Ep 164 - Balancing Liquidity & Long Term Investing

Hey, everybody, Flip and Danny here, founders of the Freedom Real Estate Group, family of companies. It's almost like the, the, what was it the Greg Brady. No, it wasn't Greg Brady. It was Peter Brady going through puberty.

Yes.

That dated me right there. All right, hit the like button if you remember that. Episod.

That's right.

Okay, so this episode actually to our podcast and our podcast is called Freedom through Passive Income.

He almost forgot that. Did you guys? You guys all caught that, right? You're witnessing to him.

Good thing there's a title before this. Yeah.

Okay, good.

Anyway, welcome to this episode. Hopefully we get into the episode eventually. This episode is entitled Balancing Liquidity and Long Term Investing.

Yes. I think it's super important and there.

Are two different things. So liquid investments, the pros are. Well, it's liquid, it's easy to access. The cons are it allows people to do emotional. Make emotional decisions and also typically lower interest.

Yes. Because the benefit of a liquid type investment is the liquidity. So it's not always the lowest of interest. It depends on the risk factor and what you're putting that money in. And if it could drop to zero tomorrow, well, you might be getting a high interest rate because you're taking a big risk. So it really kind of depends. But liquid, really easy to access. That's why people want it. Right. Long term investments, on the other hand, are the exact opposite. They're illiquid. You cannot get your money out. If you invest in the syndication in its apartment and it's projected to be somewhere between three to five, maybe seven years, well, then your money's in there for three to five to seven years. You can't get it out. You could go to the sponsor and ask her to get it out. There's no obligation on anybody's part for it to get out. You went in knowing that this was an illiquid investment. Right. So the pros for that is that it's non emotional. Right. You're going to make a decision here and you're making it for the next, say, seven years. And so you can't take it out if the market shifts and things are uncertain. You can't just go, I want my money back because it's there. You have to be patient and trust the process. So you're usually going to weather the volatile markets because you're forced to, to be patient and wait out the process. The cons is that it's not liquid. But in our opinion and why we're recording this episode is that that's Actually a pro because then you leave your investment alone. Also it's more typical for you to be in a long term investment. It's going to give you higher interest and many times if it's in real estate, a lot of other benefits as well.

Yeah. And typically this is the, the unsophisticated investors, they're the ones that are attracted to the liquidity because they've got the. Well, it's not just unsophisticated investors. There's so many people now. It's the one it now mentality, it's the Amazon. I ordered it at 10am, it's going to be delivered today at 2pm I joked about, I ordered something a couple days ago and it said three to four weeks for delivery. I'm like, what do they have to make?

It.

Blew my mind. But it's that want it now mentality.

Yeah. And the wealthy are more attracted to the long term because they, they already know they've gotten to their position in life for a reason. So they know that it's important to trust the process and to be patient because that's how wealth, true wealth, is created. Plus, the more and more you invest, if there's opportunities for cash flow that builds up and gives you the liquidity that you might want, if you've got cash flow of 5,000amonth or 2,000, whatever it is that you want for liquidity, it helps those long term investments, depending on how you're making those decisions, so that you can do that. So liquidity for liquidity sake, which means there's no purpose. If you had, if we had $500,000 US putting that into a liquidity fund or some type of liquid investment just for the sake of wanting it to be liquid and it has no purpose. That is, I think somebody said a fool's errand or something like that. But it's speculative, right? Because we really don't know. Depending on the type of investment we put that money in, we don't know exactly what's going to happen and we are going to be emotional and we're going to be watching it all the time to go, what is it doing? What is it doing? We didn't just use our wisdom and knowledge to evaluate an investment and put it in there and set it and forget it, which is what we typically like to do. That's why we love real estate so much.

Right. And it's funny because you have it. That's, that is for speculators.

Yes.

But it's funny because when I first read that I thought I said that is for spectators, but it's the same thing.

Yeah. You never really want to be in the investing game being speculative. Right. You want to be looking at things that are proven and have the history of longevity and the ability to build wealth. So the illiquid investments are for the patient, the wealthy investors who are rewarded handsomely for a future point of date and time for investing in those types of things. So what we really wanted to bring across in this episode is the fact that the more knowledgeable that you get, the more you understand the importance of the balance. Yes. It's important that some of your money is liquid. Right. That maybe you have six months worth of expenses sitting in a savings account Right now with the inflationary environment, you're losing money in that savings account. Right. But if that money provides you the peace of mind and you don't have another liquid investment that feels as safe as that savings account, well then maybe that's the right thing to do is to put that there. But other money, maybe you want an extra pot of six months that doesn't have to be in as safe as a, you know, savings account. And I honestly, I'm not a big fan of savings account. I would put it be putting in something else. But everybody has to make their own decision, right? Right. But if you had another six months to say you wanted an extra six months liquid, maybe you put that into an investment that might not get skyrocket returns, but it's a pretty good investment that's going to outpace inflation at the very least and give you that liquidity. Now anything beyond that, depending on who you are and how you're dividing up your buckets, stick it in a long term investment, where you're getting the higher returns, where you're getting the tax benefits, where you're getting all kinds of different things, compound interest, there's many different features on vehicles. And we're creating, actually we're partnering with somebody, we'll talk about this in our live episode, but we're partnering with somebody who's invested with us for a very long time. We're building a liquidity fund because we know exactly how to give people some decent interest rates that will help with the inflationary environment that we're in right now, certainly beat your savings account and are very, very secure. So like you not getting this interest rate would just be like, oh, the world like exploded or something. But so we're working on that type of thing and it's. And we're working on another fund for the Long term investments that has a little bit of an equity piece. It's got both of them have compound interest piece. Like we're creating these things because it's what we want. And what we want translates into typically what other people want. And so we all do it together.

Right.

And it's just, it's important to have that balance is really the point here. So keep getting educated, keep listening, keep doing your research.

I did want to note though, that they. We keep beating up the savings account, you know?

Yeah.

Every time. I will tell you right now that my savings account is beating my crypto account. Just letting you know that I got you while drinking too.

Yes, yes, yes. And that actually speaks to the. Depending on where you put your liquid investment, it could, you could wake up and go, eek. That's one of them. We have some liquidity, but we put it in crypto.

Yep.

And it's going like this, but we're leaving.

I don't think it's. That would have. That would mean it would have to go up. It's just going like this.

It's just. Yeah, it's just taking it from.

From the second I put it in. Hey, Look, I lost 45 cents.

Yeah.

Just like that.

But we're not taking it out. Right? We're just, we're gonna ride the ride.

Yep. It's. It's. It's what I call an entertainment app on my phone.

That's right.

Because it entertains me.

In fact, I think you bought more. You're like, oh, it's taken. I'm gonna buy more.

Yep. I did. Yep.

And it's still tanking. That's fine.

Yeah.

Listen to this pain point of flips. I thought it was a good decision. I went to Stamford.

No, I'm, I'm teasing. It. It's not a pain point. It's. It's fun to me. It's funny. It's. It's because it's money that we were going to burn anyway. Right. We light it on fire, so might as well light it on fire in the crypto account. Well, we hope that you enjoyed this episode. Make sure you're heading over to our website, freedomcapitalinvestments.com to join the investor club. But make sure you're also visiting us on our Facebook and LinkedIn groups and YouTubes and all those other things. Make sure you. Like button. You're gonna hit the like button.

Cuz guess what's funny? And he dumped more money into crypto.

You don't have to like that.

Yeah.

Just hit the like button.

Yeah, yeah.

But we like to end all of our episodes with invest, smart, live happy. Bye, everybody. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions and information on this show are not guaranteed. All investment strategies have the potential for profit or loss.