Wealth Formula by Buck Joffrey

When I finished my training and figured out that I had to invest money somehow, the hardest thing for me was figuring out who to trust. The first apartment building I bought was a 14 unit building in the southern suburbs of Chicago. I would now characterize that as a C- to D+ area. My broker was the guy who sold me my house and I trusted him. The idea of specialization on the broker side never occurred to me at that time. Nevertheless, he was still a guy I could trust which meant a lot. I ended up buying this building because the numbers looked fantastic. I got out my spreadsheet and got two years of tax returns from the seller. It looked like a home run. Many of you know this story and know how it ends. To make a long story short, I got bamboozled by a crafty and dishonest seller who owned many buildings in the area and was stuffing the rent roll. Lesson learned. The first time I invested in a fund, I got fooled by a fast talking salesman who told me he could teach me how to create my own fund while I invested in his. He would make me a “partner”. This guy was everywhere on the Internet and seemed to be on a lot of podcasts so I trusted him. When I started listening in on these weekly calls with other “partners”, It became very clear to me in a short period of time that this guy cared nothing about investors and his whole business model revolved around collecting fees from investors with very little intention of making them any money. In fact, he doubled down and actually had minority partners who would pay him even more. I quite the group shortly thereafter but I still had money stuck in the fund. That was four years ago. I’ve never seen a penny in returns. In fact, it has become sort of a joke with my CPA who refers to it as the fund with no returns. Although the guy never sends me any money, he is religious about sending me a K-1 every year to file taxes. By the way, I am more than happy to reveal the identity of that shyster to anybody who wants to know. The reason I bring these experiences up is that as much as education has to do with successful investing, you also have to eventually figure out who you know like and trust. If the task seems daunting, it is. Especially for someone like me coming out of surgical residency, I had no connections in the financial world and I was a lame duck for the sharks that enjoyed praying on young trusting doctors with six-figure salaries. Over the years, however, I learned a concept that has served me well and has, frankly, kept me from losing money since that first apartment building and that dishonest fund manager. The concept is simple–net worth= network You see, eventually I met people who are like-minded and I started to invest with people with whom they invested. Eventually, this turned into a community of investors and opportunities–sometimes going back and forth. The close knit nature of the group also served to be a very good way to keep checks and balances on everyone. Don’t get me wrong, just because you know somebody and trust somebody doesn’t mean that you are going to make money in an investment. What it does mean, hopefully, is that you won’t get purposely screwed by someone from day one—this is 90% of the battle in investing. Everyone can make a proforma look good and anyone can make an executive summary look like a gold mine. However, when I look at an opportunity these days, my main question these days is, “who is the sponsor?” This concept relates to any kind of investing really. Some of you new to real asset investing have expressed concerns about the idea of moving away from traditional equity markets because you don’t know who to trust. I get it. However, did you ever ask yourself why you trust stocks bonds and mutual funds so much? Why do you trust your financial planner so much? The answer is because that is what you were taught. It’s like religion to you. When you stray from what that religion it feels like you are doing something wrong. Even your friends and family criticize you for thinking outside of the orthodoxy. Taking your finances into your own hands requires guts. What makes it easier to make a move like this is community. Going back to the parallel of religion, once you find a group of people with whom you share a common set of beliefs and values, it is comforting. Why? It’s because the people that you are around believe in what you do and that reinforces your own belief system. At the end of the day, we are social animals. We need community and we need things in which to believe. My mission with Wealth Formula Podcast has been to help create that community for you. I am an evangelist for hard asset investing. Some of you have become ardent believers already. Others are still in the process of changing their mindset and their paradigm. That’s OK too. When you are ready to move forward, I am happy to invite you to my world of network based real asset investing. A great example of network based investing is my guest today. Before today’s interview, I never spoke directly to Ken McElroy. Yet, I know many people who know him and who have invested with him. That’s why I am on his investor list. It also helps that he is a Rich Dad advisor to Robert Kiyosaki and that he wrote the books from which I first learned the language of real estate. I hope you enjoy the show!

