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Show highlights include:

  • The counterintuitive reason following “safe money strategies” strips away your financial freedom (3:30) 
  • Why having “guaranteed money” doesn’t prevent you from going broke in retirement (10:33) 
  • How ultra-wealthy take advantage of market crashes to become wealthier (and how you can use this strategy even if you’re not stinkin’, filthy rich) (12:07) 
  • Why paying off your house can steal money from your heirs to pay the IRS instead (and how your estate plan ensures the IRS gets as little as possible) (15:53) 
  • How “wasting” $375 to set up a diagnostic machine to your financial plan can unlock true financial freedom (22:19) 

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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.

(00:20): Everybody. This is Harold Green of Brightree financial group, and it's time to stop doing what you hate. I hope you are having a fantastic day. It's a Saturday for me and had a long week and both, you know, Saturday and it's the last day of the week for me. So I'm excited to to get this here, we can start

(00:38): It and just want to share a little bit about my week. It was, it was interesting on Thursday, I had to get some car repairs done. So I had a friend who, who lived in the same area. So took Uber to his house and just work from his house for part of the day. And and then we had a little lunch and it was so interesting in the conversation that we had. And he, he he's, he's a good friend and eventually I'll have him back on the show and we're going to talk about some things that are just, oh my God, it's some crazy stuff that's going on in the world. And there's a lot of things that people are not being told. People are not being told the whole truth. And they're being conditioned to believe things that are, that are not true.

(01:19): So I want to get into my show and the title is safety versus freedom, but I'll start off by saying something else. And this one thing is very important. W if you don't take away nothing from today's show, I want you to take away like this one thing I was playing golf yesterday, and I'm making an effort to get back out and play golf again. And, you know, I played last week, but this week, this wrong was better as a snitch better. And on the last hole, I took my driver out and I just, I freaking bombed it. And everybody's like, oh my God, where was that? The whole round? I'm like, well, I try something different this time. And he was like, what was it? I said, it was my balance. I had been off balanced a whole round, and I didn't realize it because sometimes when you're going through life, you get in these ruts and you, you don't even realize you're out of balance.

(02:11): You're out of whack. And I said, I just opened my stance more, put my feet wider apart. And that gave me a more stable base to just go at this thing with everything I had. And I think it was like almost 300 yards or something like that. It was just crazy, but our, that whole almost had a birdie on it, but it was about balanced. And so today show safety versus freedom. It's a story of balance. And a lot of people do not have balance and their financial plan, and they don't have balance in their planning. So as I was getting out of my car this morning to come do the show, I realized what my mission is now. And, and I'm going to put it out there to you guys. My mission now is to radicating horrible financial planning, one at a time.

(03:00): I want to Kate horrible financial planning, poor financial planning, poor financial manager. I don't care one client at a time. And if I can change the world that way, man, I'm super excited about it because there's a lot of things that people are being told that are putting them out of balance. And I want to talk to you about safety versus freedom. We're talking financial freedom. Okay. So let's talk about the safe zone. And one of the things I'm going to get out right away is the pushing of safe money strategies, the safety of safe money scenarios, you know, and a lot of times people are pushing life insurance as a safe money strategy as a safe money. And they're not bringing balance to that whole financial plan. As a matter of fact, they're skewing everything towards that one particular product. I talked to you guys about this before being sold a product for whatever reason, versus you picking a product for a specific purpose and your financial plan.

(04:13): And you know, there's tons of money sitting out there and different types of life, insurance products and different types of annuities. We're talking gazillions of dollars. You guys can just Google how much money is sitting in these products out there. And I have a same with my clients that we don't want any non-performing assets and your financial plan. If you have a safe money product in your financial plan, that joker gotta be put to work just like everybody else. We got to figure out how to make that life insurance policy or that annuity work for you. Instead of it sitting there being dead safe money, because you're afraid of losing it. You're afraid of what happens if the market crashes, what happens at this? At least I got this money here, safe working for me. No, it's one thing to think that way, but it's another thing to think.

