043 Get Back in the Investing Game

Hey there, real quick before we jump into the episode, listen, if your earnings treadmill hasn't set you free yet, running faster won't either. Listen, hustle without principles just going to burn you out. So here's what I want for you. I want you to join me for my money machine experience live. It is three free trainings. Deep dive into how to escape the treadmill and build a money machine that actually works for you. All right, grab your spot here by going to moneymachinelive.com and I'll see you in the free training. Hey there. Welcome to this episode of the Affluent Entrepreneur show. Are you trying to figure out this whole investing game? Maybe you panicked at one point and got out of the market and got out of investments you're scared to get back in. Well, let's figure out how to manage those emotions and get you back in the game so you can build the wealth that you want. So in this episode, we're gonna really kind of nail that down. This one's a special one cause I did this presentation live and the response I got was off the charts. So I want to make sure that I shared it with you. So stay tuned for this episode and let's get your money emotions in check. See you in the episode. Cheers.

This is the Affluent Entrepreneur show for entrepreneurs that want to operate at a high level and achieve financial liberation. I'm your host, Mel Abraham, and I'll be sharing with you what it takes to create success beyond wealth so you can have a richer, more fulfilling lifestyle. In this show, you'll learn how business and money intersect so you can scale your business, scale your money, and scale your life while creating a deeper impact and living with complete freedom. Because that's what it really means to be an absolute entrepreneur.

Hey, hey, hey. Oh, my gosh. Let's get this party started. I. I hope that you are doing well this Saturday. I wanted to jump in here because some of the questions that have come about as a result of my three day training called the Affluent entrepreneur Live did a bonus training yesterday about how do you create income? I mean, we're talking about, you know, building wealth. How do you create income? And so I spent a bit of time yesterday talking about pricing value and getting paid for what you're worth. It's a huge thing, especially for personal brands or someone trying to make money with the things that we do. So this question came in that kind of brought all this thing up. So as you come in, do me a favor, say hello, let me know where you're coming from this fine, fine Saturday.

And so this question came in. What happened is they had money invested in the market and when the market started, when the pandemic hit, you know, obviously there was some uncertainty. And when there's uncertainty, sometimes people start to panic. And I don't know that that's what happened, but they pulled all their money out of the market. So they're sitting on the sidelines and I'm going to answer her question directly in a moment, but I just want to talk about it philosophically and what to do. So they were sitting on the sidelines and now they're sitting there with, with a bunch of cash and saying what happened? Now if you think about what happened is that In March of 2020 we had a decline in the market of about 30%. So people started to freak, including me a bit. But because I've been through it a number of times and I, I know better, I checked my emotions and I said, no, let it sit. And now the market's at an all time high. So now the question is, okay, the question then is, well, what do we do now? I'm sitting on this money. Or maybe you've got money in an account or you have money that you need to invest, do you turn around and put it into the stock market now? And so there's a couple things that I think we need to just kind of touch on. First things first, what I'm talking about is wealth creation. You've got income generation. Remember one of the pillars of the affluence blueprint is income generation. And how do we scale our income? How do we go from drip to a flood of cash flow? But having income doesn't give you financial freedom, it doesn't give you financial independence. In fact, it can lock you down to generating the income. See, it's what we do with the income. It's the business machine. The job machine is meant to give you cash flow, but it's not meant to build wealth. It's to meant what you do with it. It's are you building a money machine in the process of doing what you're doing? And when we do that now we start to create wealth, you know, so in that process, we need to start to shift and look at things through a different set of eyes. Because it's a different mindset, it's a different skill set to generate the income than it takes to multiply the income to get it to work. And I don't care whether you're in, in the us, Canada, uk, Australia, Germany, principles are Universal principles will work across geographic lines, across market lines. And so that's why we, we look at it from that perspective. So you're sitting on a bunch of cash, what do you do? Here's the thing. As we think about this from an investing standpoint, we are always thinking long term. I'm not trading. Trading is a different element. I do trading, but trading is a job. Trading is a daily pursuit with the things that we're doing. So one of the things to consider is that we're in this for the long term also. I'm setting the stage here also. And Miriam, if you're listening, when you're watching this, I don't know if you're on live or not, but when you go through that, it becomes important for you to understand a couple things. No matter where you are in your age or stage, your age or stage of life will change the dynamics of what you do. You know, I'm 60 years old, my son is 31. The things that he may do at 31 are very different than things I may do at 60 years old. I have a far greater net worth and wealth than he does. He's doing really well, but a far greater net worth. So the capacity to take on risk may exist for me far greater than it does for him with a brand new child. So everyone's circumstances are different, which means that there is no one size, fit all fits all. But there are principles that we need to understand that will help you navigate this process. And one of the things is to consider things from a long term view. What's the long term view? Minimum five years. So if we need the cash or we expect to need the cash within five years, I'm probably not going to want to put it at risk of volatility in the stock market or volatile events. I'm not putting it in bitcoin, I'm not putting it in those things. So depending on your time horizon will also impact what you do with a lump sum of cash. But I want to just talk about why do we want to look at this long term? Well, let's just take a look at what has, has gone on in the construct of the stock market because this will start to help you at least put some things in perspective going forward. And so I'm going to now for Instagram, you won't be able to see this, but Facebook, YouTube, y' all will be able to see this. And so here's the thing, when I jump to my iPad, I want to just, let's just take a quick look at the stock market, what it does. And I'm not trying to sell you on the stock market. All I'm trying to do is give you a perspective. See, sometimes we get so close to it.

