Unlocking the Power of Alternative Investments for Retirees with Ben Fraser

Welcome to another edition of the what's Next Retirement Podcast with Craig Weir. Life is full of transitions that have a financial impact now and in your future. When finances are affected, there are always questions to ask and choices to make. As an independent certified financial planner for well over 30 years, Craig has helped Americans make decisions that give them their best financial futures. The experiences with so many clients has given him a unique experience, unique perspective to help with what's next for you as you navigate the unknowns of your own life. What's next? Answers to the retirement issues on your mind.

Hey, welcome back. This is Craig Weir. As the intro said. Hey, look, if you are trying to figure out what's next in retirement, this is the show that it's designed to just kind of focus on you. What are the big questions in life, you know, that relate to money and finances and what do you want to be when you grow up? All those kinds of things. We just try to hit on all those things. You know, typically we talk about tax planning and general financial planning and stuff like that. But today we got special guests for you and a special subject, something that we haven't covered before, but I think you're going to really dig it. So what if you're tired of the ups and the downs of the stock market? What are you tired of having the euphoric increase and then all of a sudden the rug gets pulled out from underneath you and your statement, that was a 401k is the proverbial two. Okay. And on the other hand, you know, I can't tell you how many conversations we've had, people that were like, well, you know, my balances were half a million or a million or 2 million higher. But you know, what happened at all that. So there is a way that you don't have to suffer that if you're tired of the ups and downs and you don't want to go to the extremes of hiding it under a mattress or sticking it all into an annuity someplace. We have some hope today. We are coming through our white shining night today is Ben Frazier. Ben is managing director of Aspen Funds. He's also their chief investment officer, and he's gladly decided to come on and share some great ideas with us. So, Ben, welcome to the show.

Well, Craig, thanks for having me on. It's fun to connect again. We had you on our podcast not too long ago and it was a really fun time. So it's fun to come on yours. And you definitely set me up well. So didn't plan on being a nice Shine armor. But I appreciate. Appreciate that, man.

Well, man, I tell you what, man, for guys that are just tired of watching Apple and Tesla and all the others just kind of, yo, yo. I hope they really take this to heart. I have done this in my own life in different ways, and I hope that people will kind of just pay attention and maybe we can cast away some of the paradigms about the space we're going to be talking about and talk about it just in real world terms. Before we get into that, tell us just a little bit about Ben. Kind of like, you know, who are you and what's going on in your life? What do you do when you're not, you know, putting on the official I'm smart business hat.

Yeah. Well, again, thanks for having me on. And, yeah, my. My life outside of work is mostly made up of keeping four little girls happy. So I got. I got four girls, nine and under and even have a girl dog. So I'm very outnumbered. But I love it. It's. It's kind of fun. You got to just embrace it, right? So that's cool. We have a blast. Very, very busy life, but it's. It's all good. So hobbies. I don't have many of them because of that, but, you know, started getting to pickleball recently. I grew up playing tennis and just. Just won a tournament the other week. Kind of fun with the buddy.

You just won a tournament. You're kind of getting into pickle mark and you.

And you wanted to. It's not a. It wasn't a very competitive tournament, we'll say that. But it was. It was a fun. A fun time.

Well, it sounds like there were two people that were real competitive, and everybody else was wondering what.

Yeah.

Just happened here.

Right, exactly. That. That we had to. We had to tone it down a little bit. We started getting a little too.

A little too aggressive there. So are you guys like the. You know, the. The college tennis players that go into the novice pickleball court and just clean house? Is that what's going on?

Exactly. Yeah. We just. We look for, you know, the tournaments that we just dominate and feel really good about ourselves afterwards. You know, it's kind of funny because we started getting. We're playing in the final, and this is our first time playing pickle. Me and my partner, and I'm gonna throw him under the bus here. He's actually sitting right over there so you can hear me. But he started getting really into it and just slammed the ball right to this old lady, and she shrieked and, you know, he got a little. Little too into it. But we ended up winning the game, so that's all that matters, right? And it was a good. No, it was fun.

That's all that matters. Right? I'm gonna go pick on a bunch of senior citizens today. It'll be fun.

It was pretty bad. We're like, oh, we should probably tone it down a little bit.

This is.

Yeah, yeah.

