This is a recorded conversation between Ryan Daniel Moran and Sam (from Capitalism.com) on investing actively versus passively, aimed at entrepreneurs deciding where to allocate capital. Key themes in this chunk: choosing investments you can actively influence (buying businesses you can add value to) versus passive vehicles (real estate syndications), a practical allocation example for someone with $1,000,000—suggesting staging capital into a "warehouse" (roughly $100,000/year for ~5 years to deploy ~$500,000), using remaining capital for passive placements and reserving liquidity for the next venture—and a behavioral/goal-oriented framework (build a base of cash flow, use life insurance and cash-flow assets, then speculate once comfortable).
Chapters
I like businesses that I can impact, where I can put my time and my resources and make that business more valuable. So I'll invest in a business that I know I can help or I can impact. And so that has like a mismatch of value where you can buy at one price. And by you being involved, that entrepreneur is the one trading the time for that. And so that's another quote, asset class.
Absolutely. Yeah. I've had a lot of those opportunities. I've invested personally in a few small businesses as well, which were. Which very rewarding because it is still paring a little bit of time with that capital. But it's very, very rewarding to do that. And then all my passive stuff, the real estate syndications have been invaluable to me for being able to scale my money without having to scale my time involvement in it. Because there's just. At the end of the day, I remember I even looked personal. I was going to go buy some mobile home parts. Back in the day. I went out and I traveled through the Midwest for probably two weeks, going from these different parks to parks and looking at the whole package. And what I learned from this is that this is not an easy business. It's not just buy it and put a manager in. There's active things that have to go on with it. And so I went through that and I realized, you know what, having somebody else manage this is really dang attractive. And so that was the direction that I went with that. And it's just been invaluable to me from an entrepreneurial standpoint. It's allowed me to spend my time and focus on what I want to focus on.
So. So if a client comes to you with a million dollars, you're gonna suggest that they open up a warehouse which has a limit on how much you can put in.
So with a million dollars, we probably, if you had a million dollars of capital, we'd probably open up somewhere about $100,000 a year of a capital warehouse. And we plan on doing that for.
Maybe five years, which means that you can essentially move in five years time. You could put a total of half.
A million at a time.
Half a million dollars. So half of that million dollars can go into this other bank account, if you will. Correct, yeah.
And then the other 900,000 in year one, because you have 900,000 still to work, we would then go passively in other investments. So we go into private placements, syndications, things like that, where you are able to passively invest, not have to have any Time tied up in it. That's all dependent on what you want to do in your situation. If you only have a million dollars, if you only have it, and that's not your passive money, we may reserve some of that to go into your next venture. Because a lot of times you sell one business and you look for your next opportunity. So we want to store some liquidity there.
I'm sorry, it's. I had a brain fart at one point where I had my money, and then I, on paper, like, allocated where I was going to put. I'm going to put a million dollars into here.
Put on your whiteboard.
Yeah, basically. Basically, yeah. And what happened next was then I was like, great. You know, this will. I think I had calculated that I would have $30,000 a month in passive income and then. And still have enough. I was like, great. Like, I'll never have to work again. I'm good. It'll be super. This is safe allocation. I'll still have access to a lot of money. And then. And then I was like, great. And then I can just start the next business. And I was like, oh, shoot, all my capital was just allocated over here. What about the money that I'm gonna reserve for the business? Yeah, so that's. That's smart. Allocate a piece for the next thing. So your million dollar strategy, put as much as you can into the.
I think.
Oh, my goodness, Sam, let me finish it. Let me, Let me summarize what you're saying before you go back into smart people land.
All right, go ahead.
All right, so to put. Put a percentage into a warehouse, let that grow as you know, the next year, you'll put a little bit more into that, and with the money that's left over, put that into the opportunities that you see come up. Now, whether that is, you have an asset class that you want to invest in now or you want to put it into the next venture, if you want to put it into index funds because you have no other place to put it. And then as the warehouse grows, that is your wait for the perfect opportunity. That's wait for the home run play. Or wait for the play. Yeah, the compelling play. That's a better word.
So real quick here. I think one of the things that you have to do is it's so tough to just say general, broad advice of what do you have a million dollars? You never know what each person needs. So you think about why are you making money? So when you think about why do you get up in the morning? Why do you make money, and why do you care about passive cash flow? Why is any of this important to you? And you start thinking, you start going, that's a deeper question. That's the kind of question that I forget the name. The guy, the one thing guy, let's say those questions you don't answer right away. You think about it a little further, and you think, most people, when you're thinking of why you build your business, why as an entrepreneur you go through that grind, it's because of the lifestyle you want. It's because you want to be able to live a lifestyle where you do not make decisions based on where my next paycheck is coming from. Yes. And that's a fair statement for where most people come from. That's step one. Then step two is there's probably things past that make an influence and a difference, but you almost have to take care of yourself first to be able to get to that mental spot where you can think bigger. And so for most people, you know, the question is, a million dollars. If we can turn that into $100,000 a year of cash flow, depending on where you live, that can either make you a pop or make you wealthy. The question is, what are you trying to get to? What is your goal when you think of your passive cash flow? And that's why my model is build a base, use life insurance, buy cash flow, and you don't really give yourself permission to go to stage three, which is speculate until you've built that base wide enough that your cash flow is in excess of what you need to be comfortable.
