Wealth Formula by Buck Joffrey

I spend most shows interviewing other people. However, once in a while, it’s fun to speak to you directly. We call these question answer shows, “Ask Buck”. I recorded this podcast episode just before the holidays and I hope you enjoy it. By the time you get this note, Thanksgiving will be over but I do want to express my thanks to you for being part of the Wealth Formula Community! Enjoy the show!

With the recent boom of real estate crowdfunding platforms, I often get this question, “What do you think of the (fill in catchy name) platform? What platforms do you like?” The problem with this question is that it’s really not asking the right question. I am a real estate investor. When I invest in real estate, either as a general or limited partner, I am looking at the asset itself, the business plan, and the people who are going to carry out that business plan. All that a platform is doing is bringing deal flow to investors and then collecting fees the way a broker does. So when you invest on one of these platforms, do you know what you are buying?—Sometimes. Do you know what the business plan is to yield the projections?—Not usually. Do you know who is operating the asset, their track record, or whether or not you like the way they do business?—ALMOST NEVER. You see, investing in real estate or any kind of real asset fund requires some due diligence and, in my book, it always comes back to the people who are operating the asset. Investing in real estate is not like investing in stocks. People can invest in the exact same stocks online from anywhere in the world and they get the same exact thing. So, you can ask someone, “Do you invest in Apple? What stocks do you like?” and it actually has meaning. After all, the Apple stock I buy is the same one you buy. That’s just not how real estate works. And to be clear, these real estate crowdfunding platforms know that. They give you the same type of experience that you get on E-Trade so that you think that real estate functions the same way. But it doesn’t. Unlike Apple stock, there is an unlimited flavor of real estate equity and it should not be mistaken for a commodity. A specific asset can’t even be looked at that narrowly.  Case in point—I was once in the best and final for the acquisition of a $25 million asset in Dallas. As it turns out, it came down to two groups. One group is a heavy value-add player with primary goal of creating forced equity and a large increase in value for investors. They did not intend to make this into a cash flowing asset but saw great opportunity to increase its value and to sell it quickly. The other team looked at it as a unique long-term opportunity to cash-flow while adding value in a more modest way. This involved keeping occupancies high and increasing rents more gradually. In the end, the cash-flow team won that battle and it is performing very well. However, it’s being run very differently than it would had the other team won. It would still be doing very well, but the business plan would have been very different. I know this for a fact because I was on both teams! Bottom line is that it’s not about the platform. It’s about assets and people. I see financial bloggers and self-proclaimed financial experts writing about these platforms as if they were specific investment opportunities, and frankly, they sound like bozos. Don’t take advice on real estate investing from someone who knows nothing about it. They are probably just trying to get you to click on a link to get an affiliate commission. For me, investing is personal. The majority of my assets are deployed into specific real estate holdings or funds that that are run by specific people. In some cases, I make the decision to invest more because of the people than I do the asset. A good example of that is AHP Servicing. AHP servicing has provided a fund of non-performing notes that I have, on multiple occasions, participated in as an investor over the years. I understand what they do but the note business is not something in which I would consider myself an expert. Would I invest in any old note fund? The answer is no. However, I do know the founder and CEO of AHP Servicing well. I also like and trust him. I am, of course, talking about Jorge Newbery. Jorge has been up to a lot of interesting things lately so I invited him back on the show to get us caught up. Listen to this week’s interview with Jorge and I think you will get a good idea why I like him and his fund as much as I do. He is one of the smartest and most interesting entrepreneurs I have ever met. Jorge Newbery is the Chairman and founder of American Homeowner Preservation, LLC, or “AHP.” Jorge was the President of Budget Real Estate Inc. from 1995 to 2008, where he brokered over 1,000 troubled Department of Housing and Urban Development and real estate owned properties and acquired, renovated and operated over 200 distressed multi-family, single-family and commercial properties. Prior to that, Jorge was the co-founder of Sunset Mortgage from 1992 to 1995. Shownotes: Jorge’s background What does AHP Servicing do? Jorge talks about the current AHP fund Jorge tells us about one of AHP’s best features What will happen to AHP’s current holdings if there is a market correction? https://ahpservicing.com/