Well, you know, as you know, and I think many of our list, many of the people that listen to the podcast know my wife and I have kind of a different gig going on in it. We live full time and in a bus. You know, we travel a lot. Summers we spend up in the mountains in Colorado and kind of do our thing. But a really big thing in a lot of the RV resorts that we stay at throughout the year is this pickleball. Pickleball thing. And I will have to tell you that I'm fairly athletic, but I've never played pickleball. I always kind of turn my nose up at it. It's like, I'm not old enough to play pickleball yet. Right. But I think I am. I think I'm right there in the demographic. Yeah.

So it's fun. I mean, it's. I grown up playing tennis. It's. It's fun because it normalizes a lot of the skill level. Right. To be able to play and just to have have a fun time. It's not that hard. Like the. The higher level, you know, players, it's. They. They're. They're good, but you can. You can keep a game going and have a fun time doing. Without much. Much experience in this. It's been fun, and it's pretty funny. I mean, it's crazy to see how much of a wave is just taking over with the pickleball. I saw article crazy was a Wall Street Journal or something where they're converting. This is a local here in Kansas City. They're converting all these empty Sears buildings that have just been defunct now into indoor pickleball. I'm like, yeah, you know, money too. They'll make money. And it's just this big, empty warehouse, you know, that no one's using it, but it's in a great location, and so it makes sense. But it's. It's just funny to see how much is kind of cool.

That's cool. That's good stuff. Well, I'll have to discover my inner pickleball one of these days. I was. I was always a baseball, basketball guy, but I did some Racquetball and stuff like that. But, hey, pickleball is all the rage, so I guess we'll have to get with it.

There we go. So.

So let's kind of dive in, if you don't mind, man. You know, I set up the alternative investment space, but before we kind of dig into some of those details, just kind of, you know, I'm kind of curious. How was the company? I mean, how has Aspen Funds even launched? Tell me a little bit about why or how it came to be.

Yeah, so it started 10 years ago. I joined about five years ago, and so the company was formed. Actually, one of the founders is my father, which has been pretty fun, and his partner. They really saw an opportunity kind of post the great financial crisis of investing in distressed mortgages. Right. So obviously there's a lot of those back in the day, but one of the unique things is that you can pick these up for very, very deep discounts relative to what's owed. And then you can work with borrowers, help them stay in their homes, work out new modifications of their terms, help them get back on track and actually do good and make some good money along the way. And so it started that 10 years ago. The initial thought was, hey, this is a good time to get in. It's a good opportunity. You know, timing is a big deal as we can get into down the road of investing. And initial thought was, hey, let's just do one fund friends and family, make a little bit of money and move on. But really started growing kind of with this space, and over the past 10 years, have become one of the bigger players in this niche, and now have, I think, 3,500 mortgages in all 50 states that we service and help our borrowers. And that business continues to go on. We have legacy funds that continue to operate. Just great track record there and still doing good with our borrowers. So one of our fun things we love to do with that is tout the number of foreclosures we have, which is less than 2% of all these workouts end in foreclosure. And so it's been we've got an amazing team and a pretty cool model to still help people out while making money. So been doing that. But that really launched us several years ago into kind of broadening our approach in the alternative investment space. Because really, the original vision for Aspen was we want to be kind of the premier provider of alternative investments for the, you know, retail or accredited investors. And so we can talk more about why alternatives make sense and why you're probably hearing more about them now than you ever have. It's actually because of some recent regulatory changes about 10 years ago that kind of completely changed the game to allow access for the average individual to get to participate in these types of things. And so it really kind of expanded our approach. We've now since invested in over $300 million of real estate across multifamily industrial storage, retail, oil and gas. And so we've really expanded in. Our goal is the same, is to help accredited investors, individuals invest like the ultra wealthy and diversify out of just stocks and bonds. Because what we ultimately discovered when we have a podcast like I mentioned earlier, called Invest Like a Billionaire and part of our thesis from the research that we did early on was the ultra wealthy, the billionaires of the world, the family offices, the pensions, endowments, all these Yale endowment, you probably have heard about if their ultra success in investing. They've been investing very heavily in alternative investments and private alternative investments for decades, many, many decades. And they've been investing very differently than the average high net worth individual, which is mostly stocks, bonds, mutual funds, not to say those are bad at all. But there's some real wisdom in creating diversification outside of just the public markets, into the private markets and into multiple asset classes within the private markets. Because many of these investors, the groups I just mentioned, the billionaires, family offices, et cetera, they are generally allocated, even now to this day, upwards of 50% plus of their total portfolios into these types of deals. Real estate, venture capital, private equity, hedge funds. And so it makes up a very big part of the portfolio where the average investor, individual, maybe 5% in alternatives, alternatives, quote, unquote. Because most people think they're invested in real estate when they're invested in REITs. And I'll make a very strong argument that REITs are not real estate. It's, you know, it has some real estate ownership in there, but yeah, it's, it's very, very different. So that, that's kind of our thesis and we're seeing a huge trend to that.

