How To Invest Like The 1% To Enjoy Passive Cash Flow, Create Generational Wealth, and Reduce Taxes

Start to build up that cash. Because rookies always stay invested. They invest early, always, and often they're told to be mindless drones. That dollar cost average that wait for 30 years that they're in it for the long haul. But instead, professionals sit on cash and then they pounce when the opportunity is right.

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.

Garrett Gunderson is the man that the world's wealthy turn to in order to maximize their wealth. In this presentation from the Capitalism Conference, Garrett shares with us his strategies for investing and creating generational wealth that will leave a legacy. Most entrepreneurs are oblivious to the strategies of the 1% and how to invest in assets that will give them upside cash flow and tax benefits. So you may want to take notes or listen to this one more than once. Enjoy.

You know, I hear the word generational wealth as they kind of introduce me and I hear about like what the 1% do. And yet I think back because David and I were in Italy this summer together. I invited him out to our villa when we were there for a few months. And the reason I went there was to reconnect with my roots. See, my great grandfather left Italy in 1913, which is an interesting year to choose to leave, because the reason he left is because he was being taxed so heavily by the Italian government and the mob, because he lived in San Giovanni. And when he left, he had to leave his wife who was pregnant with their first child. And then he got on a ship, he had matzasoli, which is honey bread, so that it wouldn't spoil. Not sure he had enough food to make it all the way to the United States in the name of making a better life and being the catalyst for the legacy that I'm now responsible for in my own family. Once he got here, they didn't even understand him because he didn't speak English. And they changed his name when he went through Ellis Island. So his last name was Iaquinta. Now it's iquinto. All of a sudden, because he shows up, he gets on a train, he takes that train all the way to a small town in Utah called East Carbon, where he becomes a goat herder, lives in a freaking tent just to save up enough money to hopefully send some home for them to be able to live and at the same time, hopefully be able to buy a home and then bring them over to live with him again. That was a seven year process before he saw his daughter, who was almost 7 years old, and before he saw his wife again. And then he became a coal miner. I'm from a coal mining town where my grandfathers and even my father were coal miners. I decided to mine something other than coal. I decided to mine wealth. And what I mean by mining wealth is coal's a pretty dirty energy. But each one of you have your own energy that is very clean. And I call that a sole purpose. S O U L It's, it's your values, it's your abilities, it's your passion, it's your purpose. It's the best container of who you are. And when I heard the investment panel, even in the world of investing, we can talk about a concept like that. Because in investing, when you heard, hey, if you had a million dollars, what would you do with it? And the answer should be different for everyone because they were discussing something called investor DNA. Investor DNA is what is it? When you look at your own core values and your own core competencies and what really drives you? And, and then focus instead of diversify. See, the ultra wealthy, they're not overly diversified. They might diversify when they have so much wealth. They need to find places to put it. But to get there, it was a game of focus. Andrew Carnegie said he put all of his eggs in one basket and watched it like a hawk. So, see, my great grandfather didn't have a lot of wealth to manage necessarily, but he did something that was kind of a gift for my family because I realized the reason he had to leave his family for seven years, because he didn't understand what I'm going to teach you today. That's why it's so important to me to make sure to get this message out there. Because he didn't have the team, he didn't have the insight, because here's the bottom line, and I would write this one down. Hard work with the wrong philosophy still equals bankruptcy, still equals poverty. If hard work equaled wealth, these damn coal miners would be the richest people we know. But when you think coal miners in West Virginia or Price Utah, we don't think about a lot of wealth. We, we might think about black lung, might think about death, you might think about a shitty life, which it really was. So it's really important that we build out the proper framework and that we abolish kind of this failed financial experiment. In the world of retirement planning, like, first, can we just retire that concept of retirement? Like, that's a bad notion. The icons that we all look up to that we respect, that we admire. It's not because they retired. They could have retired long ago, but once they had even more money, they use that to fuel even more purpose. And if your purpose is greater than your problems, if your purpose is greater than the current financial circumstance, then you're going to earn and create a lot more wealth. Because wealth is a game of value creation and dollars follow value. So what I want to make sure that we do is first of all build out a framework that if you leverage, you can achieve economic independence somewhere between three years and seven years. Three years if you're already on a pretty good track, and seven years if you're addicted to lifestyle and probably have a bunch of money that you need to pay back to someone. All right, so the good news is this isn't some 30 year trajectory where you set money aside and you budget because budgeting sucks, or where you scrimp or save or pinch pennies till you get blisters on your fingers. Because that's not the road to wealth. Yet if we read most financial books, that's what they want you to believe. If you just hand your money over to other financial experts, that one day, someday compound interest is going to kick in and then you're going to have a bunch of money that hasn't worked. Somewhere between 91% or 98%, depending on which statistics and which studies you look at show that Americans are not economically independent when they're age 65. And this is what economic independence is. It's when you have enough recurring revenue to cover your basic expenses of life. That recurring revenue can come from one of two main places. One, investment income. I loved hearing the panel talk about cash flow investing. Investing isn't about waiting for 30 years. That's not investing. That's speculating. That's shirking and abdicating responsibility. That's taking on high risk. And anyone that's told you that high risk equals high return is selling you something that's not good for you. If high risk equaled high return, wouldn't we buy lottery tickets and I'll get really wealthy. But let's face it, lottery tickets are a tax on the poor. That's how governments raise funds, by having people believe they're somehow gonna get something for nothing, which is a disease of the mind. And look, there's this kind of scarcity mentality that happens with a lot of people in the world. And scarcity is the greatest destroyer of wealth. No amount of luck, saving, discipline, rate of return or financial advisor will save you, if you're in a scarcity mentality, because it's kind of this disease called the consumer condition. The consumer condition is where people look to take more from the world than they bring to it. You've seen it. It's called the entitlement mentality. You've seen it. It's when people operate out of fear, doubt or worry and they are no fun to be around because they absolutely suck the marrow out of life and never give another piece of it back. On the other hand, I believe that there's a producer paradigm. That producer paradigm is where we create more value in the world than we take from it. It's one where we believe that even if there's a finite amount of resources, there's innovation, there's ingenuity, there's value creation, there's service, there's solving problems. The bigger the problems in the world, the bigger the payoffs that are available out there for people to actually make more money. I mean, a, there's never been more money in the economy than there is right now at this second that I'm speaking. So it's not that it's scarce. It's the knowledge of how to earn it and sustainably keep it and grow. It is scarce. So we begin with investment income being part of that economic independence. The second type of income is entrepreneurial income. Entrepreneurial income isn't the income when you're actually the technician doing the work and getting paid for that. Entrepreneurial income is when you have the infrastructure and organization that, with some maintenance and monitoring it and a degree of management continues to pay every single week or every single month, even if you're not there every single moment. Right. So first of all, there's kind of this myth. There is nothing that's a complete passive income in the world. There's just things that are more passive or less passive. If you think that there's complete passive income, you're going to watch that just pass you by. When other people make money, there's maybe short stints of it. There's maybe somebody that comes to the mailbox. If you want that to continue for extended periods of time, then it takes some management and some responsibility and stewardship. So economic independence, this is a game changer because most people are being taught that if they could just save 10% of their income and then put it into some market and try to earn 10% over 30 years, because that's what the stock market has averaged since 2000 B.C. not really. But I mean, that's what they say, right? And averages are all a bunch. It's like a lie. Like if I had two showerheads this morning and I turn one freezing cold and the other one scalding hot and stand in the middle. On average, I'm at a cool temperature, but in reality I'm miserable as hell. Right. So we have to be really careful with averages. I mean, if you earn 10% or if you lose 10% on $100,000, you're down to $90,000. Then if CNBC, which I got kicked off of, apparently you can't go on CNBC and tell people not to put money in the stock market. They just cut to commercial and then the feed goes dead. And I'm like, hello? Hello? And there was never any email.