(04:54): What if there's a way to put that safe money to work? What if there's a way to make that money work? It's just hard in a safer mode because technically that is our safe money, but there's always ways to be more efficient at what you do. So if you want that money to be safe, the question is, is, is there another way we can put that money to work at maybe a little bit more risk? That'll generate you a little bit more return. Now, all investments carry risk of loss. And I'm going to tell you, past performance is no guarantee of future results. If you're going to invest money, you got to do your due diligence, and you have to understand what your risk score is. A lot of people I talked to that are sitting in safe money stuff. Their risk scores are out of whack.

(05:35): You know, and we talked about risk before, and basically I use software to help a client analyze their level of risk. And we put all these products in their safe money products on a scale of one to 100 in level of, and measure of risk, safe money products measure as one because they're guaranteed. You're not, you're not gonna lose it. So we count real estate and life insurance and annuities with a score of one. So if you have a hundred thousand dollars in an annuity and you have a hundred thousand dollars in the stock market, your risk score is going to be greatly impacted because that's like a 50 50 split and depends. Hang on how risky those stocks are. You might find yourself at a risk score like 30, even though your propensity or your appetite for risk might be at a level of 60.

(06:17): This is where a lot of people's financial plan is out of balance because they are skewed way too much to the safe money side. And they don't have the right amount of money working for them and the stock market and, or not necessarily in the stock market, I would say in certain stocks, because you gotta be careful what you buy. Another thing I noticed is these, these big, huge pushes and these real estate strategies, you know, by the real estate to create income, buy this real estate, you know, and you'll have guaranteed income for the rest of your life, and you'll never be able to lose it. You know, I understand all that, but if you're only generating $500 a month on your investment and you need way more than that, by why just be satisfied with that, why don't you look for a strategy or you look for a way to balanced in your financial plan, I'm going to get into the number one, right?

(07:10): The reason why people are skewed this way. I, and it's the number one thing I've heard from my clients. And I'll share with you if I don't forget at the end of today's show, but there's a tremendous amount of equity and real estate. And when I did my studies for a certain designations, it talks about 66% of people's net worth, you know, their overall assets. If they can afford a house are tied up in the house. And I've talked to about this on my show before, about how so many seniors have money in their homes, but they're missing this one key component they're missing the ability to have, I have a rising level of income. Why? Because social security is all gone. Almost their pension is doggone fixed, right? And they'll get like small cost of living allowances. But you know, you look at inflation right now.

(08:04): You look at, you, look at gas, you look at food. And one of the things I talk to people about is, and I hear this all the time. Yeah, I get my house paid off and I do all this and that. And I don't have to worry about anymore our bills. And I'm like, did you forget? I gave you, you're gonna live in that house. There's maintenance required on that house. Did you plan in the cost of that maintenance rising every single year, just to maintain your house? Did you plan in the amount of property taxes and how that's going to increase over a number of years? Did you think about the rising cost of inflation or the rising cost? So goods and services, do you think everything is just going to stay frozen at what you're paying right now? And this is where many people get it wrong.

(08:42): They're fixated on if I can just have a million dollars when I retire, if I can just have a million dollars on our retire and divide that up over like 20, 30 years, that that should be enough. And I'm like, that's the wrong rule of thumb. You have to look at. Can that million dollars generate me a rising steady stream of income throughout the rest of my life? And at the answer is no, man. Then you're going to have to sit down and look at that because pension funds are starving for yield these days, they are trying so many different things to find rates of returns, to satisfy their pension requirements, to satisfy, being able to pay out their promises that they've made to the workers. And you guys can look this up in the news, but funds like BlackRock and these other, these other big, huge institutions are buying up real estate because they're looking for some way to diversify their yield and to, and to make more money because more and more people are living longer and more and more people are relying on these pensions.

