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Show highlights include:

  • Why playing it safe sets you back and stifles your bank account (even if you already have money put away) (4:00)
  • How having a common “60/40 Portfolio” kills your financial freedom (and why you have to change it now) (4:34)
  • The “3 Buckets of Money” approach that lets you weather the current inflation storm (7:45)
  • Why using the Consumer Price Index indicates growth in the market for you to fill your wallet (14:13)

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You will know on a scale of 1-10 your Rapid Retire Financial Fitness! After the assessment you'll receive a free copy of my book Paying for College in the 21st Century!

Read Full Transcript

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.

(00:18): Great. Hello everybody. This is Harold Green of Brightree financial group, and man, it's time to stop doing what you hate. You know, I hope you are having a fantastic day today. I'm super excited to be sharing today's show with you folks, because I'm going to dive really, really deep, I would say deep, but not too deep into this, the world of inflation. And so the title of today's show is inflation beaters and what you folks can do to beat inflation and to make sure, you know, your portfolios are recession proof and that you are picking the right holdings during this period of time. And then also to kind of talk to you a little bit more about the rapid retire program and then how that was designed to deal with the situation that we find ourselves in right now, this high inflationary period. And so are you ready?

(01:09): 1, 2, 3 less [inaudible]. So I want to talk about the rapid retire program and I'm also investing. So I need to read you this little disclosure and using our rapid retard program. There can be no guarantees made that you will be in a position to retire seven to 10 years sooner, or any specific period of time. The results of the program are going to vary by user. And since we're talking about investments, all investment, including real estate, as speculative in nature involves a substantial risk of loss. So I encourage you our investors to invest carefully. I also encourage investors to get personal advice from their own professional investment advisor and to make their own independent investigations before acting on any information that I publish. All right, so I want to get into the show about inflation and because it's a real big topic right now, and it's not necessarily a real big topic, it's a real big, I would say issue facing a lot of people and they feel it.

(02:08): People are filling it every day. You know, I went to the gas pump to get gas or gas station to get gas. And, you know, I, I usually can fill up my tank before the credit card or the pump shuts down. Now it gets to a hundred dollars and that thing shutting off and my gas tank is not even full anymore. And I have a 27 gallon tank on this beast machine I drive, but you know, gas used to be $3 and something, a gallon here in Hawaii, then it went to four and now it's almost $5 a gallon. I'm not complaining. I'm thankful that I can afford the gas, but I'm thinking about, you know, all of the people out there that are on fixed incomes, the people that are, are not getting these major increases in their cost of living allowances and, and their social security benefits and different things like that.

(02:50): People who retired on pensions and people that have biggest incomes and that they had the mindset coming out of the great depression of just saving everything. And didn't really believe in investing because they didn't want to lose it all. And so, you know, the other thing people are talking about is the next bear market. And to be honest with you guys, I think it was since 1947 to 2021, there have been 14 bear markets, 14, and we're still here, right? It's been 14 bear markets. And so I want to kind of get into debunking some of the crazy stuff you're probably going to hear out there and all this stuff like celebrating and buy silver and gold, and like all of this other crazy stuff that people are talking about. Not realizing that we live in one of the most amazing countries on the face of the earth, right?

(03:42): I don't want to talk a little bit about this phrase. It's one of my favorite phrases and it's comes from the Bible. My people perish for lack of knowledge. And I'll tell you straight up knowledge has the ability to stop perishing knowledge has the ability to stop suffering. The problem is, is you find more people with a poverty mindset than a growth mindset. The poverty mindset says, get everything I can, can everything I get. And then sit on the can basically get everything I can and then can everything I get, but in a can it away and then like sit on the can. So I don't lose it. And a lot of times when you start having that mindset that I don't want to lose anything, I don't want to lose anything. I need to play it safe. Now that has an important place in your portfolio, but it shouldn't be the, be all end all solution to every single market downturn.

