Why Being Cash Heavy Is Prosperous Right Now – Episode 485

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[00:01] Welcome to the Prosperity Podcast. Prosperity thinkers, welcome to the podcast. Today we’re going to be talking about the principle of prosperity, which is MOVE. And it goes into relation to what is happening with a lot of investors now. They’re saying, hey, I want to be cash heavy and ready for opportunity. How does a prosperous person look at that, Kim? Well, cash heavy for a lot of people used to be, gosh, maybe 5% or 10%. And I have been preaching this for years, build your liquidity, create that emergency slash opportunity fund. Well how much? Well, emergency is sort of obvious, you know, the normal 3 to 6 to maybe 12 months expenses, more if you own a business and more if you own real estate and don’t stop building

[00:52] it. How much do you want in your opportunity fund? Let me see. How high is up? So that opportunity fund, that liquidity of dollars best stored in cash value of life insurance, but of course also stored in money markets and savings accounts and CDs and buried in the backyard and in the safe in the closet, those opportunity dollars are your cash position. They are your way to take advantage of opportunities. When opportunities find cash, there is such a great connection. You know, the old saying, if you have cash opportunities, we’ll seek you out. And so this cash position, this high cash position or, you know, high liquidity, rich cash position, whatever terminology is floating about in the nomenclature today

[01:42] easily could be up to 40% of your net worth. I think that there are many, many of my clients that are sitting on that kind of cash right now, 30, 40% of their net worth. I know I have a lot of clients that are saving 30, 40% of their income. And we have such a fun way to measure this. That is going to be a technology app coming out very, very soon. But back to the cash position from a net worth standpoint, that opportunity is what enables people back through the history of time to thrive when others are scared, to move forward, when others are holding back, to see opportunities, to create opportunities, to build opportunities, to take advantage of opportunities, that’s what those liquid dollars are for.

[02:39] And literally for the last two to three years, I have been asking people, are you sure you want all that money in the stock market? Would you maybe rather have it in a position of cash so that you can take advantage of the next opportunity and they’ll move some into cash, call me back two months later, okay, I’m ready. Well, we still need to hold on. We haven’t had the stock market correction. We haven’t had the real estate market correction. Well, okay, two, three months later, okay, I’m ready. Like, wait, just sit in cash. And it seems so frustrating. It seems so really the opposite of movement, which is what we’re trying to get our assets to do. It seems so limiting. And yet it is exactly what will prepare us.

[03:21] We protect what we have and we prepare. And when we prepare with cash, then we will find the opportunities. If we don’t have the cash, we may not even be looking in the right places for the opportunities that are out there, business opportunities, stock opportunities, real estate opportunities, you name it, unlimited. So if we have this cash on hand, and I’m taking this because you’re hearing this from clients, I’m hearing this in groups where we’re purchasing businesses and we’re doing additional things. The sentiment is, hey, hang on. Things could get a little bit bumpy. So let’s hang on to cash. That’s not a prosperous thought. And holding on to cash is, you know, prosperous because we know

[04:16] it’s for opportunity. Do you see the dichotomy in there? Absolutely. And that’s why I use the word emergency opportunity fund is because it enables, first of all, you to shift where the line is, right? There might be times when you want a little larger opportunity fund. There might be times when you’re comfortable with it being a little bit smaller, but you don’t have to be obsessed about it. And more importantly, in your thought, it’s about opportunities. And this is why I refuse to just have things called emergency funds because then in your thought is emergencies. This is also why when people are so focused in getting out of debt, I really encourage them to also save because you cannot be in

[05:02] your thought all about debt. You want to be in your thought about saving, about building, about the forward view, right? That is a very backwards view. Now, let’s not get confused. I’ve talked about measuring backwards and the value of that, but that’s different. It is the measuring of progress and clearly getting out of debt is progress and it must happen. All of those things are necessary that getting out of debt work. And yet the thought has to happen first. Financial freedom must occur in your thinking first. Opportunities occur in your thinking first and in your relationships as well. And holy cow, I mean, you can just listen to the language of somebody and get clear whether they are thinking from a prosperous standpoint or not.

[05:52] And this is not a 24-7 thing. I mean, I still struggle with occasional scarcity thinking, fear-based thinking that pops in about this, that, or the other thing. And as we’ve said numerous times on our podcast, cash flow issues don’t go away. They just give bigger zeros on them, right? Oh my gosh, I need a hundred grand for a down payment. Oh my gosh, I need a million for a down payment. I need 10 million. Whatever the numbers are, they’re just extra zeros. And yet back to that position of cash and liquidity and the opportunities that are out there and the thinking that must occur first, those are all frankly very foundational, very elementary things. Anybody can do them. That’s the coolest thing.

