What to Do If You Have Not Saved For Retirement and You Are Now 50 Years Old / Wealth Labs Podcast

those are the five things recover cache engineer well accelerate investment income scale revenue and make it count economic independence is the factor doesn't matter your age sixty years old 50 years old 40 30 20 it's all about economic independence get assets to create cash flow money could be complicated let a nerd help you we're here to demystify the complex nature of money by getting you answers from financial nerds and whiz kids welcome to ask the money nerds a weekly segment of the wealth aughts podcast where we answer your most pressing money questions getting this question quite a bit hey I'm too old hey I'm too young hey I've got a late start like we're gonna go through and dispel the money myths about age and look maybe if you're totally retired yeah there are some definite challenges as far as expanding your means at that point but I'm excited to address this because it doesn't really matter your age there's certain fundamental principles processes and really methodologies that if you employ you're gonna work regardless there's certainly advantages being younger there's other advantages of being older so will discern through and kind of sift through to help empower people so chief-of-staff stole by ask the money nerds here we go let's do it I look super intense I was like here we go like that was crazy yeah you didn't even used to me anymore okay William is writing in today nice he says I've just recently started to absorb your videos on YouTube and all I can say is I wish I started sooner I just turned 50 Congrats on that hey I'm I'm 41 at this time so not that far behind yeah I won't say my age so you just turned 50 in the last year and I just now started to really become interested in personal wealth let me say yes I'm an idiot you're not an idiot William we don't believe that I've made plenty of financial mistakes that's how I very expensive things yes yeah unfortunately I haven't been surrounded by the most financially savvy people I've begun my journey in real estate investing taking baby steps towards building my portfolio I'm still an employee but have had my eyes open to the benefits of becoming an entrepreneur could you do a video for us older students that have gotten a late start I believe there's a huge number of us out there that would benefit please continue putting out amazing content thanks for that William regardless of your age let me go through the things to do no matter what age yes set up wealth capture account this is a checking savings money market to build liquidity you want six months of liquidity six months of savings set aside for your personal expenses that gives you staying power it gives you more peace of mind and you just want to automate paying yourself first it's a check I'm covered Social Security I don't even care if it's a student loan you want to get in a habit the amount doesn't matter the habit does okay the second thing is learning about cash flow banking as a way to boost that wealth capture account to move it to more of like a wealth creation account than just capturing it so it's more of a midterm strategy to boost that once again even if you're older you're gonna get a lot less death benefit but you could still enhance your cash value with what's called paid up editions or PU A's I always want people who invest in their skill sets thinking that I graduated from school now I've got my education nope not you didn't get reg occation you got part of the process be a lifelong learner a good differentiator is there's a difference between schooling and education okay schooling is you know the four years you go to college the two year trade school education is life long it's consistent it's over the course of many many years now I'm in like in self-discovery unlearning phase right now like what are the bad habits what were the false beliefs what are the things holding back like and just allowing more but there was a time where it was all about the financial IQ 26 straight months flying somewhere in interviewing people in my early 20s and I still am always looking to learn they're right with the other money nerds kind of schooling me on what's going on and updating me and reading definitely that still happening but there's a certain amount of foundation that's been built there so investing in yourself definitely the next piece whatever that means with developing your skill sets your means where you can create more value out there and I don't think age matters we've seen that with technology in the internet it's made that less of a race culture you know where you're born I get it third world countries the poor Internet still pretty complicated it's still difficult to get ahead you know I was just in Guatemala and what a what amazing people that I met they're very entrepreneurial but definitely you know haven't quite expanded beyond their own little areas to a certain degree so I get that there's you know challenges that way but for more of the population than ever before the the plane you know field has been leveled right it's the the gap is closing in some ways and in other ways it's widening where it's widening is there's more of a wealth gap now than ever really rich people accounting for so much of the wealth with so few people and then a lot of people that are kind of stuck in a middle-class type of place and a lot of it's because of the narrative and I'm too old I'm too young I'm to this I'm to that and we've got to get to the core of value creation how do we deliver more value how do we impact more people how do we more deeply impact those people that we reach this is a huge key for that so once we've got the foundation I just talked about then it's about economic independence and this is a process that's 10 years or less its most of time three to seven years so economic independence is recovering cash so plug the leaks are you over paying tax over paying interest over paying on investment fees that don't perform or overpaying on insurance costs that don't protect then the second thing is engineering wealth what is the number that you have to get every month to cover your basics let's generate cash flow to get there is it