In college, my two favorite courses were biochemistry and organic chemistry. The logic was very soothing to me. In high school, the only thing that gave me that sense of logically progressing to an answer was mathematics—especially geometry proofs. In other words, I like concrete answers and am not as comfortable leaving arguments unsettled. Like you, I also like money and am interested in how the economy works. Sometimes I wish I had studied economics so I could better understand the nuanced aspects of what is going on today. But economics is not science. It is a social science. What that means is that while you can build models and make predictions, it’s very hard to accurately come up with the answer to a problem ahead of time. It’s not that exacting.  That’s why a room full of Ivy League educated economists can look at the same numbers and come up with different conclusions. There is no answer—only theory and forecasts. As an investor that is frustrating for sure. In fact, sometimes all the economists are wrong because the data they focus on ends up not being the right data to look at! Case in point—I remember back in the late 1980s when everyone was talking about Japan becoming the next financial powerhouse. Virtually no one, except Harry Dent, predicted that Japan would go into a tailspin for the next three decades. Harry predicted that would happen because the population of Japan was shrinking—less work force, less productivity. Today, everyone is looking at China as the next global financial power. It has certainly grown at an incredible clip over the last few decades. But China did something in 1979 that could seal its fate as another failed Asian power—it created a one-child per family policy that continued until 2015.  Will China become the next Japan over the next few years? Or, will another unforeseen variable like technology save its drop in productivity? There is no way to know for sure.  The best we can do when we consider macroeconomics is identify the right trends and get ahead of them as fast as possible. Harry Dent has a pretty good record of doing this. Right now, just like a lot of bears including Peter Schiff and Jim Rickards, he is predicting a major financial crisis. But his flavor of armageddon is a little different. He’s predicting a deflationary recession. How would this affect you? Find out by listening to this week’s episode of Wealth Formula Podcast! P.S. Listen to the very end if you invest in apartment buildings. P.S. Attached is the study on real rate demographics that Harry references in the interview. DR.1125.BELREPORT.Q3Download Harry S. Dent, Jr. isn’t just the face of Dent Research, he is also a bestselling author and one of the most outspoken financial editors in America who has developed a unique method for studying the global economies and providing insights to what to expect in the future. After years of studying economics in college, Harry quickly became disillusioned and grew to find the profession itself vague and inconclusive. So he shifted his focus to the burgeoning new science of finance, where he could identify and study demographic, technological, consumer and many other trends that empowered him to begin forecasting economic changes. Harry went on to receive his MBA from Harvard Business School, where he was a Baker Scholar and was elected to the Century Club for leadership excellence. He then joined Bain & Company as a Fortune 100 business consultant and now heads the independent research firm Dent Research. Since then, he’s spoken to executives, financial advisors and investors around the world about demographics and the power of identifying different trends. Harry has appeared on “Good Morning America,” PBS, CNBC and CNN, Fox News and is a regular guest on Fox Business. He has also been featured in Barron’s, Investor’s Business Daily, Fortune, U.S. News and World Report, Business Week, The Wall Street Journal, and many other publications. Harry has written numerous bestselling books over the last few decades, including The Great Boom Ahead in 1992, The Demographic Cliff in 2015, The Sale of a Lifetime in 2016 and Zero Hour in 2017. In 2019 Harry published his latest book Spending Waves, where he shares decades of extensive research covering over 200 businesses across 14 different industries to give readers a usable tool to find the most lucrative opportunities over the next 20 years. Today, Harry uses the same research he developed from years of hands-on business experience to offer Dent Research subscribers a positive, easy-to-understand view of the economic future in his flagship newsletter, Boom & Bust. Shownotes: India vs China: Who is going to have the biggest economy? Harry talks about Japan’s mistake Are we in the beginning of an economic Winter Season? What does Harry think about investing in apartments? https://harrydent.com/