If they watched any video, they might have known who they were getting on. You know, they're like, oh, here's our financial expert, Garrett Gunderson. What should people do right now? I'm like, they should get. And this was in 2008, I'm like, they should stop investing in the stock market. And then they show the commercial people frolicking on the beach and drinking Corona while the market goes up. And then it was actually spiraling down at the time. But see, none of that's a sustainable model. This whole notion that compound interest is a miracle. The only miracle of compound interest is that we've bought into it because the institutions are the ones that have been made rich on compound interest. And I know this may be challenging certain beliefs out there, but let's think about it. How long does it take for compound interest to truly kick in and do something for you? It's a 30 year plan that's pretty damn far away. And then I've even heard quotes, and just raise your hand if you've heard this quote that Einstein said it was the eighth wonder of the world. Anyone heard that? Yeah, that's a complete lie. We researched it. We got these two guys, Tom and Steven, the. They did the research and he was actually in Austria in this conference where he said compounding numbers was the eighth wonder of the world. And then security national life in 1927 of all times said that compound interest was the eighth one of the world and misquoted Einstein while people got their ass kicked in this little thing called the Great Depression. Right. So I'm here to make sure that we get past the myths and misinformation, because those are the landmines that absolutely harm and destroy legacy. And if there's anything that I'm passionate about, because I'm not Actually yelling at you. It may sound like it. I'm just excited. Nobody's in trouble or anything right now that I know of. David, if he's off clean, you, the rest of you guys are fine. But it's legacy is what I'm passionate about. Because when I think about what my great grandfather did, he didn't really get to have a great life as a coal miner, but he gave an opportunity for me to have a great life. And now I gotta make sure that I don't raise entitled little brats with my kids. It's a totally different thing. Like when we're in Italy, we're going to Verona and Venice and we're going to Florence or going to Siena and we're eating and drinking all the best foods and seeing the best places. My family never experienced that. And you want to know why? Because they were unfairly taxed and they unfortunately didn't have the right insight and information to do the best things with their finances. So you could be so skilled, you could be so well intentioned, you could be so loving, you could be an amazing person. But if you don't get your money handled, life is going to be difficult. So I'm gonna give you a very clear cut strategy and framework that's predictable, it's sustainable, it's distilled, and you can leverage it. And if you do, you will become economically independent not 30 years from now, but within seven years.

Anybody okay with that? All right, cool. I'm in the right room for six of you. That's awesome. No, okay, okay, cool. Yes, I'm pandering. It's fine. See, this whole notion of saving 10% to try to get 10% is a slow, dangerous road. So here's the different framework. Let's get you to a point where 100% of your lifestyle expenses are handled by investment and entrepreneurial income. And when that happens, every single dollar that you actively earn can give you the biggest insider advantage because you can build more assets at 10 times the rate as the person who's scrimping and saving. That actually gets into a mindset of scarcity. And unfortunately, that hard work is completely destroyed because of one thing. You don't shrink your way to wealth. The reductionist thinking that has permeated people's minds in the world of finance and then propagated by financial institutions has absolutely destroyed people's wealth to the point where they're being taught that high risk equals high return, like I talked about before, or that it takes money to make money. As I talked about before or all these kind of notions that are damaging and they get people to be so debilitated that they don't take action anymore. So first off, before you save a single cent or try to wait for 30 years, let's go through this framework and begin with the very first lever. And I'm using the word lever because this creates leverage in the framework. It's not leveraging money and putting yourself at risk. I'm talking about leveraging knowledge. I'm talking about leveraging ideas and relationships in a way that produce better and more consistent results. And the first lever to economic independence is to boost your profits. Or. Or let me say that really simply keep more of every dollar you make. So have you ever heard the statement or sentiment, live within your means? Anyone heard that? Who would have been so inspired if they're like, here comes Garrett Gunderson. Who is going to tell you how to live within your means? Who would have just been like, oh, hell yeah, I need to make it back early to hear about how I need to live a shitty life so that I can have a bunch of money when I am too old to spend it with my artificial hip.