We can't see the reality of what is going on. So I see some friends jumping on. I'm just gonna say some hellos to people. Drew is on, Mike Watts is on, and Jonathan's on. So, so good to have you all here. And so here's what's happening. And like I said, those of you that are on Instagram won't be able to see this per se. But those of you that are following me elsewhere in on Facebook and, or YouTube or LinkedIn, you'll be able to see this. So this is a daily chart of the Dow Jones and it goes back about six months. Okay. It's just about six months. But if you watch what's happening with this daily chart, you'll see that there is a lot of spots of volatility where we're in a narrow view. In a narrow view, what ends up happening is that it looks volatile. But when we are sitting back and looking at this thing and saying, I'm going to be in this for minimum five years, we take a wider view of what's going on in the marketplace. We start to see things different. This happens to be a six month view. It's kind of flat, it's kind of arcing. Well, let's go back and let me take it a little further. This actually puts a couple of years on it. Okay. But if we look at this, you still have little pockets of volatility. So if I zoom in and I'm looking at little snippet of the market, it freaks you out because it looks like a roller coaster. But when we zoom out and we look at a longer term view of the market, even with the big dip in March, the tendency is that we're going to go up. Let me take a longer view so you can see this. Okay, so now this is actually going over, over 10 or so years. Okay. Again, if you look at short term, you see a lot of ups and downs.