A simple question can have so much complexity around it. Here’s one I get all the time: “Should I pay off my house?”. Conventional wisdom says this is a no brainer. Look at all the financial gurus out there like Dave Ramsey and Suzi Orman—they all think you ought to be paying off your mortgage. Is it possible that they are wrong? Even in the unconventional alternative space, this is a controversial issue. A mortgage on your house is debt. If you follow Robert Kiyosaki, he says that there is good debt and bad debt. Good debt puts money in your pocket (ie. mortgages on investment property) and bad debt takes money out of your pocket (ie. buying a television on your credit card). That’s straight forward. But what about the debt on your personal residence? Clearly that does not put money in your pocket. You could argue that with appreciation it might some day, but it certainly does not make you any money in the short term. So…it’s a bad debt, right? Yes, but wait a second. Chances are, your interest rate is pretty low. Instead of paying off your mortgage that is 3-4 percent, one might argue that putting excess capital into something relatively safe like Wealth Formula Banking that yields 5-5.5 percent compounding might make more sense. In fact, that would give you not only tax free-arbitrage, but also liquidity to borrow against at a moments notice. I hear some people say that they keep equity in their home in case they need to access it for liquidity through a home equity line of credit. But the problem there is that if you have an emergency (ie. you lose your job), your bank may not let you access your home equity anyway. Banks only lend to people with income and good credit. In other words, you may not be able to get to your own money when you need it the most! And let’s not forget why that bank doesn’t want you to pull that equity out if you get into trouble. When you have a lot more equity in your home, you become a bigger target for foreclosure. If there is little equity in your home, the banks don’t see nearly as much value in foreclosure. Lots of equity in your home, on the other hand, makes you a bigger target for creditors. Just remember, when you get sued, debt like mortgages and other loans are your best kind of asset protection! Now, you may be reading this and concluding that I am a fierce advocate of leveraging your home to the hilt. That’s  not necessarily the case. I am just a fierce advocate of thinking about what you are doing rather than just following conventional financial wisdom. What I will say is that the math favors not keeping a whole lot of equity in your home if you consider the time value of money and asset protection. The rest, in my opinion, is psychological. When it comes to debt on your personal residence, the psychological often supersedes the math and that’s okay too. I just want you to think about why you do what you do. Now, what if there was a way to access home equity without borrowing? What if you could sell part of the equity in your home and not have payments to worry about? There is actually a relatively new product known as a home equity contract that could potentially allow for you to have your cake and eat it too.  That’s what we are going to talk about on this week’s Wealth Formula Podcast so don’t miss it!  Shownotes: The problem that Quantm.One tries to address What is Quantm.One? Why Home Equity Contracts are becoming more popular How to have your cake and eat it too. Matthew talks about Quantm.One’s online process

With the end up the year coming up, my mind is focused on what I can do to mitigate my tax burden.  We’ve done multiple investor club webinars on different strategies already this year within investor club. However, my favorite strategy to minimize my tax liability is to maximize depreciation. As it turns out, I have two houses in the Chicago area that I rent out. I used to live in one of them. Because they are single family homes, I did not consider doing cost segregation analysis studies on them. I figured that it would not be cost effective to do so. As it turns out, I was very wrong. There are some providers that are very skilled that provide highly reliable cost segregation studies of smaller assets as well. David Brizel, CPA is the guy who kept coming up in Wealth Formula Network. The way people glowed about him, you’d think they were on his pay roll!  Anyway, he’s based in Phoenix but I’m flying him out to Chicago to do the studies because it will still save me money compared to the big firms out there. I’m glad I decided to look into this. As it turns out, the two houses combined will result in about $200K of depreciation for me that can be applied to 2019! Anyway, I can imagine some of you are in the same boat—rental houses that you didn’t consider doing a cost segregation analysis on. So, I asked him to be on the show for a bonus episode. Hope you enjoy it! https://costsegstudy.com costseg@costsegstudy.com