Everyone defines wealth a little differently. My own definition of wealth is in the form of an equation wealth=time. Time is my currency of choice. It gives me the freedom to do whatever I like with my life. For the last 2 days, I took my three little girls (8,4,2) sledding in in the afternoon while most of my friends were at work. We had a lousy winter in Chicago–cold but not very snowy. We had to get some sledding in while we could after getting a big snow fall! Don’t get me wrong. As a general rule, I am not a leisure guy. I get bored very easily. That’s why I have 4 different businesses and am starting more as we speak. But that’s what is fun for me. My wife is a clothing designer. You can see her stuff at oliviajoffrey.com. She actually started out as an urban planner but designing clothes was more fun for her so that’s what she is doing and she loves it. Similarly, my art is creating businesses and finding unique investment opportunities. I say art because there is a certain creativity that goes with entrepreneurship and it is that expression of “art” that I enjoy most. In sum, wealth is being able to do what you want with your time. What do you wish you could do more of in your life? What is stopping you? More than likely, the answer to that question is time. If that’s the case, time is your currency too. For some, their calling in life is charity work. I believe it is very admirable to spend your life in the service of those less fortunate than yourself. However, you can often be more effective if you’ve got something, other than your time, to give. A great example of this is this week’s guest on Wealth Formula Podcast, Bill Manassero. His plan–build a real estate empire in the US to feed the poor in Haiti. I hope you enjoy the show. Buck Joffrey P.S. If you like this show and this community, forward this email to 3 friends who you think should be listening to our podcast!

My investor club is for “accredited investors.” What is an accredited investor? Well, it’s not something you apply for like it sounds. Being an accredited investor is just something you are or you are not…like you are either pregnant or you are not. An accredited investor is a defined by our friends at the SEC as someone who makes a minimum of $200,000 ($300,000 if filing jointly) or has a net worth of 1 million dollars excluding personal residence. The significance of being an accredited investor is that you can invest in things that those with less money, cannot. You can also be something called “a sophisticated investor” which has a much more nebulous definition but essentially says you know what you are doing even if you don’t have that much money. These laws were put in place long ago to “protect” the average person from predatory activity. The irony of this all is that there is no protection for the average Joe, or pension funds for that matter, against investing in a wildly bloated stock market at record valuations. Every major trader out there knows we are in bubble but there is no protection for individuals dumping money into their retirement accounts to buy mutual funds. It’s an archaic system which makes little sense. Certainly there has been some recognition of this fact. The 2012 JOBS act made it easier for Main Street America to participate in “alternative” investments via crowdfunding and made it easier for sponsors to advertise previously unknown opportunities. However, we have a long way to go. The whole securities thing is pretty confusing frankly but it is very important to understand if you are investing in private placements like we do on investor club or if you are sponsoring opportunities yourself. This week’s episode of Wealth Formula Podcast will help you to understand some of this complicated verbiage. Luckily, the guy explaining it is a very likable and well known attorney, Mr. Mauricio Rauld.

The ideal business is not one that is necessarily glamorous. I have a cosmetic surgery business that is uncomfortably glamorous for me–I’m not a really flashy guy. Nevertheless, my plastic surgeons do a great job of making people get over their body hangups. It’s not just about changing a person’s physical appearance, it is actually more about changing their mental state. That translates into their lives as confidence. It’s a good business. Lot’s of work and competition but my team does an outstanding job and we make money. However, I cannot say that it is an “ideal” business. In my humble opinion, the ideal business is one where everyone wins and the business makes a difference in the world. One example of this is Jorge Newberry’s American Home Preservation. AHP is one of our sponsors but I have been talking about them long before we ever had a sponsor relationship. American Home Preservation actually started out as a non-profit organization. The idea was simply to buy failing mortgages in bulk and rent the houses back to those getting foreclosed on—keeping families in their homes. What a great deed right? Eventually Jorge figured out that doing something socially responsible didn’t mean he had to be non-profit. In fact, what he found over the years is that by getting investors involved and scaling his business, he can actually do more good and make quite a bit of money for himself. Meanwhile, the people he keeps in their homes are happy and, of course, you are happy because you are getting 12 percent annualized return on your investment as a monthly check. Oh yeah–Jorge is pretty happy too! In this scenario, EVERYONE WINS and that is why American Home Preservation is, in my view, very close to the definition of an ideal business. You can learn more about them at AhpFunding.com. Gene Guarino’s assisted living model featured in episode 29 is another example of a business where everyone wins. His model helps seniors live in homes rather than in institutions. It’s better for the individual who needs extra help with daily living but does not want to move to a sterile box. It helps the elderly person’s children feel better about where they are leaving their parents. And,  it helps entrepreneurs like Gene by making him money while giving him a sense of doing good in the world. There seems to be an onslaught of hate in this country which is sad. For some reason, it seems like it’s okay to be hateful as long as you put an American Flag on your Facebook page. We are better than that. I was heartened to see even George W Bush speak out about it last week. This is not a political show but I will say that as a father of three little girls I am very concerned about the trajectory of our national rhetoric. I want to stay positive and continue to promote people who are doing good things. Don’t get me wrong… I am a raging entrepreneur and capitalist. We are not gong to start interviewing non-profits on this show anytime soon. I have my own non-profit organization so of course I certainly endorse good causes. However, Wealth Formula Podcast is about making money. But, whenever possible,  I want to showcase people who are making money by doing good. In that spirit, this week’s guest on Wealth Formula Podcast is Eve Picker of Small Change.

