Investments that Benefit the World – Episode 107

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[00:01] Welcome to the Prosperity Podcast, fresh alternative personal finance talk for independent thinkers who prosper outside of Wall Street. Here’s your host, bestselling author, Kim D.H. Butler and No BS Money Guy, Todd Strobel. Hey everybody, welcome to another edition of the Prosperity Podcast. This is No BS Money Guy, Todd Strobel. Once again, we have bestselling financial author and my co-host, Kim Butler with us today. And we’re going to be talking about investments that benefit our world. So many times we get people who want to know that they can grow their money and have it available to them later when they need it, but they want to know that the money that they’re investing is somehow or another improving the lives or improving the world

[00:54] that we live in today. And I would say this is a concept that 20 years ago was never even talked about and now is almost a common conversation. How are you, Kim? And what do you think? Well, I’m very happy. Thank you. And I love that people are interested in benefiting our world. And I’m so grateful that we have found investments that not only do that, but truly help the investor as well. Because I remember when the first socially responsible mutual funds came out and we all looked at them and we kind of watched them and maybe they didn’t have tobacco companies in them or maybe they didn’t have alcohol companies in them or whatever your thing was that you didn’t want, these funds had everything else.

[01:46] Or maybe they even had a specific area that you were interested in. And of course, you had some of the international funds report that and maybe even specific third world country funds, et cetera. But over time, just keeping an eye on these funds, they didn’t do very well. And they were, I think, really challenged by typical stock market challenges, as well as potentially their main focus. And I’ll admit, I certainly wasn’t an expert in them then and I definitely am not now. But this concept, the idea is wonderful. Let’s make investments that give us, and we’ve talked about this before, a triple bottom line, a win-win-win. In other words, they should be good for the investor. They should be good for the seller, the other side, if you will.

[02:39] And frankly, I think they should be good for the advisor. And that enables the advisor to do a better job for their clients. You know, there’s a lot of talk out there now about, oh my gosh, the advisor’s making all these fees. Well, if the advisor’s being helpful to you, then you absolutely want them to run a profitable business. You might just want to know how they’re doing that. But I like investments where everybody wins. And to me, part of the definition of a win is that the advisor and the client are not constantly having to figure out what to do next or constantly having to worry about outside forces that they cannot control and adjusting to them, but that the investment just does the job that it’s supposed to do.

[03:34] That’s the definition of a good investment. So let me ask you just a quick question. It is historically proven that in a down economy, alcohol and tobacco will continue to outperform or consistently be profitable versus some of these ideas. How do you feel about the idea of investing in alcohol and tobacco and using those monies to potentially fund a charity or something like that versus finding an investment that does it in the beginning? Well, that’s an interesting question. And my bias is going to come out, but you asked it, so I’m going to answer it. And that is that I personally wouldn’t do it. I have no interest in supporting those industries at all in any form. But that’s just me personally.

[04:28] And only each person can make that decision for themselves. Additionally, though, and part of the reason I’m so able to strongly stick with my values is because I have alternatives where I know I can get good investment return while contributing to something that fits better with my values. And I’ll just share a couple of examples. We have one environment where we’re improving real estate. And it’s not speculative real estate. It’s not development real estate. It’s not raw land. I don’t mean that kind of improving, but we’re just helping owners of real estate make their real estate better. Well, typically this means an apartment building that is improving. Maybe it’s parking lot or it’s lighting or it’s pool that’s there or

[05:19] the air conditioning or whatever. So think how many lives you impact there. Maybe it’s a medical office building or it’s a strip center or something that helps people that live in the area. And so you know how many lives you’re impacting there. That’s one of our available investments. And that can be done for very little money with no other requirements at all. And then we have another investment that is enabling elderly people, senior citizens to get more cash from their life insurance policies than they would be able to in other ways. And again, mentioning the fact that we’re going to be seeing lawsuits coming down the road about universal life policies and their increase in premiums. That’s going to cause even more elderly people to need to get out of their

