A hearty welcome to “Grandma’s Wealth Wisdom” with your neighborly hosts, Brandon and Amanda Neely. This is the only podcast that helps you take charge of your cash flow and leverage your assets, simply and sustainably, the way Grandma used to.
Brandon: Hi, I'm Amanda, and welcome to Grandma's Wealth Wisdom where we help you breakthrough to a smart, stable financial future with the tried and true wisdom our grandma used.
Brandon: Hey, and I'm Brandon. And today is Episode 57, “Leverage Assets the Smart, Stable Way.” If you haven't yet, go back and listen to Episode 56. We dropped a core belief we have about wealth in that episode. We shared the Grandma's Wealth Wisdom definition of wealth.
Now I'm going to go ahead and tell you it now so you don't have to stop this and go back to that one, but you definitely want to check that one out. But the definition that we have for Grandma's Wealth Wisdom or the definition of wealth is the ability and opportunity to live life to its fullest. I don't know about you, but I would love to be doing that all the time. [01:17.3]
Amanda: Yeah, and when you think about wealth as the ability and opportunity to live life to its fullest, that way of thinking as essential before we look at what we're going to discuss today. That's why we're reminding you of sharing that in the last episode, because in the last episode we were talking about the non-monetary and non-physical wealth we have, and how to leverage those types of assets.
Today we're turning to the monetary and giving you some tangible ideas for leveraging your monetary assets to build wealth that aligns with your values and helps you obtain financial freedom to live life to its absolute fullest as much as possible.
Brandon: Today is more of a process episode. We want to take you through a simple process that we hope will give you a fresh insight into your money. So, ready? [02:06.1]
Amanda: Here we go. Let's start with a visualization about being smart. Look at your two hands. Bring them up in front of you, or if they're on the wheel as you're driving down your car, just look at them on the wheel, but keep them on the wheel.
Brandon: Or if you're running, you still want to stop and look, too.
Amanda: Yeah.
Brandon: There you go.
Amanda: So, pretend that your hands can receive and give money when they're open, and when they're closed, you're holding onto what you have. So, as you open and close your fist, you're either receiving or holding onto your money, or potentially when you open, you could also lose money. Look at your right hand. Let's say when you open it, you lose 29% of your money. Now look at your left.
Brandon: Ooh, that sucks.
Amanda: Yeah. Now look at your left hand. Let's say when you open it, you gain 4% of your money.
Brandon: I’ll take that.
Amanda: Okay. Which hand would you want to open more often? [03:01.5]
Brandon: The one on the left because I'm gaining 4%. I don't want to lose 29%.
Amanda: Yeah, but what if you could use the left hand to, quote-unquote, “fix” the right hand, so that when you open the right hand, no money goes out, but temporarily you might lose 4% of your left hand, that 4% growth? Would you stop the 29% leaking from your right hand with the money that's in your left hand?
Brandon: Absolutely.
Amanda: Yeah, and I would imagine most of our listeners are probably saying yes, nodding their head up and down right now.
Coming out of that visualization, let's talk about how a similar thing is happening for so many people and they have the opportunity to fix it but they don't. The right hand is like having 29% interest leaving you to go to a credit card company. The left hand is like getting a 4% gain when you have your money in a 401(k) or an IRA, or a brokerage account. [04:00.0]
Too many people try to max out their contribution or leave their money within those kinds of vehicles, hoping for a big return, while paying more in interest on the debt side of the leisure, and they keep doing it for years and years and years sometimes because they're telling themselves, I can't touch that money. That's there for my retirement. I can't touch it. I can't touch it.
The point here is the idea that it's all one wallet. You have two hands, assets and debts. They are different things, but they are connected to your one body, your one wallet. When you look at how they could interact to improve your situation as a whole, you start to see smarter ways to leverage assets. Brandon, how about you give us some examples?