In the 1980s, you could get double digit returns on your savings. Interest rates were that high.  That said, inflation was out of control as well so the real value of earnings might not be as attractive as it is at first glance but certainly better than today. Today’s economy punishes savers be eroding there wealth through inflation while not providing and significant interest. That’s why Robert Kiyosaki says, “savers are losers.” In the last few decades, we have become an economy of low interest rates and debt. At first, we used these tools to fuel our economy and to create better lives for ourselves but, eventually, like most drug users, we became addicted. Now, we can’t live without debt and inflation! We need to create more debt so that we can pay off our old debt and we need inflation to devalue and erode the debt we have. What do you do in this kind of economy? As they say, “When in Rome, do as the Romans do.” If we must have inflation to pay for our fiscal sins, ride the wave. Invest in Real assets…real estate, raw land, precious metals and art. Why? When inflation happens, it does not leave real assets behind–we inflate together. There are few people who understand this and explain this better than this week’s guest on Wealth Formula Podcast, investment banker and author, Christopher Whalen.

I recorded this interview with Reed Goossens several weeks ago but could not figure out where to put it because it is focussed on investing the USA for foreign investors. I did not want to leave all you Yankees out for a whole week so I decided to broadcast this as a bonus episode. Going back an listening, This is actually not just a show for foreign investors. It’s also a very interesting immigrant story. So, I encourage you to listen to this show even if you are an American for the purpose of getting back in your immigrant ancestor’s mindset. I hope you enjoy this bonus episode. Buck

