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Highlights from this episode include:

  • This filthy habit will keep you broke forever (2:15)
  • This devastating mutual fund mistake will keep you from retiring as planned (7:25)
  • The wealthy insider’s mindset secret to investment success (9:18)
  • An obvious sign that you need a new financial planner (13:42)
  • How the rich use other people’s assets to multiply their savings (17:44)
  • Why being a scaredy-cat keeps your broke (19:27)
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Do you hate the thought of working past 55 or 60? Do you hate not being able to live the life you deserve today? Do you hate not knowing what your financial future looks like? It's time to stop doing what you hate, here's your host, Mr. Harold Green.

(00:20): Hi everybody. This is Harold Green of Brightree financial, and it is time to stop doing what you hate. How is everybody doing today while I'm doing really, really well? Today's a great day. This was a great week. I started allowing clients to meet face to face in the office this week. And it's just been really incredible reconnecting with my clients, getting back in touch and hearing how they're dealing with those whole Corona virus and, you know, and so people have been sharing a lot of unique stories with me. And so it's been really good. Getting caught up with them. Today's show title is how the rich get richer. Okay. How the rich get richer. And most of the people who are listening to my show are by no means rich, but they are and the middle class. And so, you know, if I could have a subtitle, it would be how the better gets better.

(01:21): Okay. Or how the good gets good. Or if there is such a thing, and I've been working with the clients in the middle class for many years, I do have some wealthy clients that you know, they kind of inherited their wealth, but a lot of people who are successful have some of the same mentalities and they have some of the same habits that they formed over the years. And today I want to talk to you about where most people get stuck, but more important than that, I want to just kind of give you some of the key things that the wealthy people do and how it has tremendously served them well over the years, you guys ready to get into this? All right. One, two, three, let's get it. So one of the things I noticed when I began working with people who do have a fair amount of resources, they really don't make excuses for why they can, or they can't do something.

(02:20): They are, they're always looking for a way to maximize what they have. So number one, they use what they have. So, you know, analyzing numbers and looking at resources and things of that nature, what we tend to do is look at, okay, what assets do you have in your portfolio of all the things that you own, that's not performing. And then how do we get those things to perform better? That's the mindset that they have. They are always looking at things that are not performing well and getting those things off the books and then finding other assets that are going to perform well. And one of the things I always tell my clients is this, you know, we should have zero nonperforming assets and your asset base zero, you know, you're out there working hard for your resources. And I don't think your assets should be laying down on the job and sleeping on the job while you're out there, busting your butt, busting your hump day in and day out, trying to make things work.

(03:19): And these people have a very tenacious work ethic. They don't let things slide and they just get up and they get after it every single day. You know, when you start looking at nonperforming assets, it's kind of like having people on a team that, you know, they don't perform well, you know, and you want to win and you're going to have to make the hard, tough decision to let them go and to move on from them and then to get the right people on your team so that you can win. And that is a very successful strategy that the wealthy use, they always have the right people on their team. They're always analyzing performance and trying to get the most out of what they have, you know? Sure. A little bit about my work ethic and, you know, running Bright's refund has been difficult at some times, but you guys know what the way to overcome is to outwork it.

(04:16): You know, when you have a challenge, you don't lay down in the face of that challenge. You just, you just have to work harder. You just have to put in more time and you just have to put in more effort. And case in point, I was having a meeting with some clients earlier in the week, and they were looking at the performance and things of that nature and the client, we were managing assets on and their 401k. And in case you guys didn't know some 401ks have, what's called a brokerage link. And you know, what they'll do is they'll allow you to move some of your 401k over into the brokerage link. So a lot of times there's a lot of mutual funds in there and you can sell out of those mutual funds and start to buy individual stocks and inside the brokerage link.

(04:57): And a lot of people don't do that because in the common excuse I hear is, I don't know what to buy. I don't know what to buyer went to solid. So I just leave it in the mutual funds and I just let the mutual funds do their thing. Well, we'll talk a little bit later on, on another show about how those mutual funds, how they work, how they're set up, what the fees on the Mar and how they are. I tell you one that worst things I've ever seen in my entire life. I've seen a lot of bad stuff, but all these mutual funds have performed throughout the school. Rota virus has been abysmal to say the least. And so back to this client, just call him Jerry, you know, and, and that's a fake name, but I'll just call him Jerry. So, you know, Jared and I were talking and very said, okay, so how much do I, how much should I move over from the brokerage link?