(09:38): If these corporations and companies are offering them, especially states, city, local county mean municipalities. Man. I've seen the rates of a forced savings in these things as high as 14% of a person's income like here in Hawaii, if you're a firefighter or a policeman or something like that. I mean there, man, I believe I've seen that like 14%, if it's not more of your pay, it goes into the pension fund. Okay. And sometimes the pensions have bad years and they're struggling. Now. They've turned around recently because of the different things that are happening in the market. But what if you're on a pension and you're on a fixed income, what is your cost of living cost of living allowance in that? And this is where people get fixated on safety. I'll have my pension, I'll have this and I don't have to worry. That's not necessarily true.

(10:31): And I'm going to say this. And it's very important in all of my years of being a planner, I've seen how the word guaranteed money can hamper wealth creation. Okay. Guaranteed money is not creating you any wealth it's protecting against the downside. Now I do agree that you have to have downside protection mechanisms in place, but when you have all your money, protecting us against the downside and very little going towards the upside, that plan is out of balance and it's not going to work. I mean, you're going to run into some serious problems somewhere down the road. So why do people think this way? Like I can't afford to lose this money. I can't afford to lose this money. Why do people think that way? Number one, I think people have been conditioned to thinking that way, you know, through various marketing techniques, when I watch TV, now I'm starting to see some of the bigger institutions, marketing, safe money, you know, guaranteed money and people talking about the market is going to crash and, and different things like that.

(11:34): And all of the commentary about the market crash. So I'm not going to say any names, but from time to time, I do have clients call me with these concerns. And they'll say, well, so-and-so said this, and so-and-so said that. And you know, with all these things going on and you know, what, if, what if this happens? What, what if, what these people are saying comes true for whatever reason? And my response was quite frankly honest, and I said, something is going to happen. Something always does happen. What happened when we had the crash in 2020 when the market just turned upside down and went down, I said, if you had cash and you got in the market at the right time, when it was at the bottom, do you think no, how much wealth you're sitting on? And I share it with the clients that when the market crashes, you got to understand if you've got money sitting on the side, that's the best time to get in from a [inaudible] perspective because you want to be I on weakness, right?

(12:28): They say, sell the highs, buy the low, right? So all the written by the dip, that's the term that they use. And it's, it's the know number one way that wealthy people have taken advantage of these crashes because they have money in different places. But when the time comes to buy, they buy in and I've been using that strategy pretty effectively now for, for some time buying on weakness. But you have to understand what stocks do you need to buy on a weakness. And that takes a lot of studying. You need to understand what needs to be bought and when it should be bought. But over safety leads to an imbalance in your financial plan ever had a tire out of balance. And you're trying to drive that car down the road and your tire is not balanced properly, man. That's one disaster waiting to happen.

(13:14): It's the same thing side of the financial plan. And this is we are seniors have run into the problem with the reverse mortgage because they pay the house off. And all the money's just sitting there in the house and the house has grown at maybe one or 2%, but the, all the maintenance and repairs to keep it up, their pensions are not going to allow them to just sit like that. And it's okay to have saved money, but just don't count on safe money as your sole financial plan. Why? Because when it comes to safety, there's restrictions, I'm going to say that to you again, when it comes to safety, safety is not free. Safety is going to cost you something. What is it going to cost you? Well, a lot of times in your annuity products, you have surrender charges. You got to keep the money in there for a certain period of time.

(13:59): And you can only take out so much a year. Well, now they have income riders that guarantee you a certain amount of rising, a rising level of income every single year. But the question then becomes is that enough, right? When you look at your long-term financial plan and look at what you're spending every day, when you retire, do you want to maintain the same level of lifestyle? Yes or no? That you want to have the same level of lifestyle that you've been accustomed to or better retirement. Yes or no. If the answer's yes, you got to look at it's your income streams and your assets and, and what you're using to generate that. Because if you're all just fixated and saving money and save money, then that's a dangerous thing. You got to think about that. Now I do believe in safe money. I have probably about, I dunno, 10, 12.