Even a big one in March, here's the one in 2008, and it flattens out. But if you look at what's going on, the market is going up in the long term. So if I start to look at this in the long term, forgetting the peaks and valleys, the volatility if you will, things change. Why is this important? Because what's happening with folks is we allow our emotions to get into our decisions. And when we allow our emotions to get into our financial decisions, our financial intellect declines. Okay, I know that may be smacking some people in the face, but I did it. That's how I got caught in the Ponzi scheme. My emotions got involved. And we go on this emotional roller coaster. And you're not alone. But the problem is we start to make decisions based on the emotions and not the logic, the analysis, the history. And when we do that, that's a challenge. Thank you, Aaron. Aaron says, very true. So good to see you here, Aaron. So let me go to another. Let me just take you through this, because I want you to start to look at this idea of money emotions. What's the roller coaster of emotions and the cycle of emotions that start to play in and what. How it can wreak havoc on your portfolio and your financial life. And then I'm going to give you what I think you ought to do. If you have a lump sum of cash, do you go in the market now? Do you go, you know, do you go in a little at a time? How do you do that? These are the principles. These are the things that in affluence blueprint, we spend the time to start to understand. Fact of the matter is, y' all need a process, a system that has been proven over time. You know that there's two to three generations that have never seen inflationary times. They have no experience in it. The good part of me being older is I've seen it. I've been through high interest rates. I've been through high inflation. I've been through corrections. I've been through recessions. I know what happens. I know the emotions I felt. I know the emotions you might feel. So the thing is that what keeps your emotions out of the game is having a process in a system. Now, I am not talking about the folks that are sitting there saying, I got a system. And you have to watch the red arrows and the green arrows and all of those things. And it seems so easy. Yet people lose money on their system. What I want you to do is focus on a principle that has a process that encompasses your whole wealth creation and your financial life. And I want you to focus on one little thing. I want us to embrace financial independence as a holistic thing that gives your life meaning, impact, money and peace. And so that's the way I want you to start to look at it. Let's look at these money emotions. Those of you that are with me on Facebook and YouTube, you'll be able to see this and everything. So here's, here's how this plays out. This is the money, emotion, roller coaster. And what ends up happening is that at the bottom, when people first start out, there's this level of optimism. And so we start off with this optimism and there's this hope, there's this, this idea. And, and now you start to see the market creeping up. And what ends up happening is in the emotions. And start from optimism, turn into impatience. And if I misspell something, I am sorry, but my iPad doesn't have spell check and you may not be able to read my writing anyway, so it doesn't really matter. So that optimism shifts to impatience where all of a sudden you start to think about getting into the market and that impatience creates excitement and people will go through this series of emotions and then they sit back and say, so they get in the market and, and they want to gain. And I mean, you may feel this like, like I see this in the real estate market because prices are going up. We've had home prices in certain areas go up as much as 20%. And there's this tendency, this urgency to go, oh my God, I'm going to miss it, I'm going to miss it. And you jump, you're going to jump in. You realize that the money investing is made on the buy side, not the sell side. We have to buy it, right? And so we need to strip away the emotions for the buying decision because that excitement that you had, so you go, optimism, impatience, excitement turns into overconfidence. Now that overconfidence is when you sit back and go, I am golden. Listen, this may be hard for some of you to accept, and the only reason I can accept it is I got hammered. In a prior, prior recession when the market is on an upward trend like it has been, we've had 12 years of effectively a bull market with a slight hiccup here and there. Okay? 12 years. If you jumped in the market and there are people out there that are talking about how well they did in the market. If you jumped in the market 2009, 2010 and stayed in the market, you did freaking great. Not to take anything away from you, but was it because of your strategy, your process, your system, or was it simply because your timing of the market was good and you happened to get in at the beginning of a 12 year run, a 12 year run up of the market. See, too often we take credit for what the market has done. I did that, I did that and I got slammed in 2008 slammed. I thought I was infallible, that overconfidence was there. Boom. And then it hit me home something awful. And it straightened me out because then all of a sudden, after the overconfidence, you start to see things teetering and what happens that overconfidence starts to turn into complacency. Now, if you saw any of my three live trainings and their replays up, if you want to go see the replays of the series, go to affluencelive.com jump in, they'll be up for another couple of days. And you can go through all the trainings of the affluent entrepreneur live. But complacency, if you saw that, and I talked about the four stages of the affluence journey. Complacency is your first step to crisis. Complacency is the first step to crisis. It doesn't matter what it is. We're talking money. Money is a relationship. You're talking about your relationship. Complacency is the first step to crisis. You talk about your health. Complacency is the first step to crisis. And everywhere, complacency will be your first step to crisis. And what ends up happening is that overconfidence turns to complacency and say, I got it, I got it, I got it. Now all of a sudden the market turns and it's going down and that complacency starts to get a little bit