Are you sick and tired of hearing the same old conventional financial advice? We feel you. We're fed up with those same old truisms that fall flat when you get into the unique opportunities and challenges of specific situations. This show is all about bringing you historic wisdom around wealth-building with practical insights on how to apply it to your journey. When conventional financial thinking doesn't get you where you want to go, you need wealth wisdom. Let's master wealth-building together.
(00:04): Financial portfolios are like belly buttons. Everyone's got one and some are stinky, but what does a financial portfolio look like when you're just starting to build wealth? Do you wanna build each part simultaneously or build us a at a time? How do you know if you're doing it right? How do you get caught up? If you're behind, there are so many questions, but we are here to ask what if it were easy? Seriously? What if it were easy? Hi, I'm Amanda and welcome to wealth wisdom, financial podcast, episode number 103 financial portfolio construction for building wealth and I'm Brandon. And we get asked all the time about portfolio building. There are so many different ways of thinking and mixtures of different financial products and different ratios that it can get challenging, right? It can sometimes feel like it's all just a personal decision and it is in a lot of regards. You build what's right for you. And I'll build what's right. For me, that's kind of how it ends up. Yeah. We believe there are a few fundamentals that apply to, and across generations, we're gonna share those today. And they aren't very conventional of course, because you know, we are not your just typical conventional people.
(01:36): Yeah. In fact, are you sick and tired of hearing the same old, conventional financial advice? If so, we've, we're fed up with those same old truisms that fall flat. When you get into the unique opportunities and challenges of specific situations, this show is all about bringing you historic wisdom around building wealth, with practical insights on how to apply it to your journey today. When convent financial thinking, doesn't get you where you wanna go. You need wealth wisdom. Let's master wealth building together. Let's start with a fun analogy. We learn as kids with blocks that you can't build a castle, all will Willy nilly. Like actually I was doing that stuff this morning. Actually, we were recently teaching our preschooler that he needs to put the bigger blocks on the bottom to hold up the smaller blocks. If he starts with the smaller blocks or just builds with whatever blocks are most convenient to grab, the entire construction project eventually ends up, right? Where is started a pile of blocks on the floor and a huge mess that he's gonna clean up and lots of Legos that may hurt our feet.
(02:53): Again, we all learn this as kids with our Legos, even like the preschool type Legos, the big ones, right? You have to be intentional with how you build haphazard Lego building. Doesn't end very well. Yeah. It goes to a crash right yet when it comes to building our financial futures, we pick up this block here and that block there, we see so many people picking, whatever is easiest to use or whatever a close friend says. They should do no wonder too many end up with haphazard financial castles that tumble over the minute, there are economic trimmers or challenges. sure. You can make good decisions in the moment when opportunities present themselves. But do you want a good financial life or a great one? Do you want a toddler's Lego build or a Lego master build? Like you'd see at Lego's headquarters, another the Lego headquarters build just like there's a superior way to build with Legos. There are better ways to construct a financial portfolio, especially if you're trying to build real wealth. Now I can hear you starting to think. Yes. I know I'm in your earbuds, but I can literally hear your brain. I'm just kidding. I'm imagining a lot of you're starting to think. Okay. Yes. I want to be intentional. I believe being intentional will help me build wealth, but how do I know which parts of a potential portfolio are like big Legos and which are the smaller ones? How am I gonna know if I'm doing it right? That's why I hand it off to somebody else to do it for me. There's too much to learn. It's super overwhelming. I I'm just gonna like go at it. How I'll haphazard. Like what financial FOLs are you talking about that are best for building wealth and how could this ever be
(04:45): Easy? And we hear you for sure. I mean, actually there are over 450 different financial products in as many ways to combine them as there are people in the world. So, I mean, it's confusing and a lot, that's why we said financial portfolios are like belly buttons, right? And unlike belly buttons with financial portfolios, there's actually no shortage of opinions about what yours should look like. Everyone has one, right? For sure. One person says cryptos, where it's at another person says you better own some precious metals. The HR person hammers in you, that you better take the company match with the 401k and then just let the target date fund handle the rest and so on and so forth. We hear these opinions all the time. I mean, just this morning and we add a little bit of this and a little bit of that to our financial lives. And then voila, there it goes. Right? Problem is that when we end up with a haphazard financial life where the, this product over here is gathering dust and that product over there is causing us anxiety when we could combine the two or use them in coordination and see our goals become reality. But because we have something over here, something over there, it just gets a little confusing.