Yeah, that's like the main notion out there, like. And look, that was one of the early books I read was the Millionaire Next Door. Anyone read the Millionaire Next Door? Spoiler alert and earmuffs if you don't want to know the ending of that book. But I'm going to save you some time. The Millionaire Next Door. It's Christmas season, so it's a lot like the first half of A Christmas Carol. If you will be a miserable miser, you too can be a broke millionaire that no one likes because you don't turn on the air conditioner in the summer. Cause that's gonna save you some money.

Oh, yeah. You know people like this, right? Like, I remember my buddy Marcus. Like, he lives in Vegas and we used to be buddies. We're not really buddies anymore because I would go to Vegas and he's like, dude, I'll pick you up at the airport. I'm like, sweet. And then he would roll up and like, his hubcap would, like, roll across the street with, like, the antenna that was a hanger from his closet, you know, no air conditioner. Have you ever been in Vegas with no air conditioning? It was an experience where I'd roll down the window and it felt like there was a blow dryer blowing in my face. And so then I'd roll the window up and it felt like I was in an infrared sauna that had been on too long, and I just wanted to punch him in the throat. And then we'd get to his house, and I'm thinking, oh, God, finally some relief. And his Thermostat was at 86. And I was like, Bro, if I pay you five bucks, could we get that all the way down, like, 79 or something? That'll feel like Antarctica, right? But that's those people that think that wealth is about what you can stop and reduce and not do. And you read the books, and it's all about that. And what those books miss out is on. First of all, the magic to wealth is being a freaking entrepreneur. It gives you the biggest advantage that's out there because you're in charge of your value creation. Because as you create more value, you can get paid more money. And as you serve more people or impact them more deeply or reach more people or solve major problems, there could be a windfall of cash that comes in if we're actually capitalistic.

So the first piece is to keep more money and to live within your means. You can budget, but budgeting sucks. So there's two other ways to live within your means. The second way to live within your means is to be more efficient. Simply, there's four eyes to efficiency. The first I is don't tip the IRS. The IRS is taking money from 93% of you that they don't require, but you're voluntarily handing it over because you don't have all the tax strategies. Number two. The second I is is interest. If people have more than one loan, there's an 80% chance that they're paying more interest than they need because they either don't have the right credit score, the right collateral, or the right connections or the right cash flow reporting. And it doesn't even mean that you have to refinance sometimes. Sometimes you can streamline that or renegotiate that and put more money in your pocket. The third I is investments. There's two ways that people become less efficient with their investments that are so substantial that if you could correct these two things, you're gonna have a ton more money. In the world of investing, we usually get to hear about percentages. Like, they love percentages, because percentages make us feel like it's not a big deal, like, 1%. That's no big deal. Unless you're in the world of sailing and you're gonna go, like, from North America, and you're gonna go across, like, the Atlantic Ocean and try to get to Britain. If you're one degree off, you're just in the wrong hemisphere. No big deal. You know, it's the same thing in your finances. So if you had $100,000, you invest that for the next 30 years and they show you this stupid lie called 10% in the stock market year in and year out, that grows to 1.74 million. That sounds awesome. Now what if you have 0.8%, so less than 1% in non performing fees, like non performing fees, like legal fees, admin fees, 12 B1 fees which are marketing fees that you paid to the mutual fund companies or certain expense ratios for fund managers that aren't doing their job or they're not beating out the other indexes. Now Instead of having 1.74 million, you have 1.4 million. That's a $340,000 cost because of an undetected unnoticed fee that sounded so small because it was a small percentage. But it's exponential. If compounding interest is a miracle, guess what? Compounding cost miraculously cost you a ton of money. Now what if you only get 8% because you have this in some kind of retirement plan in addition to being in mutual funds and those kind of investments, now it only grows to a million. So that's a $744,000 cost because of 2%. So I've got this whole financial nerd network is what I like to call them because they are financial nerds and they are proud of it. Like they wear it with a badge and they're like human ATMs, they're like financial detectives to find out where those things are so that you stop paying for non performing things and keep that money in your pocket. Now the second part of the third I.

Is downside protection. Do you have a trailing stop loss if you've invested in someone's business, do you have a UCC filing? If you've invested in some type of other investment with a private individual, did you add some degree of collateral? I mean, think about the financial institutions when they were up here on the panel. They called a stated loan a stated lie loan, which it typically is, right? Like oh yeah, I didn't make enough money money to get this loan. So I'll just tell you, I make more than I made. Now that's when the banks get in trouble. But when the banks want to be secure, they think of a couple things. Number one, what can they do to protect their downside? They're not good at real estate, they're not trying to get into real estate. So what they're Looking at first is your credit score. Then they look at your taxes, right? Then if you're going to get that property, they're going to make you pay for an appraisal. And even after you pay for an appraisal, they want you to put 20% down. Otherwise they charge you PMI, private mortgage insurance. And I can go on at the ways that they're protecting their money. Why is it then that they tell us it takes money to make money and high risk equals high return when they're doing the exact opposite? It doesn't take money for them to make money. It takes your money. And they tell us 10% is a good return. But if you're only getting 1% on a savings account and they lend that money out for as little as 2%, what rate of return do they have? 100%. They borrowed your money, not even theirs, for 1%, and they sold it for 2%. And if they screw it all up, then what happens? You pay taxes to bail them out. Do you see that there's a completely different set of rules that they're abiding by? I'm not saying that they're wrong and that they're evil and that they're bad and that we need to not use them, we need to not be used by them. Rig the game in your favor. Start earning interest rather than paying them interest. Start to learn about cash flow banking. You got the book? What would the rockfillers do? It's in your bags. It shows you how. Could you boost that 400 to 800% on return, protect it from liability, and then increase and boost Your cash flows 20 to 50% in the future because you use a coordinated strategy with all of your assets.