paying things off is it building things up then the third one is taking all assets and rather than accumulating which at 50 compound interest isn't gonna do you a lot of good because you gotta wait all the way tell your 80 to really get the benefits of it fully so instead we're going to focus on cash flow over accumulation so that's accelerating investment income then fourth is scaling revenue so whether you're a business owner and you grow that business or whether you're an individual that works in an organization that you get upside potential through whether that's bonuses whether that's incentives whether that's specific projects that when they hit can you get more money you've got to have that upside potential where you're not just trading time for dollars in today's economy and then the fifth one is to make it count it's investing back in yourself it's having quality of life along the way those are the five things recover cash engineer wealth accelerate investment income scale revenue and make it count economic independence is the factor doesn't matter your age sixty years old 50 years old 40 30 20 it's all about economic independence get assets that create cash flow the notion of financial planning being overly emphasizing retirement planning and setting money aside for 30 years is the problem that's kind of the antagonist of the of the story that's kind of the villain when it comes down to it so how does someone go about finding their economic independence number look at your basic financial situation right what are your utilities what what's your rent or what's your mortgage you know what are the basic things as far as food and shelter and then when you have that number yeah that's your economic independence number how much you have to have every month now it's can you reduce that number because you pay a loan off right so that lowers the bar in a good way yes or could you invest that creates more cash flow to get there so for some people they've got to look at their investment index their investment indexes they take how much they deposit into an investment right and so they take however much that is and then they divide the total so the investment index is simply investment index is how much have you put into an account divided by how much cash flow or how much payment comes to you now a lot of people have no cash flow coming from their investments because they've been trained to be accumulation investors rather than cash flow investors so that's why we want to accelerate investment income and what we want is we want a really low number so a low number here would be 50 or less that is a cash cow just kicking off tons of cash flow if it's 50 to 100 that's pretty that's cash flow strong if it's greater than 100 well you know we want to get better cash flow from the allocation of your money some people do this extraordinarily well with real estate others buy businesses and do it really well others are more passive and maybe they invest in real estate funds or they invest in dividend pains docks or they do you know I see people that use options trading in order to create cash flow you've got to find what works for you for me I've mentioned over and over it's really intellectual property and creating those recurring revenues from everything from selling books to having the coaching programs that well factory that support people in the implementation but ultimately we also want to know your cash flow index right which is more when you've borrowed money so how much did you borrow divided by how much you have to pay per month and what you want on that is a high number here you're the one that's giving your money out to get cash flow there you're borrowing money so exactly when you're the bank you want a really low cash flow index because it means there's a lot of cash flow coming in to you for not giving a whole bunch money and you're in the game of cash flow if you're an investor you want a really low investment index because it means you didn't have to put a lot of capital out there to create a very powerful cash flow now an example would be if someone's been paying on their mortgage for a really long time and maybe they only have three years left but it's been an amortized loan over fifteen years or thirty years maybe they've been paying extra on it they probably have a really low cash flow index on that less than fifty so if they were to pay that off let's say it only took thirty thousand dollars and it saved fifteen hundred dollars a month that is a big return imagine taking thirty thousand dollars in creating fifteen hundred dollars a month that's gonna be hard to invest thirty thousand dollars to create that same cash flow so we're just looking at how to manage cash flow engineering wealth is finding what your number is I've been finding ways to create that cash flow accelerating investment income is saying what do you have existing resources you can start creating that cash flow I've seen people use their credit and they've helped other investors buy real estate and they get paid a percentage of the real estate deal or monthly cash flow for using their credit so that's a resource to be more resourceful with I've seen people do a 72 t distribution on their 401 KS which starts to give them monthly cash flow now without the 10% penalty so that becomes a cash flowing asset versus an accumulation asset or obviously people do real estate and they rent it out with single-family duplexes for plexes commercial property that there's cashflow positive that's another example right but you got to look are you better paying something off because you have a low cash flow index or do you have a low investment index which means you have a really good cash flow where you're putting money in like you said it's the opposite you want a high cash flow index and a low investment index right that's that's the deal one thing that you said earlier about compound interest right I think there are a lot of assumptions about what compound interest is and how it may benefit us do you want to speak a little more to maybe the myths of compound interest and clarify what that really means compound interest feeds this formula that people believe that wealth is a function of money times rate times