Ryan Daniel Moran (speaking on Capitalism.com, May 23, 2018) explains his personal investing approach emphasizing passive cash flow, tax efficiency, and long-term wealth. He prefers predictable cash-flowing assets (dividend stocks, income websites, certain real-estate funds and syndications, hard-money lending) and allocates roughly 60–80% to these, 10–20% to longer-term upside holdings, and 10–20% to speculative investments (friends’ businesses, crypto, startups). He favors partnering with specialists (e.g., mobile-home-park syndicators, real-estate funds) rather than operating assets himself and plans to increase private-equity style deals in his next phase.
He reserves about 10–20% for longer-term upside and about 10–20% for speculation.
Dividend-paying stocks (example: AT&T at ~6.25% dividend at time of recording), income-producing websites, mobile home park syndications, hard-money lending fund, real-estate funds, private equity/private deals, and ownership/retention in his own businesses.
Chapters
I'm headed to dinner with one of my advisory clients. I sit on the board of a couple companies might recognize. Here's a hint on who this one is. Do you know what company this is? Post in the comments if you know who I'm, who I'm about to have dinner with. I'll put a photo on Instagram of it. But hey, listen. So what I thought would be fun is if we had a conversation about what I've been investing in. I attempt to live on passive cash flow, meaning money that just comes from investments. So I don't like to take money out of my companies.
My business's money is the business's money. And what I do is if there's profit left over in the business at the end of the year or at the end of a quarter, I might do a distribution to myself. But the whole point of that is so that I can buy something to invest in that has passive income. Then take that passive income and that's what you determine you are going to live on. That's how you expand your lifestyle. So here's what I want to go through. I'm going to go through what I've been investing in because there's some really sweet opportunities that are a little bit different than what most people talk about and I think you'll enjoy hearing about them. So I'm after three things, three things when I am evaluating a potential investment opportunity. And first and foremost, I'm looking for cash flow. So all these people who are in investing in cryptocurrency, I don't care. Like, I don't want a piece of it.
If you want to have a very small piece of your portfolio in cryptocurrency, go for it. But to have the majority of what you've got in something that provides no cash flow, you're speculating, you're gambling it's not a good use of funds. Instead, we have to look at predictable cash flow if we're going to evaluate a good investment opportunity. So this includes things like stocks on the stock market. Why would you buy something if it is not producing a healthy dividend? For example, at the time of this recording, AT&T stock is paying out a six and a quarter dividend. Six and a quarter. Can you imagine if you had a bank account paying you six and a quarter percent on your money? You would have people flooding the bank. There would be a run on the bank because everybody would want to put their money there. And this is a bank that has been around for decades raising their dividend and it could go up in value, it could go down too. Right. But if you're after the cash flow, then it going down in value just allows you to buy more. You want to buy as much cash flow as possible. So that's the first thing I look for.
I'll go through my criteria and then I'll give you a few things that I'm investing in right now, personally. The second thing that I'm looking for is tax efficiency. So I'm looking for things that are not going to increase my tax burden. I look for things that are going to decrease how much I pay Uncle Sam and increase how much I get to keep in my pocket. So that would be things like dividends. Again, dividends are taxed at a better rate than normal income. There are certain things, things that are depreciable, meaning I can write off a lot of the investment.
In that thing. So for example.
I'm not an accountant, I am not a tax attorney. You shouldn't listen to anything I have to say on taxes because I don't know what darn thing. But there are some things in the new tax code that seem to suggest that certain forms of real estate are more depreciable than they used to be. So what that means and please talk to somebody smarter than me before you do your taxes or make decisions based on this. But listen, there are some people who suggest that investing in real estate, particularly right now with the new tax changes, will allow you to save more on taxes than under the old law. So for example, I am, I am investing in some mobile home parks. Now. I don't try to be a mobile home park investor. I'm partnering with people who, that's their business. And we'll talk about that here in a second. But because of the way that the tax code is structured, there is sometimes an immediate write off. That was cute. There's an immediate write off that happens. So if you put 100 grand into an investment, sometimes a chunk of that comes off your immediate taxes. So you get to put some of that back into your pocket. For example, I bought some income producing websites in the last year and I bought them for the cash flow. But because of some changes in the tax code, a large percentage of that purchase was written off right away. So I got to put money back into my pocket and get the cash flow from that. So that's the second thing that I look for. First has to produce cash flow. Number two, I'm looking for tax efficiency. And number three, that's when I evaluate the Potential upside, the long term wealth, not the short term changes. But do I want to hold this thing for five years? Do I want to hold this for 10, 10 years? Will this make me a wealthy person over the next 10 years? It's only the third thing that I look at, not the first and the second thing. So how does this apply? Let's look at some things that I'm investing in right now. So.
I reserve about 60 to 80% of my investments for these. The things that meet this criteria, tax efficiency, passive cash flow and long term wealth. I reserve about 10 to 20% for things that, that have upside that I'm not going to touch for a long time. That's like I own a decent amount of CVS pharmacy stock, doesn't pay a lot of cash flow, doesn't give me any tax efficiency. Although if I sell it at a profit then maybe, and then 10 to 20% goes into like speculation. So if you want to invest in a friend's business, you want to start a new business, you want to put it into crypto, whatever you want to do, that's where you can speculate if you want to do something like that. All right, so with my 60 to 80% allocation of cash flow that hopefully grows over time, that's tax efficient, I don't try to be an expert in any given field except for business. And again, I try to keep as much in my business as humanly possible. So if I'm gonna invest in real estate, I'm not going out and buying them myself. I used to do that and then I ran the numbers and they were terrible. The numbers were atrocious on keeping a portfolio of single family homes because that's not the business that I'm in. It's not a business that I'm going to grow over time. I want to put my money in the real estate fund that will make that their business. So I just give my money to the people who that's their primary focus.
I have a decent amount of investment in those types of real estate funds. I have a decent amount in a hard money lending fund which is cash flow based.
I have a decent amount of money in a mobile home syndication that one of our backroom members is putting together that has really attractive tax benefits and cash flow and wealth and upside wealth. I have, my largest allocation is in income producing websites because there's special tax breaks that come from digital assets. And I'm buying a ton of dividend paying stock right now because dividend paying stock is down compared to the rest of the market, so I have a good amount invested in that. Beyond that, my primary investment is in my business and other businesses like private deals. The next the next phase of my career is going to be specifically in private equity, meaning buying businesses with high cash flows, putting together the deal, growing the businesses and exiting, hopefully so that I can buy the Cleveland Indians. So that's how I approach it. I'm not looking for home run plays. I'm looking for the things that will pay for my life so that I can keep as much as possible in the businesses that I'm a part of or the businesses on which I advise and sit on the board of. All right, so I hope you found this valuable. Let me know what you thought in the comments. I'll talk to you soon.
