Latest / The Family Teams Podcast / Ep. 341 | Should You Undertake Risky Asset Acquisition?

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Ep. 341 | Should You Undertake Risky Asset Acquisition? · The Family Teams Podcast

• 0:00
  Like for example, in your 40s, I would say you need to be building assets.
• 0:07
  What's up, guys? Welcome back to 5 Minute Fatherhood. So in our Facebook group, Joe says, Jeremy dedicates a good amount of paper, real estate, to discussing family resources in his book, Family Revision. I've been contemplating my family's path to moving from being wage earners to asset owners. I'm a software engineer currently employed in W-2 job that pays great wages, provides good benefits, but I want to begin activating that income for buying assets so that I don't have to be a lifelong employee.
• 0:37
  This job serves as a good way for us to begin financial asset purchases. I want to get feedback on how I can best steward the financial resources I'm trading my time for so that we can become asset owners. He's saying, should I pay off my mortgage? Should I max out IRAs? Should we begin to purchase real estate as investments? Should we activate the equity in our house to be buying assets? I'd love any thoughts. There was a great discussion, by the way. Lots and lots and lots of feedback, including professional financial planners,
• 1:05
  And the like jumping in to help Joe. But I will just for the sake of you guys listening to this, I tell you there's one perspective that I I kind of put on here and I want to get your thoughts on this, Jeff.
• 1:20
  Joe was clarifying the comments. His concern was trying to understand, is it wise to withdraw? How risky should I lean in trying to build assets? Is it always the right idea to pay off your mortgage before you start investing in real estate, for example?
• 1:45
  And one of the things I encouraged him to think about was the question of basically how old you are and how quickly or slow this is likely to happen. So the biggest problem with building financial assets is always a time problem.
• 2:05
  In other words, if you're asking me this question and you're 50 and it'll take you to 80 before you pay off your mortgage and you can start investing in assets, then, you know, I would encourage you to be a little more risky. Right. And likewise, he's saying even in your 20s or 30s, if your current trajectory takes you to paying off a mortgage into your 50s, then at that point.
• 2:27
  it becomes very difficult to not justify being more risky in order to make sure that you have, your life is sort of, you know, is quickly going away while you're trying to be super safe. And so I think about these things a lot in terms of the time horizon.
• 2:50
  And if, if somebody, I have friends, for example, who, who in their mid thirties, um, are able to totally pay off their mortgage and then go and invest in lots of things. I'm like, I think that's amazing. I wouldn't want anybody to tell them, Hey, that's silly. You should always, you know, take all your money out of your house and invest it in assets. Um, because they were able to do this by the, before they even turned 40. Um, but I have other friends who are working W2 and
• 3:16
  jobs and at their current trajectory, their house won't be paid off until they're in their mid-50s. And if they stay on this trajectory, it's going to be—their children and their grandchildren will be coming while they're still trying to learn how to buy their first asset. And so I would just say that's a variable that often is not really well-considered in this conversation. There's a verse in Psalm 90—
• 3:42
  And Moses writes in this psalm, it's the one psalm that Moses writes, teach me to number my days a right so that I might gain a heart of wisdom. And the older you get, the more you realize there are certain things during certain decades that you really need to try to do. And I would say your asset-building decades, like, for example, in your 40s, I would say you need to be building assets. If you're not building assets in your 40s and you're waiting until your 50s or 60s, that's too late, in my opinion.
• 4:11
  So for most families, because their kids and their trajectory, their family is going to be, you know, is going to be too set in its trajectory. You'll miss a really critical time horizon. But yeah, Jeff, what are your thoughts on this one?
• 4:27
  Yeah, I think there's so much solid here. I mean, obviously, the classics you got to start with, which maybe I'm sure you already have, is get into the rich dad, poor dad type of stuff. Get in and make sure you're in the right philosophy. One thing I'll say, too, is don't. I do think sometimes people, when they get onto this train of idea, they sometimes want to escape. Like if you – how do I say this? Yeah.
• 4:46
  It's okay to be a quote unquote wage worker if you make enough wage to basically like if that if you're almost bankrolling yourself, you know what I mean? Yeah. And so if you, you know, if I if I could be a software engineer that made 200 grand a year, I would probably do that. But I don't have that skill set. You know what I mean? So then I could dump that cash into building assets. So don't always just forsake wage earning versus asset building. They're symbiotic. They go together. It depends on what it is. The asset is the long term play for your family team and your wages can serve that.
• 5:15
  very much so. And it's less risky too. And then another thing too is, yeah, a lot of this comes down to just personal comfort and risk ability and how far you want to push something. So you really got to know your own personality. You got to know your own family's personality. How much is your family willing to...
• 5:30
  bear some risk. Um, what was the other thing I was going to say, you know, and, and the spectrum's all over the map. Like I know some very, very big, prominent real estate guys where their big thing, they, their guns, they stick to is like, you should never own your own home. You should rent everything else you should buy. Kind of like, right.
• 5:45
  You should be the most mobile and free and you should like, you know, never be paying down on your own home. You should only be renting so that you can be nimble and free and then use every single dollar you have to be, you know, being pushed towards assets and cash flow. So like it really just, you know, it gets all across the map. And now that's a crazy strategy, but a good strategy because those guys have shown that you you can accelerate the process more than everyone else can because you're not.
• 6:09
  You don't have this huge ball and chain of your own mortgage on your leg, even though it's building an asset as well. So, yeah, there's so many, so many different strategies. But I think you have to assess your own risk level. I think you have to assess what you said, specifically your season and your age is critical to what kind of strategy is strong. And always keep reminding yourselves it's a long play, too, that you're building for your family as well. Yeah.
• 6:32
  Very good. And just so you guys know, Jeff and I are not professional financial advisors. So definitely, you know, find a financial advisor if you don't have one that understands family teams. We got friends over at Outpost Advisors that help us out a lot that think like this, and they can answer very specific questions. But yeah, I agree 100%. Your risk tolerance
• 6:53
  is a really critical thing. Your season of life and your actual W-2 income and how much more above your expenses can you put towards assets. Those are all massive variables that can really swing how you approach this topic. But Joe, thanks so much for bringing this up. And man, that discussion in the Facebook group
• 7:16
  was amazing. If you want to join those discussions, just look up Five Minute Fatherhood and ask to join the Facebook group.