Should I talk faster, do you think?

I was just wondering. So we're three eyes in. All right. We got IRS. 93% of people overpay the IRS by $11,430 for every half a million dollars that they make? If we throw out the big people, the people that way overpay. The second thing is interest. And we have a process called cash flow optimization where we find $2,484 per month of lost money just through not differentiating expenses, not understanding what things are destructive, to eliminate, what things to address and increase, and then how to restructure loans and renegotiate. The third one was investments. We talked about the fees on that. And the fourth one is insurance. If you have duplicate coverages, improper structure, you know, this is where people lose money on insurance. So of the Four eyes, let me spend some time on the thing that will provide a huge rate of return for you. Now you can put these things on the ground in the next 24 hours. I'll kind of build the framework inside of that. Then I'll finish out the rest of the five levers to economic independence. So on taxes, here's two things to avoid. These are the two biggest traps that are out there. The first one is deferring your taxes. If the government owes between 19 and 20 trillion dollars, who thinks in the long term we're going to see taxes go down? By a show of hands, who thinks 20, 30 years from now we're going to have a lot lower tax rate than we have today? Zero. Okay, zero people. That's a concern to me. And if you decide that you're going to put money in a government qualified plan, you've just invited the worst partner into your life that exists in the world. Want to know why they're a bad partner? Because they say, okay, you put the money in, I'll be your partner, I'll take 40%, but if you get out early, I'll take 50%. And in the future I might take a bigger percentage based upon my economic circumstance. I don't know what it's going to be, but right now I'm $20 trillion in debt. Who's ready for that partnership? Show of hands, right? That's the trap. Deferring taxes is not saving taxes, it's deferring taxes. Don't get caught in that trap. The second trap, early on in my financial career, before I understood what I understood today, I remember I'm a newlywed and I tell my wife, hey, we're going to get rid of your little red Infinity car that you love because there's this obscure thing called the section 179 for vehicles over £5,500 where we can write it all off in one year on the purchase price. So we're going to buy a Chevy Tahoe even though we don't have kids and I just work all the time, so we don't go to the mountains or anything. But it's going to be a great idea to buy a depreciating asset to save tax. See, my wife told me I was a jackass and it turns out she was right. I just thought it was hurtful she said that. So.

Don'T borrow to consume, don't borrow to go get a depreciating asset. But most importantly, don't let the tax tail wag the dog. It doesn't make sense to spend a dollar to save 40 cents. So don't defer and don't just spend. So here's the three things to do around your taxes. I'm helping you navigate thousands of pages in just three piece framework that. Here's the deal. If we can save you 10, 20, 30 or a bunch of tax per year, that's the equivalent of scrimping and saving money for decades to create that same amount of cash flow. But let's do that in the next five minutes. You guys in? I'm going to go fast, take down the notes and here's the deal. I'll go a little too fast and then I'll just let you guys get some free stuff. Is that cool? If I just like. I'll just put it up where you can text this number. You can text 44222. The word independence and what it's going to do. I know that's only five numbers if there's any old school people in here. And normally you got to have seven or maybe 10 if you have like a pre, you know, like an area code. But 44222. The word independence and what it's going to do is give you our Wealth Factory mega kit. And we actually brought a team here so that if you want to meet with them and talk to them one on one about your personal situation. So it's tailored and customized so to find out where you might be losing or leaking money, they'll do that for you. I'll make sure you get a copy of Killing Sacred Cows since I gave you the copy of what Would the Rockefellers Do? It's the nine prevailing myths that harm entrepreneurs that are the hardest things to detect. But once you detect them, you can avoid them and not have your wealth confiscated over and over as most people do in their life, that harms their legacy. Cool. All right. I'm glad I got one. Huge fan. I love you, whoever you are. Like, yeah, thank you. Making me feel good. Let's go. This is gonna be quick. Number one, first thing is simple, but don't discount it because it's powerful. You've got to have a tax team. The first person on your tax team is a bookkeeper. The second person is a cpa. And here's the deal. It's hard to find the right cpa, but you need someone that is actually a strategist, not a filer. A tax filer doesn't help you if you're doing multiple millions, you need a tax attorney. And if you own Your own commercial building, you need an engineer. There could be up to four people on your tax team. Now, you want to be proactive with them. And every single quarter, get on the phone with them and have a brainstorming session. Your job is not to be bridled or limited by the tax code, but just throw crazy ideas out there and have them tell you why that could work or why it can't. Like, when I went to Italy this summer for a couple months, I said, I want to write that off. He says, you can't. I'm like, okay, I'm going to have a mastermind while I'm there. I'm going to have David over. I'm going to film some things. I'm going to write a book. I just think better in Italy, I'm not meet with my wife and she's part of my corporation. And then all of a sudden, 50% of the trip becomes a write off by the end of the call. Okay, so you want to brainstorm. Now, the second thing is you want a different set of eyes on your taxes every three years. Because if you've missed, you can go back and amend. In 2006, I had two business partners die in a plane crash. And I did not get proactive. I didn't talk every quarter to my tax team. I didn't get any information over to them. And I found out in 2008, I had overpaid my taxes, $54,000. So instead, the government wrote me a check for once, and I got that money back. So you can amend your returns back up to three years. So that's part one of the success framework around tax. Part two. You want to turn all of your expenses that can be legally turned into deductions into deductions. Here's your number one question. How does this relate to my business? If it relates to your business, documentation is the key. Let me give you some examples. You can Pay your kids $6,300 if you have kids under 18, and you don't have to pay taxes on that as long as you can think of things for them to do, including a $2,500 modeling fee. Would work if you put them on a website or something like that. Or maybe you just have them walk out here on stage with you like Ryan did. You know, like, I've done that with my kids. So you find ways to pay them. Another thing that you could do. Who here knows the Augusta Rule? Well, my clients. That's weird. Oh, my clients just raised their hand. That's cool. All Right. Augusta rule is a big one, because if you use your home 15 days or less in the year for business purpose, employees, vendors, clients, you can rent that out to your business. The business writes you a check. You don't have to claim that as personal income, but the business gets to write it off.