alarming and it turns into anxiety. So now you got anxiety. And what ends up happening is the emotions that start to come in put you into a space of denial. So you're sitting back and saying, it's not happening, it's not happening, it's not happening. Listen, stick your head in sand all, all you want. If it's happening, it's happening. If a train's coming and it's going to hit you, it's going to hurt. That denial then turns into, oh, my God, I should have got out a long time ago. Oh, my gosh, I can't believe this. And what happens is that denial turns into regret. All these emotions are flooding in now that regret you're selling, you're getting out, you're. You're just dumping everything. That regret turns into fear because now your existence, your future, all of that stuff is put in jeopardy or you start to be concerned about it, and that fear actually escalates and turns into panic. And when you're in panic mode, you can't make any good decisions. So what do you do from panic mode? You turn around and you Go, I don't know. I surrender. So you surrender to it all. You just give in to it all. And then you start to look at what was left behind. And that surrender turns into despair. And a lot of people have given up on the market because they got hurt, because they went on this emotional roller coaster ride. And then they watch it and it comes around the corner a little bit. And all of a sudden we go back to hope. Because all of a sudden they say it's stabilizing and it's starting to turn around and this and that, and then it shifts to relief and we're right back at optimism again. And if we're not careful, we will run this same roller coaster over and over and over again. And what ends up happening? At the point, there's two. Two points of places where you've maximized your. Your financial risk, okay? And that is at the top, where you're overconfident and you think you're infallible. And at the bottom, when you're in despair. Because what that means is that what ends up happening is that you end up getting out of the market too late and into the market too late. You miss the whole run. And so the point of me saying is this, is that if the emotions are running, your financial decisions, your investing decisions, you need to be careful. Because when the emotions go up, you will run through this roller coaster and you'll make bad decisions. I know I did. I know I did. As intellect goes up, that's what happens. Think about it this way. This is what I call the emotional spiral. So what ends up happening is that we actually make some sort of decision. I'm going to get in the market, I'm going to buy this stock, I'm going to put this money away. And from that decision, we're going to. We end up with a result. We get some result, we get an outcome. It's going to go up, it's going to go down. It's going to do the things we expect or not expect. That result then transfers to a feeling. Emotions. Then, if we're not careful, that feeling creates a behavior. That behavior leads to your next decision, which leads to the result, which leads to another feeling, which leads to another behavior. Hence the emotional spiral. Hopefully, this is making sense. How do we get out of the emotions? How do we do this? The way we do this is to make sure that we follow a process, a system where we understand the market dynamics, we understand the emotions, we understand the principles. For instance, we have something called the wealth priority ladder. When do we invest money? How much do we invest? When do we pay off debt, what are we doing with it and those types of things. It becomes really important for us to do that. So let me get back to that question. Sitting on a bunch of cash. Do you go in the market or do you not go in the market? If you're going to go in the market, do you go all in or do you go in a little at a time? You may not like this answer, but I'll qualify it. The answer is it depends, it depends on your circumstances. However, let's just walk through this for just a moment. If I look at it this way, there's two ways you can go into the market. The most important thing isn't when do I get in? If we look at this from this perspective, when we talk about compounded growth, when we talk about growth, there's an exponential curve that starts out flat and then accelerates up. And there's this flat section that you feel like you're not making progress. And then as it accelerates up you go, wow, we gotta get past a flat section. So what's more important about timing the market? Time in the market is more important. Getting in the game is more important. Okay, yeah, absolutely. Arhan is. Consistency is the key. So there's two ways we can go into the market no matter where it's at. We can do what's called DCA dollar cost averaging or we can lump sum in. Here's the thing, most of the time it just makes sense to just get in the market and that's it. And just you're talking long term. So even if the market goes down a bit after the day after, did you make a bad decision? If you were making the decision for a two day run, maybe. But if you're making the decision for a 10 year run, probably not. Okay, probably not. This is what we need to be real aware of as we move forward. Now if it is a large sum relative to your net worth, say you inherited a million bucks, then maybe what we do is we space it out over a 10 to 12 month period to bleed it into the market. If it's a small sum and you don't expect to touch it for, you know, 10 years, it's long term money, small sum. I probably would just put it in. That's just my thought on it. I don't know Marion, I do not know. In your situation 1 what your debt situation is, what your peace of mind fund situation. If we look at the, the wealth priority ladder in the Affluence blueprint and understanding that it'll give me a little more indication of where that money should go. But if it's sitting in your retirement, which I understood that's where it was, was in the retirement account. We don't put it out of retirement account because you're going to hit with tax and you're going to get hit with penalties. So it's in the retirement account. That means it's long term money. Unless you're retiring in the next couple of years, let's get it working for you. Here's the thing. We need to realize that your money, they're your little employees, they're meant to work for you seven days a week, 365 days a year, 24 hours a day.

