Latest / Live 100 Podcast with Jason Yarusi / Your Idea of Wealth Book is Outdated

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Your Idea of Wealth Book is Outdated · Live 100 Podcast with Jason Yarusi

• 0:00
  SPEAKER_00: So you have to think of the asset not as being the strategy.
• 0:02
  SPEAKER_00: Asset is the tool.
• 0:03
  SPEAKER_00: The strategy begins when your life is trying to build.
• 0:05
  SPEAKER_00: Before you choose where the next dollar goes, you have to evaluate these six things: liquidity.
• 0:09
  SPEAKER_00: Many times people lock up all their money and they don't have the access to liquidity.
• 0:12
  SPEAKER_00: How quickly can you get the access to money?
• 0:13
  SPEAKER_00: Next is leverage.
• 0:14
  SPEAKER_00: Real estate allows you to combine and control a large asset with a portion of the purchase price.
• 0:19
  SPEAKER_00: Instead of a stock, we have to buy all the stock of real estate building.
• 0:21
  SPEAKER_00: You can actually multiply your returns by leveraging it with other people's money.
• 0:24
  SPEAKER_00: The next piece of deposit is cash flow.
• 0:26
  SPEAKER_00: Does the investment produce income today?
• 0:28
  SPEAKER_00: Number four, it's control.
• 0:29
  SPEAKER_00: In real estate, an active operator can improve the property, raise revenue, reduce expenses, influence the outcome of the property in a positive way, but also in a negative way.
• 0:38
  SPEAKER_00: Next is your time horizon.
• 0:39
  SPEAKER_00: We all want to be richer or rich tomorrow.
• 0:42
  SPEAKER_00: But how can the money that you have stay invested and how long?
• 0:46
  SPEAKER_00: Lastly, life alignment.
• 0:47
  SPEAKER_00: This is one that most people ignore.
• 0:50
  SPEAKER_00: What type of life are your investments helping you build?
• 0:53
  SPEAKER_00: Principles remain consistent.
• 0:55
  SPEAKER_00: Spend less than you earn.
• 0:56
  SPEAKER_00: That's the parable that stands a test of time.
• 0:59
  SPEAKER_00: Avoid destructive debt, maintain reserves that can give you the opportunity to weather a storm when it comes and invest consistently.
• 1:06
  SPEAKER_00: Understand what you own and allow the magic of compounding to build enough time for it to actually work.
• 1:18
  SPEAKER_00: All right, let's go.
• 1:19
  SPEAKER_00: If you're tired of not feeling fit, tired of just having a focus, tired of just not having a life that you deserve.
• 1:23
  SPEAKER_00: This is the place to be, I'm Jason Russi.
• 1:24
  SPEAKER_00: You know, for decades, Americans having an idea of wealth building was just a simple plan.
• 1:29
  SPEAKER_00: You know, you buy a house, you're just gonna pay down the mortgage, you stay there just long enough, and you let the appreciation build up your net worth.
• 1:37
  SPEAKER_00: And well, that plan, it worked for millions.
• 1:40
  SPEAKER_00: It might even work for your parents or your grandparents, but does it still work today?
• 1:45
  SPEAKER_00: And is this absolutely the right playbook for you?
• 1:48
  SPEAKER_00: The Federal Reserve Bank of Philadelphia surveyed over 5,000 Americans and asked how they would use a financial windfall to build financial wealth.
• 1:57
  SPEAKER_00: Adults 30 and older, and then they ranked home ownership as still the best uh wealth building tool.
• 2:04
  SPEAKER_00: But adults that were 30 and younger, they focused on stocks and index funds, and home ownership actually was far down at fourth.
• 2:13
  SPEAKER_00: And here's where the divide is.
• 2:14
  SPEAKER_00: You know, older adults, you see a house and you see the security for savings and the evidence that made it.
• 2:19
  SPEAKER_00: But younger adults, they're looking at just how expensive houses are today and how much they're making and how much the run up in prices has been right now in houses compared to the increase in the amount of money they've made.
