Episode #48 – Preparing for Opportunities

Hi, welcome to another wealthy and wise Wednesday and as usual, I hope you are having a good week and that you have got something productive going on. Hope you are enjoying this podcast, I sure enjoy looking around and reading all the different things I want to talk about, I have got a list of [00:00:21] long of all the things that I can throw into a podcast and I am really, I would really love to hear your suggestions too. So if you have any thoughts or ideas or things that you would like to hear and discuss on this podcast, please reach out, you can always just send those suggestions to questions@wisemoneytools.com because obviously this podcast is for your benefit and we want to make sure they are productive for you, so if you have anything that you’d like to discuss or you discuss, please reach out.

[00:00:59] So as I am reading this week, I come across this comment that Charlie Monger said, now Charlie Monger is Warren Buffet essentially his partner, they work together, with both chart halfway, then Warren does stuff on his own and Charlie Monger does stuff on his own but Charlie said something interesting, I think he said this years ago because I know I have heard it many times over the years, they are just kind of stuck with me this time. It is something that we probably have to talk about and he says that I would rather be prepared and not have an opportunity than to have an opportunity and not be prepared. Okay, so let’s break that down just a little bit, what is he really saying here, and what is an opportunity? From his world, an opportunity is some sort of investment, something they can buy, something they feel it’s on sale and it is going to increase in value over time. This could be an entire business, this might be some stock, this might be real estate, anything that they can really get involved in that looks like it is a good opportunity to get into. So what does he mean by prepared?

[00:02:19] Well, the only thing that it could mean is that they are prepared financially to take advantage of the opportunity, so what does that mean in our case? Well, that is where this whole entire building your capital and banking system comes in to play because this has become your story facility for that preparation, for building up your capital so that when the opportunities come along, you can take advantage of them. So often in life, you can probably think back in your life when something occurred, some of it happened when you ran into some kind of a situation where you just say huh, if I just had the money or if I would [00:03:06] those are the famous wishes that we all have. I remember thinking back where I grew up in California, there was this part of town that hadn’t been developed there and I lived on the South side of the development and my best friend lived on the north side of the development and I always had to drive this, oh it was probably a three or four miles stretch of really just nothing but some empty fields, maybe there were some trees, maybe there was some orchards or some sort. But I remember and this is [00:03:48] 16, 17, 18 years old. I know where I live, I know where he lived and I know in between someday that is going get built up.

[00:03:59] Now, I am 16 years old, not a lot of capital at my disposal but I do remember thinking if someone just or whoever owns that land someday is going to turn this all into residential or commercial properties and be very wealthy. I happen to know some other real estate guys and some investment guys that my dad was friends with and don’t get me wrong, we grow up very almost poor, my dad worked really hard but he just did not have anything to his name financially. A paycheck to paycheck kind of guy but we lived in this area where there were some associations where he knew some very wealthy people and I got to kind of [00:04:55] associated with them and certainly their kids over the years and learn a little bit more about them. I had a friend whose dad was a real estate developer and a friend whose dad also was a big-time investor and so I would pick up little bits and pieces and just because of the fact that I had learned enough about what a real estate developer needed to do, that is what sparks my curiosity about this land between where I lived and where my best friend lived.

[00:05:29] Well lo and behold, fast forward the number years, I don’t know who owned the property, I don’t know how it changed hand and who actually developed it but somebody developed all that property and it has most likely made them a [00:05:45] load of money. So what does that have to do with a little quote here, I’d rather be prepared about not have an opportunity than have an opportunity and not be prepared. The ideas, there are times where you might be prepared, you have built up this capital, you might have been waiting for 3, 4, 5, 8, 10 years to deploy this capital into something, but you have been very patient, you have waited for that opportunity to expose itself. You have taken the time to understand the number and the predictability of the outcome and there are times where you just think wow, I am prepared, I have got nothing in front of me. I remember for years not really making any investment decisions because things just weren’t very attractive.

[00:06:38] Market at all-time high, real estate market going crazy, I remember about pre 2008, everybody was getting into real estate, some [00:06:49] mortgages and there were some writings on the wall that you could just tell that these things couldn’t last forever and obviously it didn’t. But we were somewhat prepared, somewhat involved but the big time opportunity hadn’t quite come along yet and that is really what you are trying to do, you are just trying to prepare for that opportunity, better to miss out or not having an opportunity but have the capital because when that opportunity comes along and you can now do Warren Buffet says when it is raining gold, you go out with a washtub and catch all the gold you can. And those are the times where you just want to have already taken the time to prepare. So I guess the moral of the story is don’t be discouraged that you are saving and putting away and storing all that capital up, you are like the squirrel in the summer time getting ready for winter and having the access to that capital when that right opportunity comes along. It is going to be extremely beneficial to you.