So calculate that if that's, you know, let's just say it was $2,500 you're charging per time. If you're in Austin, you do it during south by southwest. You charge $7,500 at that time. You do it during Austin city Limits. It's another time. You just look at what would it cost to get a hotel or what would it cost to get a banquet room. And then you charge that there is no tax to you, but you write it off in the business. So that right there could be worth 12, 13, 14, $15,000 in something. That simple, as we talk about it today, or even simpler things, is like having a home office. You grid off half your utilities or other simple things that you can turn expenses into deductions. For me, I set up an intellectual property company. Now, that intellectual property company, part of its intention is to put things on video, which means I now buy uniforms for that. And when I'm at home, I sit in Lululemon. I don't work out, and I just sit in it because it's super comfortable, you know. And then when I'm on stage, I wear this kind of stuff. And now that's a uniform that I'm riding off. Turn your expenses into deductions. If you have a company, you need to have an annual meeting. I think better in exotic locations. So I always have my annual meeting. Like at Whistler was our last one where done Hawaii, we've done Italy. We write that off. There's so many things. And the IRS says that the majority of you are not taking all of your tax deductions. Why? Because you might have an accountant that says they're conservative. Anyone have that accountant that says they're conservative? Here's what they're saying. I'm antiquated. I'm having you overpay your taxes because I don't know everything there is to know out there. And they scare you into thinking that that's, you know, you're going to get in trouble, there's going to be red flags. But a lot of this is just so freaking simple that for some reason, they're not doing it. Depesh, how many things are your accountants missing, you know, that you bring to them back in the day. So you had to go get a whole new team. Right. Like it's just how it works. So the third one, and this is where you're going to save a boatload of money, is to reclassify your income. The way you reclassify your income, turn active income into passive income. That's really powerful. Active income into passive income. How do you do that? If you're not incorporated, you can set up an S corporation and differentiate your income. You take a reasonable salary, which isn't what you're worth, but what you'd hire someone else to do that job and then you can take the rest in distributions. And distributions. Don't get hit with self employment tax. That's 15.3% savings. Even when you max that out, it still saves you 3.2% on Medicare, Medicaid and it saves you above $250,000 an additional 3.7%. So somewhere between 3.2 and 15.3% just because of how you paid yourself, even if it was the exact same amount or. We heard about captive insurance agencies earlier. I have a captive insurance agency. Personally, I can put money into that pre tax. If I don't have an insurance claim. When I take that out, it's a capital gain. So I just took ordinary income and turned it into capital gain which almost cut my taxes in half. That's reclassification of income. Other ways to reclassify your income. Let's say you own real estate or you have a building that you're a tenant in and you own the building. Charge yourself the highest possible rent because that's going to come through at a lower tax rate than if you're paying yourself a salary. If you own real estate, that can help you reclassify your income because you can become a real estate professional, which doesn't mean licensing, it means how much time you spend on it and you get unlimited deductions with that. There's so many things that you can do in this realm. For example, you can set up a C corporation and if you have a new startup business or a part of your business that you have like a division, like if you're a doctor and you see patients but then you want to do supplements, you could put that in a C corporation and you pay less tax on the first $50,000 in the C corp than you do on an S Corp or an LLC or another way, reclassify your income. If you're the only owner in an llc, you're not being as tax efficient as you could. What you do is you put at least a 1% partner in there, even if it's a spouse or something like that. And then you move to Schedule K. It gets taxed as a partnership and it lowers the taxation on that. So reclassifying income is a major, major way that tons of people can save money. Like if you live in a state, anyone live in a state like California or New York or where you're just paying a boatload of taxes, but you have clients outside of those states, you could learn about a grantor defective trust called a WING in Wyoming or a NING in Nevada and avoid state tax on people that are from out of your state that you're serving. I mean, I could go on for hours, but just text that number there, 44222, and grab the guides so that you have those resources to go into more of that. So that's the first piece was just the IRS of the four I's. So we have irs, we have interest, we have investments, and we have insurance. That's how to be more efficient. So we talked about two of the three ways to live within your means. The first one, we all agree, sucks. It's budgeting. Now, there's someone in here that loves budgeting. Who is it? It's cool. I'm not going to steal it from you. You get a still budget if you really want, but the rest of us, you never have to budget again. If you do this simple thing, go to your bank, set up a separate account, call it your Wealth Capture account. Every time you free up money, every time your business grows and you pay yourself more, just make sure you're automatically paying a portion of that money into that separate account called the Wealth Capture, that's automatically saving money. Now, most people think they're automatically saving money, but if you're putting it into an investment that's not saving, that's investing. And I'm in agreement with other people on the panel. Now is the time to start building up a lot of cash, because people that build up a lot of cash are going to be able to take advantage of the change in the economy. The people that are going to get wealthiest in the near term are not the ones that are chasing the stock market returns, but the people that are sitting in cash that when the stock market finally starts going down and everybody else is like, when do I sell and realize that loss. And now they get into scam scarcity. Now they're just trying to make ends meet. And they probably got really addicted to a better lifestyle than they deserved because it Wasn't about value creation, it was about luck. That's when you can pounce and start buying great opportunities. Businesses are going to be on sale for a different level. Opportunities are going to show up. Like when McDonald's grew massively was during a recession. And they started to buy real estate that they couldn't get before the recession. When Apple started to grow massively is when they started to acquire companies during times when everybody else was cash strapped and they were cash heavy. Start to build up that cash. Because rookies always stay invested. They invest early, always. And often they're told to be mindless drones. That dollar cost average that wait for 30 years that they're in it for the long haul. But instead professionals sit on cash and then they pounce when the opportunity is right. I want you to be a better investor. I want you to use your investor DNA. Only invest in things that you know and, and try to avoid the greed gland when you feel like you're missing out. Because that's about the time everything's gonna start happening and turning because that's when the mass hysteria comes in. Like have you ever heard of Tulip Mania? Anyone heard of that? There was a time where tulips were the most expensive commodity in the world. Because of the hype around tulips. Like that's some dumb shit.