• 2:30
  SPEAKER_00: It's expensive financing, it's the maintenance cost, the possibilities that they may need to move just to rent right for the next part because they can't even get into a down payment for a house.
• 2:40
  SPEAKER_00: One group sees the house as a foundation, the other group sees it as something that might just limit their freedom.
• 2:44
  SPEAKER_00: Question is not which generation is, question is, are you blindly following a wealth playbook built for somebody else's circumstances?
• 2:53
  SPEAKER_00: I believe in real estate.
• 2:54
  SPEAKER_00: That's our company, that's what we do.
• 2:55
  SPEAKER_00: Real estate has transformed my life.
• 2:57
  SPEAKER_00: It's created cash flow, appreciation to give me tax advantages, or for some, buying something that restricts your next move.
• 3:03
  SPEAKER_00: It can only work if the deal works.
• 3:06
  SPEAKER_00: When you think about this, if you're paying too much, using bad debt, underestimating your expenses, or buying something that restricts how you can build wealth, maybe it's just not the right property for you.
• 3:17
  SPEAKER_00: The same is true of the stock market, right?
• 3:18
  SPEAKER_00: Index funds provide diversification, liquidity, simplicity, and the ability to invest automatically.
• 3:24
  SPEAKER_00: But putting money into index funds doesn't automatically eliminate risk.
• 3:27
  SPEAKER_00: You still need patience, discipline, and the ability to save and invest, even when the market drops.
• 3:33
  SPEAKER_00: If you look at Robinhood, right, it's so addictive.
• 3:35
  SPEAKER_00: They have the red and the green.
• 3:36
  SPEAKER_00: Every minute, you're either up, you're down, oh, you're down big.
• 3:39
  SPEAKER_00: It's red.
• 3:39
  SPEAKER_00: You're getting alerts.
• 3:40
  SPEAKER_00: Oh, you're up green.
• 3:41
  SPEAKER_00: Oh, you're getting alerts.
• 3:43
  SPEAKER_00: It's become a strategy and it's addictive, like many other things in life.
• 3:46
  SPEAKER_00: And people see this and they have the fear and the monger that it's gonna keep going down.
• 3:49
  SPEAKER_00: I'm gonna lose everything.
• 3:50
  SPEAKER_00: So you have to think of the asset not as being the strategy.
• 3:53
  SPEAKER_00: Asset is the tool.
• 3:54
  SPEAKER_00: The strategy begins when your life is trying to build.
• 3:57
  SPEAKER_00: Before you choose where the next dollar goes, you have to evaluate these six things: liquidity.
• 4:01
  SPEAKER_00: Many times people lock up all their money and they don't have the access to the liquidity.
• 4:04
  SPEAKER_00: How quickly can you get the access to money?
• 4:06
  SPEAKER_00: Publicly traded funds, stocks, right?
• 4:08
  SPEAKER_00: You can sell them quickly.
• 4:09
  SPEAKER_00: Real estate on the other side, it could take months to sell.
• 4:12
  SPEAKER_00: And honestly, the price you receive is not absolutely guaranteed.
• 4:15
  SPEAKER_00: Liquidity has value too, but too much liquidity, it can become a temptation, just like we spoke about.
• 4:21
  SPEAKER_00: If your investment is always one click away from selling, right, the second that you fear or hear all the things are gonna happen and the world's gonna end, you automatically sell out and then you lose out, you lose money and you miss out on the opportunities.
• 4:31
  SPEAKER_00: Think about that.
• 4:32
  SPEAKER_00: How can you protect yourself from your own emotions?
• 4:35
  SPEAKER_00: Next is leverage.
• 4:36
  SPEAKER_00: Real estate allows you to combine and control a large asset with a portion of the purchase price.
• 4:41
  SPEAKER_00: Instead of a stock where you have to buy all the stock of real estate building, you can actually multiply your returns by leveraging it with other people's money.
• 4:48
  SPEAKER_00: And it can help you multiply, but it could also multiply losses.
• 4:52
  SPEAKER_00: Debt does not care about your intentions.