(05:42): And this was probably about maybe about a year ago. I think we're coming up on a year, if not less, maybe eight months or so. And I said, you should move all of it. And Jerry said, all of us said, yeah, move all of it. And Jerry said, I don't know, I'm just not comfortable with that. And I said, so what, what do you want to do? And he said, well, why don't, why don't we just move some of it over? I think it was about a million bucks or whatever sitting in there. And so maybe less than one, is it maybe about 700, 800,000 at the time? And so I think we moved over maybe about three or four, whatever it was. And the next thing, you know, I got this thing performing so well that his entire balance is about one point $1 million now.

(06:31): And you know, I did move a little bit more over throughout the process, but not too much because they were uncomfortable with that. So when we did our review, Jerry said, looked at the performance and I think it's up like 30% or something like that. Even through coronavirus, even through, you know, the dips of last year, even through all of that, you know, this portfolio that I built for him is performing extremely well. He looked at me and he said, you know, why, why didn't we move more? Why didn't we just move the whole thing? And I said, Jerry's because you were uncomfortable. And you were scared to do that because you felt that the mutual funds were safer. And one of the things Jerry didn't realize was that he was investing in the stock market anyway, some of the same stocks that were holding over on the brokerage link that they hold and the mutual funds, the problem is the mutual fund is too watered down.

(07:24): And they don't rotate out those stocks that often because they have the strategy that they want to use and that they are tied to in that mutual fund. And so I went on to tell Jerry, I said, Jerry, you know, I work almost seven days a week. Do you know that? Right? And Jerry said, yeah, we know you probably work seven days a week, you know, nine hours, 10 hours a day, but it's not nine to 10 hours a day. Some days are very long for me. Some days are not long, but I try to make an effort to study something in my field. Every single day. I try to learn something about my portfolios. I try to learn something about the market every single day. And I'm up usually early in the morning, studying, you know, researching doing my due diligence. And my attitude is I just have to outwork everybody else.

(08:12): I'm a small company by the way. But I think I use that to my advantage because anytime I want to change something out of my portfolios, I don't have to call someone up and say, Hey, you know, run 30 different analysis on 20 different stocks. I can do that on my own and I can do it relatively quickly. And so it allows me to make moves much faster than say someone owning a mutual fund or someone that has a team of 30 different people having to, you know, run through a lot of different scenarios before they even make a move. And so one of the things that Jerry could have did from the very beginning was utilized what he had better, but what held him back was the thought process that he was using. And the fact that he also probably talked to a lot of his coworkers because I've heard some of those things that they say, and they all kind of tend to run together and that's going to lead me into the next thing I want to say is the wealthy.

(09:10): They avoid the herd mentality and they take advantage of what they have, but then they also avoid the herd mentality. They're not watching TV and doing what everybody else is doing. They're not, you know, going to parties, trying to get tips on stuff. You know, they're usually doing this on their own, or they have the right team of people that are doing it for them, but they aren't doing the same thing that everybody else is doing. And so if you're sitting out there and you're in a spot where, you know, you can't figure out how to pay for college, or you can't figure out if your goal is to pay the house off, how to get that done faster, if you know, you're trying to grow your portfolio and you just can't figure that part out, or the people you're working with, you know, they can't, they're not doing it.

(09:50): And if you're out there trying to figure out how to get more into your retirement and you just haven't been able to do that, do me a favor, go to my website, retire now, retire wild.com and check out the rapid retire section of the website, and then download the game changer form it, just give me a call (808) 521-4401 so that I can have a serious conversation with you. And then maybe, you know, I can work with you and coach you and to doing some of the things that the successful people have been able to do, but avoiding the herd mentality, it's hard to do because of the peer pressure, cultural, gravity, things of that nature that constantly pull people down. Okay. Here's where most people get, get stuck and why they are in the herd mentality. First of all, they're, they're trying to fit in.

