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The 8 Places I Invest My Money Before Crypto or Stocks | Ali Katz · The Great Wealth Transfer

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  Interest rates are going up, they're probably going to go up even more. The money's sitting in
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  your checking account. Not earning enough is going to fall further behind. And most people aren't
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  going to change a thing and they're going to wind up regretting it. I've been through three economic
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  cycles. As a business owner, we want you not dependent on anything out there and only
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  dependent on yourself. So I want to give you four moves to make every time the rates rise. And the
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  first one you can do immediately right away today.
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  Hello. Welcome back to the Great Wealth Transfer podcast. I am Ali Katz, and today we're talking
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  about what to do with your money when interest rates go up because everybody is freaking out,
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  interest rates are going up. They're probably going to go up even more. And I've been through
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  three economic cycles as a business owner and I'm a lawyer. And while this is not financial advice
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  or legal advice, I've spent a lot of time with a lot of folks around what to do with their money,
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  what to invest in. And I remember I was a kid, but I remember when interest rates were
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  in the high teens 18%, 19%, 20% mortgages, December of
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  1980, or 18%, things could get a lot worse. We most of us have been living in a time when interest
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  rates were really, really low. Some of us even got locked in on 3.75% interest over 30
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  years. Through the idle loans. I helped a lot of people get those loans because I remember
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  thinking to myself, this is a once in a lifetime opportunity. We need to receive as much of this
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  money as we possibly can while it's available, because it's not going to be here forever. And
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  here's the time that it's not available. Let's talk about
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  what to do when interest rates go up so that you don't have to be freaking out. You can just be
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  making good decisions with your eyes wide open. Move number one is going to be to lock in any
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  variable debt that you have. And this can sometimes be scary. And I really get it. I've been
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  all over the spectrum when it comes to debt. When I first started in my business, I didn't want to
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  use debt at all. I had $100,000 of student loans, and I had just come out of a job where I got a
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  six figure paycheck, and even with that six figure paycheck, I still felt broke, which was very
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  confusing to me because I had always, ever only been a waitress. So now I had a six figure
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  paycheck. Why would I still feel broke? Well, it turns out I had money dysmorphia. We're not going
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  to talk about money dysmorphia in this episode, but I do encourage you to listen to one of my
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  episodes on money dysmorphia, because it's a big one. Many of us have it. You might have it, your
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  parents might have it, your friends family, and it starts the way that we cure our money. Dysmorphia
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  is by looking at what we have. When I was looking at the potentiality of using debt to build my
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  business, I was terrified. I didn't want to use debt. I thought that might mean that I'm a failure.
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  It turns out that using debt, using credit to build, to create more income,
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  to create more revenue, is one of the best things that you can do when you know how to do it. And it
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  starts really by looking at what you have. Being willing to see it. Being willing to stay. Eyes wide
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  open about it. And so what you want to do today is look at all of your debt. Map it out. Identify
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  what's fixed and what's variable. Now in most cases, traditional mortgages are
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  fixed, right? You can have a 30 year mortgage less often a 15 year mortgage at a fixed rate. You
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  don't have to worry about that. It's probably at a pretty low rate lower than it is today, and you
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  just leave it where it is and you keep making your payments. But if it is variable, meaning that
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  it changes based on what the prime rate is, well, this might be the time to get locked in. You may
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  say I can't get locked in. Interest rates are too high to get locked in. Well, they're gonna go
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  higher. You can always refinance later if rates come down as long as you qualify. But move number
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  one is to look. See what you have. See what's variable and your credit card rates are going
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  to be variable. Your mortgage might be variable. If it is, lock it in and look at any other variable
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  debt that you have and see if you can get it locked in. Your student loans could be variable