By now, you know my paradox. The more I invest in real estate, the less I pay in taxes because of my real estate professional designation. It could be worse. I could not have the designation and not be able to apply passive losses to all sources of my income! It’s a good problem to have. My situation makes me think about the profound impact of the basic tenet of microeconomics. That is, people do things because they are incentivized to do so. In my case, I am incentivized to invest in real estate. Because I have profound tax advantages from investing in real estate, it makes me hyperaware of investments and expenditures that do not have any tax advantage. It’s the reason that I won’t even consider investing in the equity markets. If I’m operating outside of my real estate happy place, there better be tremendous yield potential (ie bitcoin), a benefit beyond just the investment itself (Wealth Formula Banking), or something else compelling. As a car guy, this has put me in a difficult spot. I love cars—especially Italian sports cars. But buying a Ferrari off the lot just makes no economic sense at all. It’s guaranteed to depreciate by no less than 50 percent over the next 20 years. Then, it may or may not start to regain its value. Another option I have considered is focusing on maximally depreciated sports cars—say something from ten or fifteen years ago. At least then I wouldn’t have to worry about losing value as much. What I would really like to do eventually is have a collection of classic cars. I’ve mentioned this before and almost did pull the trigger on my first acquisition a few months back after a perceived near death experience. But the microeconomic incentives once again prevailed. I also realized that I didn’t really have the garage space to park a multiple six figure investment. So…for now, I am still driving my Prius. However, to be clear, I still love the idea of buying nice things that will likely appreciate over time. Nothing you buy from Ikea will ever go up in value. So, why not buy some things that are more expensive that you can enjoy for a lifetime and sell them at a profit someday? Anyway, I will follow my own advice soon enough when it comes to cars. In the meantime, I have found a super cool business that allows you to own a fraction of your favorite classic or rare supercar and trade it via an on-line marketplace. The business is called Rally Rd. and it functions solely as a mobile application. It’s a fascinating business model and one that you may particularly enjoy if you like to combine your hobbies with investing. This week’s Wealth Formula Podcast features an interview with one of its founders, Rob Petrozzo! Rob Petrozzo is the Co-Founder, Chief Product Officer at Rally Rd. Rally Rd. is a free app that allows members to invest in individual blue-chip collectibles with ease. Each asset on Rally Rd. is vetted by a team of industry experts, acquired, insured, and professionally maintained & monitored 24/7. Shownotes: Rob’s background How Rally Rd. started Rally Rd’s market Classic cars and the economy rallyrd.com

If you read the title of this email and felt a little weird about it, I think that’s pretty normal. It was intended to get a reaction out of everyone. For those who believe in giving for the purpose of being a good person, it might disgust you to think of adulterating your good deeds. If you are less charitable minded, it gave you good reason to read further rather than delete an email about giving your hard earned money away. The truth is that charitable giving is complicated. For those who have done much of it, you know there is a benefit to you that you understand yourself, but is a little hard to explain. You see, several scientific studies have shown that giving money to charity makes you a happier person. In that regard, charity is not entirely charitable. In exchange for a monetary gift, you are getting a psychological boost— a return of happiness so to speak. Of course giving can have a financial benefit as well. You get a tax deduction every time you give and, if you give enough, you can even drive yourself down to a lower tax bracket and potentially come out even. That’s very basic charitable giving economics. But obviously there are a lot more levels of complexity used by the ultra-wealthy for tax and social benefit. You have already seen leveraged charitable giving in the form of conservation easements although they certainly are not without controversy. That has not stopped the likes of Ted Turner and Donald Trump from utilizing them. Charity, as it turns out, has its own complexity when it comes to higher level personal finance. You have probably heard of things like charitable remainder trusts and other vehicles used by the ultrawealthy to legally avoid estate taxes.  