So, you know, our, our listeners are, you know, typically the guys and gals that are about to retire or already into retirement. And you know, they kind of built a nest egg for many of them, at least the ones that we get to talk to and help is they built that nest egg by just plodding money away, sticking it in that 401k for the last 30 years. And they wake up one day and they got a million, 2 million, 3 million, 4 million plus. Sitting in an IRA. And they did it all through the stock market. Very seldom do we find people that really embrace this alternative investment space. But I'm the guy with just enough lack of hair and gray hair that I remember why most people didn't do that. It was really the wild, wild west back in the 70s and 80s. I remember the. They were just tax deals, you know, the cattle deals, the livestock deals, the oil and gas deals that had absolutely no economic value other than the tax benefits. And then of course, the 80s and the 90s hit and a lot of those things washed out. And I think people just got really afraid of it. But that's really not what's available now, right? I mean, the types of things that you offer and that other people in your space offer, it's really. It really. It seems to me like this space has really grown up and it has. I'm sure there's still some bad players, but for the most part, there really are some. Some good things that can be. That can happen when you open your mind to doing things a little different than what's comfortable or what's convenient. So I got my own answers. But from your view, I mean, if you were 65, 70 years old, and you had a couple million bucks sitting out in an IRA and some other money outside of other places, knowing what, you know, what are just one or two of the main reasons why you would be looking at putting some of the asset classes that you just mentioned into your portfolio. Why would you do that? Why would somebody want to do that?

Yeah, great question, great observations. And I think what's really changed is not necessarily that these deals are all of a sudden now being done, these better quality deals, better access, better transparency, but they were being done more in a vacuum. They were mostly being done with big institutional investors. And in 2012, there was something called the Jobs act, which kind of flew under the radar, but it basically changed the game. I think this was a revolutionary change from before this act. You had to have what's called a preexisting and a substantive relationship with an operator, a provider of these investment vehicles, to even have the opportunity to see them. Right? And so most of these were traded through broker dealers. And whenever you kind of go into the traditional financial plumbing system, right, the legacy system, broker dealers, et cetera, it's very high fees. There's just a lot of crap is being sold because it's all commission based. And so it kind of attracts, to your point, some of the wild west, some of the cowboy operators, but in 2012 the regulations changed to where these sponsors could directly market to the individuals and be able to share openly about the things that they're doing without the worry of these kind of a previous regulations. So there's still some rules you have to kind of be aware of. But that's, you know, if you go on Facebook or, you know, wherever, you probably, you know, you have a decent net worth. You've probably seen some ads for different multifamily deals or whatever, right. So you're seeing a lot more of it. And because, because of these changes allowed access. So obviously that doesn't necessarily mean all the bad actors are gone. Right. You still gotta, you know, understand how these deals work. You gotta learn how to do some due diligence and all that. But the access has changed. And since then, the amount of capital and retail capital that has come into the market has been really extraordinary. And the projections from this point on are pretty one direction, just going up into the right. Because it's got a lot of attractive benefits relative to just stocks and bonds and advisors. And there's several surveys that I could reference. We have a whole podcast, I think our first podcast episode references a lot of these studies where most advisors are wanting to increase allocations to alternatives for their clients because one, you generally get better returns and two, you get true diversification. What has come to happen over the past probably decade, I would say, in the public markets is correlations are approaching zero. Right. Across all or approaching 1. Sorry. Of all asset classes. Meaning.

Explain. Yeah, explain what that means.