(10:34): And then they say, you know, I'll say, okay, why are you doing what you're doing right now? And they say, well, you know, I'm not very good with the numbers. And so I don't know what I'm looking at. And so I rather just leave it up to the professionals and the pros and just kind of, you know, let them handle things. And then I just check in here and there. And, and here's the deal. This is your retirement. This is, this is your life. Okay. And if you're just leaving it up to people and not checking in and figuring out what they're doing, then, you know, you're putting yourself at risk by not doing everything that you could do. Another excuse I hear is, is I don't have time. You know, I'm super busy and so on and so forth. Well, this does not take a lot of time.

(11:14): Okay. Once you set it, you can forget it in the most part. But if you're working with the right professional there, they're going to keep you in the loop. They're going to keep you queued up. All right. If you're working for somebody who just said, you know what, give me all your assets. And then I'll call you every three or four months or every six months or whatever, and, and, and see how you're doing. Or, you know, you don't hear from them at all, except for an email once a year. And you don't check in, then it's time to change that up. Okay. Another excuse I hear from people is, well, you know what I heard sounds good. And it was presented. It sounds good. So I signed up for it. And then I'm just kind of letting it do its thing. And they're not checking in the thing wealthy people do, or the successful dude, they do trust, but they also verify, right?

(11:56): They're looking at comparison, they're looking at contrast and they're looking at all these different things. And again, they are trying to maximize their efficiency and their asset base. Another thing I see when people come in and you know, they're not able to get it done. I want to know who they've been talking to. I want to know why they're doing what they're doing because to me in the back of my mind, if you say I want XYZ, but you're doing ABC. I know, I know it's not going to help you get there, but you're stuck. And you're probably stuck in a couple of different things. And one of the, one of the most painful things I've seen people stuck in is a relationship with a planner that they've known for a long time, you know, as hard, but in some cases, even if you've known them for a long time, you have to understand something.

(12:44): If they are not performing and you are not getting the results that you need to get, don't be afraid to sit down with them and have a conversation and say, I know we've known each other for a long time, but I'm just not happy with my performance. It's not going the way I needed to go. And I'm going to have to part ways, but here's something that's important. If you have neglected things on your end, it could end up that way. But if you had conversations throughout the years with them, and you've given them multiple opportunities and they still haven't gotten the job done, you're going to have to part ways. And it's hard if they were a relative, because you want to help your relative. You want to help your brother. You want to help your sister and you want to help them. But here's the thing.

(13:27): If you were letting them manage your assets, just because you can help them, or it helps them, then you might want to look at doing something differently. Okay. Here's a case in point. So I had a family come in years ago, and this is a very, it happens quite a bit more, more times than we think. So they came in and, you know, they had a high schooler and they were looking at trying to figure out, okay, how, how do we get this kid through college? And then nor finished through high school and how do we get them into college and pay for college and different things of that nature. And so I began to share with them my plan. And so, you know, they revealed to me that they were working with another advisor and I said, well, you know, how long have you known them?

(14:06): And they said forever. And so it turned out that it was a sibling. And I said, well, you're going to have to talk to your sibling and the spouse that I won't have any problem with that. You know why? Because your system is great. And I've been working with my sibling for all these years. They are not paying my kids' college tuition. They're not going to fund my retirement. They're not going to do any of that. I just had my assets with them because I know them. They're my sibling. And they were helping me out. And they said something interesting. They said, you know, my brother's not going to have a problem with this because they're just not because we have a really great relationship. And that was one of the shocking times. I've heard that because other times people would refuse to change up that and hire a new planner out of fear of causing bad blood in the family and things of that nature.

(14:56): But you got to understand, you got to have a conversation with the siblings. You got to have an understanding or a conversation with these friends. The last time it happened, it was a friend of the family that, you know, they went to the same church and things of that nature, you know, and I said, not to be me. And I said, but, but look, you've known them for how many years? You know, 10, 15, 20 years. Okay. And your friends, right? Yep. Well, have you guys ever talked about college? And they said, no. And I said, well, if I was your friend, I would definitely be talking to you about college. I would definitely be talking to you about the market. I would definitely be talking to you about your performance. And I would definitely be talking to you about how woefully unprepared you are.

