Getting Off The Roller Coaster – Episode 044

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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 hosts, best-selling 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 my co-host and best-selling financial author with us today, Kim Butler. Welcome, Kim. Thank you, Todd. Happy to be here and excited to share some wisdom with our listeners that they can really sink their teeth in as opposed to the chatterboxes that are going on in the media these days because of the wild week in the stock market. Of course, we’re recording this on what you would say maybe the eighth, ninth day.

[00:51] But I just noticed something recently that the big mess in 08 was September 29th. Here we are headed into September. We’ve already had a wild week and I think we’re in for a pretty wild ride as we head forward and it’s one of the reasons that we at Partners for Prosperity do not like investing in the stock market. But nevertheless, we realize that some of our clients do so we’ll talk about that a little bit and talk about what they can do instead so that they can get good sleep at night. Well, and I think maybe first we can kind of prep that this third quarter has been set for this. I think even the Federal Reserve has been telegraphing the fact that QE3 or whatever they want to call it was going to be the quarter that they potentially raised interest

[01:45] rates. So it’s interesting that we’re seeing this volatility and I wonder how much of this volatility is actually preprogrammed because there is segments of the marketplace that can make money on volatility, isn’t there? Absolutely. I was listening to a Tony Robbins video recording the other day and he was bragging about how some of his investment guys have always been making money even in crazy markets. And so it’s absolutely possible to do it. I just don’t feel that the volatility and the stress is worth it because we have investments that make money regardless of what’s going on in the stock market. And even the big, big players that are in the Tony Robbins level, if you will, are having to really put their noses to the grindstone and do extra work in

[02:39] order to make money in a volatile market. And there’s so many of us that, I guess, with the traditional training in the stock market believe that you have to accept this level of volatility if you want a certain level of gain. So particularly, double-digit gains seem like a very unrealistic number in anything that’s safe right now. So you’re pre-programmed to almost hunt this level of risk and volatility in order to get those double-digit returns. And that’s one thing that you’ve always been against, isn’t it? Absolutely. Because this idea of the fact that you have to take on more risk in order to get reward is wrong, flat out wrong. And it always cracks me up when people say, well, how risky is that when we’re

[03:38] talking about some of our investments? And it’s interesting that we have to sometimes get into the actual definition of risk. But obviously, everything has some risk. But volatility is a type of risk that we do not have to put up with. And I want to share a funny little story about knowing what you know, in other words, being really, really confident about what you know to be true. And most of our clients know in their heart of hearts that they don’t have to put up with volatility, but they are not confident in that knowledge. So here’s the story that may help drive this point home a little bit. Picture a college class, freshmen students. It’s the beginning of school. So this is a good time for this story.

[04:24] And it is calculus. And the professor comes in and writes a really complicated equation on the board and says, hey, who wants to solve this? So one student goes up, writes it out on the blackboard or the white board, I guess, and solves the problem. So he thinks and the professor says, no, no, you’re off from the start. So the student goes and sits down. Anybody else want to try? Yeah. So another comes forward, erases all the first student’s work, basically starts off solving the problem the same way. And the professor says, no, no, no. No, no, no. This year, you’re starting off wrong. And so this student sits down. And the third one comes up and says, I’ll try. And he starts writing on the board

[05:09] the exact same beginnings that the other two students did. And the professor says, no, this is the wrong beginning. And the student keeps on writing and just stands there while the professor’s saying, nope, nope, don’t think that’s gonna do it. Well, nope. The student continues, continues and finishes the problem and the professor says, Oh my gosh, you’re right. That’s fabulous. And the other two students are just absolutely befuddled because they know that that’s the way that they were going to solve the problem. And the professor says, this is the most important lesson that you’ll learn. You can’t just know the information. You have to know that you know it. You have to have the confidence to say,

[05:59] no matter what the professor’s saying, or in our case, no matter what the media is saying, no matter what your friends are saying, no matter what your brother-in-law is saying or whoever it is that you’re talking to about your finances, you have to know that you know what you’re doing and you have to be confident in that knowledge. And so many of the things that we work with, let’s just name the three products, whole life insurance, been around a couple hundred years, people may say it all the time. Life settlements, been around over a hundred years, people may say it all the time. Bridge loans for investing, been around as long as real estate’s been around, peer-to-peer lending, been around literally since human beings

[06:44] began exchanging things and people may say both of those things all the time. So the story is there to remind us that we have to do our research, absolutely. One of my husband’s favorite lines is, if it sounds too good to be true, then do more research and figure it out. Don’t just nay say it right off the bat because everything that we love sounded too good to be true. Electricity, the iPhone or the VCR in its day or whatever you think about, those things sounded too good to be true but with a little bit of research and a little bit of diligence and some confidence on somebody’s part, then those things came to be. And so our clients need to dig in, go ahead and do their research. If they hear from us something

[07:36] that sounds too good to be true, find out about the tax law in 1911 that started life settlements. Find out about the mutual ownership of life insurance companies. Talk to other people that provide bridge loans as investments or that have done peer-to-peer lending and get your confidence up and then don’t let it be shaken. Don’t let it be shaken by the media, by the talking heads, by the newspapers and the various articles that are magazines that you read. Boy, something that I’ve started to do of late is before I read anything, I go and look about the author. I wanna know who’s thinking I’m reading and oftentimes I’ll not read an article because of the author. I can tell they really don’t have the background

[08:21] that I want to help me know that I know. Fantastic. I would want you to address sort of one other area in that too and that’s the excitement that I think people crave from investing. These investments that you mentioned are paying double digits continuously but they don’t necessarily have the ability to have a 50% jump or a 50% decline in one afternoon like we see in the stock market. Do you think there’s a percentage of people that are looking for that excitement that is maybe more gambling than investing? Yeah, that’s a really good question and good heavens, there’s a hundred different ways that we can get excitement in our life without having it affect our finances and our family’s finances.