(04:36): And we're going to get into that. And so the first thing I want to start with is letting you know that the 60 40 portfolio is dead. I'm going to say that again, the 60 40 portfolio is dead. What does that mean? Well, there is an old phrase. How about having 60% of your portfolio in equities and the other 40% of your portfolio in bonds, which is basically debt that pays you interest, which you use as income. The stocks are for the growth and the bonds are for the, the income, right? So it's kind of like a little bit of a push and push and pull tug of war you have going on, but it is still should be getting you in the, in a positive direction. But while all of this stuff going on right now, bonds are paying like Jack because interest rates have changed, right?

(05:22): The, the bond yields have changed. And so things are very, very different now. And so if you're sitting there with a 60, 40 portfolio, you're probably not going to be able to keep up with the pace of inflation that we have going on right now, inflation used to be 3.05% for years or, and in some cases less than 2%, but with everything we have going on right now, it's really, really ratcheting up and pushing up the pace of inflation. Some of the gurus out there, talk about how inflation is transitory and how, you know, when the supplies changes and, you know, we get people fully vaccinated and all of that stuff. It should start to come down, but I'm going to tell you something inflation is probably going to be here for quite a while. It's going to be here quite for quite a while.

(06:06): And one of the reasons why I think that is because there are a lot of people leaving the workforce. I mean, people are leaving their jobs and drove some for good reasons and some for not so good reasons. But you know, a lot of the families who had kids, you know, when they started seeing what their kids were being taught, they like to hell with this, we're going to start raising our own kids. We're going to start educating our own kids. And people are leaving highly skilled jobs, highly successful. People are leaving highly skilled jobs. Then they're going to go home and they're going to take care of their families because they've decided that, you know what, they can live on one income. They can downsize a little bit, but you know what? They still have the ability to buy things. And so they're going to continue to buy things.

(06:44): They're going to continue to shop and they're going to continue to put gas in their cars. And so I believe that over a number of years, we're going to continue to see this trend. And the other thing is with our immigration system, they're bringing more and more people into the country. And then they're also talking about giving people free money to buy things that they need. That's going to continue to drive the price of goods and services. And so one of the things that happened with inflation is that you get too many dollars chasing too few goods. When you, when you have people buying these things that are not making these things, it's going to cause the problem to become worse and worse and worse and worse and worse. And so you got to kind of think about your portfolio and you've got to kind of think about your situation.

(07:26): Where are you, how are you invest it? And so I want to talk to you about what stocks we typically look at during high periods of inflation or a high, you know, periods of recessions, their markets and different things like that. But before I kind of get into that, I want to talk about something, something very important inside of the rapid retire program. We have three buckets of money inside that program. We have a short term bucket for money that you'll need in the next five years. The goal on that portfolio is five to 10% a year. Then we have the intermediate portfolio, that's money. You're going to need five years to 10 years. The goal of that portfolio is 10 to 15% a year. Then we have the long-term bucket. That's money that you're going to need 15 years and longer. The goal of that portfolio is basically 15 to 20% a year.

(08:27): Now why is using the bucket strategy? The most important thing you can do because the bucket strategy allows you to treat inflationary periods like a bump in the road, like running over a small rock, like hitting a little bit of a, a speed bump, right? It's not a barrier to your portfolio. It'll be treated like a little bit of a, like a nominal thing. It's not going to be this huge major thing. And here's why I'm seeing that so many people, when they retire, they put a lot of their eggs in one bucket and or they put their money in things like say conservative things like, you know, we're retiring. And so, you know, the consensus on the street is you gotta like try to stay within a certain rate of return, like maybe 5%, which is conservative and then maybe only draw out 3% so that your portfolio doesn't hit what we call portfolio failure.

(09:21): Well, using the bucket strategy eliminates that because you're basically putting all the money that you need in the next five years and one bucket. And then you're generating a return on that. But then you're also drawing down that bucket. So my thing is, is I don't care. What's left in that bucket at the end of five years. I just hope it doesn't run out in five years. The goal is to have it not run out before the, like say the last day, like say it's December 31st of that, that last year. So if you need $300,000, my goal is for you to spend it all and not run out of money before the end of the period. But, you know, we can technically empty that bucket and then refill it again with the money from say five years and on. So the goal is to constantly refill those buckets.