Yeah. The traditional idea, modern portfolio theory, is if you have a good blend of stocks and bonds, generally those trade in an inverse way. So if stocks are up, bonds are down. If bonds are up, stocks are down. And so you kind of create some balance, you create some mitigation, so you reduce your variance of return. And if you have a little bit more stocks relative to bonds, you're going to get a little bit more upside and growth. So you can kind of keep that average growing. Right. Well, last year, 2022 was the worst performance of the 6040 portfolio in the past 100 years because not only did the stock market suffer from some of the interest rate increases, but if you understand basic math, interest rates going up impacts values negatively in bonds. So bonds had a terrible year because interest rates were going up, driving down the value of bonds. And so there's what was supposed to be this kind of risk mitigation from a diversification standpoint, both went the negative direction. And that's what's happened even with REITs. Right. Oh, I'm going to get some diversification by going into REITs. And sure, they all have different drivers of what's driving the demand, but in the public market, so much of what drives performance and drives price discovery is sentiment. What is the sentiment of the market? What's the Fed going to do next? It's very reactionary. And so everything is in this vacuum, trading off the headlines. And so the more that that happens, the more these different asset classes trade more similarly and reducing diversification. So it's a little aside in diversification, but in the private markets, these are not traded on any exchanges. And so if the Fed does something different tomorrow than they did yesterday, it's not going to change the pricing of the asset you're going into. Right. If you're buying a multifamily apartment building in a good market with some positive population growth, positive rent growth, and you have direct ownership into that asset, you can drive a lot of value even outside of the external factors going on. Right. There's things that you can control and have a lot more impact on that and reduction of your variance of return, which is kind of the traditional measure of risk.

Yeah. And so you don't have the yo yo on your statement every month where you get, you know, it's, you're not riding the roller coaster, so to speak. Certainly the values change and there certainly are risks in anything that you invest in. But to avoid that volatility to me is huge. And to get into an investment strategy that allows you to participate in totally different components than what is the expected future value of this company's cash flow streams in the future is pretty huge. Let's define I've been out, I've been away from the definitions for long enough because I haven't done the actual investment management work for now, six or seven years. But so what are the thresholds now? We're talking to people that have to be accredited investors. Right. So just, just real quickly, before I get into some, some meat, I want to cover, what is an accredited investor in today's definitions?

Yeah, great, great question. So if you haven't heard that term, accredited investor, a lot of people think, oh, I have to go get some certification or some kind of test I have to pass to become accredited. And it's not that. It's basically you are, you're not based on your financial position. So there's, there's two ways to qualify. One is by income. So if you're a single income earner and you make over $200,000 for the past two years, or if you're a joint income earner and making over $300,000 over the past two years and expect to make the same going forward, then you're accredited. Or if you have a net worth of greater than $1 million excluding your personal residence, then you are accredited. So the kind of folks you're talking about, you have the IRAs of 2, 3, 4 million dollars. They're pretty comfortably going to be accredited. Yeah.

And so as a just a quick commercial, if you will, I'm a huge proponent of alternative strategies, but I'm even a bigger proponent of owning these alternative strategies in an, in a Roth IRA instead of in a regular ira.

Yes.

Because of the potential and the demonstrated historical performance can, can be significantly higher than what I would say the average person's experience is with a typical investment advisor and investment management person program. I can put it in the show notes, but if you'll go out to our website@craig weirwer.com you can download the books that we've got. And the first book I wrote about the whole subject of why would you even want to do Roth conversions? Is there and you can download it for free. And then the second one I wrote, which is the five Biggest Mistakes, which is really Roth Conversion Secrets that kind of gets into the mechanics of it. All that stuff is available there. So all this stuff that we're talking about, it's great from a return standpoint, but man, you just, you put a multiplier on your benefits when you get it to where those benefits are forever going to be tax free. And that's kind of what we talked about on your podcast. So. All right. So, you know, a lot of people are kind of, they probably got the same, you know, white goatee that I've got, and, you know, the, the flowing hair is gone. They remember the days of the shysters and the slick stories and the high fees and all those kinds of things. As Ben's explained that that's there certainly are bad players and you need, as he said, you need to do some due diligence. But that was the Wild West. Now, now everybody's kind of wearing jeans and flip flops and it's a lot, much more relaxed environment. But you still need to know what are the questions you need to ask. Right. So you're going to get this memorandum and this prospectus, and they're written by attorneys so that we all stay totally confused and they still charge their thousand dollars an hour type of thing. But just what are the primary Things that if you would get, if you went to your, if you had, if you had a big brother who knew nothing about this space, and he said, what questions should I ask? What would you tell the listeners? Are the really the main, two or three primary questions that are the most important thing before you get into the minutia of the details of the due diligence?

