What The Top Investors Are Doing Right Now – Episode 590

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[00:01] Welcome to the Prosperity Podcast. Prosperity thinkers, welcome to the podcast. Today we’re going to take a time machine back to the beginning of 2020 when the job market was still humming along. People were intoxicated with growth and then something happened. Kim, you had some wisdom that you want to share with the audience around this. Well, this actually came from a Federal Reserve graph that I saw recently that showed savings rates in the United States from I think it was about the 1970s to today. Today we are at 2.9 percent, 2.9 percent of income in America is the average amount of income that is being saved, which is deplorably low. In the 20s, so like 2020, the latter half, 2021, the rate was well over 20 percent.

[01:06] In the 70s when the chart that I happened to be looking at was first starting, it was in the 13 percent range and we’ve all heard that people in other countries save in the 10 to 20 percent range. And so here we are in America bumping along in the early part of 2020 thinking all is well when we all get blindsided by, oh, you have to go home and some people were able to work and some were not. Yet people realized after the first week or so, this is serious. And so they started saving and they may not have known what they were preparing for by the act of saving. And again, I want to identify saving as a verb, the act of putting money away, not savings as a noun, storing money. I mean, that that can’t happen even until you get saving as a verb figured out.

[02:02] And we have a structure to help people with that. Nevertheless, in the 20s, in the 2020s and in the era of 2021, people were saving 20 and 30 percent of their income. Well, that means that we can. And so what kind of life does that have the potential to prepare you for? It’s amazing. I didn’t even know it was that high. I was unaware of those numbers. I could I honestly would have thought like maybe 10 percent, but 20. Yeah, Federal Reserve out of St. Louis. OK, so if we go back in to thinking about the mental shift with that, there’s always a conundrum that our opportunists are going to take. And yes, I’m talking to any of you listeners in your 20s or 30s. This is to you right now. Don’t worry about the best interest rate on your savings.

[03:02] It doesn’t matter unless you are talking savings of like, hey, I got 10 million bucks sitting here and I’m just trying to figure out what you don’t. It doesn’t matter. So how is it that if Kim, if you were the president of the Association of the Savings Club of the United States of America and you’re going to get us back up to 20 percent, what is your inauguration speech? Ah, how fun it is to find a structure to make it automatic because anything in our life that we deem important, we must make automatic. And I think sometimes as human beings, it helps to look at what happens if we do it, like it to almost sell ourselves on a story of amazing results with this action. And it helps to look at what happens if we don’t do it.

[04:04] So I saw a fun little meme the other day. Somebody was trying to help their young children understand the importance of brushing their teeth and they Googled images of teeth that had not been brushed. So these are mouths that people have that have had an unfortunate circumstance occur in their lives for many years. This doesn’t happen overnight with these horrible teeth. And it sent the kids running to the bathroom, right, to brush their teeth. So that’s the story that we need to look at in the savings realm. And this is what preparation is about, because if you take a life that has saved money for emergencies and opportunities, we don’t want to just stop at emergencies. They can handle things like 2020, things like being laid off for a

[04:59] year or more. Those are all emergencies, possibly a car accident that doesn’t get replaced with insurance. So they’re having to purchase a new car for whatever reason. Those are all emergencies. A tree can fall on a home. We had that happen in our family where, of course, insurance is going to pay, but does it pay on time? Does it pay enough, et cetera? And then there’s opportunities. The savers, the people that put money aside, liquid dollars available to pursue opportunities, get to take advantage of an endless array of opportunities. It could be a business to buy, an investment piece of real estate that looks good, helping out a family member, other investments that they want to pursue because they’ve got that savings habit installed.

[05:49] And so the ability to take advantage of opportunities, the ability to solve emergencies is the life of a good saver. Now let’s look at the other side. Somebody that has got poor habits around this space often has to put everything on credit cards, which possibly means poor credit scores, which possibly means they pay higher interest on car loans, higher interest on mortgages if they can even get them. Because of poor credit scores, the person that does not have an emergency fund is stressed at work. They have a hard time focusing. If anything goes wrong in their life, like they can’t work for a period of time or they get laid off for a period of time or it’s 2020 and the business that they’re in closes for a period of time,

[06:41] they are in a scramble mode. And this is not a fun way to live life. So those that cannot solve emergencies and the statistics are amazing. I mean, most families in America, I don’t have the exact quote, but I think they’re a month or maybe six weeks away from bankruptcy because of lack of saving as a noun in that case, emergency money stored. But let’s also talk about opportunity money because saving is a verb, the act of putting it away builds up opportunity money. And so the person that does not have any opportunity money cannot buy investment real estate, cannot take advantage of a market crash in their favorite investments when things are on sale and they should be buying more. They can’t even take advantage of two-for-one sale at the grocery store