time which is how much money can you put in it's the notion if it takes money to make money that's what people who want your money that's what they tell you takes many make money so yeah if you put more money in you'll have more in the future well okay of course rate how do most people try to get a higher rate of return they take more risk but higher risk equals a higher chance of loss so now they're adding more money they're taking more risk and then they're told hey compound interest is the 30-year or longer proposition because if we look at a compound interest curve it's kind of this curve that's slow initially then it grain steam the ten to twenty years but then twenty to thirty it gets that hockey stick that exponential curve so it's always something kind of out there well the institutions selling compound interest are actually compounding cash flow they're focused on cash flow so if you go to a bank they say great we're gonna give you two percent you'll see a sign for like a savings account or maybe a money market or a CD right at two percent and then you'll see a sign over here that says oh we've got a mortgage for four percent well that looks like that's not a big spread but they're they're renting your money for two dollars right per year for your hundred dollars over here they're selling a hundred dollars for four bucks a year right well the reality is that's a hundred percent markup that's 100 percent return if I can pay two dollars to get four dollars back that's a hundred percent return that is an amazing rate of return on the other side of that is if I'm only earning two percent but I'm paying four percent well if I'd cash out my two percent account and pay off the four percent account that's 100 percent improvement so that's why we want to look at the cash flow index versus the investment index because this is really you know finance 101 but understanding this is essential and what I want to cover here is what's called cost of money the cost of money is either the highest interest that you're paying on something or so it's either what you're paying or what you're earning so what can you safely sustainably earn on your money some people might get 10 20 30 percent one year on an investment or on their business but that's probably not something you're gonna get for 30 years so it's it's got to be sustainable so let's say you knew you could earn four or five percent right but right now you're paying a 10 percent interest rate on a credit card well paying something off is a much higher priority at that point yeah I've seen 22 hard to beat that rate of return so every time you don't pay that off that dollar is costing you a dollar 22 because it's your opportunity cost what that dollar could have saved you see there's always an interest cost whether you pay cash and you forfeit the right to earn interest or whether you borrow and you pay interest either way there's an interest cost we know when we borrow we pay interest that's the obvious one the less obvious one is oh I'm forfeiting the right to earn interest that's opportunity cost so cost of money is your highest net sustainable rate of return or your highest net sustainable cost so you've got to really understand that to know and make personal finance personal so should I borrow should I pay cash well first off what's the peace of mind if you borrow and it's something you've borrowed to consume you're gonna go into debt do never borrow to consume if you borrow to acquire an asset that's creating cash flow make sure you know how to manage that asset or otherwise that could become destructive but understand your cost of money to know whether you and you know how you manage all this and you know whether you pay off a mortgage if you're only paying 2% because you're on an introductory rate for a few years and it's an adjustable but you're earning 4% now that's a pretty good situation but if you're paying you know if you're paying five percent you're only earning 3% you're going in the wrong direction there so it's it's very personal that's why it's hard to just hear people say you should always get rid of your mortgage and pay extra every single month to it or you should never pay off your mortgage and you should get the maximum tax deduction who's right well it depends who are you how do you relate to the mortgage how do these things operate and work so you know learn your investment index on all your investments learn your cashflow index on all your loans I understand that this notion of wealth equals money times rate times time it's very limiting it's what I would call the accumulation philosophy what I believe in is the velocity or cash flow philosophy so if we look at velocity it's how we kind of measure how often the money circulates in a given year in the economy that's just the GDP divided by the money supply so GDP gross domestic out you know product that's essentially their output divided by how much money is in circulation which is our input now if they just print more money doesn't necessarily increase the GDP right it could actually lower it because it inflates right or if they you know so if someone says just take more risk that's a new input or save more money that's a new input so the question is how do you keep your input fixed and increase your output what's your velocity cash flow creates velocity keeping your money in motion being efficient plugging financial leaks that keeps more of your money without having to work harder or scrimp or save or sacrifice or most importantly scale how do you increase your output by being more strategic with your initiatives and what you do to deliver value right through technology or automation or you know delegation yeah so one of the things this person wrote in and was talking about real estate investing they're starting to get into that right so how how do you go about acquiring assets and maybe like I don't think responsible is the right word you know someone's into real estate how do you go about doing it without really putting so much risk into it I know you have a friend who wrote a book about you know by then build right yep so in real estate the first thing I would look for is how do you make money on the buy so an example that I lucked into made money on