(06:05): Yeah. And this reminds me of something called silo thinking it's kind of a corporate term where you don't pay attention to the whole. You are only are paying attention to the parts, but you might lose parts and you might even have parts competing with each other. And as I was like, thinking about this, I came across this example that I think is a great example of kind of a wealth wisdom that actually comes from outside of the typical wealth world. It's not an economist. It's actually in the 1950s, a French sociologist, Pierre BAU. I don't speak French. My apologies if I'm pronouncing that incorrectly, Pierre, a French sociologist, you got Pierre, right? I got pier, right? Hopefully he grew up in a poor rural village. He left, he fought in a war. He came back to that poor rural village to kind of study its folk ways as a sociologist would. And part of that study, he went to the village dance. But as a sociologist, he looked where no one else was looking. The center of attention was the dancing, but on the outskirts of the crowd where a group of men considered UN marriageable because they were farmers. And in the 1950s in France, most women wanted to marry men with professions. It was a insight from how the industrial revolution had changed his community in their folk ways, right? Pier used this insight from looking at the whole of his community rather than just what everyone else was looking at to catapult his activism. For those who believed that he believed to be subordinated by society and how it had changed due to the industrial revolution.
(07:50): He spent his career questioning those in power and how they tried to focus everyone's attention. And then pier brought wisdom to how social classes preserve their social privileges across generations. Despite saying that they're trying to create a more equal world. You can, we'll put some links to some more information up here, but you can look 'em up on Wikipedia, read a bunch of stuff about what he did, but I wanted to share this story. As an example of silo mentality, it's usually talked about in core corporate America, where departments in the same company compete rather than cooperate. And it's been shown to have some pretty disastrous effects, particularly silo thinking is pointed to as one of the causes of the fall of Lehman brothers in 2008, this kind of fractured thinking that comes with silo mentality effect, not just your micro economy, but our financial institutions, our public policy, and so on and so forth. But let's focus in on you. How do you, how do I, how do we stop thinking in silos about our financial portfolios? How might we gain fresh insight by looking at the outskirts of what it might seem that the crowd is doing? What might it look like to shape our own holistic financial portfolios, where the different parts help each other and boost each other rather than compete with one another
(09:13): From our research. And we believe there are three time tested pieces of wealth wisdom that can help you create a financial portfolio that builds wealth. They are three powerful questions because remember wisdom is about finding the right questions. And if you don't remember that go to, I think our last episode, the episode before that, on that, rather than just the right answers, we're gonna ask the right questions. The answers can change as life changes, but the questions are timeless. Here we go. Here are three powerful questions for constructing a financial portfolio. That's really gonna help you build wealth. Question. Number one, what's important to you about building wealth. Yeah. Each individual or couple do this with your significant other, if you have one and they all have their own reasons to building wealth, even Amanda and I have different reasons, right? Then there are different ways to build that wealth depending on its purpose. So you might have different, again, skill sets, cha all kinds of things that would tell you which way to build wealth.
(10:27): For example, building wealth, to make sure a single individual can have financial freedom. As soon as possible is gonna look differently than building wealth to set a up multiple generations within a family to never have to worry about money again. And remember wealth doesn't even have to be about money. It could be about being able to go on a field trip with your kid whenever they, it comes up, right? It could be anything what's important to you about building wealth might be the time freedom or sleeping. Well at night, like those are not necessarily money, but it could be something that it produces. What we found helpful is to just free write or type. If you prefer to type and start with the phrase, I want to be wealthy because, and then just write or type whatever comes to mind. There are, are no wrong answers. And after you've emptied all your thoughts and feelings related to the importance of building wealth and defining what wealth is, you can go back through and highlight or circle three to five phrases or words that seem to be most important to you. And then after that, you're ready to go on to question number.