(15:37): I said, so if, if that person is really your friend, then why are you guys not having this conversation? And what they told me was surprising. They said, you know, they probably know we have these issues, but they were just afraid to bring it up and to make us feel bad about our position. I said, well, how does that help you? I said, I want you to do me a favor. You're not going to come on board right now. You're going to go talk with your friend and you're going to tell them, okay. And you're going to have a heart to heart conversation with them. And you're going to see what's what, and then if they can't figure out what to do for you, you're going to give me a call back. And then we're going to sign up. I can't tell you guys how many times that has actually happened because the people were in a tough spot and they were open-minded and they were looking for every single thing they could do in order to get them out of that jam.

(16:26): And I've been extremely blessed and happy to be working with them. But again, you're going to have to look at your team and you're going to have to verify the work that they're doing. And if they are not performing, you're going to have to get the right people on your team. We see this in sports all the time. Okay. See it in sports all the time. Sports teams are not afraid to get rid of people on the team that are not performing. You know why? Because it could lead to a lot of other different things. One area could go bad. Another area could go bad and it's on and on and on and on and on. Alright. So we talked about the wealthy, how they have a very phenomenal work ethic. They're always working, they're always out running everything. They're always just really trying to stay ahead and maximize and use what they have.

(17:10): Okay. They avoid the herd mentality. And the next one is a big one. Not only do they use what they have, they use, what other people have. They know how to tap into the resources that are out there provided by others, whether it's a talented key person on their team, a networking or whatnot. But more importantly, what I'm talking about is I'm talking about leverage. They understand how to leverage assets. All right? So investing, there's something you can use called a margin loan. And if you go to my rapid retire brochure and you look at that statement at the bottom, it talks about, you know, before you look at investments or whatnot, you know, past performance is no guarantee of future results because all investments there are subject to risk. And so before you invest, you're going to have to do your due diligence. And that's an issue that a lot of people, that that's where they suffer because they don't do their due diligence.

(18:07): But what a margin loan does is it allows you to borrow money from your brokerage or your platform based on the cash you have in your portfolio, and based on the stocks you have in your portfolio. And so if you can leverage your portfolio, that's a phenomenal thing. Okay? So I'll get into margin investing and how to do that on another show. But we're just talking about the power of leverage and then leveraging assets and then using what other people have. And so not only do you use what you have, but you can use what other people have. Okay. Now the next thing I see from people that are extremely successful is they don't waste their time and effort on small things. They do big things. They're trying to accomplish very big things. And they do them in a big way. A lot of times people are unsure about the moves they need to make.

(19:03): And so they make these little baby steps because that's what they're told. You know, if you're not sure, you know, don't do too much. And if you don't trust them, just look at what you can afford to lose. And, you know, only put in what you're gonna afford to lose and things of that nature. And so there's a lot of the small mentality kind of thinking going on. But if you're going to be successful in your finances, you got to make big moves. You cannot be afraid to make big moves. And that's why it's important to have the right team of people with you. Because what they're going to do is they're going to look at the moves that you need to make. They're going to vet them out. And they're going to tell you, you know, based on like a five year forward, look at a 10 year forward, look a 15 year forward, look where that's going to put you if you make these moves.

(19:47): So going back to Jerry. So Jerry, we were having this conversation, Jerry and his wife, and I told the wife and, you know, she wanted to retire early and so on and so forth. And I said, you know, you're working really hard for your money right now. And you have all of these things coming up, you're doing all the heavy lifting, but yet, you know, you're coddling your money over here and it's not performing because you put it over here. And I said, but you want to retire early? I said, so what you're going to have to do is you're going to move that money from this spot. You're going to put that money on that spot. And you're going to have to get it to work harder and do more of the heavy lifting. So that way you can relax and you can retire early.

(20:25): It's very possible. And that's what rapid retire is designed to do. You don't have to quit your job and go do something different or retire altogether. You can just wake up and go to work every day, knowing that you get to go to work because you want to not because you have to. And so you're going to have to do those and make those big moves in your finances. Okay. In order to, and especially during this right now, it's, it's one of the most phenomenal times in history that I've seen in regards to being able to being able to make moves. And so I'll leave you guys with this. I had a conversation with a client. I think it was a couple of days ago and they called in and they said, Hey, you're doing a really great job with the brokerage link side of my portfolio on my 401k.

