Controlling Your Investments, Diversifying Your Investments, & How to Become An Empowered Investor
In this YouTube episode, Jason Hartman outlines the mindset and tactics of an "empowered investor"—a real‑estate investor who maintains direct control, focuses on essential assets, plans purposefully, invests consistently, leverages credit, and maximizes tax advantages. He begins by warning that relinquishing control invites fraud, incompetence, and high fees, then presents a series of "commandments" for empowered investing: (1) invest in necessities such as housing and its construction materials; (2) set clear, long‑term goals and avoid speculative, short‑term gambling; (3) treat investing as an infinite game—continually deploy capital rather than trying to time markets; (4) concentrate on the historically proven asset class of income property while diversifying geographically; (5) use credit as an asset and leverage it strategically; (6) pursue education, build a professional team, and tap resources like investment counselors and the upcoming Scottsdale conference; (7) exploit the tax‑favored nature of real‑estate through cost segregation, 1031 exchanges, and depreciation. Throughout, Hartman references recent financial scandals (FTX, Madoff, Holmes) as cautionary tales of lost control, and he emphasizes mental leverage, delayed gratification, and the importance of using every available resource to accelerate wealth creation. The episode concludes with a call to action to join empoweredinvestor.com live for further networking and learning.
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So this goes back to commandment number three. Be a direct investor. Thou shalt maintain control. When you relinquish control, you leave yourself susceptible to three major problems. Number one, you might be investing with a crook. Number two, you might be investing with an idiot. And if they're dishonest or incompetent, you will lose money assuming you pass those two major hurdles. Honest, competent. Well, they take a giant management fee off the top for managing the deal. And now here's your host, Jason Hartman, with the complete solution for real estate investors. Today, I wanted to talk about how to become an empowered investor. What really differentiates investors? I mean, look, we've all considered Warren Buffett, we've considered various strategies. You know, I talked about Malk Hill lately, who is the author behind the Random Walk Down Wall Street. And there are so many different ways to look at investing and look at success in life, in any aspect of life, of course. But what really makes the difference between an investor who wins the game and who's having good results and an investor who has maybe some highs, but also some terrible lows? And with all of the stuff that's going on in the world now with the stock market gyrations, with the economy chang, with the housing market changing, and most of all with the cryptocurrency market and all of the scandals, you know, it's just going to be really interesting to see how this latest big scandal with FTX unwinds and the collateral damage of it. You know, we've got to just be grounded. We've got to be grounded into what makes investing work, what makes it work for the long run. How do we invest so we can sleep well at night? So let's dive in to how to become an empowered investor. What are some of the philosophies, the traits, the tactical things that they do? How do they think? What really differentiates empowered investors from all of the other investors out there who really struggle with their portfolio and struggle to make it work? So let's go ahead and dive in. So first of all, and I think this is a core philosophy, empowered investors invest in necessities, not fluff. They invest in the things people need. What are the things that all humans need? Well, of course, one of those things they always say, the old saying is, you know, everybody needs food, clothing, and shelter. And shelter. Housing is such a critical human need. It's absolutely necessary. So provide that housing. Let them rent that housing from you, that necessity, housing. Now, another component of this is that, remember the housing itself, the ingredients of the House. All of those construction materials are also necessity items because they are used in so many other things other than housing. So there will be continued pressure to increase the value of these commodities, these ingredients of a house, whether it be lumber or concrete or copper wire in the walls, or all of the petroleum products that are used in a house, or the energy that goes into making a house. So all of that is part of that big necessity oriented investment that you as an empowered investor are focused on. Plan and align goals. Empowered investors, they plan and they align their goals with the things that actually work with the things that make sense. So if you think about this from a traditional financial planning perspective, right. Why are you getting into investing? Well, of course, everybody's going to say to make money, what else? Of course, Jason, that's the whole reason we're here. That's the reason we're listening. Well, there's more to it than that. Are you looking to make a quick buck? Hopefully not, because that is not investing, that is speculating, that is gambling. What is your reason for investing? What is your time horizon? What is your investment goal? Is it capital gains? Is it income? Is it tax benefits and wonderfully income property offers all of the right things. It offers capital gains opportunities, it offers income opportunities. And of course it is the most tax favored asset class in America. So plan and align goals and just understanding what your goals are as an investor, okay, invest, don't speculate or gamble. And this ties in with the other one, of course, right? Investors invest. And guess what? As investors, if you call yourself an investor, and hopefully you do, then what do investors do? Well, they invest. They don't agonize about trying to time the market. They are constantly investing. They are constantly putting money in play in the investment markets in their favorite type of investment. And they're not trying to pick the bottom or pick the top. That is the game of the speculators, that is the game of the gamblers. And we all know how that works out, or should I say how that doesn't work out. Because