• 4:54
  SPEAKER_00: The payments still arise when the vacant unit is there, the repair is expensive, and or if the market slows down, you still have debt due.
• 5:01
  SPEAKER_00: Leverage is powerful when you see the asset producing enough income and you have enough in reserves, but when those protections aren't there, leverage it can turn into just pressure.
• 5:11
  SPEAKER_00: Every month that payment's coming, whether you like it or not.
• 5:13
  SPEAKER_00: The next piece of the puzzle is cash flow.
• 5:15
  SPEAKER_00: Does the investment produce income today?
• 5:17
  SPEAKER_00: Or are you depending entirely on some future event appreciation or price increase?
• 5:23
  SPEAKER_00: A property that creates durable cash flow can provide options.
• 5:27
  SPEAKER_00: A stock index fund may generate dividends, but the primary strategy is long-term appreciation.
• 5:32
  SPEAKER_00: For real estate, to have a mix of cash flow and appreciation is ideal.
• 5:36
  SPEAKER_00: Some markets they can only give you cash flow and very limited appreciation.
• 5:39
  SPEAKER_00: Other markets might be very heavy in the appreciation and absolutely no cash flow.
• 5:44
  SPEAKER_00: Neither model is automatically better, but you do need to understand what job you expect your investment to perform.
• 5:50
  SPEAKER_00: Many times we invest without actually knowing what our goal is with that investment, beyond I want to make money.
• 5:55
  SPEAKER_00: Is the money designed to create income, preserve capital, gain wealth over time, or just remain available to be able to move around if the opportunity is needed?
• 6:04
  SPEAKER_00: You know, give every dollar a job before you choose exactly what the vehicle is.
• 6:08
  SPEAKER_00: Number four, it's control.
• 6:09
  SPEAKER_00: In real estate, an active operator can improve the property, raise revenue, reduce expenses, influence the outcome of the property in a positive way, but also in a negative way.
• 6:20
  SPEAKER_00: When you have an index fund, you don't control these companies.
• 6:22
  SPEAKER_00: You have very little say.
• 6:23
  SPEAKER_00: Maybe you can vote, but you're one of thousands, sometimes millions.
• 6:26
  SPEAKER_00: So you can't go in there thinking that you're gonna be able to time the next downturn.
• 6:30
  SPEAKER_00: Your control is that you can understand that you have the opportunity to sell, but from your savings rate and allocation and behavior, understanding that the risk is outside of your control.
• 6:40
  SPEAKER_00: Some people they want operation control.
• 6:42
  SPEAKER_00: Some people they want the simplicity.
• 6:44
  SPEAKER_00: What are you choosing?
• 6:45
  SPEAKER_00: Be honest, control, it does require your responsibility, requires you to not only have the time, the knowledge, and desire to go out there and operate and put forward the work to make an investment property perform, but the appearance of control without actually doing the work can also be a liability.
• 7:02
  SPEAKER_00: Next is your time horizon.
• 7:04
  SPEAKER_00: We all want to be richer or rich tomorrow.
• 7:07
  SPEAKER_00: But how can the money that you have stay invested and how long?
• 7:12
  SPEAKER_00: A home, it could make sense if you plan to remain in that area and you know, maybe grow a family, have the kids go to school there, and you know, you feed the cost for the family to actually live there, it might make sense.
• 7:22
  SPEAKER_00: But if your career is gonna change and you know, you you plan on moving in a few years, or you know it's not a great place for the family, investing in a home today for a horizon of 12 to 24 months might not be the most practical solution.
• 7:33
  SPEAKER_00: In this index investing, that requires a long time horizon.
• 7:37
  SPEAKER_00: If you need the money during a market downturn, that liquidity, uh, it might be gone.
• 7:41
  SPEAKER_00: Or it might be not as much as you want.
• 7:43
  SPEAKER_00: And by the time you get it out, the market might rise again.
• 7:46
  SPEAKER_00: And now you're investing at a lower basis compared to at less assets than you would have had before.
• 7:50
  SPEAKER_00: Don't put long-term money into short-term decisions.