(11:38): So question number one, what's important about what's important to you about building wealth and then question number two, if you were queen or king of money, what would you want your money to do for you? And you wanna start without financial products in mind, right? You wanna take off the labels and start without the financial products in mind and list qualities, then prioritize those qualities. For example, everyone would probably say they want their money to grow. Ivan met a single person sin. That's not interested in growth in some way, shape or form. And if it's not growing right, it's because you go backwards, cuz there's actually inflation. So, you know, growing might mean keeping up with inflation, but a 55 year old might put safety much higher than growth. Knowing that the five years before and after retirement or when they're most vulnerable to follow, be careful when you put access too, most people put that lower and then they run into issues, right? They think that I don't need that until later. Life is gonna throw you curve balls. If you're in business for yourself, those curve balls can happen more often and have bigger curves. Right? Most people lock up almost all of their wealth in their retirement accounts like 401ks and IRAs yet when a curve ball comes, those accounts are off limits unless you're okay with the 10% penalty of course. And the rule of getting around that 10% penalty are super strict. You definitely can't use it for a new roof or a new car. Even if you technically qualify for a hardship withdrawal under IRAs rules, an employer, 401k, doesn't have to let you take it. And that's serious, serious. I mean, like for real,
(13:31): As you're listing out your qualities of what you want your money to do for, or you, and then you're prioritizing them, you're ranking them by what's most important. Be sure you consider access carefully. It's not just about emergencies. It's about flexibility and opportunity as well. Now that you have more clarity on what's important about building wealth and what you want your monetary wealth to do for you. You're now ready for the next question. Question number three. So question number one, what's important to you about building wealth. Question number two, if I were queen or king of money for the day, what would I want my money to do for me? And then question number three. How do I want to build so far? You're acting like an architect of your financial future, right? You're designing your wealth according to your dreams and what you want. The next step is to switch from architect to engineer. Sure. The architect can dream up the fanciest more outlandish buildings, but then the engineer has to figure out how to make it happen. What will make it structurally sound while also fulfilling the dreams of the architect?
(14:43): Now, this is a super important part of this. Too many people skip too quickly to actually grabbing building materials and like, you know, financial products like a three year old grabs Legos, don't rush this part of the process of deciding how you want to build. Yeah. And those pieces also may have different parts in it. Like you might have some as aspects of what your money does for different things. I would think so ready for hot to take on how to build your dream financial portfolio, try this emphasize and see how it fits other than build a diversified portfolio right away. Focus on installing one element at a time and start with your foundation. Now that's pretty like a controversial to say, that's why we called it a hot take rather than start with a diversified portfolio right away, focus on installing one element at a time and start with a foundation. Let's break that down. Most people would imagine building a diversified portfolio by getting something like a thousand dollars cash fund liquid emergency fund, right? And then going directly to index funds mutual funds or ETFs because you can have immediate diversification versus buying individual stocks good in theory. But what if you build up a large, fairly large cash reserve and then start to add riskier assets after you've covered your access needs, what might that look like and how might that change your ability to build wealth?
(16:22): And this is why we love the bank on yourself. Concept over the last eight plus years, we've built a fairly large cash reserve that we've already used to pay off debt, get through an emergency, take a bucket list trip that I really wanted to take and buy a home. It's been instrumental for us to have that liquid accessibility cash. So we could do those things. If we hadn't had started banking on ourselves, we might still have student loan debt. We wouldn't have been able to sell our business as L and we would probably still be renting. And we 100% wouldn't have this podcast because we wouldn't be there. We wouldn't be where we are today. Now, now that we're in this stage of our lives, where we have this stability of no debt to banks, we have a home, we have our family we're ready to of really catapult our wealth building into some of those riskier investments. And guess what? We can use our bank and yourself type policies to do two things at once. While we pursue quote unquote investments, our cash will still grow within our policies because we have a properly designed to see with the right kind of company. And I don't wanna rush this too much, cuz I feel like maybe possibly people who never set up a foundation, they start with, you know, trying to get super diversified right away. What ends up happening is that life happens. Things come up and they keep having to destroy their compound interests. They keep having to go into debt.