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  and now is the time to get locked in. Ideally probably on an income based repayment plan. Again,
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  you can always refinance later. If rates come down, eventually they'll come down. But you want to get
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  locked in now because we see that they're going up. So that brings us to move number two, which is
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  that you want to keep some cash on hand in my book is $1000 to
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  $10,000 in cash at home, somewhere safe in small bills. What is that for? Well, that
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  is for in case something happens where you do not have access to electronic banking and you need to
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  be able to trade with the people in your community. And you want that, of course, in small
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  bills. Tradable amounts 1 to 10,000, depending on your financial circumstances. Then you want to
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  have 1 to 12 months of expenses in the bank and accessible through the bank. This is your
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  emergency reserve, and when I say 1 to 12 months, it's 1 to 12 months based on what your expenses
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  are. So knowing what is your minimum to thrive? What is the minimum amount that you need? Some
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  people to call it your nut that you need to cover every single month just to pay your bills, and you
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  want 1 to 3 months of that amount in the bank to cover your bills. You want it in a bank account
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  that you're going to be able to have access to, to be able to pay those bills very easily. And that
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  might be in a checking account. And typically checking accounts don't pay any interest. So you
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  want that to be the least amount that you would need. The least amount that you would need depends
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  on how fast you could start earning again. If your income stopped today. And that's going to be
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  dependent on how do you earn your income right now? Do you earn your income right now through
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  your own business, through your own service, or are you wholly dependent on somebody else for your
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  income? If you are wholly dependent on somebody else for your income and you don't know how to
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  sell a service where you can make money immediately, then you need a longer runway, maybe
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  closer six, seven, eight, nine, ten, 11, 12 months of runway so that you could either get another job
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  or learn how to sell your services or product. So that's how you're going to determine your runway
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  for me, because I know how to sell my services, and I've created a lot of intellectual property over
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  time. I need a smaller amount. I might need only 1 to 2 months of emergency reserves in the bank. But
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  my business, for example, needs more reserves in the bank. Right? So we have a seven
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  $800,000 a month payroll that we need to make. So my team is saying, well, we need $1
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  million in reserve And that money needs to be accessible in a way where it's not
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  earning interest. And what that means is it's losing value every month because it's not earning
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  more than inflation, more than the cost of inflation. So the cost of that money is decreasing
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  in what it can purchase. And that's why move number three is to put your cash to work. I would
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  recommend that you put a month of bills in checking, and then move the rest into a high yield
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  savings account, where you're checking poles from your high yield savings account as needed, so you
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  can earn a real rate on your cash, not 0%. And right now I'm saying it's at least 4%. So that way
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  at least your cash is earning something. 7.28% on a mortgage. Well, you're not earning more than
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  you're paying on your mortgage, but at least you're earning something. You're not earning zero,
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  and maybe you're at least keeping up with the cost of inflation so that you're purchasing power
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  is at least staying the same on the money that's earning 4%. Now, I know a lot of you are going to
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  be considering get rich quick type opportunities around now as well, because we see that happen is
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  that the more things feel scary in the economy, the more interest rates are rising, the more
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  inflation is rising. Sometimes people will take big risks to earn higher yields. And just know
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  that anytime you're earning a high yield, you're taking a lot of risk. And so you have to balance
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  your risk reward ratio. And are you willing to lose everything that you have in order to earn
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  these higher yields? And we see that a lot of people get taken advantage of by example Ponzi
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  schemes where somebody will come to and say, give me $100,000 and I'll pay you 10%.
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  10% seems great. I can only get 4% in the bank, but are you actually going to get that $100,000 back?