the by is one of my friends Joe called me he said hey I've got a friend that is not making his house payments but there's a lot of equity at the time there was ninety thousand of equity on basically at $280,000 home so he's risking losing it and go into foreclosure so I came in and I bought it we used my wife's credit no money down we bought the property and then he started making the payments to us while he lived in it but he worked on his credit over than the next year and then he bought it out and we were just gonna split the equity at the time that he bought it out because I helped save so I actually walked away with 90 grand and he walked away with 90 grand because the market was so hot at the time right that's making money on the buy there's already equity there because of a distress situation a distressed seller we did another a simonia nerds question where someone's got a bunch of equity in their home like 40% equity in their home but they can't qualify for a loan that might be an example right where they could yeah so so how can you make money on the buy some people do it because they know if they just you know improve some amenities maybe they improve the master bath maybe they improve the entryway maybe they improve the kitchen that they immediately know someone's gonna find more value in that right so some people are good at the fix and flip and there's formulas and they're software that are super just really effective it's competitive but know what you're doing so how can you make money on the by the second way you make money on the by is that cashflow positive from day one how can you buy it and it's already cash flowing the day that you get it the right rental agreements right for commercial property so there's already lease agreements and you know obviously that's gonna drive the price up because in commercial they look at the cap rate which has to do with the rents versus what you purchased and so obviously people know what they're willing to buy based upon that let's say that you went and you bought a thirty Plex okay but it was just zoned as a thirty Plex but then what you do is you build it the each unit could be individually sold so it's not and then you go to your tenants and maybe thirty percent of them to want to buy that unit and all you had to do is make some modifications for it in order to qualify for financing and all of a sudden okay you've got a great situation because you could sell that refinance have a loan at a place where everyone else or you could even sell or finance to your tenants which might mean they make a down payment you're the bank they're paying a higher payment because now they're building equity and you're the lender so these are just a few examples of what you might be able to do or maybe you have a really great property and you make it a corporate retreat and all of a sudden you're renting that for short term so you cuz when you when you rent something for 12 months it's gonna be a much lower monthly payment then let's say we're close to Park City right now during Sundance you can really rent for high during that week because of the demand right or during the ski season when that's a great winter like it is this winter you can rent for a lot more for those short terms rather than and now it's more work because there's more turnover and there's more management but that could be a big boost in cash flow as well so you make money on the by because of a distressed situation or you know what you're buying that someone else didn't know or maybe it's someone's now deceased and it's part of an estate and they're just trying to you know move quickly and get their cash like the cabin that's what happened here with this cabin cash flow positive because you have the right renters or you fractionalize the ownership and now you've got eight different owners and they're all leasing it out there's there's so many options there yeah I know my investor DNA is not real estate but this is exciting stuff yes so make money on the by be really cashflow positive and this is what I would say you have some type of due diligence team or formula and you have to look at a lot of deals so if you're gonna get in real estate treat it like a business not like a hobby because otherwise you're gonna be with really competitive intelligent people to have software and have teams and you know that they'll pass up on a ton of deals to find the right deal so if you're patient you're looking at enough deal flow you're gonna be a lot better off and so you know I'm a instructor for some of the real estate programs out there and you'll just see there's so many things to do in real estate from lease negotiations to lease options to seller financing to auctions to you know commercial property to residential to vacation rentals I mean there's foot but don't try to be an expert in all those things find what it works for you and you could be a little bit more passive and get involved in real estate syndications where you're an investor or REITs real estate investment trusts where you're just you know buying into a fund but you'll have less control and those don't always go according to plan so you better be really clear about it or the really good ones may not pay as high ever return unless you're a very wealthy family and and part of the accredited you know investor type of arena but you know there's active and there's passive and you know there's a lot of difference in how much time it's gonna take all right you asked we've answered so keep bringing your questions awesome any nurse comm chief of staff's Tova Garrett Gunderson come anyway you

Channel: Garrett Gunderson

Views: 13,064

Rating: 4.9449539 out of 5

Keywords: Garrett Gunderson, Wealth Factory, Wealth Building Strategies for Entrepreneurs, Financial Freedom, Financial Independence, Getting to economic Independence, what would the Rockefellers do, business, success, entrepreneurship, Robert Kiyosaki, Matt Clark, Ryan Daniel Moran, Tim Ferriss, Grant Cardone, What to Do If You Have Not Saved For Retirement and You Are Now 50 Years Old / Wealth Labs Podcast, What to Do If You Have Not Saved For Retirement and You Are Now 50 Years Old

Id: Uspe0KTNNJo

Length: 23min 14sec (1394 seconds)

Published: Wed Mar 18 2020