Yeah, no, absolutely. And you. I want to be clear, too. There is a lot of concern from investors because the private markets are largely unregulated. So there's exemptions from regulation, which is created as private market. And part of the reason that there's still you have to be accredited, so you have to have some financial wherewithal to be able to invest generally in these deals. And the idea is, hey, there potentially can be some risk here, and you got to at least have some sophistication to be able to understand what you're investing in so that it's not someone that has $100,000 to their name and they put it all in one deal or Bitcoin or whatever, and it goes bad. So I want to be clear there. And the reason I want to emphasize that is my biggest thing. What I always tell people is the best thing you can do is get the education yourself, learn about these types of deals. And I think it's even broader than just private alternatives. What I'm really seeing a trend of which is really, really positive, I believe, is people are taking more ownership of their money. And traditionally, the system has been, hey, I'm going to go make as much money as I can. I'm going to step as much as I can into the 401, get the match, set it and forget it. Never think about it. But what people don't realize, and we talked about this a little bit on your podcast when you had come on our podcast, people work so hard to make their money, but then they spend no time maximizing what they've earned. They're not making their money work for them, and they just stick it into these mutual funds, but they don't really know what it's in. They don't really know what are the fees and those kind of things. And so it's not even just alternatives. I think it's just a general approach of being more active. And so I'm seeing a lot more, what I'll call it DIY investors, where I'd say I want to take a little more ownership of my finances, because when you do that, regardless of what you invest in, you're going to have way better performance. You're going to be able to identify the strategy, identify the things that are the red flags and things, things that you want to be aware of. And so I say all that to say, and if you're just kind of getting started here, the best thing you can do is start really slow and really small. Right. And so the best way to reduce risk is just reduce how much you're investing initially and just start building a track record with some sponsors. But even before you kind of get to that point, there's a lot of things you can do and I like to think of a few things. Right. If you're investing money, imagine you're going to a horse race and you've kind of got these three components of a deal. So there's the racetrack, there's the horse and there's the jockey. So I like to think about these separately. So your racetrack is what's the asset class they're investing in? Is this a multifamily apartment deal? Is this a self storage investment? Is this, you know, land entitlements or is this oil and gas indication? Right. What is the track that this, that this horse and jockey are on? And do I believe in the long term, you know, sustainability, positive trends? Right. Of the story? Right. So there's, I'm going to have a very different feeling about investing in, you know, urban office than I am going to be in, you know, suburban, multifamily residential housing or something. Right. Those are two very, very different things. You got to understand what are the long term trends supporting or not supporting these assets. The second is the horse. So the horse is the actual investment itself. What's the strategy? What's the vehicle they're going to do it with? Is this a development deal? They're going to build this from the ground up and lease it up and sell it? Is this going to be going to buy an old class B apartment in a good area, they're going to renovate it and lease it up at higher rates kind of value add deal. Is this in a good market? Is this in a growing market? Is this in a diminishing market? And so that's kind of the other piece of this. You got to look at the big asset class, you're going to look at the market and the deal itself. And then arguably the most important piece of this whole equation is the jockey. And the jockey is who's the one driving the deal? Who's the one that is making this deal happen, Putting all the pieces together, what's their track Record how many deals have they done. Right. What's been historical performance? What are the backgrounds of the sponsors? Do they have any gray hairs? Or are they just kind of young bucks kind of getting started in trying out a new strategy? So there's a lot of things you can just basic smell test. But thinking about it that way, breaking it down, the different components, and then something jumps out. Dig into that a little bit more. Right. And if something doesn't make sense, you don't feel comfortable with it, don't move on. Right. There's a lot of deals out. There's a lot of things to look at, but that's the most simple way I've kind of been able to describe. Just to start and try to break it down like that. And specific due diligence I can get into, but those are the good places to start.