I’m going to Belize next weekend. Actually, by the time you get this message, I will already be back. I’m looking forward to seeing some of you there at the field trip. Our Mahogany Bay Village investment opportunity in Ambergris Caye, Belize with its world class luxury affiliation is active and we are fast and furious on the raise. So if you are interested in this opportunity, don’t miss out. If you are an accredited investor, you can go to reefequitypartners.com and take another look at the deal. Of course, you can also go to wealthformula.com and sign up for investor club. Lots of GREAT opportunities coming through the Investor Club pipeline over the next couple of months. By the way, if you have signed up for the club and have not talked to me yet, make sure you schedule your appointment with me ASAP. While the Belize offering is regulation C– meaning you do not have to have a pre-established relationship with me, if you want to invest in any future apartment buildings, you MUST have a pre-established relationship with me as we will be using regulation D. So…don’t miss the boat. Also, I am considering opening Reg D offerings to non-accredited investors if you consider yourself a “sophisticated investor.” A sophisticated investor is a type of investor who is deemed to have sufficient investing experience and knowledge to weigh the risks and merits of an investment opportunity. If you are not accredited but believe you fit the criteria of a sophisticated investor, reply to this email and lets get on the phone. Once I get to know you and your experience a little bit more, you might be eligible to participate in some of our deals and put some of that lazy IRA money to work! Through our Investor Club, I’ve had a chance to speak to many of you over the last several days, and a lot of interesting conversations ensued. We’ve got a lot of interesting people with interesting skill sets in this group. One of the topics that came up is whether to go into active real estate investing or to be passive. This is a complicated question. However, my advice is this. Look at your own situation and figure out what your goals are. I define wealth as time and so time must figure that into your decision. For example, if you are already making $200K or more per year and working over 40 hours per week, you have to figure out if it is worth it to add another job to your already busy life. Make no mistake, if you want to go solo with real estate or any other kind of investing, it is a business–especially in the syndication world. I have an analyst looking at 30-50 deals per month. The time that goes into being a “deal hunta” like my friend Peter Halm is significant. Therefore, it will either take you substantial amounts of time or cost you a significant sum of money as you hire the help around you to create a successful business. That is not to be discouraging. In fact, if you are not already making a lot of money and you love real estate, by all means, go for it. My point is that the entire goal behind entrepreneurship and investing should be to make our lives easier, not more difficult. If you can make enough money to invest in passive income now, you have to look at the opportunity cost of adding additional layers of complexity and work to your life. I wrote about this topic in my book, Seven Secrets of Eternal Wealth in a chapter called “Momentum”. The book is still number one in multiple categories and you should consider picking up a copy on amazon if you haven’t. Going back to the concept of “momentum”–in physics, Momentum=Mass X Velocity. In this week’s episode of Wealth Formula Podcast, I am going to relate this Newtonian formula to our Wealth Formula. Take a listen and tell me know what you think! Buck

Wherever you stand on the political spectrum, you must admit that the Trump presidency has already demonstrated that it is going to do things differently over the next 4 years. Curiously, history shows us that presidents have very little to do with the state of the economy. Mostly, they are just in the right place at the right time or vice versa. Let’s take Bill Clinton for example. Clinton’s term coincided with the rise of the internet and the dotcom economy. Lucky for him, he got out before that bubble burst. During his 8 years in office, Clinton dismantled some of the most significant pieces of financial regulation we had and we did not see the negative implications of those choices until 2008. For example, the repeal of Glass-Steagall legislation occurred in 1999. Glass-Steagall was enacted by the United States Congress in 1933 as part of the 1933 Banking Act and separated commercial and investment banking. It restricted affiliations between banks and security firms. What does that mean, you ask? Quite simply, the repeal of Glass-Steagall made it possible for the big banks to become “too big to fail.” Without this repeal, the global financial meltdown of 2007-2008 would not have been possible. But in November of 1999, Clinton declared “the Glass-Steagall law is no longer appropriate.” Don’t get me wrong, I’m not dissing Willy. My point is that most people judge presidents based on things with which they had little to do (ie. the dotcom era). The first George Bush got elected just as we were entering a recession…was that his faulty? Economist will tell you that he simply got caught in the cross-hairs of an oncoming recession. What if he was elected in 1992 instead of 1988? Now, in the case of Trump, we may actually being something a little different. If indeed he goes through with massive infrastructure projects, we will see a direct impact, for better or for worse, on the economy. The Trump effect already has made an impression. The dollar saw it’s worst month in decades because Trump has repeatedly suggested that other currencies are undervalued. That necessarily means that Trump believes the dollar should be weaker and, going against the strong dollar policy that has been the rule since the Reagan administration, Trump is clearly advocating for the “weak dollar” and the markets see that and a sell-off of the dollar was the result. By the way, he wants a weak dollar to make our exports more attractive to other countries. Anyway, as an investor, the infrastructure projects have many implications. First, infrastructure projects mean inflation, almost by definition. Quantitative easing did not work well and you might wonder why printing billions of dollars would not have created inflation in and of itself. The reason is that the money was lent to banks. The bank, in turn, used it to improve their balance sheets and never really started lending the way the fed anticipated. Infrastructure projects, on the other hand, mean that the government is going to inject money directly into the economy. Think of the construction of bridges, etc. You put a lot of people to work along with manufacturers and ultimately, that money spills over into the rest of the economy as people spend their new earned money on things they want and need. That’s why this kind of fiscal policy is referred to as helicopter money. If done, it will stimulate the economy and also INFLATION. So, as a real asset investor, we don’t fear inflation because we are hedged against it. If you own rental property and inflation goes up, so do your rents. In fact, inflation will erode your debt and so having a mortgage is a great idea when inflation increases. How do interest rates behave through all of this? Well–everyone is so fixed on what the federal reserve is saying and doing. The reality is that interest rates have much more to do with bond markets than they do with the fed’s yearly 25 basis point increase. So what determines what interest rates will be and how will that affect you and your ability to buy real assets in the coming years? Find out by listening to this week’s episode of Wealth Formula Podcast as we discuss these concepts with James Eng of Old Capital Lendin