[00:08:01] The other thing that I was thinking about is the capital itself and specifically when it comes to taking income, there is a saying that you don’t eat the goose that lays the golden eggs but it is okay to eat the eggs. Okay, what does that essentially means? Your golden goose is your capital and that capital produces income, it produces return and it produces some sort of growth and you don’t ever want to lose or invade or spend that capital. We don’t want to eat that golden goose but that golden goose sends out some eggs, sends off income, sends off growths and we can take that and that could be used as an investment or income stream that we can live on. And eventually that is what we all want to be in retirement, we want to have access that are producing assets and so we can leave our capitals alone, keep it about status quo and take the income and earnings off that capital. Take the eggs from the golden goose and that is okay.

[00:09:19] While we are building our wealth, it is always wise to take the eggs and reinvest them and now that becomes more capital and more capital so that eventually we have this very nice nesting, so that we can produce income in retirement. Now here is the problem, we under think retirement. You know it used to be a million bucks was a lot of money, it is just not that much for 25 or 30 years’ retirement any longer. Think about this, we are living longer, you may be retired longer than your productive working years were and so you have got to plan for at least a 25, a 35-year retirement is not out of the question any longer. So a million bucks stretching out 35 years, I mean that is a lot of task for that million dollars. I often say that you probably have to be thinking of at least 2 million dollars just to have a decent lifestyle and 2 million dollars is 10 or 15 or 20 years from now, obviously with inflation and purchasing power still isn’t going to feel like two million dollars of today. So we have got to let that golden goose, our capital grow and reinvest and grow and reinvest but we have got to do it patiently, we have got to wait for the right opportunities.

[00:10:55] This traditional financial planning approach of taking your money every month by month just doesn’t work, it is just speculation. What we want to do is build and build and have capital and when those opportunities come along, we were out there with a wash tube picking up all the gold we can. This happened often times in market cycle, it happens often times in just events that might occur, it happens just in your specific community whether be real estate or a business opportunity, so the idea always being always be prepared, build that capital, keep the capital, let the capital work for you, don’t spend the capital and then eventually let that capital or the golden goose sends out that golden eggs for retirement. This might sound more complicated than it is, it is really not that complicated and it is really not that hard, the problem is wall street and financial advisers want use jogging and all these things and talk about diversification and asset allocation and [00:12:09] and betas and alphas and just get you confused so that you feel like you have to have them manage your money or you are never going to get anywhere and that couldn’t be further from the truth. You want to manage your money, you want to be in control of your financial shift and using that banking system that we teach, where you can build up that capital and ultimately take advantage of opportunity, that is a very sound strategy that is going to help build your wealth more so than anything and then eventually talk about the golden goose, one of the best retirement income streams that you can have comes off this banking system and tax free, so it becomes a very nice golden goose.

[00:12:57] Alright, I hope that was at least thought-provoking, something to talk about with your family and your spouse, think about what you are doing and why you are doing it, build that capital, I mean just save and put away as much as you possibly can because when that opportunity comes along, you want to go, we will say all in. I mean when Warren Buffet, Charlie Monger, these great investors have an opportunity, they are not buying few shares here and there, I mean they go all in and you can have that same opportunity. It is going to happen, it happens in everybody lifetime, might only happen three or four times in your lifetime but if you are prepared, if you have the capital and when the opportunity comes along, you can take advantage of it. But again it is better to be prepared and not have an opportunity than to see that opportunity comes along and you are just cracking yourself against your head saying oh, if only I would have saved my capital, this opportunity is so awesome, I wish I can take advantage of it. So there you go, hope this was again beneficial, thought-provoking and more importantly hope it just put you on that path, that just packs away your capital, don’t spend your capital, let your capital continue to lay those golden eggs.

[00:14:26] Alright that is it for this week, if you have any questions, again thought, comments and suggestions, send those to questions@wisemoneytools.com and we will respond as quickly as we can. Other than that, you go out and have a great week, take care.

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