when you get older and you live long enough to see and compare people's performance throughout the course of a decade or throughout the course of their lifetime, you just see the people that just consistently invest and they don't agonize about timing everything because just timing just does not work. The people consistently investing are the people who win over the long term. They win the big game. Now, an important thing to understand is the concept of the infinite game, right? Some people are playing the finite game. And in the finite Game. The goal is to get the game over with, right? But life is not a finite game by any means. It is definitely an infinite game. And the goal of the infinite game is to keep playing the game. And as an investor, that's the way we should view it. Our goal should be to keep increasing our wealth and keep playing the game. And you know, after a while when you get to a certain point, that game just becomes really fun. And I almost hate to make the comparison because it's so cliche, but it's like Monopoly, right? It's just like playing Monopoly. It's fun after a while. You know, you've got so much wealth that you've accumulated that you're literally just playing Monopoly for fun. And if you can make a great contribution along the way and improve the lives of others and inspire others, so much the better. But investors invest. Just remember that. If you are an investor, what do you do? You invest. That's what investors do. Speculators speculate and gamblers gamble, but investors invest, hopefully. I'm conveying the idea there. You're always investing, you're always putting money to work versus the gambler and speculator who are saying, well, you know, I think I'm gonna try and time this and figure it out, and I'm gonna wait on the sidelines because, you know, the deal isn't good enough right now. And let me tell you, that's what people said in 2012, that's what they said in 2015, that's what they said in 2019 when the repo market was falling apart. That's what they said in 2020 when Covid came along. That's what they say all along. But guess what? The people who kept investing made the most money. It doesn't matter. I just pick those years at random. Okay? They could be any years. You could go back to the 70s, you know, I mean, that poem that I'm always talking about and sharing with you. The reluctant investors lament such a great lesson because it was written in 1977 when the author, Donald Weill, thought everything was so overpriced. In 1977, folks, we always feel that way. Everybody always feels that whatever their asset class is, it's at a market top. Maybe I should just wait, right? And the beauty of income property is you invest for multiple characteristics. It's a multi dimensional asset class, which makes it an absolutely beautiful asset class. It makes it the most historically proven asset class in the entire world. Now, another trait, another characteristic of empowered investors is they are into direct investing. They want to be in control of their money. They want to know what's going on, they want to have first hand knowledge and they don't put too much trust in the system or in other people or in other companies. They want to be in control. So if you invest in pooled money assets, if you invest in stocks, bonds, mutual funds, syndications, private placement memorandums that you know are more related to a business usually, right? A startup or some business sorts, you are not a direct investor, you are not in control. You are relying on somebody else, some other company, some other person. And look at all the people that relied in Sam Bankman, Fried. Look at all the people that relied on Bernie Madoff, on John Corzine and Elizabeth Holmes who just got sentenced to 11 years in prison, right? Do you know she doesn't have to report to prison until April? Isn't that ridiculous? Why not take her off right away, you know, once there's a verdict? I mean, why not put her in jail right away? What's the wait? You know, I wonder if she'll try to flee justice before then. It's crazy world we live in. But look, we've all heard the stories, there are so many of them. And if you trusted resumes, nobody would fault you for trusting the resume of Bernie Madoff, who was president of nasdaq, who headed up all sorts of ethics committees, right? On Wall street, ethics committees. I mean, can you imagine John Corzine, MF Global scandal, he was governor of New Jersey. Talk about a good resume, right? Elizabeth Holmes, she was the next Steve Jobs, right? I mean, Sam Bankman, fried. The media was in a love fest with him. It was ridiculous the way all of the news media just covered things up. They just gushed over this guy, right? All of these criminals, it's unbelievable. And there are so many more. I mean, we don't have to talk about Enron or WorldCom or Global Crossing or I mean it's just limitless, right? So this goes back to commandment number three. Be a direct investor. Thou shalt maintain control. When you relinquish control, you leave yourself susceptible to three major problems. Number one, you might be investing with a crook. Number two, you might be investing with an idiot. And if they're dishonest or incompetent, you will lose money assuming you pass those two major hurdles. Honest, competent. Well, they take a giant management fee off the top for managing the deal. I mean, many of these people offering various syndication deals out there, they're honest, they're competent, but they get paid a Giant fee for running the deal. Okay? And look, if you've got tons of money and you want to just delegate to someone else, you can do it. But just understand that you are paying a premium for that. And if you want to grow your wealth fast and you need to be a direct investor, you need to be in control. So it depends what stage you're at, right? Just understand. Of course, it depends where you are in your personal wealth journey. All right? Getting educated. You've got to be educated. Now here's the thing about this. Number one, real estate or income property is actually a pretty simple business. For thousands of years, people have owned properties and they have rented them out to other people. It's a pretty simple thing. And you can do it that way. You don't need to spend your time going to a ton of seminars or buying a bunch of educational products. It's really pretty simple. However, if you want to