(14:52): I don't know how many life insurance policies between my wife and kids we have. And we started them when we were young. And because I just believe in saved money almost to a fault until I became a fiduciary advisor. And once I became a fiduciary advisor was like, wait a minute. This safe money makes sense. But I got to put the safe money to work because based on my financial plan, based on my holdings, based on how my wealth is being created and how my wealth is growing, I'm probably going to have one humongous tax bill upon my debt. Now I ask clients this all the time, right? What do you want? Do you want your money going to the IRS? How much of it do you want going to the IRS? And how much do you want going to your kids? They say, well, I want a hundred percent going to the kids.

(15:38): And I don't want anything going to the IRS. If I can help it or as little as possible. And I say, well, who's going to make that happen. And they say, well, how old are you going to make that happen? I said, no, I'm not. Because what if I'm not here? What if I'm, what if I'm old and I'm not doing this anymore. And hopefully that's a long time down the road, but that's, it's your plan. Your estate plan is going to help make sure that the IRS gets the least amount of as possible. And your, your heirs get the rest. How do we do that? Well, you got to have some safe money in there, which is life insurance policies, dividend paying life insurance policies. But sometimes that's a little costly. And some people say, man, you know, I can't afford to put that kind of money in there.

(16:12): And I'll say, well, what are you doing financially? Well, you know, we're trying to pay the house off. And I'm like, why? Well, because you know, we don't want to have any more, you know, we, we don't want to have any more debt. We want to pay that all off. And I'm like, yeah, I understand that. But if that puts your financial plan out of balance, in regards to everything you say you want to do in life, then why are you still doing that? Why don't we look at something different? And so sometimes I'll make the suggestion that if you have a ton of home equity in your home, why don't you use your home equity line of credit to pay for your life insurance policy and to lock in your health and your age at say 35 or 40 or whatever it is because although the premium looks kind of large right now in comparison to your overall estate, it can be humongous.

(16:51): I ran this one scenario for a client and I said, you know, the premium is this much today. I said, but when you turn 72 and a half or 72, what are you going to do with all of this, this money that you have to take from your IRAs? What are you going to do with that? You're looking at 150 to $300,000, depending on how much more you add to these IRAs based on how we're tracking and how we're managing. You're looking at $130 million. You know, if you live to 95 or whatever upon debt, that's a lot of money based on the projections and how things are tracking. And this premium at this at that time is going to look very small. And so I said, you know, if I were you, I would start by buying maybe a smaller policy and putting in less, but understand this over time, you're going to have to, you know, start more policies because you need a larger death benefit to help offset your estate.

(17:42): We're not building the life insurance policy, so you can take the cash out and do all these crazy things with it. That's that's, that's not the deal. Yes, it'll have cash value that you can use and worst case scenario. But what we're after primarily is the death benefit to give your estate a tax-free lump sum of money upon your death, where it provides liquidity to your estate. Now here's the other side. We want to talk about the financial freedom side. What is financial freedom? You might have your own definition. To me, financial freedom is being able to do what you want when you want, who you want, how you want without giving it a second thought. That's financial freedom. You know, you wake up tomorrow and you say, I don't feel like doing anything today. I'm just going on a plane and go somewhere. That's financial freedom.

(18:37): Now it could be a little irresponsible, but if, if you're financially free and you've got people managing things for you, you're not tied down to anything. But if you're looking at safety and I had this conversation with my friend, we were talking about how people bury their talents and how they don't use their gifts for this very same reason, safety, like the parable of the talents. You guys heard me talk about. This gave all of them each to, according to their ability, one got five, right? One got three and one got one or something like that. And the one that got one had the ability, ability to do something with it, but they buried it in the ground. Why? Because they, they were talking about safety. I don't want to lose it. So at least when you come back, you will have what you gave me.

