November 4, 2019 – Broken Retirement Daniel Ameduri, InventHer Mina Yoo & Hilary Meyerson and Milwaukee Rocks!

As we look into the future, we see what technology and digital is doing to the different industries in the city. We recognize that need to both import and grow the talent base of tech professionals in town.

Karl Gouverneur is vice president digital workplace and corporate solutions and head of digital innovation for Northwestern Mutual. In this role, Gouverneur focuses on providing a digital core to enable efficiency and flexibility that enriches the experience of the company’s employees. He partners with business areas across the enterprise to integrate technology with the company’s business strategies and objectives. Five local Milwaukee companies, Accenture, Advocate Aurora Health, Kohl’s, Northwestern Mutual and Rockwell Automation, are forming a cross-industry partnership and investing more than $5 million to form the MKE Tech Hub Coalition, a unique collaboration to bolster and grow the Milwaukee region’s economy. 

Highlights from Daniel’s Interview

I think if you have $1,000 to save, rather than put it towards retirement or, worse, put it in an actual retirement vehicle where it’s locked up and you have to pay a 10% penalty, I would go out and buy some income. The easiest thing to do if you’re just a turnkey and you don’t even want to research housing is, there are private rates where you can have a 10% to 12% yield every single month paid out to you. Realize that’s a potential 10%. But every single month, you can have money either direct deposit into your account or a check in the mailbox.

I think that’s the real focus in Don’t Save for Retirement. It’s changing that mindset from deferring everything to actually focusing on buying income. My wife and I live by one principle, one code, because we want to become financially independent. That principle was we only bought assets that produced cash flow. If a check wasn’t coming to the mailbox, we did not allow ourselves to buy it.

If you have the tenant pay off the house, at the end of that 30 years, you have a pension. If you rent out single family homes, you don’t even have to have the tenant pay it off. You could pay it off earlier than that, and start that pension 15 or 20 years before the age of 65.

It’s outside the paradigm, but I would definitely buy stocks with dividends, especially from companies my grandkids could be doing business with this company? Because things are changing quickly, but you look at companies like Disney or Costco or Google, and these are companies that are not going away.

Honestly, if they pay a great dividend, some companies like AT&T or General Mills… The thing about General Mills is, the next time you’re eating something, look on the box. You’d be surprised. I was having a power bar last night, and I looked at it. It was from Costco, and it said General Mills. They are involved in everything. A lot of their income is even coming from dog food. These are world dominating companies, and you want to own and enjoy those dividends, because they’re safe and they’re consistent.

Any business that you can start, whether it’s freelancing, independent business, or a side gig, anything that you can do actively, on your own, is great. We’ve already discussed rental properties. There’s also private things where you can own and have access to options that only the biggest hedge funds and institutions and insurance companies had in the past. If you’re an accredited investor, or you go to any of these family wealth office meetings where you have to have a net worth of 50 million, it’s all roads lead back to buying commercial real estate, apartment rent, buildings, anything with cash flow that’s backed by an asset, including lending. Lending is another thing that the middle class totally missed out on. Yet, that is exactly how the banks make money. It’s how the insurance companies make money. So if you’re an accredited investor, there are there are plenty of different private equity funds that can help you. But if you’re not, that’s okay, because now there’s crowdfunding, and the recent laws passed through the Jobs Growth Act back in 2012.

Now anybody can participate through companies like LendingClub, where you’re actually doing consumer credit or Peer Street, in which you’re taking a fractional, tiny, tiny share, maybe only $1000 of somebody’s mortgage, and now you’re making money on a mortgage that’s got 30% equity. There are also companies out there like Fundrise, which is a company that lets you invest like you would with a family wealth office, only anybody can do it. You can do it with 500 bucks, and you’re owning shares.

Why am I suggesting private rates over public rates? There have been studies that show there is actually a cost to buy the second market pricing, it’s about 30%. And what I mean by that is, if you have a public rate like Vanguard, you can sell it with the click of a mouse. There’s actually a premium on those shares, on that value. On a private read, it takes a month to three months to sell your shares. However, as an investor, the volatility is not in your head. Even though volatility doesn’t equal risk, it’s still not there, and that helps you make smarter decisions. 90% of the profits are going out to investors, so they’re not double taxed. So that’s one of my favorite go-to plays. Outside of that, I also like the crowdfunding stuff like Peer Street, where you’re getting involved in mortgages or LendingClub where you’re getting involved in consumer credit.