• 7:53
  SPEAKER_00: That's a very important thing here.
• 7:55
  SPEAKER_00: And the same time, you know, short-term money money gets stuck in long-term decisions if you're not clear on the business plan.
• 8:00
  SPEAKER_00: Lastly, life alignment.
• 8:02
  SPEAKER_00: This is one that most people ignore.
• 8:06
  SPEAKER_00: What type of life are your investments helping you build?
• 8:09
  SPEAKER_00: With the house, does it provide stability to your family?
• 8:12
  SPEAKER_00: Or is it making your house poor where you have such a big house but you can't afford to do all the other parts and the pressure of just making the mortgage payment every month is just over and above?
• 8:20
  SPEAKER_00: With a rental property, does it create income or does it give you a second job that you never really wanted but didn't even know that you were gonna have?
• 8:27
  SPEAKER_00: Will this investment create freedom?
• 8:29
  SPEAKER_00: Or will it check out every day to give you another responsibility that puts you on a remotional roller coaster each and every day, week, and month?
• 8:39
  SPEAKER_00: Technically, a good investment could be wrong for your life if you go back and ask yourself these six questions to make sure that that investment actually aligns with the life you're trying to live.
• 8:48
  SPEAKER_00: If your parents, you may have brought one house, you stayed in one city, you worked for that same employer for 30 years, and that may have been the perfect strategy for you.
• 8:59
  SPEAKER_00: Your children, you know, they may work remotely, they could change industries, move around the world, build businesses, invest globally, but their strategy may look completely different.
• 9:08
  SPEAKER_00: Principles remain consistent.
• 9:10
  SPEAKER_00: Spend less than you earn.
• 9:11
  SPEAKER_00: That's the parable that stands a test of time.
• 9:15
  SPEAKER_00: Avoid destructive debt, maintain reserves that can give you the opportunity to weather a storm when it comes and invest consistently.
• 9:23
  SPEAKER_00: Understand what you own and allow the magic of compounding to build enough time for it to actually work.
• 9:30
  SPEAKER_00: Being in and out so much, it doesn't allow that magic, that part of compounding to work.
• 9:35
  SPEAKER_00: And I'm not here to defend real estate or stocks or other assets.
• 9:38
  SPEAKER_00: This isn't something that I'm here like defending a sports team like it's the Jets.
• 9:42
  SPEAKER_00: You can't be attached to investment.
• 9:44
  SPEAKER_00: Questions are, what return am I targeting?
• 9:46
  SPEAKER_00: What risk am I willing to accept?
• 9:48
  SPEAKER_00: How much control am I willing to have or not have?
• 9:52
  SPEAKER_00: Is this money liquid?
• 9:53
  SPEAKER_00: Right.
• 9:53
  SPEAKER_00: What happens if the market moves against me?
• 9:55
  SPEAKER_00: Right.
• 9:56
  SPEAKER_00: All of these pieces of the puzzle, it can help you just understand like, what am I setting up for my goals?
• 10:00
  SPEAKER_00: Where are my responsibilities?
• 10:01
  SPEAKER_00: What are the advantages?
• 10:02
  SPEAKER_00: And then what stages of my life is this going to come back to me if it actually does?
• 10:06
  SPEAKER_00: You have to protect your family, but you have to create options for your life to support the mission that you're on.
• 10:12
  SPEAKER_00: You know, you don't need the parent strategy, you don't need your kid's strategy, you need your strategy.
• 10:16
  SPEAKER_00: Asking these questions, it allows you to put down a clean answer to where you're trying to go.
• 10:22
  SPEAKER_00: Make the decision, give the dollar that you're investing, give it a job, make sure what's coming back for you, and take that next step.
• 10:29
  SPEAKER_00: All right, that's what I have for you today.
• 10:30
  SPEAKER_00: This is the Lib Winter Podcast.
• 10:32
  SPEAKER_00: If you found that helpful, go down there and leave us an honest rating and review.
• 10:35
  SPEAKER_00: Let's do this.