I had a really interesting week. As you know I launched my book 7 Secrets of Eternal Wealth a week or so ago and it became an international best seller. I also got invited to appear on 7-8 TV show to talk about the book. So I’m excited to get our message out to more people. Thank you to all those that bought it and wrote a review. By the way, if you like what I’m doing please do share it with others. I send out notifications via social media. You can friend me…look for Buck Joffrey. You can also find me on linked in and of course twitter where I am @BuckJoffrey. But sharing this show is important. Getting our message out is important and I hope you can help me do that. If you are an accredited investor, you absolutely should be on the investor club list. This podcast is where you learn. Investor Club is where you can turn these concepts into action. We have had 2 offerings so far including and ATM fund and my luxury hotel opportunity in Belize. If you want to know more about these, and you are an accredited investor, please join the club at wealthformula.com and we can talk off-line. For those of you who are not accredited investors, we have presented a number of opportunities on this show where you can participate. One of those is our new sponsor, American Home Preservation which buys non-performing mortgages and keeps people in their homes by renting them back to the owners who are getting foreclosed on at a price that they can afford. It’s a feel good business for sure but it also yields 12 percent per year so it’s good for even those of you who are heartless. I’ve invested hundreds of thousands of dollars in this fund over the years myself and felt great every month I got a check! But…you can invest as little as a few hundred bucks to get started. Learn more about them at ahpfunding.com Now, today’s show is another opportunity that is open to non-accredited investors. David Sewell was previously on my show to talk about his turn-key business in Panama where you can literally buy coffee farms for long term cash flow. That show was a great hit and many of you actually bought some land I hear. David is a very smart guy with a great heart and he actually has a new opportunity about which you will be some of the first people to hear. Investing in coffee is very interesting because of the abundance of coffee drinkers and a growing market… it also helps that it is totally addictive. When you think about things that are not going away in the next 20 years, it’s safe to say that coffee is one of them. What else is here to stay? Well.. I bet you chocolate will be around for a long time. The market is growing at a tremendous pace and—who doesn’t love chocolate? My 3 little girls alone could keep that industry around for at least one more generation. On this week’s episode of Wealth Formula Podcast, David Sewell will tell us how we, too, can profit from coffee farms!

The inauguration was yesterday and the world is pretty much the same. It’s actually sunny in Chicago which is a rarity this time of the year Meanwhile, the Dow is going crazy…flirting with 20,000. Trumpenomics has got people excited. Small business future confidence indices are off the charts. The enthusiasm has not been this high since the raging Reagan 80s. Can Trump turn it around? Is he the new Reagan? Who knows. What I can tell you is that he faces substantially more challenges than Reagan did. He did not enter office in the middle of a giant asset bubble as we have now. He had a sluggish economy and high inflation but at least he had monetary policy to work with to get things under control with Paul Volker. Trump has a massive asset bubble and no monetary policy tools to work with at this point. The fed’s rates in 1980 was 13.35%. Meanwhile, we have been near zero for 8-9 years with several rounds of quantitative easing. The only option he has left is a massive infrastructure project…aka helicopter money. That will stimulate the economy but it will create even more debt and inflation. He’s banking on economic growth making up for the difference and we know he wants to weaken the dollar, presumably to erode the debt. Maybe it will work.. Who knows. Many don’t think it will though. But then again, I’m an armchair economist at best. On the other hand, my guest on Wealth Formula Podcast today, Lior Gantz studies the economy very closely and has some very interesting perspectives to share with us and, more specifically, some different ways to invest in this economy. So, when we come back, we will talk to Mr. Lior Gantz from WealthResearchGroup.com.