Yeah, that's good. Yeah. I don't think you want, you know, Uncle Vinny, who decided, man, there's some money in this apartment complex down here. Let's go hit up all the relatives and let's go in and do it. I don't know anything about it, but, man, Uncle Vinny's smart. He can figure it out. That maybe is not where I want to put my money. Right, Right. The other thing, too, that was important to me back in the day is, and even now, when I look at different things, I like to look at how is the sponsor compensated? What is their motivation? Right.

Yes.

Is their motivation just to make sure you stay on the hook where they can get management fees forever, or do they. Are they rewarded for great performance? And as long as I get my part as an investor, I don't really care what the sponsor gets. What I care about is me. So to focus too much on the fee aspect without looking at the track record of what have they been able to do in the past? I don't think that makes a lot of sense. I know. I know a lot of people get stuck on fees of any kind, and I do, too, in certain instances. But what you really have to focus on, on anything is, is it going to give me what I need and what I want at a reasonable value to me, so. And I'm kind of jumping into a couple different areas here, but my primary kind of the primary point is, you know, if I were looking at an Aspen Funds deal, I'm going to. I want to figure out, are they really truly a partner in this with me, or are they just somebody that's going to hit my account and get their fees every single Year. Right. And from what I've gathered from the stuff that I've looked at, you guys really have a really unique approach or a very equitable approach to that, in my opinion. So that kind of wants me to launch into kind of so we can keep track of, keep some track of our time and what we're doing here. Give me the, give me the pitch of, you know, why Aspen funds, what makes, what makes Aspen funds unique from the 20 other people that as soon as I click on an ad, I get to see their stuff too.

Yeah, absolutely. I mean you kind of hit a lot, a lot of it. It's I think, alignment of interests. Right. So part of our pitch, if you will, is we as owners invest in every single deal that we bring to our investors. And we sometimes invest a nice chunk of the overall equity we're raising on the same terms, on the same fee, structure everything as our investors. Because how better do we align interest than we're putting our own money in there? Because we believe in the deal. And so our whole goal is we're not going to bring anything to our investors that we would not, you know, excitedly put our own money in. And I think that's like the ultimate litmus test. Right. So I think that that in of itself is a pretty big differentiator. I think we got a 10 year track record. We've been investing for a long time, very, very diverse backgrounds of our principals, we have four principals, been investing, you know, combined over a hundred years and investing in lots of different asset classes. And we've seen the ups and the downs and you know, we're, we're, we're trying to do right and we have a lot of investors that work with us and most of our investors invest more with us over time. So it's usually a pretty good indicator that they like what they're, what they're seeing. So yeah, I think it's a lot of things, you know, and I'd kind of make another comment too. You're going back to the fees and you know, just the more you kind of get into the space and understand, you know, what's the market rate for this fee, what's, you know, what's normal, right. Versus what's outside of kind of normal range. And you can get a pretty good sense of a sponsor from like there's these things called PPMs, private placement memorandums, very simple or very similar to a prospectus for a stock. Right as you go. First thing I do, I go straight to the fee section and the waterfall section. Because these two things show you exactly who gets paid and what priority and what are the splits between investors and the sponsors and then what are the fees that they're taking and when do they take them and how are they taking them? Right, because those things, right, they're going to be the most indicative of anything else aside from you got to believe in the deal, believe in the strategy, believe in all that. But it'll tell you a lot. It'll tell you a lot. And to your point, it's important to know that. So yeah, I think one other point I'd make too. I think as you kind of get into this and obviously we're not financial advisors, I'm not giving any advice, so I got to throw that caveat out there. But what I've seen a lot of people do is I kind of call it the sock drawer of investments. Right. They kind of hear about Uncle Vinnie's deal and they throw some money into that one. They see another deal on a Facebook ad and there's like, I'll throw some of that one. And then they're just getting referrals left and right. I'm just going to throw these deals. Well, eventually they have this kind of hodgepodge of investments that they didn't really, they looked at a little bit, but ultimately they're now getting these tax forms and they don't even know what they're doing. How are they doing, what's the strategy behind it? And it's just this kind of random assortment of deals. But what's so important as with anything is you got to understand what are your goals first as an investor, are you looking for passive income, like a current income stream? Right. Are you looking to multiply the net worth? And then within your portfolio, what kind of portfolio allocations do you want to have to these different buckets? So you got to think through that first and you got to go and invest with a strategy and the investments you do. Because a lot of times someone can do this kind of stock draw investing approach and they'll look back and oh, I just did like 10 multifamily deals and they're all in Texas and they're all class B value adds. I thought I was getting diversification. You're probably not that diversified as well as you think because you don't have some other asset classes, some other sponsors, some other markets. So you can really be pretty selective as you build this over time. But again, you want to have a good strategy. For example, we have a debt fund that pays a current income Stream, we pay 9% every month that's annualized and been doing that for 10 years. And it's just bread and butter, vanilla income. But some people need income, especially if they're retired and they want to live off the net worth. And then other people, they don't need income and they want to kind of maximize growth. So we have development projects. You can kind of come into a development project and get Some pretty big IRRs if everything goes well, right? So there's just. You got to understand what you're doing, what kind of risk you're taking, what are your ultimate goals, and use that as you're kind of going through this whole learning process.