(19:19): And I didn't, I didn't risk it. I didn't, I didn't lose it. Right. And we all know how that ended. It didn't go too well. But when you build your financial plan on safety, safety, safety, and not risking and not losing in a sense, you aren't giving up financial freedom because it was going to take a very long time in order to create financial freedom and save money products. I'm not talking about real estate and things like that. I'm talking about just life insurance and annuities, things like savings, accounts, CDs, money market, depending on your risk tolerance, you're going to have to put more of that money to work in order to create your financial freedom. But we're talking about a scenario where a person got a brilliant idea, but they said I only got seven more years before I collect my full pension. If I, if I leave now, I don't get my full pension.

(20:14): And I was telling my friend, I said, that idea would have created that person an income of a million to $2 million a year, if they would've followed through with that plan and would that business idea, but they're, they're relying. They want that safety. They want that $60,000 a year pension. That's going to last them the rest of their life. When they had a great idea that could have made them a million and $2 million and said, why did they not choose that later idea? I said, because it's hard, right? There's no guarantee that you're going to wake up every day and do all the steps and things you needed to do to bring that idea and that plan to, but the safety side, you can just sit there and do your regular job and collect your pension. I see people trading financial freedom all the time for safety.

(20:58): And I think the number one reason why they do that is because they don't want to pay somebody to help them out. They don't, that's the complaint I hear from my clients when they try to refer people in the first thing they say is, well, what does he charge? And I've talked about my fees on the show and you guys can go look them up in my ADV on the website, like that's sec requires you to full disclosure fee. So when a client says, I don't know what heroin charges, it doesn't mean they don't know. They do know. Maybe they don't want to say at the time, or maybe they forgot because all of our clients get their statements downloaded to their accounts and they can go open it up and see exactly what's being charged with their counsel. If they want to know, there's a way they just open up their, their portal and look at their statements.

(21:44): I mean, it's all there. We're required by law to show clients exactly what we charged. And so the client responded who the hell cares, what HR does. The state was working. You know, we started with this much and now we have this much. I, I know he's not ripping me off. That's for sure. Because if he was, I would know it. And I just, I just cracked up laughing. And I said, I love you for that man. And and I'm so grateful for that, but for a lot of people, they just cannot get over this thing about like fees. And I'll be honest with you guys. They don't cost you anything to talk to me. You can talk to me for free, you know, just it's an hour and I'll talk to you and we'll look at your stuff and then figure out where you need to go.

(22:19): But if you want me to analyze it, it's $375 because I got to spend time plugging in all this stuff. You know, it's like hooking up a diagnostic machine to your financial plan to figure out where the error codes are the fault codes, because everybody comes in here with a check engine light. Everybody comes in here with a check engine light. And so I got to diagnose that. And if you want me to diagnose your check engine light on your financial plan, man, it's going to cost 3 75 an hour. And like I said, I can package deal that and give you guys two hours for free. I mean, I'm sorry, two hours for the price of one, but I mean 3 75 to, to make sure you're on the right track

(22:54): Or to stop trading financial freedom for safety. I mean, that's, you know, that's a, that's a small amount of money, right? 3 75. You'd probably waste that on your cell phone bill every month. So I want to put that out there to you stop trading financial freedom or safety. You have to have balance in your plan. You have to have some risk in there. Then you have to have some safety in there, but your plan must be in balance. And again, my goal is to eradicate horrible financial planning, one client at a time. So if you are a client, I love you from the bottom of my heart. Thank you for giving me the opportunity to serve and to work with you because that's all I ever ask is an opportunity to help make your life 10 times better than what it is right now. So I thank you for that. And thank you for referring people in and have them listen to the show and them know I don't, I don't charge you anything to talk to me unless you want your plan analyze, but I'm excited to be doing this excited to be sharing this with you. And until next time everybody, 1, 2, 3, let's get it.

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