These strategies are complicated for sure and I can’t say that I really understand them. However, they are also really powerful and worth knowing about because they may very well begin applying to you before you know it if you are participating in our Investor Club offerings! For that reason, I invited Jerry Borrowman on Wealth Formula Podcast this week. Jerry is one of those guys who really understands the nuances of all of this stuff. That’s more than I can say for 99 percent of the advisers out there—even the ones who deal with the ultra wealthy. If you want to understand how estate taxes can become legally optional and actually leave more money to your children by giving money away, don’t miss this episode.  Buck P.S. I asked Rod from Wealth Formula Banking to help me with the interview. If you have any questions about this interview, reach out to him at rod@wealthformulabanking.com Jerry Borrowman joined New York Life as an agent in Pocatello, Idaho on March 3, 1978. In the course of the next 24 years, he worked as an agent, sales manager, trainer, and assistant vice-president in field technology. He traveled for New York Life International including work in India, Hong Kong, and Argentina. In 2001 he joined Beneficial Life as Vice-President of Advanced Solutions and Professional Development, where he and his team provided classroom and internet training, illustration support, and individual case support. Jerry also worked as a member of the Product Design Committee, Agent Market Conduct Compliance Committee, and as lead designer for agent software. When Beneficial Life withdrew from the sale of new products he joined Cambridge Financial Center, the Utah, Nevada, Idaho and Arizona affiliate of Penn Mutual Life Insurance Company, where he works as Director of Advanced Solutions. In the course of his career, Jerry has taught more than 2,000 classes to agents on topics related to all areas of advanced markets, in more than thirty states, and a variety of foreign countries. Shownotes: Why do families with considerable wealth use charitable giving tools to reduce their estate tax? The estate tax is a voluntary tax Jerry talks about the estate tax exemption Do charitable gifts reduce the amount of money available to family beneficiaries? Income tax savings with charitable gifts

Where are you today? Where do you want to be? Based on what you are doing right now, is there any chance that you are going to get there? Those are questions that I ask myself frequently—especially when I feel like I’m in a rut. Why is it important? Well, for those of us who are fortunate enough not to have the burden of worrying about where our next meal will come from, we have the opportunity to create our own destinies. But the fact that we don’t have to hustle anymore also increases the likelihood that we go on auto-pilot and live a life of abundant mediocrity. If you don’t care for more than that, more power to you. However, if where you are today does not match where you want to be, make sure you do something about it. If you want to win the lottery, you have to at least buy a lottery ticket! In my case, I would like the opportunity to influence the thinking of more professionals like you. I’ve done pretty darn well this year and it would be easy for me to sit on my laurels and congratulate myself in hopes of simply repeating my success in 2020. However, simply repeating the success I had in 2019 is not what I wish to to do. In order to get where I want to be, I need to touch more people. I am a firm believer in the words of Zig Ziglar, “You can get everything in life you want if you will just help enough other people get what they want”. So the question I need to be asking myself is whether I am putting myself in a position to maximize how many more people I draw into our Wealth Formula Community. I need to make sure that I give myself the best chance to grow the brand and to spread its message. How about you? What are your goals? Maybe you want to add a zero to your net worth. If that’s the case, can you get there just by doing what you are doing now or do you need to actively change your facts? What is it that you need to do?  The people who do the most in this world do it by design. Very few people accidentally get rich. Professional athletes and entertainers work their asses off at their craft before they become rich and famous.  People who get rich from their investments do so by investing in things that could possibly make them rich! Stocks, bonds and mutual funds are not going to make you rich. Listen, I’m not here to tell you that you have to change your life. I just want you to make sure that you are not moving through life like a zombie and regret that you didn’t at least put yourself in a position where achieving your dreams was even possible. Remember—you can’t win the lottery if you don’t buy a ticket. Being a physician, dentist or engineer does not define you. You define yourself with your own efforts. My guest on Wealth Formula Podcast this week is a great example of that. David Phelps started focusing on real estate during dental school and went on to become a major influencer for his colleagues in personal finance.  