[06:15] universal life policy in some way. And so if we as an investor can facilitate that transaction through something called a senior life settlement, and we get a good deal and the seller gets a good deal. And again, like I said earlier, the advisor gets a good deal because these are investments that don’t need a lot of babysitting and handholding. Then that’s where you get your triple win. And they may have some requirements in terms of an investor’s net worth and whatnot, but it’s still a viable option for a win-win-win on everybody’s court. And what should we say? No harmful substances included. The one thing I would like to mention is, you know, we also talk so much about whole life policies and maybe using a paid up additions rider or, you know,

[07:13] even a traditional whole life insurance policy to build up cash value. That really gives the person to not only invest, but it gives them an opportunity to invest locally. I mean, maybe there’s a house in your neighborhood that, you know, has gone into foreclosure and fallen into disarray that would make a perfect home for someone, but because of the condition that it’s in, it’s actually pulling down the value of the entire neighborhood. You can use that cash value in your whole life insurance policy to buy, renovate and either sell or rent that policy. Can’t you rent that house? Sorry, can’t you? Absolutely. And we have available through Todd Langford’s Truth Concept software, a calculator to help you determine if that particular real estate

[08:09] deal would be a good one. I was just talking with a client today. He knows that we have investments available that are in the low double digits. And he said, well, what if I find a real estate deal? Should I do that instead? And I said, I don’t know. What is the rate of return on that real estate deal? Which, of course, he did not know the answer to that because the real estate brokers typically don’t know rate of return numbers. They might know caps or other indicators, but they don’t know rate of return. And at TruthConcepts.com, there’s a real estate calculator where if you’re a client of ours, we can do the calculation for you. If you’re not, you can go buy the calculator yourself. TruthConcepts.com, there’s a real estate calculator that will literally

[08:51] calculate the actual rate of return that you are earning on that property, taking into consideration everything, the depreciation and the down payment and the rent and even vacancies and the whole bit. And it will enable you to actually put a rate of return on a real estate deal. So you’ll know, for example, that you could borrow against your whole life at a cost of eight, but have a real estate deal that might earn 25%. And from there, that is a fabulous rate of return on not your money, but the insurance company’s money. Now, you’re probably going to have to put some of your own money in to do the down payment, but you never know, you could even use the insurance company’s money to do the down payment as well.

[09:40] Regardless, the calculator can figure all that out and tell you that 25% rate of return or equally importantly, it can turn around and tell you, hey, this real estate deal is only a 4% return, so maybe you shouldn’t do it. Now, Kim’s in a situation where when we talk about next door neighbor, you might have to get in your car and drive 10 minutes in order to find one. But for those of us who can look out the window and actually see those next door neighbors, think of the benefit that you have done not only to yourself, but everyone on the street who cares about their property. If you can renovate something and get a homeowner who cares about their house as much as you do. I can’t think of a better way to do a total win for everyone.

[10:27] That’s right. I think that’s a quadruple win. Awesome. Any other thoughts you wanna add to this about how we can benefit ourselves while benefiting society? I’m just so totally, I’m not against non-profits, but I am so excited about for-profits moving into the area of non-profits because we don’t have to go out and continuously seek donors. We can actually show people how to make profits while improving the world. And I think you’re gonna see so much of that. I encourage anybody who’s interested in that subject to research Richard Branson. He is doing an incredible job of showing people how they can make a profit. And gosh, he sure doesn’t need the profit. It’s just that a profit model is sustaining over time.

[11:27] Non-profits continuously have to be fed by someone else, whereas a profit-generating model can last forever. Absolutely. The more profit we make, the more people we can help. So thank you to everybody. I do want to throw out a short gift. That is our e-book called Financial Planning Has Failed. And it’s available at partners, number four, prosperity.com slash e-book. There’s an audio version there as well. Again, it’s partners, number four, prosperity.com. Super. Well, special thanks to Kim Butler. This is No BS Money Guy Todd Strobel for the Prosperity Podcast. We really encourage you to keep sending in your questions. Again, this podcast today was based upon a question, and we will gladly answer any question.

[12:19] If you have a differing opinion and want somebody to listen, we’re here as well. We want to have 100% transparency. We look forward to serving all of you again and again. Thanks so much and take care, everybody. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit us at partnersforprosperity.com. If you liked this episode, make sure you subscribe and leave a review.