Leaving them dormant on the side with no work assignment.

You wouldn't do that if you owned a business. Well, your wealth is a business.

And so we need to then think about how do we put it in. So that's how I would do it. Is depending on if it's a huge sum, maybe we put it in over the next 10 months. Is there going to be some correction? Totally there is. I can tell you with 100% certainty the market is going to correct. I have no idea when though. I don't have a crystal ball. If I had a crystal ball I'd be in a different business. No one has a crystal ball. If someone out there gives you 100% certainty of exactly what's going to happen, when it's going to happen.

Run. But I will tell you the market will correct. It does that. That's the pattern. It goes up and it goes down. I don't know how long, don't know how deep and I don't know when. No one does. So I play the long term. You all should be playing the long term. And if you choose to play short term, you take a little pocket of it of your portfolio and you play the short term. That's what I. Okay, great question. Arhan's asking what is a small instead of huge lump sum here? 20 to 50k. It depends on your situation in the sense of 20.50k. If it is a large sum relative to your net worth, I said okay, so if it's 10% or more of your net worth we probably want to put it in a little increments. Okay. If it's not a large sum relative to your net worth.

Then we likely won't. Okay, so it is specific to each person because $20,000 to Elon Musk is meaningless $20,000 to the rest of us. It certainly means something. So we got to look at it in context of your own situation. It is $20,000 a lot. It could be a lot if you've got kids that are in middle school or high school and getting ready for college and this is their college fund and now we're going to need it to pay for college. I was watching a show where the dad actually put his daughter's college money into an investment and the investment went bad. Well, now his daughter had no college money doing that. Okay, so the way I look at net worth, so there is a total net worth number which is basically is asking net worth is investable net worth. Right? And I said, so I have a total. So I look at my total net worth. But your total net worth takes into consideration all of your assets and all of your liabilities, all the things you owe. So it's what you own minus what you owe and what's left over is your net worth. However, not all of your assets can provide you your lifestyle in the sense that they don't produce cash flow. My home, although beautiful.

Worth a fair amount, I don't consider part of my investable assets because it puts a roof over my head. It gives me a return on investment through joy and living, but it doesn't create cash flow. And what I need is the investable net worth, which is the machine, the money machine that you all got to create. It's what we do in affluence blueprint is to help you create that money machine that's going to produce the cash flow so you can fund all the things that you want to do. So I want to look at investable net worth as well as my total net worth, but there are two different numbers in many cases. Okay, great question. So hopefully that answers the question. You have a lump sum. We got to look at things that from a long term basis, we got to look at it in context to your total net worth and what it means and how long do we have for the money. And then we're either going to put it in over a 10 to 12 month period or we're going to put it in lump sum depending on the relationship to your total net worth. But most importantly, we get the emotions out of the decisions. One of the reasons to just put yourself one of, one of the key elements, one of the accelerators of the accumulate pillar of the affluence blueprint is complete automation. But one of the reasons we automate our investing, one of the reasons we Automate our investing is to make sure that we take away the emotions out of the investing decision. If I set it up where I'm putting 3, 4, $500 a month away and it's autom out of sight, out of mind. There's no emotions in that decision. It happens without me. I don't have to make the decision.

It just happens without me. Hopefully that makes sense. All right, I'm going to answer a couple questions and then I'm going to close out so you guys can go enjoy your Saturday. If you haven't had a chance to go watch the training, the three part training series that I have got, affluencelive.com affluencelive.com, get in there, watch the training. I've got two additional trainings up there. One about getting out of debt and the other about pricing value and getting paid what you're worth. So those are bonus trainings. So there's five actual trains up there. Get some coffee, get some water, get a pad of paper, go through it. Let's change your financial destiny. The whole idea of that whole training series is to give you the map and the blueprint to shift to living an affluent life. To live not a life of opulence, but a life of meaning, a life of impact, a life of fruitfulness and a life of peacefulness. That's the purpose behind all of it. Okay?