[06:34] You as a wealthy person can do them. You as a not so wealthy person can do them. You can teach them to children early, early on. Robert Kisaki’s famous question, one of my favorites, is stop saying, I can’t afford that. And instead ask the question, well, how could I afford that? That’s what enables that opportunity thinking, that prosperous thinking to come into play. And the position of cash backs that up. It lets you spend money based on values. It lets you see opportunities where others may not. It gives you peace of mind and sleep at night money that enable you to then prepare for your day literally in a more appropriate way because you’ve slept well the night before. And all these things, like I said, are very foundational.

[07:31] And yet every single one of us, no matter how big our balance sheets are, needs and wants to practice this kind of thinking. Robert Kisaki Yeah, absolutely. You know, I think that what you’ve done here is you’ve framed it so that we have the emergency and the opportunity appropriate. Because with a lot of financial minds, you can become fanatical. You can sit there and say, well, you can race towards your return on investment or your race towards leverage or whatever it is that you’re going to find. And you’ve framed it properly. Is it Dolph that said the quote of an opportunity? Go for it there. Dolph de Roos, the deal of the decade comes along once a week. Robert Kisaki Yes. So here’s my thinking.

[08:21] And again, arguably, my thinking is a little different than many people. But I see the emergency and opportunity fund. And what I see, if I have to quantify or put a stamp on what that is, I see that as I’m buying time. And the reason why is because I now have the opportunity to say no to a not good deal. And I’m saying yes to the right deal. And I think what happens, and I’m seeing this happen right now, and I’m not going to name names because I have friends in the mix of this right now. When I saw them go through a lot of the real estate turmoil in 06, 07, 08, they pulled out, they got ahead, they didn’t learn. And now they’re dealing with some really heavy stuff. And had they had the emergency and opportunity fund,

[09:17] they wouldn’t have to be doing desperate things right now. Right. And that’s where it’s sad. And on the other end, I have friends that may be a little too cautious. And so we’ve got that balance in there. And you’ve helped bring it together so that we have a more prosperous way. And then you humanized it. You said, even Kim has days when you have to sit there and recalibrate. So maybe we add in this. Can you give us a real quick recalibration tip of what you do? Absolutely. Yes, yes. A lot of it is physical, like get up, walk around, move, go outside. And then the second is express gratitude. And the more specific I am with my gratitude, the better. And then the third is up level the gratitude away from the material thing

[10:09] that we tend to start with to the spiritual thing or the inspirational thing. So quick example. I get an email. It’s, you know, that two by four in the face. I will get up from my computer, go out my office door, bring him a dog with, be grateful for dogs. You know, they’re always either happy or loving or just there for you. And then be grateful for the inspirational or spiritual aspect of Emma dog, which is that unconditional love, that attitude of all is well. And we’re going to find a way through this and literally physically, right? Being outside, petting the dog. Those are the things that shift that when they occur. And, you know, I know people that carry around a little gratitude stone in their pocket.

[10:56] I know people that bring their dog with them everywhere they go. Literally and other things like that. But gosh, even 10 jumping jacks can do it. Absolutely. You know, for me, I carry an eagle right here. There you go. I just have it in my pocket. It’s one of those every single day I carry it with me. And it’s one of those like little reminders. It’s simple. You just helped, we’re going to dedicate part of this episode to PetSmart and say that we’ve helped out the dog community. But in reality, there are a lot of things that we can do. One thing you mentioned is that there is an app that you’re creating that helps you understand the opportunity and emergency pieces. It’s not available yet. It will be available soon.

[11:43] Yes. How about this? For the most active listeners, if you would like to be on that first beta list, here’s what you need to do. You need to send an email to hello at prosperity thinkers.com. Kim, will you give them the secret subject line so that they can get that? Cash app, C-A-S-H-A-P-P. That is not the name of it because there are others named that. But that is your subject line, cash app. Excellent. So this is specific for you listeners. Send the email to hello at prosperity thinkers.com subject line cash app. You will get to be one of the first to try it out. It’s amazing. Here’s another thing that we’re doing to make it in a way more prosperous for you and for you to understand next steps in this game.

[12:35] So Kim, thank you for sharing that with us today. Thank you, Spencer. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit ProsperityThinkers.com.