(10:02): So therefore you don't have to worry about running out of money. And the only thing that does is it allows you to ride over these types of downturns, these types of recessions, because the most important thing you got to understand is what we call the recovery period. If we go through a bear market, how long do they normally last? I don't know. It could be anywhere from several months to a number of years, two years, three years, we don't know how long the bear markets are going to last. But the thing about these things is this. Even in bear markets, there are still companies that are generating five, 10, 15% a year. You just simply have to find them, put them in your portfolio. And what I do is we constantly rotate between different sectors in order to generate the rates of returns. This is not that hard to do when you're operating in Roth, IRAs and 401ks, not 401ks, but traditional IRAs, because there are no capital gains when you buy and sell, right?

(10:59): You can buy and sell as much as you want. And with our structure, there are no fees for buying the stocks and there no you know, commissions or whatnot on the trade. So I can trade on a, a client's account and buy them what they need and their IRAs and traditional IRAs and Roth IRAs, without having to worry about these capital gains. Now, if you are in a joint or a non-qualified account, like say a traditional brokerage account, this is a little bit tougher. You're going to have to be a lot more strategic in those portfolios due to the fact that there are capital gains. And so I implement a strategy and those portfolios where I'm buying, I'm selling off the losers, buying the winners, and then I'm using certain strategies to offset the taxes or the tax consequence at the end of the year, whether it be short term capital gains, you know, being wiped out by short term capital losses or vice versa.

(11:46): So there's always a strategy that you can put in place to help you deal with this. The other thing I hear people talk, like I said earlier, is just buying gold or buying silver or buying precious metals and different things like that. Now some of that might work. But the other question I have is why not set in cash for a little bit way for things to cool down, and then jump back into the things that are winners versus buying gold, silver, or anything like that. Another thing people look at is pegging with cryptocurrency, and I'm going to do a show about crypto a little bit later on down the road, not right now, but you can also use crypto as a hedge. There's other types of assets that you can use as a hedge, but you're going to have to understand how do they spend into your long-term financial plan?

(12:37): Like what bucket are these assets considered being placed in? Are they in your short-term bucket? There? Are they in your intermediate? Are they in your long-term? And before you buy some of these things, you got to kind of go back and look at the history of, of their performance. What, you know, a lot of people thought gold was going to take off and go through the roof. A lot of people thought gold would be up like really big due to the inflation, but not necessarily gold. Hasn't moved all that much. It has made some moves, but it hasn't moved as much as people thought it was going to move as they're going to move more later. I don't know. But if we look in the past month, gold was up to $175 or more a share. Now it's down to $167 and it's down a dollar and 33 cents today.

(13:21): And you know, when I look at the news and they're talking about Jerome Powell just got renominated for another four years, they think he's going to start raising interest rates like crazy. And that's why today in today's market, you see this downturn in technology, you see, you see people selling off technology. But the funny thing is, is they've already priced in, I think it's a, a quarter percent or something like that rate hike 25 basis, point rate, rate hike, or something like that. So they've already factored that in. So what's going on. I think right now is people doing a little bit of rotating people doing a little bit of profit taking and that that's going to happen towards the end of the year. You will see more volatility in the market as people just kind of get their bearings and try to figure out where they want to be for 20, 22, what's going to be happening in 2022.

(14:07): That's something important to understand. And so you gotta look at your financial planning and you have to understand what's happening. One of the other things I want to look at is I wanna look at something called a consumer price index. And basically that's a measure that examines the weighted average of price, like say the cost of goods and services and transportation and all that stuff has gone up by. And when we look at some of these charts, the CPI is just like, it's just like off the charts, it's going up like crazy. And like I said earlier, I don't think that stuff is going to go down. And there's some other headwinds that are affecting us too. You know, again, the supply and demand. Also, we're looking at the service industry and things like that. So if the increase in the supply of services lag behind the increase in the demand for services, there's going to be other things that we have to worry about, right?