But it happened. So the third way to live within your means is to expand your means. Expand your means. Yeah. Keep more of what you make. That's the first lever. The second lever is to strategically engineer wealth, which means find your economic independence. Number what is it? Reverse engineer and say what's the number one thing you could do today to get there faster? What's the second thing you're going to do? What's your foundation? Do you have that handled? Do you have the right car, home liability, disability, medical, life insurance, business owner policies, corporate structures, estate plans and liquidity. That's your foundation. Don't skip that. Because if you skip the foundational piece, you're one incident away from having wealth confiscated from you. And all of us are in store for financial surprises. Yet we can address 90 plus percent of them with proper planning. That if that happens or when something happens and it doesn't have to confiscate your wealth or derail you. See, the Rockefellers understood this. When you read that book and hopefully you do because it's not that pretty of a book. Killing sacred cows is prettier. My son asked me that like that's a 10 year old's question. Which book do you Think looks nicer, dad? Killing sacred cows, like, who cares? But if it just sits in your bag, it doesn't do any good. If you read it, you'll see that the Rockefellers are on their sixth generation of wealth. But most families that wealthy never make it past the third generation. And the Vanderbilts had more money than the US Treasury. Yet nine years after Cornelius died, they had doubled their net worth and his oldest son died. And then within 54 years, the first Vanderbilts started dying broke because they never addressed protecting their money. They never addressed handling these things that could happen to confiscate the wealth. And the more successful you are, the more, the more you're susceptible to the success tax. The success tax is people want what you have. Or there was times I did so well in real estate that I thought I was really smart, but I just had good timing and I had nothing to do with it. So all of a sudden I thought, if one's good, 100 is better, right? That's a success tax. And be careful with all the semantics out there in the financial world, because you're going to hear in the next few years about all these losses in retirement plans and in the market. And right now we're having this big run up, but the money isn't lost. Be crystal clear about that. The money is transferred into other people's hands. And the ignorance tax is the worst tax of all. So money doesn't disappear or go out in the woods and get buried very often, unless like we're in the mob days or something like that. Instead it goes to people who are in the know and people that are playing a game that is already rigged against them. So I want to make sure this framework gives you the game that to rig in your favor. So the first part of strategically engineering wealth is build the foundation. The second part is safety, which creates sustainability. That might be things like learning about umbrella policies, having asset protection trust, building up, you know, an opportunity fund, getting lines of credit so you have liquidity, that's what that could be. And then the third piece is growing it, building that cash flow plan to become a better investor. The third lever to economic independence. The first one was keep more of what you make. The second was strategically engineer wealth. The third one is to accelerate investment income. Any money you have right now that's not producing cash flow if you're not economically independent, is a huge opportunity to get to that advantage where you can get 10 times the growth, because all of a sudden every active dollar could go be reinvested. So turn those lazy assets into cash flow. If you have retirement plans, you can learn about a 72T distribution that allows you to get that money out without the 10% penalty. Or self directed IRAs where you open up to the world of investing instead of just the brokerage houses of investing. The fourth thing, another big game changer, scale business revenue. All these books. I heard Ryan ask a question about Tony Robbins book and here's the thing about that book. It is a great map on how to be better at being middle class.

I'm sorry, it is. I don't mean to be mean about it, but like he says, hey, you know, owning a business is risky. But Tony didn't make his money putting his money in index funds, indexed annuities or any of that shit. He made his money being a world class speaker and owning a whole bunch of businesses. And I want you to remember that is don't go invest in other people's boardrooms or other people's visions or other people's dreams before you fully funded your own. Don't prematurely diversify. Usually premature is not a good word, right?

Like premature babies. I can't think of other things that that would go with.