When people think of David, they don’t think dentist, they think financial freedom. He is a great example of someone who has taken his destiny into his own hands despite coming from a typical professional background. You definitely want to hear what David has to say. David Phelps, D.D.S.Owned and managed a private practice dental office for over twenty-one years. While still in dental school, he began his investment in real estate by joint-venturing with his father on their first rental property in 1980. Three years later, they sold the property and David took his $25,000 capital gain share and leveraged it into thirty-one properties that later produced $15,000 net cash flow.Multiple health crises suffered by his daughter, Jenna (leukemia, epilepsy and a liver transplant at age 12), caused David to leave practice so that he could spend time with his daughter. Unfortunately, a divorce and failed practice sale provided additional setbacks that he had to think and work through.Today, David is a nationally recognized speaker on creating freedom, building real businesses and investing in real estate. He also combines his professional and personal experiences to illustrate how the tactical and aspirational work together. David helpsother logical, rational professionals become dreamers, then strategically manifest those dreams into freedom. He authors a monthly newsletter, “Path to Freedom” and hosts“The Dentist Freedom Blueprint” podcast. Freedom Founders Mastermind Community grows exponentially, year by year, providing the pathway to freedom for many professional practice owners.“The greatest risk in life is doing nothing.” Shownotes: David’s story: from dental school to real estate What school does not teach you about finance What is the Accumulation Theory? Why you can’t rely on outdated rules to manage your money today

I’m a doctor, but Wealth Formula is not a doctor podcast. Sure, probably 30-40 percent of my Accredited Investor Club is made up of physicians and dentists, but that just happens to be the byproduct of my own professional past. People with common background tend to flock together I guess. That’s fine with me. I love working with other health-care types but I don’t ever want to approach them cold. You see, when I first set out to do this show, I was going to make it about doctors. It made sense to carve out that niche since, at the time, no one was really filling the vacuum.  In the end, what kept me away from a doctor show was that most physicians are too difficult to convince of anything other than conventional financial wisdom and other bad ideas. The voices that have emerged as influencers for doctors now talk of ETFs and “living like a resident”, which of course is at odds with my real asset, abundance focused approach. Back when I lived in Chicago, I tried to reach out to some doctors locally a few times. One of my neighbors was a neurosurgeon making millions of dollars per year who was dumping his money into a financial advisor like everyone else and his idea of alternative assets was investing in medical device companies that would randomly solicit him at his office or in the operating room. Not to be too negative about medical device opportunities, however, I have never seen a doctor invest in a medical device and make the millions he typically anticipates. Why? Well, a good idea only goes so far. You have to have a demand for the product and a very good team implementing that plan. And while those great opportunities do exist, most individual doctors never see them because smart investors and venture capital get to them first. Most medical device startups come to doctors when they are pretty much busts to begin with and after everyone else has said no. But that’s your typical doctor investing—send it to the wealth advisor or spend it on an idea that will never take off. It’s painful to watch but even more painful to try to intervene. So now, I just work with the doctors, who along with everyone else in my network, find me and who are open to another approach to personal finance. I should point out that, as I’ve said before, I don’t think it’s a bad thing to invest in high risk high reward type investments with a small portion of ones portfolio. However, there is a smart way to do that as well. You still need to dig into the information that is available and be smart about your allocations. It is even smarter if you come at it as a team. Venture capital is certainly one approach to asymmetric risk that is worth considering. If you find the right group with whom to invest, you might have an opportunity to achieve considerable returns on an asymmetric risk fund. The idea there is that you put your money in competent hands to spread over multiple opportunities. Some of them might go bust and some might result in 5x-10x outcomes. I personally have not invested in any venture capital myself, but I would do that before I ever considered investing in a medical device company that came knocking  at my door. Even asymmetric risk has strategy to it that can optimize outcomes. To help us learn about venture capital and to see if it might be right for you, this week’s Wealth Formula Podcast features Vanessa Bartram of Zora Ventures.  