Brandon: Perhaps it's producing contributions to investing vehicles while reducing your debt or paying off your debt. Perhaps it's taking money out of investment vehicles to actually pay off the debt. Right? Does that make sense, Amanda? [05:06.4]
Amanda: Yeah. So, the first one is an, as you receive more income, you put more money toward your right hand to stop the leaking versus putting into your left hand. And the second one that you said is more like you take the money out of the left hand and you use it to stop the leaking in your right hand.
Brandon: Yeah, something like that. And then, perhaps it's taking a serious look at the debt payoff method we shared about in the episode titled “How to Get Out of Debt and Stay There.” It's a really great episode. And the idea for that episode was these people who yell, I'm debt free, but then they end up going back in debt, we don't want to just get back to zero, but how do we stay out of debt? Do the math.
Amanda: We'll put the link to that episode in the show notes, too, but you could find it in your podcast feed. It's called “How to Get Out of Debt and Stay There.”
Brandon: Yep, exactly. So, you want to do the math. You want to make sure it really is smart for the short and long term. You want to weigh your options. Make sure that you're making smart decisions, not just going with what everyone else tells you to do, but do what's right for you and your future. [06:19.1]
Amanda: And after you're thinking smartly, you're ready to think about stability, or maybe you could do stability first, up to you. But let's talk about stability. Let's go back to your two hands and think about stability.
Let's say you've got your right and left hands working together. The right hand, maybe you've stopped most, if not all of the leakage, and the left hand is still seeking the best growth that it can get. Now I want you to draw your attention just to the left hand that's seeking growth on your money. Your left hand is what we could call the building hand.
I like to think about it like this. My dad, I can still picture him. He loved to build things with wood. His left hand was always at work, guiding the wood through the table saw, so that it would cut what he needed to build the piece of furniture and do the things that he needed. [07:12.0]
He had to be really careful all the time when he was building, but especially when he'd operate that saw and his left hand would guide the wood through the saw. Unfortunately, not once but twice, he cut his fingers and the saw.
Brandon: Yeah, he actually cut them off, right?
Amanda: Right, parts of them, yep. When you're seeking to build wealth, how at risk are you of getting your fingers cut in the saw? Do you have any protections in place to make sure your money is safe while it's also growing?
Brandon: I think that's an interesting analogy. I know I've seen a few people who have lost fingers and usually it's a table saw incident where they've lost them.
Amanda: I've been noticing when we'll watch TV shows where they're building things and they're using a table saw, there's been a lot of modernizations to that function that there's tons of safety and it's almost impossible to get your left hand caught in the table saw now, at least from what I see on those TV shows. [08:14.1]
Brandon: Yeah.
Grandma always said, “Eat your vegetables. Look both ways before crossing the road. And never risk your financial future on elements of the market you can’t control.” That Grandma, always good for some tried-and-true advice. And although some of her wisdom seems to have skipped a generation, you don't have to be left behind.
Download “Grandma's Top Tips for an Independent Financial Future” absolutely free, when you visit Grandma’sWealthWisdom.com. Don't wait. Get Grandma's best tips today.
Brandon: So, the technical way of talking about this with your money invested in the stock market is called portfolio management and the ways to manage portfolios is called portfolio theory. [09:03.4]
We don't want to get all technical. The basic gist is about finding the right percent of each aspect of your financial assets such as the stocks, bonds, commodities, currencies, and mutual funds. Portfolio managers can get paid really big bucks to figure this out for companies and wealthy individuals. Likely, you're more of a do-it-yourself type person with your own monetary assets, and, no, you don't have to make it so complicated like they do.
When you look at the money stacking up in the left hand, how much is at risk of falling out or getting siphoned away as others put their hands into your money, or the economic environment changes, let's say, due to a pandemic like we're experiencing now?
Amanda: This is when you start to think about your pockets. What if you had a pocket? You could take your left hand and deposit some of your cash from your left hand into that pocket. Imagine that pocket protects your funds from future taxations, from the risk of the stock market, while also giving you growth you can count on and keep that money accessible for you? [10:16.3]
You can put your money into the pocket and take it out whenever you want, but no one else can touch it. How much of your money from your life tan would you want to put into that pocket and how much would you leave in your hand at risk?