If you’re 65 years old or 70 years old, and you have a chunk of change, and you’re insecure about how you can manage your money, I’d get an annuity. I’m not going to write off any of these vehicles, I just don’t think they’re for most people. One that I love, and we might totally disagree on this, is whole life policies. I have eighteen whole life policies. I just dump the cash in there, and it gets an internal rate of return of about 5%. But the first thing I do is, as soon as I put $10,000 or $100,000 in it, I borrow the money right back, and I rip it right back out. The money is still there, growing. It’s very complicated. To be honest, I probably shouldn’t have gone down this rabbit hole, but I’ll take the money and then reuse it to purchase more income. So the same dollar’s being used twice. It’s very complicated to learn about whole life policies, but once you get it, you’ll fully appreciate why they are the largest institutions in the world. You’ll understand the biggest owners of whole life policies, and why some of the wealthiest people on the planet are buying these things. Someone was written a few years ago for $262,000,000; it’s insane. But it’s a no brainer once you fully get it, because it’s simply a place to hold the cash.

Technically, with whole life insurance, you don’t ever have to pay the loan off, if you continue to make your premium payments annually. The reason the life insurance companies will easily give you money against your cash value is because there’s 0 risk of default. If you have $100,000 of cash value, they’ll loan you about $95,000. They pay out dividends, and these companies have never missed a dividend. They’ve been paying dividends as early as the 1800s, or even the late 1700s. These companies do not miss their dividends. They’re owned by the actual policyholders. These are not publicly traded vehicles. So their shareholders are essentially the whole life owners, and they are distributing dividends from the profit of the insurance business, which is the best business in the world, because you’re constantly taking in cash and not providing a service for the most part. So we’ll think about it seriously. How many people have used, for example, their homeowner’s insurance? Yet we keep sending these people thousands of dollars per year.

You can pay back the loan however you want. You can do interest only, you can pay principal, or you can never pay it off if you want, and that’s a head scratcher for a lot of people. You have to keep the policy current. So as long as you’re making those annual payments, they’re paying you so much in dividends, the policy is growing so much, but you actually never go negative. That’s a strategy you could use. I actually just pay the interest. In the book, the whole life policies is in the income section, and it’s just another way you can expand and grow your income. Again this is a dual compounding way to grow your income, and it’s something that the wealthy use every day.

I would suggest cutting spending if you’re really determined to become financially independent, really reveal your personal finance side and what you can cut. I remember when I searched how to cut spending, my wife and I really wanted to not be poor anymore. And we would search the internet, and the internet would say, “Save money on transferring your credit cards!” or , “Save 1% on transfers to your checking.” That’s BS. But we did crazy shit. We moved an hour away from where we were raised, we got rid of our dogs that had a bed built. We stopped eating meat. We did extreme things, and it’s all in the book, all of these things we did. Do we live like that now? No, we live. We live a great, amazing life now. But for two years, we sucked it up, because we were determined. We were like, “I don’t want to be a minimalist my whole life, and I don’t want to be in the rat race my whole life.” And we figured the more we cut, the more we can buy income. And eventually, once that income surpasses your expenses, your basic needs, you’re free to unleash whatever you want to do in your life. At that point, you own your time, which is the most important thing.

In East LA County, a home went for $500,000. About an hour away, we bought a house for $95,000. This was in 2009, right after the crash with very bottom prices. That allowed us to be able to save enough money to buy more rentals. And eventually we moved to Texas and bought our dream home. There’s so many great reasons to move either 20 minutes outside to save money or move further or if you can. If you’re mobile enough, move out of state, get the hell out of these high tech states, and go to where capitalists treated best.

If your listeners will go to futuremoneytrends.com they can read the introduction of the book, which starts with my wife and I in a bankruptcy attorney’s office, as well as the first chapter where I define wealth and I had to recondition my mind. They will also get the weekly wealth digest, which shows them everything that we’re investing in right now.

How do I define wealth? Ownership of my time. I like to wake up when I’m done sleeping. That’s one of the most important things to me. I don’t like to wake up to an alarm clock, and I want to be be in full control of my time.

We go to the church of Robert Kiyosaki, Rich Dad Poor Dad. So my kids play Cashflow, Monopoly and games like Net Worth every day. They all have their own Scottrade accounts, they go with me to every single financial meeting, they go with me on business trips. They’ve been the gold mines, our life teaching these kids has been through 18 countries in the last two years, and five continents. We do this because we want to really open up and internationalize them, as well as focus on teaching them value creation and business. You gotta remember, a hundred years ago, 90% of the people in the world were entrepreneurs. It’s more natural to be an entrepreneur and to create value than to be conditioned to become an employee. The stuff all the schools are going to teach are just useless; it would be a waste of their time to go there.

I should preface that by saying homeschooling is a privilege. I don’t want to put anybody down who’s in a situation like being a single parent or maybe their passion is not to be a stay-at-home person. Maybe they’re a person who wants to conquer the world out there, and create something. It is a privilege to do it and a luxury, and if you can, great. But if you can’t, you have that right. Ultimately, you’re gonna have to teach your children about life and about money, because they’re not going to get any of that in school.