7 Secrets of Eternal Wealth

By: Buck Joffrey MD
Date Read: 2017-02-15
Rating: ★★★☆☆

Introduction

Free Yourself from the Golden Handcuffs

“Investing for capital gains for retirement is like filling up a bottle of water as much as possible and then taking little sips, hoping you die of something else before you succumb to thirst.” -Buck Joffrey, MD Wealth Formula Podcast

Here’s the bottom line on cash flow investing–think income—that’s what matters. You are not buying stocks; you are buying additional streams of income that do not require your time.

Chapter 3: Understand your Investments

Only invest in things that can be explained with a quick diagram on the back of an envelope. If you don’t understand it or you don’t believe it, don’t invest in it. That may sound overly simplistic, but I have made millions relying on this rule of thumb as an investor.

My friend Jorge has a great business called American Home Preservation. It’s sort of a feel-good business. You see, Jorge’s business buys failed mortgages from banks. A failed mortgage is when the home owner stops paying it. As you can imagine, there were an awful lot of these in 2008. However, there is no shortage of them now either. Jorge’s company buys these mortgages in bulk at pennies on the dollar from the issuing bank. Then, instead of kicking people out their homes, he negotiates with them and rents the home back to the owner—with an option to buy—at a price they can afford. Because he’s buying the mortgages for pennies on the dollar, the profit margin after renting these homes out is huge. But Jorge doesn’t buy all these mortgages himself; he gets much of it financed through investors. In fact, you can invest as little as a few hundred bucks with Jorge, and he will give you 12% annual return on your investment issued to you as a monthly check. That’s a pretty easy-to-understand model, right? I bet you could easily diagram that out on the back of an envelope.

Chapter 5: Essentials

My philosophy is to invest money primarily into the first two levels of Maslow’s hierarchy. Why? I believe in primarily investing in things we must have, not the things we desire. No matter how tough times get, people must feed themselves and provide themselves shelter.

Chapter 7: Invest in Financial Education

In the 1970s, psychologist Noel Burch described the four stages of competence. Here are the steps as I understand them: Level 1: Unconscious incompetence. You don’t know what you don’t know. Level 2: Conscious incompetence. You have insight into your own knowledge deficits and understand your current limitations. Level 3: Conscious competence. You understand and can execute, but it is not second nature. You still have to concentrate and think things through to get them done. Level 4: Unconscious competence. The task is second nature.

Notes