(14:57): So will we see a demand in services versus a demand just for goods, right? So if people just keep buying and buying and buying and they don't go out and do stuff, then that's going to continue to be problematic, right? But we want to see an increase in the service sector. We want to see an increase in travel industry. We want to see people get back into these jobs and we don't want to see wages continue to shoot through the roof because this is what people have to pay people now just to get them to work because they're competing with the government handouts and different things like that. Right? So it all boils down to a morality issue and a personal choice issue, you know, and what it means for you and your family and what your goals are. Right? So the last thing I want to get into is what if something bad happens?

(15:42): What if, what if inflation sticks around for a long time, right? They all say the tech stocks don't do well in high periods of inflation, but I'm telling you, we live in one of the greatest countries ever. And we constantly continue to innovate and innovate innovate. There will be people with money to spend. There will be things that, that will, you know, the stock market is based on corporations generating a profit for its shareholders. And therefore the company becomes more valuable than the, you know, their share price goes up, right? So what do we have coming around next? What's the big, the latest innovation. We have something called the metaverse right? This the, the, the digital world that's going to be happening, right. It's already being built. There's companies that are already profiting from this and their share price has gone up just because people think this is where the future is going to be.

(16:29): So again, what if we face a downturn? The, the question I have for you is this not if we face a downturn, it's when we face a downturn, how fast can your portfolios recover? Right. How fast can you get back on track? Is it six months? Is it one year? Is it 18 months? Is it 60 months? The last bear market? I think we were in that's in P took like five years to recover. I mean, that was nuts. And so for me though, I think that the one before the last one, everybody talks about their Berg bear market of 2020, because of a coronavirus. To me that was kind of like a one-off because it doesn't really happen like that all the time we shut down our whole entire economy. And now we're trying to like, crank it back up and get it started back up again.

(17:17): And it's tough. But before that the last bear market, the one before it took about, I think it was 60 months for the S and P to recover. And I looked at that and I was like, why that's too long? And the thing about it is in order to have a faster recovery in your portfolio, there is going to have to be a good amount of rotating going on in your portfolio, because you have to understand who's moving up, who's moving down. And sometimes they trade places and you gotta have to have your finger on the pulse all the time. So in order to prepare for this, a lot of my clients are prepared. I mean, a vast majority of them who are in my rapid rappers, our program, they are prepared. And one of the things you can go back and do is listen to my podcast, show, title, recession, proof, right?

(18:01): How to recession proof, your portfolios, what is it that you need to do to get yourself in position, to make sure you are recession proof? And if you're out there and you're wanting to know like, okay, how, what can I do? I want you to get on my schedule and schedule a meeting with me to go over your stuff and to take a look at it and figure out what adjustments that we need to make. But if you don't do that, there's something else that you can do to it's words that destroy the impact of inflation on your finances. And I want to just kind of give you guys an affirmation out there. All right. One of the things I say all the time is this will be my best financial year ever, regardless of the circumstances and the market, or regardless of the circumstances and the city I live in, regardless of the circumstances present, this will be my best financial year ever.

(18:56): And that's one of the things I've been saying now, probably for the last, I don't know, seven or eight years, and every single year, my numbers just get better and better and better and better and better because why I'm creating these pathways in my brain to go and find that increase and increase is always the answer. Not decrease. Increase is always the answer now increase is not guaranteed, right? But it is the answer you can strive for, into which you can find ideas to create increase. I believe that inside the rapid retire program, that is an idea or increase. And I tell clients when you're in the rapid retire program, you can live your life while yet planning responsibly for tomorrow. You can enjoy today and still playing responsibly for tomorrow. You don't have to sit there and say, gas is $10 a gallon. I guess we're not going to go nowhere.

(19:49): No, you'll be able to buy that gas. You'll be able to take that trip. You'll be able to do all the things that you need to do. Why? Because we are increased minded, not poverty minded. We are growth minded and not decrease minded. And so if you would get on my calendar, get on my schedule, click in the show notes. And I'd love to talk to you. See where you folks are at and help you get from where you are today, to where you really want to be. And so until next time, everybody, 1, 2, 3, let's get it.

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