optimize it and you want to really be a pro at it, right? Then you do need to gain education. But the asset class itself is so forgiving that even without much education, without pursuing it, without listening to things like this, you can do pretty darn well. You know, we've all seen the situations in life where. And it's usually used as a jealousy, right? You know, when we're, when we're envious or jealous of someone else. And I understand there's a difference between jealousy and envy. I get it. But you know, we describe them as lucky, right? Dumb luck, beginner's luck, right? How lucky can you get? And that's true. But with income property, it's pretty easy to get lucky over time because it's a pretty simple business. Now, of course, if you want to accelerate your path, if you want to have more success and fewer frustrations, of course getting educated is very, very important. And part of that, part of it, where you're going to learn a lot is by having a team, a team of pros, a network of people who will help you on your journey. You know, they say nobody's self made really in life, right? Nobody really does it alone. Look, in the intro to this show, it says Jason Hartman, self made multimillionaire, right? Well, that's not exactly true because nobody, nobody is really self made. In the final analysis, we all had help, we all had inspiration, we all had mentors, we all learned from somebody else. What is that old quote about? The reason I can see so far is because I'm standing on the shoulders of giants. And that is true for all of us. No question about it. So the self made is sort of a, an expression. It's a cliche. But the reality is we all had some help from somebody, right? We got our inspiration somewhere, we got our knowledge somewhere. And one of the fastest ways to do this is through a network, through a team, of course, learning with conferences and seminars and podcasts and YouTube videos. That's very helpful. But the best thing is learning from people on your team. And that starts with what we offer for free. Investment counselors. And our investment counselors will connect you with all the resources you need, whether it be financing, 1031 exchange, self directed IRA, whatever, right? We can connect you with lots and lots of people. And another way you can get connected and plugged in is to join us for our upcoming conference in Scottsdale, Arizona. So be sure you go to empoweredinvestor.com live that's empoweredinvestor.com live, and you will increase your network. You will meet or again, see all of the team members that you need to help you on your investing journey. And you're just going to have a great time and you'll learn the most when you're having fun and when you're having a good time and when you're being social. It's just going to be a great event. So join us for that empoweredinvestor.com live. That's empoweredinvestor.com live. That's the URL for you. All right, now concentrate. The old saying in investing is concentration or focus creates wealth. Diversification perpetuates wealth. Now, what if we could have the best of both of those worlds? And with income property, we can have the best of both of those worlds. Very few assets or strategies offer both of those things at once. You know, there's two old sayings, right? The first one is, don't put all your eggs in one basket. We've all heard that one. And then there's another one from the late, very, very rich Andrew Carnegie, who said, put all your eggs in one basket and watch that basket. Watch it carefully. Pay attention to that basket. So your eggs are safe, right? Well, with income property, it's fantastic because we can have the best of both of these worlds. We can concentrate by focusing on the most historically proven asset class in world history, income property. And we can also diversify that income property geographically. And we will help you create the plan for that. Just reach out to our investment counselors through jasonhartman.com and we can help you execute that strategy. In this entire strategy that we're talking about today, everything we're talking about today, don't be attached to any one area I just talked about. Concentrate and diversify at the same time, which is really a rare opportunity with any type of investment. But also when you're diversifying geographically, don't get too attached to anything. We want you to be somewhat disloyal. Yes, that's not a good quality. The best quality is to be loyal. Right? That's what we all think. Think. And that's true in most cases. However, in this case, we just want you to invest where it makes sense. So be area agnostic in terms of investing. And again, we can help you with that strategy. Okay? Use your resources. Empowered investors use their resources. They try to use every resource they have. Think about this. You know, we've all seen a balance sheet. We all understand what a balance sheet is. On one side of the balance sheet, you know, we maybe we have a line down the center, right? And we're drawing this out. On one side we have assets. We have all our assets. On the other side, we have all our liabilities, and we add them all up. And at the bottom, we put a total for all the assets. And at the bottom, we put a total for all the liabilities, and then we take the assets and we subtract the liabilities. And what is that? That gives us our net worth, obviously, right? That's. That's what our net worth is. So for assets are $2 million and our liabilities are $500,000. That means our net worth is 1.5 million. Right? Okay. But we rarely ever think of our credit as something that should go on the asset side of that balance sheet. And I just see this over and over and over again. That's why I've been saying the same thing here. For 18 years, I've been talking about this the same way. I mean, if you came to one of my seminars back in 2004, you would have heard me say this, right? Credit is an asset, and if it's unused, it is an asset going to waste. Investors invest. Right? We talked about that. So they deploy their capital, they get it into things that create a return on investment for them. And one of the things they need to deploy is their ability to borrow their credit. Right? I mean, think of World War II, for example. Why did the US win World War II? Well, some will say, well, it was because of the atomic bomb. You know, that was what cinched the deal on World war. World War