Sorry, I have a comedy show I'm doing tomorrow. So. Scaling your business revenue, invest in people, processes, technological procedure, build that. Find ways that you could build more cash flow without you being directly involved every step of the way you're going to build more equity. Business is three dimensional equity, cash flow and personal fulfillment. Because you can actually connect to and course correct in the things that you're doing in that business. And the fifth one, the fifth piece of this is to make it count. You don't get a second chance at a first class lifestyle. This whole notion, if you just defer and sacrifice, then one day someday you're going to be happy. If you learn to be a miser. You don't just flip the switch one day and go like oh cool, now I'm abundant. I'm a nice person, not an asshole that just saves every dollar and just thinks about money 24 7. That doesn't work that way. What happens is if we buy into the reductionist thinking and scarcity, you will never be wealthy even if you have a decent sized bank account because you'll feel like if you utilize that money or spend that money that all of a sudden you're harming your net worth. Net worth is relatively worthless if it can't be converted to cash flow. I know people have had big net worth and had big bankruptcy that went along with it because it was illiquid, because they didn't understand how to manage cash flow. And this notion of retiring by accumulating money. Wealth accumulation is slow. You want to be fast and sustainable. It's wealth acceleration. It's cash flow, it's velocity. See, here's the old equation. Wealth equals money times rate times time. So if you want more wealth, they say add more money. That's stupid. Okay, if I add more money, I'll have more in the future? Maybe. Depends on how bad the investments are that you choose, right? Second, take more risk. Who was drunk on Wall Street? That's like, let's just tell people high risk equals high return to sell this piece of crap investment, right? And then time. Oh yeah, just wait longer. That's great news. And if none of that works, they say move to Ecuador. You know, it's cheap there. You might have dysentery when it's over, but you need to die early. You didn't have enough money. That's a crappy model. Here's the different model. Velocity is the gdp, which is the output of our economy divided by the money supply. What that means is the more times dollars circulate through goods, services, experiences, the more they circulate, the more wealth that's built. That wealth isn't a finite pie. It's not a zero sum game. If I give you money, you get to take that money and utilize it again. How often do we utilize that? That's investing. See, when people hear the word expense, they usually think of it negatively, like it's bad or wrong. But your income is someone else's expense. And real investors know this. Sometimes investments show up as an expense on the income statement initially. But assets and income for the long term. The right employee, the right mentor, the right marketing program, the right resources. So keep more of what you make. Identify that economic independence number and start working towards it. Find your existing resources and be more resourceful by turning the cash flow on and getting rid of lazy assets. Scale your business revenue, which means invest in yourself before you go. Invest in everything else. And then the fifth thing is make it count. Which means you have your this legacy that you're living. Legacy isn't the amount of money you leave behind because you die twice in your life. First when your body dies, and second when the last person that knew of you or of your name ever whispers it on this earth. I'm here to make sure that my legacy lasts. Because it's not something that just dies with me, but it's something that's the example. I live today by having the right family retreats with my kids so that we have distilled our core values as a family. So we have a family crest as a family, just like we have a logo for our business. So that we have a doctrine that we call our family Constitution that governs our trust that's dynamic and is distilled and is the core philosophies that I've learned in this world that I want generations to be able to benefit from for years and hundreds and decades to come. Just like the Constitution of the US Right, but for my own family. And then a family office. The Rockefellers had a family office. Financial professionals that are on the same page have the same philosophy, communicate with one another. And they're not just paid because they're making some type of commission. Instead, their job is to protect it, preserve it, and perpetuate it. The Vanderbilts didn't have any of those things. They lost all their money. The Rockefellers did. They donated $50 million to charity this year and their wealth still grew even after David Rockefeller died. That's what I want for you. Because my great grandfather didn't have that and he had seven years where he didn't get to see his family. So I'm on a mission to make sure 1 million entrepreneurs achieve economic independence. If you have it, you can swing for the fences in your business. You can make sure that money isn't your master, but you master your money and that you make choices with financial freedom in mind. And I use that term very carefully because financial freedom in our world has been a bastardized term which most people think means an amount of money they have in a bank account. That's not financial freedom. Financial freedom is a state of mind where money is no longer your primary reason or excuse why you would do or not do something. We have a disease and a plague in our world today, where money absolutely governs people's decisions to the point where they are manipulated, thinking that because there's a Black Friday sale that they're actually saving money. They're not being about investors, they're about consumerism. And you have an opportunity to do something extraordinary which is have impact, define what your skill set is, bring it to the world in a form of value creation. And the bottom line is dollars follow value. Make sure nothing destroys your legacy, that you get clear about who you are, you find the path to making more money and you have the financial team that surrounds you to keep more of every single dollar you make. And you'll be able to get there in a short period of time. If you follow the five tier methodology I just talked about, keep more, engineer the wealth, accelerate the investment income, scale the business revenue and enjoy life along the way. Because you are your greatest asset. Not a stock, not a bond, not a piece of real estate. And surround yourself with good people and get rid of the A holes. It's that simple.

Give it up for Garrett Gunderson.

I want to stay standing with you because energy, it's high enough. And I just want to ask you a couple questions about this. I actually want to ask you about work and life because you travel the world, you get a ton of stuff done, you have a great relationship with your wife and kids, you run a great business, you help entrepreneurs all over the world. How the heck do you stay so centered and present and still get everything done? How in the world do you do that?

Okay, this will be a couple pieces to this question. The first one, and I think the first time I ever shared it, we were sharing a stage on a panel at Amazing. And I've gotten even more clear about this. But what I figured out is I have to categorize people into three categories. First is people I'm friends with. People I'm friends with. I say yes to their invites and I invite them to things all the time. People I'm friendly with are the people that don't want to see me succeed. They're too indoctrinated in the consumer condition. They're negative people that aren't thinking about ideas and impact. Instead, they're thinking about competitive complaining and circumstance. So I say no to every one of their invitations and I never invite them to anything. And it gets a ton of time back into my life. And the third category are buddies. Buddies are people I like but I'd never do business with. And by not doing business with them, I save a lot of time because I usually end up holding the bag on that. The second thing is business habits and rhythms and personal habits and rhythms. Every day at the end of the day, I look at my calendar. I say, does my calendar reflect the man that I want to be? And what did I do today that someone else could have done unless I absolutely loved what I did? And then I said, rather than being cheap about who I hire, I make sure to pay more and hire the very best people so that I could delegate roles, not tasks. Tasks enslave you. Roles free you up. Because if you can count on someone and hand it to them and they can do it, then you can go to Italy for two months and still have your company run and only work for five half days. Or you could be on the road and have an event. We have one of our workshops going on right now. When he first invited me to this, I'm like, I have a workshop. And by the way, someone that you introduced me to is at the workshop. They're like, you're supposed to be at Capitalism. I'm like, I'm going last night. And they're like, oh. So yeah, once again they feel like, how are you doing all this? But I have a book coming out next year. We have 35,000 copies in bookstores in March, 100,000 copies out the gate. I'm going for number one with that. It's because I chose a good team and I've just gotten more selective. I do five things really great and then I say no to a ton of stuff. I say no to a lot of opportunity because we always get these distractions as entrepreneurs that are gift wrapped in something that looks like opportunity. And I've gotten really clear to listen to my wife because her intuition tells me when it's bullshit.

So we both believe that entrepreneurs are the greatest engine that we have to create growth and change. And entrepreneurs go into something, we get amazing results right away. And then we often get constrained by stuff we need to get done by things like payroll, by paying taxes. You're working at freeing that up and freeing up that capital. Make sure it stays in the hand of entrepreneurs rather than governments. What do you think is the number one mistake that people make that gets them constrained?