So I think one of the things that needs to be said before we shut down here is we need to point out that, you know, one of the things that people really like about the stock market investing is that if they want to pull their money and they want to go buy something, they make a phone call or they get online, they crank it out and you know it by wire in their deal. That's because they're dealing with a marketable security that has a well defined active market that's, in my opinion, controlled by, you know, a lot of different rules and a lot of different players. But man, when we go out and we buy several class B apartment complexes and we throw them into a bucket and a sponsor offers them to us, it's difficult to go get $50,000 out of a $25 million deal instantly, right? So there's this, there's a liquidity issue that is, that exists inside of some of these that also needs to be part of your decision of how much you put in. And you need to look at where you're, when you need money, how often you need money, that kind of thing. So the deals that you put together are talk just generally about, you know, if I were, let's say I had $100,000 of my million that I wanted to do a baby step. If it wasn't in the debt fund type of thing, am I locking money up for 15 years, like if I were in an annuity, or am I looking at a lot shorter time frame than that? Ben?

Yeah. So every deal is different. Again, you gotta understand what's your goals. Is it liquidity then that's gonna change the types of deals you invest in. So our debt fund, for example, we have a one year lockup period and then, you know, full liquidity thereafter. It's not instantaneous, but it's within 90 days, generally is what we Target, you've always been able to hit that. So you have some liquidity, right. And that type of an investment, it's an evergreen fund, so it's kind of always going and put money in, take money out as you need. And other deals, like we have oil and gas investments that we've done, and those are 10 year deals. And you're not getting any money out of it, right, Other than the cash flow coming from it, because these are hard assets and we're reinvesting back into more drilling, et cetera, et cetera. So every strategy is different. And again, that's probably the biggest knock that alternatives get, right? Well, they're not liquid and there's definitely some merit to that, right? Liquidity is important. Liquidity is you have to manage liquidity as an investor. But what's interesting, we actually did this episode on our podcast, one of the first ones, where we looked into some studies that was done by a Bain company, it's a big consulting firm on investment strategy and liquidity. And what they found was most investors, even through downturns, overestimate their need for liquidity. So. Meaning that they think they need more liquidity than they actually need. And if that's a preventative thing from keeping you investing in these things, then you got to think about that, right? Because. Because here's a really concrete example. So you talk about investing in class B apartments. Well, you can go, well, I'm just going to go invest in some REITs because I can have liquidity, but I'm still investing in apartments. Well, check this out. So there's a metric called price to book ratio, right? You've probably heard of price to earnings. It's basically the price you're paying for a dollar of earnings annually. Well, price to book is a similar ratio, but it's great for real estate. So it's what's the price you're paying relative to the book value of the assets? Right? So if you invest into a syndication or fund that's a direct private investment, your price to book is generally going to be pretty close to one, maybe a little bit less than one because you have a little bit of upfront fees. But say it's pretty close to one, that's really good. Most of your dollar is investing in the asset. Well, the average price to book of REITs and this has changed over time, but pretty consistently it's about 5x. So that means if you put $5 into a rate, only $1 of that is actually going into the asset. The rest is goodwill and Premium. And you call that liquidity premium. Right. So that's. That's the premium you're paying to get liquidity, that asset class. I would argue that liquidity is probably not that it's not worth that much. Right. It's not worth only getting 20%, you know, value into assets. So it's something I think about. Liquidity is important. You know, I'm not saying put all your eggs into the private market. You know, that. That's definitely. If you do that, you got to be really. You got to know what you're doing and manage liquidity and manage lines of credit and other things. But you don't want that to be a deterrent from investing in private alternatives because one, you're paying a lot more for liquidity than you probably should be, and two, you probably don't need as much as you think you do.