(18:01): Something always keeps happening that they can't get ahead. And that might not be true for everybody. But I see it happen for a lot of folks that I talked to that are, you know, a couple decades beyond me in terms of time, but never set up that foundation. And that's part of why we talk so much about setting up a foundation is cuz we see how important it is and how not having one over the course of time. You know, life is gonna happen. There gonna be resets in the market. There's gonna be roofs that need to be repaired, cars that are gonna need to be buyed, purchased root canals that are gonna happen. Like all the things. If you don't have enough foundation that can totally get in the way of building true wealth, okay. I I'll get off my little soapbox there
(18:47): And we know that it can be controversial and all of that, but that's our take on it. And I believe, you know, it has been a lifesaver. Not everyone is gonna agree with that approach. And you know, there's all the, the haters and naysayers, but it does have its place. We just wish more people would consider it. And the advantages that it can have at the very least, we see too many folks nearing their older years with a half hazard financial portfolio because they didn't take the time to be an architect and engineer of their own financial house. And I don't want that to be you. I want you to take the time be cuz I, I don't know. It's only your future. So to sum up, we wanna underscore this rather than a haphazard financial life. You can build your unique portfolio in a way that it has a rock solid foundation that you can count on no matter what's going on in the economy or on wall street. And that's a very powerful piece of wisdom that some people just never hear
(19:56): And we're told no risk, no reward. Right? And you've also got to speculate to accumulate, which is like telling a preschooler that if he wants a tall Lego castle, then he needs to put the smaller blocks on first. Then that isn't logical. So if you're looking for strategies to stabilize your portfolio, we'd love to help you remodel and strengthen your foundation. That's our specialty working alongside folks to master wealth building by making sure their foundations are solid. Notice. We didn't say put everything into the foundation. We're simply saying, make sure you've given your foundation the attention and deserves. And if you're ready to replace the no risk, no reward with reliability is reward. Then schedule your 15 minute intro call with us today.
(20:44): We'll put a link in the show notes. I have to just say like that idea reliability is reward in and of itself. You don't, you're not gonna hear very many financial professionals tell you that you're gonna hear them say, you gotta take risk. If you, you know, if you wanna get to your goals, you're gonna have to take risk. And we're here to say that that is not true, that you can and be set for life without taking unnecessary risk. So as you're learning new information, you're hearing these competing ideas, you're coming up with fresh ideas. You're going through those questions we shared earlier. It's gonna be difficult to decide what to carry through with and when we're here to support you. But we've also developed a filter to use when, how to move forward to your goals and dreams, financial and otherwise it's a free gift for you email@example.com. Go download it today and start connecting with your intentional financial life.
(21:40): Yeah. So that's still method.com for that. And if you want to schedule a call with this, go to grandma's wealth, wisdom.com/call, I believe. And you could schedule a call there. So next time be sure to subscribe because we are gonna be defeating a very common reason. People give up on the process of being the architect and engineer of their financial house. So we're gonna talk a lot about why people don't even go there. You start to answer the three questions for today. If you feel like you need a bottle of and acids, then this next episode is gonna be for you. So a little cliff hanger there, it's gonna be fun
(22:21): Until next time. Keep building your financial confidence. We hope you live long and profit. The topics presented in this pod cast are for general information only, and not for the purposes of providing legal accounting or investment advice. Untouch matters. Please consult a professional who knows your specific situation.
(22:42): This is the podcast factory.com.