The number one mistake is that they can't differentiate the three measures of worth. So there's price, which is what we pay. There's cost, which is our economic impact, and there's value, which is our overall feeling of satisfaction. And most of the world, they live in the world of price. And when we try to save money, we end up expending and taking tons of energy in the name of that savings. It constrains us. And then all of a sudden we have less energy for everything else. But if we can understand cost, I would pay 10 times more for my tax attorney than I pay him right now because my economic cost goes down so much having him in my life. So the value that I have knowing that I'm going to pay less in tax is I feel good. Because, dude, my, my great grandfather was run out of a country because of tax. And then he got to the US in the year we came out with the US Revenue Act. I'm pissed off about all types of taxes, ignorance tax, success tax, you know, employee tax. Because I'm here to make sure that people legally and ethically pay the very minimum so they can put that back in their life. And if you're not willing to invest in yourself and let other people support you because you have a mentality of if you want it done right, you got to do it yourself. That is your constraint, and you're never going to get truly wealthy.

Garrett, we asked the investment panel this question. I want to ask you this. We're at the top of the market. Well, close, maybe.

Like, when is it going to stop? I've been saying the same thing.

We're in year 10 of a big boom.

Yeah.

What are you investing in right now, or what do you see coming? How are you managing your wealth differently? Or is it the same path forward in these economic.

Little different. One is I am stuffing every dollar the government will allow me into my overfunded life insurance plan right now because I want massive liquidity. I could pull that money out at any time. I'd have to do better than 9.9% to put it somewhere else. And that's a pretty amazing storage tank. And the second thing is, I started to look at investing not as products, but. Let me give this equation, and then I'll answer the second half. There's this equation. Who in here wants more money? Just by a show of hands here. Okay. All right. If you don't earmuff this. Okay, so financial capital is a byproduct. It's a byproduct. So if you think you have a money problem, you never have a money problem. It's actually a problem of two more precious forms of. Of capital, one being called mental capital, which is your knowledge, your wisdom, your insight, your tools, your strategies. Mental capital, if you've ever heard, it's not what you know, it's who you know. That's not true, because Ryan doesn't hang out with me, and I don't hang out with Ryan. If neither of us brings anything to the table, we're just someone. We'd make fun of each other, essentially. Right. So what you know matters in today's world. And the second piece is relationship capital, which are people, networks, organizations, mentors, family, friends. And if you want more financial capital, it's you're either an idea or relationship away from that next level of prosperity. So I am bullish and aggressive on investing in quality relationships. I'm bullish on investing in the right mental capital and attending and spending time with the Right, people. I put a lot of money in that every year because it always pays off in a big way for me. So. So that never changes, regardless of the economy. But I stopped looking at investments as products and I started looking at investments as what are my biggest skill sets, how can I package that up and start bringing that to the marketplace, not only the customers and clients, but even to other financial people. And in the last two years, by looking at that, half my income comes from licensing what I do. And I consider that my number one investment. And I can get six figure and seven figure like payouts in short periods of time. I can't do that with any other investment unless I would have gotten into crypto when I was first told about it.

You know, Garrett, thanks for being here. Thanks for all you do for entrepreneurs. Give it up for Garrett Gunderson, everybody.

Hey fastlaners. I hope you enjoyed this presentation from the Capitalism Conference. If you're interested in the next capitalism.com event, visit brandbuildersummit.com for more info on our upcoming event dedicated to physical product sellers. Again, that's brandbuildersummit.com we'll see you there.

If you've been listening to the last few episodes of the show where we feed featured entrepreneurs who have crossed the seven figure mark and are on their way to eight figures, then you undoubtedly have heard us talk about the Backroom. The Backroom is a group mentoring program where we cast the vision for getting to $10 million a year and beyond and being ready to sell your company, because ultimately that's where the big payday is going to come from. We also open up investment opportunities so that you can put your profits into places that give you more wealth and potentially more cash flow or even help you save on taxes. We have some pretty cool places where we put cash that give you sometimes all three. Plus you're in a room with people who are the best in the world at what they do. We bring in my team of advisors that help people get into retail. They help people clean up their systems. They help people clean up their books. They even help them reposition their companies so that they can be sold for more money. We also talk about what's working right now on Amazon and on other channels, but the focus of the group is on casting the vision to get to eight figures and beyond and clearing all bottlenecks that stand in your way while also opening up other opportunities for you to enjoy a life of freedom. Because that's what we're after here. We're not Just after this to work hard and work 16 hours a day. We're doing this so that we can have freedom and we get freed by making enough money so that we can invest into places that allow us to never have to work again and then building empires with people that we love doing business with. And that's what we're doing inside of the backroom. And I could also tell you that we're looking to buy and buy into some of our students businesses through something else that we're doing pretty cool in the back room. But I will save that for another day because that is still in process. But if you have an idea that you're not sure how to bring to the marketplace, if you've got an audience that you know could be the fertile ground for a really profitable seven figure physical products brand, or if you're selling enough product to be able to say, you know, I could step on the gas here if you've got that million in sight, or you're beyond the million and you know that it's time to accelerate the process to get to that eight figure mark. Because you're playing the review game. You're, you're playing price wars. You're tired of sacrificing profit margins. You're working way too long for too little result and you want to clear those bottlenecks so that you can grow faster and have a sellable company. So one day you can have that ideal freedom lifestyle. We can help you inside of the back room. It's one of the more expensive things that we do. It's also the highest ROI thing that we do. So it is application only. You need to be ready for it and you need to be ready to move when you join. So you can go to freedomfastlane.com, click on backroom and see the application, see all the pricing details from there. Working with me one on one starts at about $100,000. Joining the back room is a little bit less than that. So just know going into it that it's a serious investment and it is only for people who either have funding, have sales and are ready to go once they join. So if that's you, go over to freedomfastlane.com, click on the back room and you'll see the application and full details there.