II. No, that wasn't really why we won World War II. I mean, we could certainly argue about this, and I'm no expert, I just want to say that. But the way we really won is we had this massive amount of industrial capacity. The US had unaffected, undamaged industrial capacity. Can you imagine if we fought World War II and we thought, well, you know, we've got all this capacity, these resources over here, but we're not going to use them now. We're not going to use all those resources, all those factories. And remember how all the factories during World War II were converted for the war effort. You know, it's interesting. If you ever want to study an interesting story, look up the story of who invented the television. And it's really quite a sad story because the real inventor never really got any credit for, for it. And part of the reason was that World War II came along and as the manufacturing was starting, all of the effort for the manufacturing was diverted to the war effort. And so TVs could have existed much earlier, but they didn't because of the war effort, because of the lack of capacity to manufacture television sets that, you know, were totally viable before World War II just couldn't be made because the factories were being used for something else. So I love it when I see these people that brag about their super high credit score. And if your FICO score is 820 or 850, which mine is not that high. Mine's like in the high sevens, which is actually too high. What do I mean? Why would I say it's too high? Because the higher it is, the more it represents an unused asset. You got to use the asset you want to deploy your credit. And as you borrow initially, your credit score is going to go down. But as you start to develop a repayment record with those lenders, your credit score will go up. Right? But if you don't borrow, if you don't use your credit and you've never had a late payment because you've never done anything, that is not the way to go. That is not being an empowered investor. An empowered investor uses the resources. I mean, what if America during World War II said, hey, you know, we want to keep these factories all shiny and clean. We don't want to use them, we're not going to use the resources. We're just going to keep them over here looking really good. That's how some people treat their credit score. You got to use your credit because leverage is such a powerful asset. When you can borrow and get the bank to be your partner in these real estate deals, incredibly, incredibly powerful asset in Fact, I would argue that all success in life comes down to the use of leverage. Not just about borrowing money and financing real estate deals, but leveraging anything. I mean, look, if you want to get into better physical shape, you've got to use leverage, right? You've got to use mental leverage to motivate you to work out and exercise. You've got to use mental leverage to get yourself to eat, right? You've got to use mental leverage to overcome yourself, right? That's how we get empowered to do anything. Because the natural thing to do is not always the best thing. The natural thing to do is kind of to be lazy and to be, you know, hedonistic and gluttonous, right? And none of these are going to serve us well. They will in the moment, but they won't in the long run. So as I've often said on the show, the sign of maturity and the sign of is the ability to delay gratification for a bigger, brighter, better future. And every decision make in life is a decision whether we want gratification now or more gratification later. And a big part of that in making all of those little micro decisions all day long, is leverage. It's mental leverage to overcome oneself and their desire for instant gratification. All right? So use your resources. Use your credit leverage properties. When you use more leverage, you accelerate return on investment. Of course, we all know that. And you actually reduce your risk when you have the bank as your partner, your risk is lower, not higher. Sorry, Dave Ramsey fans, but Dave is fine for the market. He serves people that have a bunch of credit card debt and have a bunch of student loan debt and are still spending money like they shouldn't be. Right? But Dave Ramsey is not a good teacher when it comes to investing. He's a terrible teacher for that. He's a good teacher for the lower end of the economic spectrum of, you know, getting out of consumer debt and all kind of stuff. But with us, we want to deploy leverage strategically and efficiently and successfully. So use the resources. That's what empowered investors do. Now, finally, they invest for tax benefits. Taxes are the single largest expense in any of our lives. It is the expense we will have. Yet so many people are completely bored when it comes to discussing taxes and income. Property is the most tax favored asset class America. It's an absolutely beautiful, you know, we have, and we might speaking at our Scottsdale event, we've got a fantastic cost segregation company that a bunch of you our clients are using. They offer very, very inexpensive cost segregation reports where you can get bonus depreciation on your properties and really accelerate your tax benefits. 10:31 Exchange a tax benefit that is not considered very much because you can't calculate it over a short time period but over a long time period you can. And that is a fantastic tax benefit because you are investing reinvesting with pre tax dollars. All of the beautiful tax benefits of income property. The ability to take additional write offs that you wouldn't normally be able to take. The ability to pay for travel like to our Scottsdale, Arizona conference. Really phenomenal opportunities. The ability to just enhance your life and deduct expenses. Now I have to make the disclaimer. Of course I am not a tax advisor. I'm not a legal advisor. So check with the appropriate professional always. But you know that's the basic idea. Income property definitely the most tax favored asset class in America. No question about it. So that wraps it up for today. Some qualities, some traits, some philosophies, some ways that empowered investors think. I hope it's helpful to you. Take advantage of that and go to empoweredinvestor.com live and join us at our Scottsdale conference. We look forward to seeing you there. We're going to have a great time and we'll talk to you on the next episode. Sa.