Yeah, well, you know, a lot of the people that we deal with, I've kind of coined the term IRA millionaire, and they're other than the obvious. Most of the people that we work for are folks that, generally speaking, are probably never going to touch very much of their IRA over their lifetime. And so they're. But they're so used to being able to go get it that they maybe would say, oh, I'm not going to lock money up for three or four or five or 10 years, because if I need it, I want it. And then, like to your point, in reality, you're probably. You're probably going to die with more money than you have today. And there's some percentage of that portfolio that the world would really have to change for you for you to need that portion of that portfolio, whether it's 10%, 20%, 50%, 60%, whatever. So, of course, that's, that's our bailiwick, is putting together that comprehensive financial plan so that you can make better investment choices of what you're doing. We don't invest people's money, Ben. We don't manage it. We don't send them to investment advisors. We don't do any of that. But we help with the construct of the structure of what that should look like and help them to understand the parameters that are necessary and that they need to make things work. And I, you know, we, we love that part of it. And the tax planning portion of what we do is our intent to help them really make sure that they're able to maximize that last half of life where they're not just feeling the pressure of Uncle Sam every April and all these huge required minimum Distributions that come out. But, man, I really dig what you guys are doing. Tell me, how can people connect with you? Give me two or three ways that people can connect, or if it's simpler than two or three, just how do they find out more about Aspen Funds and try to be able to connect to ask some really specific questions for them.

Yeah. Yeah. So probably the simplest way is if you just want to get more general education or podcast, invest like a billionaire. It's the Billionaire podcast dot com. We had you on the show, so you go listen to that episode. It was a great episode. But our whole point of that show is just education around alternative investing. It's just breaking down and demystifying a lot of the things that go on there. And then, yeah, if you really want to learn more about the investment strategies themselves, Aspen Funds is the best place to go. Find out about it. And you can download, you know, myriad of our ebooks and other free content we put out there and just schedule a call with our team, if that makes sense. So, yeah.

Cool. So they don't have to go to their. To an investment advisor to work with you. They don't. They don't have to go through Fidelity or Schwab to connect with you. They can have a conversation and you can help them with a lot of the mechanics of how do we actually get that in my IRA or my Roth or whatever. Your team can do that for them, right?

Exactly. Yep, Absolutely.

So is there anything else that I. That maybe we. That I didn't ask as a good host, that I should have asked to get the point across that this is really a pretty cool space people need to check out?

No, I think we hit it all. I think we hit that and more. So I feel like we hit the big stuff. And I think the big thing I would just say is, like I said earlier, really take an ownership mindset over your money. You work so hard to accumulate this money. Don't just turn a blind eye or just blindly trust someone else to have your best interest at heart, because no one's going to care about it. Your own nest egg more than you. And not even just the investing side, but everything about it. You got to take ownership of it. You know, dive in, figure. Figure things out, start to learn. And you. You'd be shocked at. This stuff is not that complicated. The whole system is set up to make you feel like you. You can't figure it out. You don't know what you're doing. You need help. It's really not that complicated. Right. It's some common sense, a little bit of curiosity, asking good questions and just, you know, experience. Just starting to reread these things. You know, get on these email list, start talking with, with these different firms and just start doing it right. It's just rip the band off and start, start diving in because it's, you're really, there's some, some really good gold on the other end of the, of the side here. Yeah.

Cool. Well, I've listened to several of your podcast episodes up to leading up to me being on there, just so I get a feel of the vibe and what you guys really do. And I highly recommend that you guys get out there and listen to one or two of them. Subscribe to their podcast and if you haven't click the button, subscribe to this one so that you can be right on the cutting edge of the stuff that we bring to you as well. So, Ben, thanks a lot, bud. I appreciate you being here and man, looking forward to maybe another time we can hang out and share some good information with folks.

Sounds good. Thanks so much, Greg.

You bet.

Investment Advisory Services offered through Q3 Advisors this presentation is for educational and informational purposes only and is not intended to be individualized financial, tax or investment advice.