P.S. – If you are interested in learning more about ZORA and investing in Israeli tech, to sign up for a webinar they are hosting on Tuesday, October 22nd from 12-1pm EST.  Vanessa is an impact entrepreneur turned impact investor. She began her career in investment banking in Mexico City, advising middle-market companies on M&A strategies and restructurings. She later founded the Miami-based impact HR company, WorkSquare, which she grew to over $25 million in revenue. Vanessa holds an MBA from Harvard, a BA from Princeton, and is a Heritage Fellow with the Wexner Foundation. Shownotes: What is Impact Tech? What’s the difference between a venture capital fund, private equity and angel investing? Vanessa talks about Zora and why she chose to start Zora in Israel http://www.zora.vc/wealthformula

I am in a financial position that may seem somewhat unusual to you. You see, the IRS rewards me for my real estate investments by taxing me less. If, on the other hand, I keep my income in the bank, or invest it in traditional equities or bonds, the IRS shows me no mercy! Admittedly this is by design. I am a real estate professional. One of the great benefits to that designation is that all of my passive losses flow through my personal tax returns. In other words, all that depreciation and mortgage interest I get by investing in real estate not only builds my net worth, but SAVES me money in the form of tax mitigation. Not a bad deal right? To illustrate the power of these completely legal tax advantages, remember that with bonus depreciation even limited partners often end up with K1 losses of 50-100 percent of invested capital. Those losses add up in a hurry! With that perspective in mind, why would I EVER consider investing in anything that is not tax advantaged? Think about the returns I would need to get in order to simply break even with the tax breaks I’m getting from investing in real estate. The returns would need to be HUGE. I’m not going to get that through Vanguard ETFs! In fact, I truly believe that the only way I can get higher tax equivalent returns on capital is by investing in asymmetric risk type investments. For me, that means a little bit of bitcoin. You may think I am crazy, but I actually don’t even consider investing in bitcoin all that risky. Sure it’s volatile, but I’m pretty darn sure that 5 years down the line anyone who buys bitcoin today will be pretty happy. I’m less sure about all of the alternative coins/tokens. They may have more explosive returns or they may simply go to zero. But bitcoin going to zero?—ain’t going to happen if you ask me. Now I don’t overdo it with my bitcoin portfolio. For one, it’s important to have discipline and value add real estate is my bread and butter. In fact, I bought bitcoin with only about 5 percent of my investable assets this year. Aside from its riskier nature, buying bitcoin does not save me any money! It’s not tax advantaged. So what’s a bitcoin HODLR to do? How about “Buy, borrow, and die”? That’s the mantra of the ultra-wealthy. The idea is that  you can borrow against most assets that you own and invest in something else. You don’t get taxed on your loan and you’ve got a way to create liquidity out of an asset that is sitting around waiting to appreciate. If you invest those borrowed funds into real estate, not only do you get the benefit of investing your capital in two places at once, but you also get the tax advantages! You can do this with all kinds of assets. Traditionally, the wealthy have done this with brokerage accounts and other real estate but also with gold and fine art. The good news is that these days you can even do it with bitcoin and that’s what this week’s show is all about. Zac Prince is the founder of a cutting edge company called BlockFi. BlockFi is essentially creating financial products from the cryptocurrency ecosystem including the origination of loans and even savings accounts that pay cryptocurrency in interest. In this week’s Wealth Formula Podcast, Zac tells us all about it and gives us his take on the massive infrastructure that is creeping slowly but surely into the bitcoin ecosystem. Whether or not you buy bitcoin, you are going to want to understand what’s going on in the digital ecosystem because soon it will be part of your every day reality. Don’t miss this show! Zac Prince is the Founder and CEO of BlockFi. Zac’s experience includes leadership roles at multiple successful tech companies. Initially in adtech, where he was a part of two successful acquisitions, Admeld (Acquired by Google) and Sociomantic (acquired by DunnHumby). Prior to starting BlockFi, he led business development teams at Orchard Platform, a broker dealer and RIA in the online lending sector, and Zibby, an online consumer lender. He graduated Cum Laude from Texas State University with a BA in International Business and minor in Spanish. Shownotes: How Zach got into Bitcoin How Bitcoin became more mainstream in the last 2 years What is the Halvening? Why is Zach bullish on the future of blockchain? Zach talks about BlockFi @BlockFiZac @TheRealBlockFi BlockFi.com