(21:06): But the mutual fund performance is just in the tanks. And I spoke to them and I, and I said, you know, we talked about this before inside of your mutual fund, the way your company has it set up, there's really nowhere to run. And in terms of growth and so on and so forth, all your mutual funds, if we analyze the performance of all the mutual funds in your portfolio, you really have nowhere to run. This one is down 20%. This one is down 15%. This one is down 30%. This one is down 25% other than putting it in and say some sort of bond fund or whatnot, and just holding it there. But that kind of defeats the purpose of what they actually wanted to do. So we were analyzing the 401k and they said, well, why is it like that? And I said, you know, here's, here's the thing that makes me sick about your 401k is the fact that they are choosing fees over performance.

(21:58): A lot of mutual funds have recovered and are doing well, but a lot of them are down in the dumps still, even with the recovery that we've had, these mutual funds have not recovered. And it is sad. How so? And I said, well, let's analyze all your holdings and what you can put your monies in, in your 401k. And here's another point. And also in this 401k, the company limits how much they can have in the brokerage link and how much they can move over. So it's 50 50. So if you have $300,000 in your, in your 401k, you can only move $150,000 over to the brokerage link. The other $150,000 has to say, stay invested in those mutual funds or whatnot. Okay. Which is horrible because what they're thinking is you don't know what you're doing, so you can hang yourself. And we, we want to protect you.

(22:42): We need to protect you from you. We need to protect you from predatory advisors who charge high fees and our opinion, and on and on and on. And so when we analyze, it was kind of like 50 basis points or half a percent is what the, the mutual fund B's are, but they're down 20%. So you tell me you're going to trade off being down 20%, just so you know, you can pay half a percent for that fund to be managed. That's, that's sprayed up hot, garbage to just to keep it clean. So as we looked at it and knowing her situation, what we did is we called the 401k company. We said, look, she wanted to see if she could transfer all of it over because of what's going on. And I said, probably not. They're not going to let you, because they're not going to change the rules just for you.

(23:24): I said, here's what we're going to do. We're going to do a hardship withdrawal. And we're going to take as much as you can out of these non-performing mutual funds, we're going to cash them in. And we're going to move them over to a brokerage account that I can manage for you. And we can buy whatever we want to get this to, to recover because the performance on the broker side is phenomenal. I said, I can build that same portfolio outside of the 401k for you. And I said, it's going to be a phenomenal thing. And we've been successful even in the midst of COVID the up and down. We're still up 10 to 15% because we've been able to make moves, buy stocks, sell, move in and out rotate. We can do that, but in the 401k, she couldn't do that. So I think it was, you know, somewhere around a hundred thousand dollars that they could pull out and the taxes could be paid over three years.

(24:12): So when you look at the taxes, it's a hundred thousand dollars and we can spread those taxes over three years. To me, that was a phenomenal thing. And they've waived the penalty. So essentially it's taxes based on just that money, because it's counted as income. And with them being furloughed and being laid off or whatnot, their income is going to be low. The spouse doesn't make a whole lot. And so they're going to be in a pretty low income bracket for the next three years or so until everything comes back. So with that being said, we're looking at about $10,000 in taxes, over a spread over three years. So that's 3000 something dollars a year, which is not a lot, but if we're able to get 10 and 15% a year just by moving that money over, was it a good move? That was a very bold, good move.

(24:59): And the thing is, is they're not going to take that money and spend it on bills because they don't need to. They're very diligent. And so these are the kinds of things that I'm talking about in regards to how the rich get richer, how the, how the good get good, or how the better gets better. They use what they have. They use, what other people have. They avoid the herd mentality they trust, but they also verify, and again, they do big things. And so if you want this for yourself, give me a call (808) 521-4401. And I'll be glad to have a conversation with you and to see if we can figure out how to help you stop doing some of the things that you hate has been my pleasure talking with you guys today and sharing with you. And until next time, everybody, one, two, three, plus, get it.

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