[07:34] where, you know, they might get their favorite hamburger meat to put extra in the freezer, you know, they may not even have the ability to have a freezer because they’ve never had the extra money to purchase something that would create the opportunities that would be necessary to store something like meat or fill in the blank, you know, extra vegetables or whatever it is. And so the family that doesn’t have savings is at risk at a stress level, at a poor position as it relates to being able to take advantage of opportunities and because savings saves families, those that have emergency opportunity funds can solve emergencies and take advantage of opportunities. And they don’t have the stress associated with not having that ability.

[08:26] Absolutely. You know, you’re mentioning the opportunity piece. And one of the things that I’ve noticed is I’ve, you know, just seen a variety of people throughout the world is that if you don’t have savings and if you don’t have those essential pieces taken care of, you can’t even see the opportunity. Like some of the opportunities will hit you in the face. Like people will say something, but like people can’t even see the opportunity and many times the opportunities are free or low cost. But you can’t see it if you haven’t done the savings. Have you seen the same thing happen? Absolutely. I was at one of my strategic coach sessions. This has been probably 10 years ago. And there was so much opportunity in the room as is true for every

[09:18] strategic session. Not only are you there to work on your business, not in it. So there’s great opportunities just for yourself and your thinking capacities, but there’s other amazing entrepreneurs in the room. And this guy had a margin call. So he had a stock account. He had taken a margin loan against it to do something. I don’t know whether it was to invest or to do something in his business or what have you. And his broker was on his cell phone saying you have got to get us money or we’re going to sell all this stock to handle the margin call. Couldn’t pay attention to anything that we were working through for his own self was completely missing out on all the amazing conversations with other entrepreneurs.

[10:00] Couldn’t see any opportunity because he was so focused on the problem at hand that really frankly probably never should have been there to begin with margin loans are very risky. And I’m not saying that it couldn’t work out at some point in some way, but to have this guy’s business and opportunities within the community of the strategic coach group that was there that day, absolutely obliterated because of his stress level and his blindness was sad to watch. Yeah, I agree. Sad, but what an amazing blessing to be able to see that and say, okay, and, you know, one of my mentors, I remember this conversation I had with him, this was a conversation we had 10 years ago because he had savings because he had the right mindset.

[10:54] It was December 31st. He got a phone call from another business friend of his, and he acquired a very substantially lucrative business. For $1. I believe it. $1. The opportunity was there. He took it. And it’s because everyone else was panicked in the market. He was not. And so, Kim, what you’re sharing here, the lesson from strategic coach, the lesson from us creating the habit, absolutely invaluable for listeners, depending on your income, you may have some money set aside. You may think it’s enough. You may not think it’s enough. The mindset that will determine all what’s a piece of wisdom around the opportunity mindset because we’ve hit the savings mindset. What’s a piece of wisdom around the opportunity mindset?

[11:51] Well, and in answering this, I really want to pick up the younger crowd because that’s where amazing opportunities exist and they may not have the wisdom to see them. I think when we get a little older, we’re a little bit more attuned to looking for them. Nevertheless, the younger crowd, because they’re used to living on, not very much as their income rises, they have such an opportunity to be an amazing saver and the people that take advantage of our structure are statistically proven to save 300 times the national savings rate, which, you know, if it’s at 2.9%, it doesn’t take much to get up to a 20 or 30% savings capacity. With that space, the peace of mind that then feeds that 25-year-old

[12:42] or 30-year-old kid to pursue opportunities is amazing because they’re able to get their chin up and their point of view out beyond themselves and, you know, when we’re in our early 20s and even early 30s sometimes, we can be pretty selfish, but if we have opportunity money, we start to see what’s out there and a lot of people at that space, they may be W-2 employed, but they’re looking for that business opportunity and it’s very difficult to see past your paycheck if you’re living paycheck to paycheck. But if you have that savings, you start to see opportunities that exist outside of yourself in order to leverage the opportunity money that you have available, as well as your time, your capabilities, your relationships, et cetera, and you can really

[13:38] start to build on that so that when an opportunity comes, like December 31st for a dollar for a business, you have not only the dollars, but the mindset to be able to see it and the confidence to take advantage of it. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit ProsperityThinkers.com.