Building Wealth Without Predicting the Economy – Episode 684

Transcript provided by the show’s production team.

[00:00] Spencer Shaw: Prosperity thinkers, welcome to the podcast. We’re gonna be talking about building wealth without predicting the economy. My crystal ball for predicting the future and the economy is broken today. I don’t know what is… How’s yours doing? Kim Butler: I don’t think I ever had one. Spencer Shaw: Well then maybe we both should just go over to Polymarket and see what they’re gonna say. No but really we have predictions going on all the time, people saying, “Oh, this is what’s gonna happen to silver. This is what’s gonna happen to oil.” They’re all just throwing darts to who knows what board. You don’t play that way. How come? Kim Butler: Well, because long ago I heard a well-known speaker say, “If you’re an economist and you just predict growth, you’ll be right 50% of the time.” And I

[01:00] thought, “Okay, that’s not a game that I wanna play.” And so it’s so much more peaceful, so much simpler to trust some centuries-old spaces to put money in so that we have certainty around our money, so that we can have peace, P-E-A-C-E, and simple finances. Holy cow, you said this on a previous podcast. I don’t know what it is about us Americans, but we really like complexity sometimes, until we don’t. So I’ve got two sets of family members now in their late 80s, and oh my gosh, do they wanna simplify their lives. Simplify. And oh my gosh, should they, because they just don’t have the energy level, the brain capacity and they’re fully functioning. But still, and you know, heaven forbid that they weren’t, it would be even worse. They just don’t have the energy level and the brain capacity to deal with the complex. And so it’s so critical that as early in our lives as we can, we set up a very certain foundation that will serve us the rest of our lives so that in our later years we can have much certainty and simplicity around our finances. Now, we’re gonna get into the fancy stuff. Absolutely. That’s just human nature. And that’s awesome in addition to a certain, and quite frankly very boring, yet very effective foundation with our dollars Spencer Shaw: So when we talk about financial decision fatigue, you were talking about be- you know,

[03:00] situational decision fatigue, which I think for 80-some-year-olds, what that means is, “Hey I don’t wanna have to be making a lot of decisions throughout the day. Let’s narrow this down.” What does that look like from a person doing this with their finances, both young, ’cause you work with a lot of young families, and old? Kim Butler: Well, the funnest thing to do for a young family is make sure they have their emergency fund set, so however many months, 6 to 12 months, whatever their peace of mind dictates, in cash, in a bank, or in a mattress if you want, and maybe in a life insurance company, but let’s just leave that aside for a minute. Get that emergency fund s- set, decided upon, right? Talk amongst the spouses, pick a number, fill it, check it off the box. Then the next thing is your opportunity fund, and you want to create an opportunity fund that you can use the rest of your life. The best place

[04:00] to store the opportunity fund is the life insurance industry, where you have mutual companies that function like credit unions do. Think MassMutual, Guardian, New York Life, Northwestern Mutual, Penn Mutual, Lafayette, companies like that. And that opportunity fund gets to be stored, in today’s world, that earns 4 or 5% without taxes, and it will serve you the rest of your life. Furthermore, it will also set you up way in the future, like when you’re in your 70s and 80s, to create a guaranteed income for life. So if you or you have parents that are in this age, are in your 70s and 80s and 90s, creating a guaranteed income for life on top of Social Security is the single most peaceful thing that you can do, that drives so much certainty and guarantees and peace of mind. So there is a very

[05:00] unique product, and it comes from that same life insurance industry, and it is the opposite of life insurance. In other words, we buy life insurance in case we die young. Well, this product is so that we can live until we are old. And it guarantees an income for life every single month, payable like clockwork guaranteed dollar figure, guaranteed amount, and guaranteed for the rest of your life. Well, somebody in their late 80s today is going to live at least another 10 years if they’re healthy. That’s what the statistics show. And likely another 20 or 30 years. I mean, somebody in their 70s today absolutely has 30 years ahead of them. And so this element of picking guaranteed income for life with a very specific product that is guaranteed amount, guaranteed timeframe. The

[06:00] only guarantee that we don’t know is how long you’re gonna live, but it’s guaranteed to pay no matter how long you live. That is what builds that foundation, that peace of mind. It’s not your fun, sexy investment, but if you layer in Social Security and then you layer in some additional guaranteed income for life, especially for both spouses- Oh my gosh, the peace and certainty that you can have in your family Spencer Shaw: Yeah. So good. So one thing I’m looking at, ’cause I’m looking at our notes here and that I’ve put about the predicting of the economy, and one, you’re solving a huge problem by taking care of the speculation. You’re lining up the guarantee. So that’s good. But often what we want is we wanna be excited about the upside. So to give an example I was looking at some real estate, and this

[07:00] piece of real estate I, you know, I’m constantly– I, I love real estate. Real estate people love real estate. That’s just how it is. And it had only gone up 20% over the last 20 years. That’s not a lot. And I looked at another piece of real estate in a different city, and it had gone up 200% in the last 20 years. Of course, if we’re in the prediction game, all of us would wanna put our money in the market that went up 200%. So for you, you handle the basement, the certainty, which is really good. How do you work with people helping them when they’re looking at that upside and either temper, because I couldn’t predict the 200%, but I get excited about it. So what do you do there? Kim Butler: Well, as stated in previous podcasts, you pursue the house of both. Ideally, you use one to create the other, right?

[08:00] So you build in that opportunity fund, get some guarantees, and then leverage that or borrow against it to pursue those higher opportunistic investment deals. And you’re right, nobody can tell. And, you know, I don’t know whether you can purchase both properties or not, but that’s certainly a way to go. At a minimum, you can have your opportunity fund and borrow against that and get your guarantees, but then also get your opportunity actual implementation on a particular property. And then ideally, I’m a big fan of cash flowing properties as opposed to things like raw land, because then you can use the cash flow to pay back the first opportunity fund to create the second one, and you can do that literally unlimited for the rest of your life. So that’s how I would go about it Spencer Shaw: Oh, I like this. Okay. So we’re living in the house of both, and all of this I’m gonna say this: it’s all because Kim loves ice cream, and she wants both

[09:00] flavors out there. That’s all it is. So at some point you grew up and someone said, “No, you can’t have this,” and you said, “Well, I’m gonna have both,” and you figured out how to do it, and you figured out how to help and coach people through that. Whatever that is, I’m grateful for that ice cream and grateful for you. So thank you for doing that, Kim. For any of you listeners, if you’re looking to get that house of both, send an email to hello@prosperitythinkers.com.