take advantage of upside, limit Downside, there are a lot of really positive things to it when it's structured properly. But it's equally as good as it can be when it's structured properly. It can be equally abrasive to a balance sheet when it's structured improperly. So you really just, you cannot be too diligent in that.

So you've got this pool of cash now which grows but doesn't shrink. And what should people be looking for? And we're looking for cash flow plays. Obviously I, I buy dividend paying stock at opportune times. You have deal flow that comes in all the time from. But what should, what should people be looking for? A great. I'm going to park it here and wait. What should they be looking at? While we're waiting to see how the market is going to go, I was.

Thinking about how many, I was trying to decide how many fingers to hold up for criteria. I wanted to give because I want to be like 10, but I'm going to limit it to four. So number one, something you understand, so something that you can understand and you feel like you understand the business model, what you're invested in. Number two is it needs to prioritize cash flow. So those things and the reason I'm not giving you a specific investment is because if you understand the criteria, the investment will be much easier to find than with business owner situations. There's such a variance there. I want to be a little bit more vague with that. So number one is something you understand. Number two is something that prioritizes cash flow. Number three is something that you see value that you believe has long term value or value for the horizon. You may like to or need to hold the asset. So for example, investing in Sears right now may not be the best investment for you because you might not see the horizon long enough to outlast your investment. I mean I drove by one on the way here with some boards on the doors. So that's probably not ideal. Not a good sign invest, not a good sign. Want to invest in things that we think are likely to get there. And then lastly would be is understanding your individual situation and looking for there's macro value, that's value to the overall economy and then micro value to you individually. So for example, if you're paying, if you're already way ahead on taxes and you need more liquidity, you may need a certain kind of investment that focuses more in your, your specific needs, that timeframe as opposed to someone who's got a high, high tax burden. So someone who has A high tax burden when they go and a high tax burden and they understand that they can offset regular income with real estate losses because they qualify for that. Well, that person that becomes a no brainer for what they invest in because now they have a 40% discount on their purchase price. So they have a micro value that is unique to their situation. Does that make sense?

Not at all.

Okay, so let's go back here real quick.

No, I don't want you to explain it more. I want you to tell me what people should be investing in. So here', here's like real estate meets all those criteria. Businesses could meet those criteria. Real estate, dividend paying stock could absolutely. But it's like it's all dependent on that first piece is like what do you understand? Like you took a year to understand the investment that came to your desk.

What I would, what I would look for doing when it comes to that is the reason you diversify is you don't diversify to make more money. You diversify to mitigate risk. So that's kind of piece number one is when everyone thinks I want to go diversify, you diversify to mitigate risk. So if your goal is you want to grow your capital, you want to grow it as efficiently as possible, you're probably going to feel more comfortable if you're able to diversify to some degree makes sense. And so being able to diversify, part of that is it's just like building a business. You don't go do everything yourself, you go find quality people.

I completely agree.

And so when it comes to invest in those things, I would say try to diversify your balance sheet into various cash flow plays that hit the, the guidelines I was giving you, but use quality people to get there. So instead of you having to go spend a year learning each thing, you go find people who you believe have the right, you know, they have the right competency, the right character, you know, all those things that you would want out of someone who's going to be taking over control of your money and use them to use them to manage those assets. So if you want to go invest in real estate, go find someone who the type of real estate you like, the geographic location, figure out macro what you want to do and then find someone who's an expert in that particular field.

Yeah, so for example, one of our backroom members had a huge exit, tens of millions of dollars they received and they decided they wanted their next business to go into to be commercial real estate. Right. I trust this person, I trust the strategy and this is going to be their now full time focus and I've invested in their business which now buys up real estate which is fantastic. I know that he is all over that. I'm not going to go go try and buy a commercial property. That's not my business.

I understand completely. I actually think I know you're talking about he's bought some properties in Oklahoma. Yep, yep, there we go. So you know it's an absolutely. You now go have a quality person who knew who had at least enough wherewithal to know how to go build a multi million dollar business. So I mean that's not that money is the only butter you need. It does help a little bit to say that you were at least successful in this area and so then you take that over and now you say you have someone who's a quality person, who's got character, who's competent, is intelligent, who's going to go, who's going to dig into this and they're going to put their full time energy, effort and skill sets into going and building your wealth. That's outstanding.