And so make sure that you go back and go through that. It'll only be up for till probably middle of next week and then it's gone. So take the time to do that. If you get a chance to go through it. This weekend we're actually going to do a giveaway drawing so you get a chance to. You're going to have to answer. You're going to have to go and take a quiz. I know, I know. Oh my God. He's testing this. It's a quiz. The quiz is easy. It's like 12, 15 questions. I don't remember from the training. So you answer the questions, gets at least 16 out of whatever it is. Right. So I guess it's more than 15. So it's probably 18 or 19 questions and get at least 16. Right. You get entered into a giveaway and on Monday morning we're going to do the giveaway. So you're going to get a chance to win my number one best selling book, Amazon gift cards, Apple pencils and access to my event. That'll be next year, probably virtually. But if I can do it live, I will. Called the AFFLUENCERS intensive multi day event that we're going to do. You'll also get the opportunity to win, no obligation, a one on one laser coaching session with me. So go there, go to affluencelive.com make sure that you are in the system. On the all access page you'll see the quiz, you'll see the VIP list, all of that type of stuff and we'll make sure that we get that dialed in. And there was one more question I'm going to answer that and then we'll, we'll get going. Is that I'm hopefully I pronounce this right. Andreas, do we pay off student loans at 7% interest or do we put the money to work for us so we have a debt payment strategy. Here's what I want you to do. I'm going to. I'll answer it briefly, but I want you to go through the the bonus training that I have on that all access page about paying off your debt. Because I literally walk in detail about what the conventional thought behind paying debt off. In fact, what most people say is we pay all our debt off.

First and then we start investing. I don't agree with that. In short, your wealth creation is a behavior. It's a muscle that needs to be exercised. The sooner we start to create the behaviors and cement the behaviors and build that muscle, the more likely we're going to keep that in the long term. So at some level I want to make sure that we're investing upfront at the same time paying down the debt. Will it extend out our payment of the debt? Certainly it will. But I don't want to just exercise the debt pay down muscle. I want to exercise the wealth creation muscle at the same time. That's no different than going to the gym. And you've seen it, dudes, guys, I've seen it. You know it. And you know the guys go in there, all they do is work their arms and their chest and they don't ever work the legs and they look like little stick poles and they got this big muscle and you wonder how their legs even hold them up. It's the same thing. I want to exercise both. I want to exercise both. In some cases, if the interest rate on the student loan is that much higher, I might turn around and say let me accelerate the pay down of that debt a little faster and lean more on the debt than I would on the investment. Because for every piece of that debt you're paying down, you're getting 7% back because you're not paying on it, but I still want you to exercise the wealth creation at some level. Okay. I hope that helps. Andreas, you all have been great. Do me a favor, hit me up if you have any questions, anything going on, and know that we got more of this coming. We got more of this coming. And my show, my weekly show, the Affluent Entrepreneur show, we're going. And I'll bring some of you on to answer questions and coach you there, too. But we also next week have a special week because we're going to do the giveaway on Monday. I've got a couple of other things going on the rest of the week. I'm going to bring some guests on probably Tuesday or Wednesday once I talk to them and get on their schedule, and we'll talk about their financial journey. And you'll get a chance to join me. There's a special zoom link to get in there, and you'll get that on the all access page by making sure that you're in the system. All right, you guys all have an incredible, incredible day today. And I appreciate you. I appreciate you being here. I appreciate you sitting back and saying, I'm going to take control of my financial future. I'm going to sit back and be the one that takes control, to decide that my financial destiny means something to me. Because it's not just you that you're doing it for. You're doing it for your family. You're doing it for your legacy. You're doing it for your children, your grandchildren, and the generations in between. The other side of it is that people are watching you. So those to the right and left of you that get a chance to see you step up, they're going to wonder how you did it. They're going to ask you how they did it. And now you become the role model. That's the gift of the ripple effect of finding financial independence. And as I've said over and over again, financial independence, to me, it's a birthright. Let's just go claim it and let today be the day that you decide that it's yours. And let's run this path together. All right? Until we get a chance to chat or anything like that, always, always make sure that you try to live a life that outlives you. Cheers. See ya. Thank you for listening to the affluent entrepreneurship with me, your host, Mel Abraham. If you want to achieve financial liberation to create an affluent lifestyle, join me in the affluent entrepreneur Facebook group now by going to melabraham.com group and I'll see you there.

And that's it for this episode of Building YOUR Money Machine, where we help you learn how to master your money, eliminate financial stress, and live a life of of choice. If you found this valuable or helpful to you, here's what I'd love for you to do. If you do me a favor, go to Apple, Apple Podcast, or wherever you're listening to this podcast and rate and review the show. It helps us tremendously to keep us at the top of the list so we can continue to get this information and this message out to people. Because I truly believe that financial freedom is your birthright, and I want to help each and every one of you claim it. Thanks so much.