[09:16] But I do agree that sometimes it’s excitement. Sometimes I think it’s even bragging rights like, oh, I picked a stock and it did this or I picked a fund and it did that. But I also think that we fall into the trap as human beings of wanting something for nothing. We wanna be able to put in just a little bit of money and have it turn into a lot of money or and this is true in lots of areas of our lives. We wanna eat right just part of the time but have good health or we wanna work out just part of the time but have good physiques. So human beings can fall into the lure of excitement or gambling is basically another way to talk about that or the lure of something for nothing. And yet we know in our heart of hearts

[10:05] that that isn’t going to get us good long-term results. And so we need to be aware at this time in particular whether or not we’re thinking about the stock market in terms of, oh my gosh, I’m glad I got out of it or oh my gosh, maybe I should get out of it. That when this period of volatility occurs it can take decades to recover from. In the depression, it was about a 22 year I believe I’ve got the statistics right, 22 year timeframe for things to quote get back even. Now the last couple of years we’ve had it happen in the seven year timeframe from 01 to 08 and then 08 to 15 or so both seven year timeframes where people quote got back even. But the problem with that is that your account may be

[10:59] again quote back even you missed out on seven years of growth. And there’s an opportunity cost with that that growth that you didn’t get while we can be grateful that we’re back even that growth that you didn’t get during that timeframe is detrimental. So please, if you are thinking of getting out now is the time it’s funny I’ve just in the last week talked to a couple of clients. Oh, it’s down a little bit down compared to what? Down compared to 2008, nine no, definitely up from that down compared to a couple days ago, good heavens. Let’s use this as a wake up call and turn to investments that are not so volatile that are not putting us through the roller coaster ride and do the life settlements or the bridge loans

[11:47] for investing in the life insurance for savings. Savings needs to become popular again. It is so not popular right now and it’s really hurting our families and our country because when we save, then we can invest for the long run. And I know that the media pendants and even some of the government officials out there are saying don’t save that takes money off the table. No, it doesn’t. It helps us build for the long haul. And even if you’re 70 years old, you’ve got probably 20, 30 years to go. That’s the long haul. We need to be saving and saving in the place where it’s not taxed and where it can grow at four or 5% and then investing where it’s probably going to be taxed because investments typically are

[12:33] but is definitely growing double digits and not roller coaster riding. Super. Any other thing you’d like to share with people as far as if you’re looking at, there’s two ways I guess to look at your investments. There are the money that you’ve already invested and there’s also the money that you’re trying to accumulate for investments, which with the 401Ks, the IRAs, it makes it really easy to take small amounts of money to start saving. Do you have strategies for that as well? Absolutely. We recommend that people start their saving. And if you’re at the beginning of a phase could be because you’re young or because you are needing to start over. But if you can start with monthly contributions

[13:23] into a place where you can control it. So 401Ks could be one place, no doubt, especially if you get a match, but they’re not very well controlled. So we feel it’s better to save in a place where you can control it and build up to the 25 or 50,000 that is necessary to do real investing. So we can talk about that further. That’s a great idea for another podcast. If people wanna elaborate on that a bit, we can do that. And in the meantime, I’d really just like to open the door for anybody that would like to learn about our alternative investments that are earning double digits or about our savings account environments that are earning the four or 5% without tax to get in touch with us, call us.

[14:11] You’re welcome to get some information via email ahead of time. And if you prefer email us, we’ll send you some information via email ahead of time. And then let’s get on the phone and strategize around your situation and help you get away from the volatility of the stock market into places that are growing without fluctuating, producing income without missing a beat every month and a place to store cash for liquidity. Superb. And just for anybody who’s out there listening, if you need the number to Partners for Prosperity, that is 877-889-3981. Again, that’s 877-889-3981. And then in past shows, you’ve had a nice little gift for our listeners. Did you bring anything with you today? Yeah, if people haven’t had a chance to grab it yet,

[15:06] we have our Financial Planning Has Failed booklet. It’s about 60 pages that does get into these three products and some of our strategies a little bit deeper. And that’s at partners4prosperity.com slash ebook. Partners4prosperity.com slash ebook. And I wanted to add to your phone number, the extension 120. That’s the easiest way to get ahold of somebody. That’s Jill. And she can get you started, get you some email information, and then if appropriate, schedule some time with me. Look forward to it. Super. Well, again, this is No BS Money Guy Todd Strobel for the Prosperity Podcast. And once again, special thanks to Kim Butler. Take care, everybody. Thank you for listening to the Prosperity Podcast.

[15:51] To take control of your money and have it work for you, visit us at partners4prosperity.com. If you liked this episode, make sure you subscribe and leave a review.