Now you're thinking about stability. Now you've got this pocket in this analogy. That's where you can put the money you can leverage when a great opportunity comes your way. Without pocket money, your leverage might be severely limited, or your leveraging could put you at an even higher risk.
Brandon: This is where we get to say congratulations. With your right hand, your left hand, and your left pocket, you're starting to get your own personal portfolio theory and your ability to manage your monetary assets accordingly. [11:01.7]
Amanda: Finally, we're ready to solidify your unique portfolio theory or put it into action. This is when we talk about becoming a percenter. Notice we did not say become a one percenter. That's a totally different thing. What we mean is becoming a person who works in percentages rather than in fixed dollar amounts.
First, you've got your two hands. The left is earning funds for you while the right is servicing your debt. Look at the percent of growth or loss from each of these over the long-term to think smartly about how much money goes into which hand and so forth.
Then, you've got your left hand and your left pocket. The left hand has the funds you're investing to seek as much growth as possible but could also be lost, while the left pocket holds the fund securely while growing at a rate and being accessible. Look at the percent of your wealth that's in your left hand versus in your left pocket and you're thinking about stability. [12:02.8]
Brandon: Then you're ready to look at everything with a percent rather than a fixed dollar amount. When you get paid, how much should go to the other things like spending? How much should go to the right hand like paying off debt? How much should go to the left hand investing? How much should go to the left pocket, savings?
If you answer in percentages, then when your income goes up or down, your percentages auto-adjust. It's harder to change a fixed dollar amount. When you get an unexpected windfall, you're a member, you don't just have to do one thing with it. You can do a percent here and a percent there, and a percent to something else. You can even apply a percent of your time like you can do that in all areas of her life. When you start to become a percenter, you start to notice all kinds of ways to apply percentages to your life and your business. [13:00.8]
Amanda: So, let's recap. We want you to break through to a smart, stable financial future. We say it at the beginning and we say that the end of every single episode on this podcast. Now you know part of what we mean by “smart and staple.”
Smart entails paying attention to what your right hand and left hand are doing by treating your finances as all one wallet. Debts and assets are interconnected.
Stable entails keeping a portion of your money safe from taxes, risk and fees, but still growing and accessible. These work really well as percentage-based ways of thinking, but they do require some deep thought and a healthy dose of personalization, which we love to do all the time, and we love to help you find your unique percentages and discuss how they might change over time. If you want to develop your own portfolio theory for yourself, we love having those kinds of conversations.
All you’ve got to do to get started is go to Grandma'sWealthWisdom.com/Start, S-T-A-R-T. You'll find all the details you need to get started there. [14:09.7]
Brandon: And I'm really excited about what's coming up in the next episodes. We're about to go into our summer of interviews again. So, last year we did a summer of interviews and we had a health expert and some other amazing experts that I think were just amazing.
And so, now we're doing it again and I'm just going to tell you this, it isn't recorded yet, so we don't want to jinx it by letting the cat out of the bag, but we have some amazing, powerful people already aligned up. Let's just say the next episode might be us getting to have a conversation with one of the biggest heroes that we've had in our life, and he's a legend and considered a godfather by many because of his wisdom in his industry, and you're not going to want to miss that episode.
Amanda: Yeah, he has this quote at the very beginning of one of his books, which was one of the reasons we wanted to interview him. He is definitely a seeker of wisdom and here's the quote that he had. “Wisdom was created before all things and the understanding of prudence is before all time.” [15:16.0]
So, until then, until the next time, keep building your wealth simply and sustainably, so you can break through to a smart, stable financial future.
The topics presented in this podcast are for general information only and not for the purposes of providing legal, accounting or investment advice. On such matters, please consult a professional who knows your specific situation.
This is ThePodcastFactory.com