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  And if it's a Ponzi scheme, you may not. I've talked to families and individuals who've been
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  taken for hundreds of thousands, even millions of dollars in situations like this. So you really
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  want to be evaluating everything with clear agreements where you really understand the risk
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  reward ratio, how are they paying these higher returns and that you actually understand it? We
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  want to make eyes wide open decisions. You want to really understand how does this actually work? How
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  is this person earning this kind of money that they're able to pay me these returns? Or how's
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  this business earning this kind of money that they're able to pay me these kinds of returns? And
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  if you don't understand it, consider taking all of that brainpower and putting it into something
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  that you do understand, like learning how to sell your own services, which is not dependent on any
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  economic reality other than that you have a high value service and people need it, and that you
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  know how to sell it and get it in front of the right people. That's always completely within your
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  control for the conversation, for the business owners, those of you that are already doing that,
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  you're already selling a service. You're already selling a product. You have a team. Look at how
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  much reserve you're keeping in your business bank account. And if it's at 0% right now, talk to your
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  bank and see if you can get the kind of account where you have a sweep account so you can keep
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  some of that money in high interest yield savings. That way you're at least getting paid on those
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  reserves. So, you know, business owners think about that. You've got reserves that are sitting in the
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  bank and shouldn't just be earning 0%. I'm in conversation with my team about it. Right now is
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  not always the easiest thing to do, but it's a conversation that is worth having with your
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  banker. If you have a CFO with your CFO, get your CFO on it now. So that brings us to move number
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  four, which is looking at where are you investing right now. These are the eight places that I'm
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  putting my money before crypto or the stock market. Keeping that cash at home
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  1 to $10,000. Small bills keep a food supply on hand so that if for some reason you don't
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  have access to stable food supply, You've got food supply at home for your family and to be able to
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  share with the people in your community who didn't think ahead. Get geared to live on the land
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  for two weeks to a month. You know, some folks are talking about big power outage problems. I know
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  that we had some here in Colorado last winter where people didn't have power for 3 to 5 days.
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  Same in Austin recently. You want to have access to power. You want to be able to live on the land.
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  You want to be able to filter your water, right? This is an investment for you to make in the
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  supplies that you'll need to be able to do that so that you're not depending on other people, but
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  you've got that for yourself and then can share it with your neighbors. Keep your money in a local
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  bank, if at all possible, and a bank that you know that you're going to be able to have access to,
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  and then invest in the people that are closest to you, the people that are helping you to build your
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  own ecosystem. I think investing in people is one of the most under looked investments. And by the
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  way, by investing in people, starting with investing in your own ability to deliver and sell
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  a high value service. Is comes before all of this. You don't have access if you don't have a
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  service or a product that you could sell if you needed to because you didn't have a job. We want
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  you not dependent on anything out there and only dependent on yourself. You can still have a job
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  right now, but also invest in being able to offer a service, a high value service of your own, and
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  then invest in the people that are closest to you being able to do that as well. Your children, the
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  people that help you to support your children, and then insurance, risk management and estate
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  planning. The one thing that we know that is going to happen to all of us is we're all going to die
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  and you may become incapacitated first. So the best risk mitigation that you can do to protect
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  your resources is to invest in insurance and estate planning, and only then real estate that
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  you could live in if you needed to. Right? You may be choosing to rent right now because renting may
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  be a better financial choice than buying, but you may still want to buy something that you could
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  live in if you needed to. When I was doing this analysis for myself before I had resources, I
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  bought myself a van and I built it out so that if I needed to live in a van by the river, at least
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  it would be a nice van. And only then after that would you start looking at investments outside of
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  yourself, outside of your family, outside of your community. Thinking about cryptocurrency, thinking
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  about the stock market. But before you even look at cryptocurrency in the stock market, it could be
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  worth looking at private investments in people that you believe in building, things that you
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  believe in, and then looking at cryptocurrency, then looking at the stock market. And the full
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  breakdown of all of this is on my Substack. I will put the link to it in the show notes. Take a look.
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  I'd love to hear what you think. Leave a comment about how this resonates for you. Does it line up
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  with how you're making your investments? What questions do you have? But today, right now, I want
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  you to pull up every debt that you have credit cards, mortgage loans to other people who have
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  loaned you money, market fixed or variable, and then identify if you need to lock in where we are
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  right now and send this to someone that you love so that they're not stuck when rates go up again,
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  that they made those decisions. Now that they decide to get eyes wide open now and consider
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  whether you want to like, create maybe a little community of people who are going to talk about
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  this together regularly, whether that's with your spouse or your partner or friends and family.
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  Consider that this is the time for you to step into your role as a steward of your family
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  resources, and your family resources may include. Chosen family may include your community because
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  the financial landscape is changing fast, so I want you to be sure to follow for more. Share this
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  with somebody you love. This is Allie Katz. This is the great Wealth Transfer podcast. Thanks for
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  getting eyes wide open and I'll see you again next time.