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May 10, 2022

How Elon Musk & the Uber Wealthy Use Money w/ MC Laubscher

How Elon Musk & the Uber Wealthy Use Money w/ MC Laubscher

MC Laubscher runs the podcast "CashFlow Ninja" where he interviews the likes of Robert Kiyosaki, Grant Cardone, and other wildly wealthy individuals. He has spent decades taking notes on how they view money and use it - and today we bring those strategies to you and me!

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Transcript
brian:

M C welcome.

mc:

Thank you so much for having me on welcome

brian:

question for you off the top. Talk to me about $20 million. Why was $20 million important?

mc:

Most of your listeners have probably heard of a book called rich dad, poor dad by Robert Kiyosaki based selling. Finance book personal finance book of all time still continues to sell. He also developed a game, a board game called cashflow and essentially what most people don't know either is that he created the board game for. And then he wrote the book and it was well, rich dad poor dad was essentially like a pamphlet or a little booklet that would sell the board game and just teach how the board game works. The concepts taught in the board game, essentially explain how this game works and you've

brian:

interviewed Robert too, right? Yes. Talk

mc:

to him. Yeah. Yeah. He's great. And he. And on the board and the board game, which is phenomenal. If anybody wants to literally get smarter and more financially savvy, every single day, just display cashflow. Most people love to play games to begin with, and if you're just getting started out, play cashflow, cause eventually you'll play it in real life. When then it becomes really fun. But start with the board game first. It's like the monopoly game. It's a lot of fun, but at some stage you've got to go play it in real life too. But essentially your question is why is $20 million so important? One of the things that's interesting about that board game is there's the rat Bryce and most of us know what the right price is all about. It sucks. It's Go and work you're on this, just this treadmill, essentially that never stops. And hopefully in 30 to 40 years, you'll have enough Crum saved up in a diversified portfolio of stocks, bonds, and mutual funds. And then eventually, hopefully somebody else knew more than you did about your money, like a financial advisor, and there'll be a mountain of money for you and you'll get to retire. Okay. Like all the retirement ads sit in separate tabs, looking at the ocean with your significant other, or maybe there was a different, yeah, but most people are there. And then in the game there's a a track called the foster. Essentially. And that's when you're out of the rat rights. Now you're doing bigger deals with just incredible people. And now you're playing the game at a very high level. The one thing that the, essentially the only one tweak that I would make to that game is there's an in-between phase, essentially, especially when it comes to net worth. And this is just from my experience that once you get to from zero to $20 million in it. The most financial advice that people get in that bracket too, by the way, that's one of the most underserved sectors and people when it comes to financial advice most folks just have a financial advisor that they give money to essentially. But once you get to a certain threshold and. Off just looking into this over the past two decades, you look at 20 million, all of a sudden it's a game changer. So the in-between or phases like yeah, you could get out of the rat race. And let's just say your net worth around that, that when you do that is maybe around 5 million bucks, let's just say, or even less than that. But now you still have to build to get to that 20, because when you get to 20, now the game completely changes. Now people are basically falling over themselves and over other people to hand you. Money. And what I mean by that? There's a lot of advanced strategies, which you then can tap into when you get to a certain network level. And that is usually if you just scan the environment. And from my experience over the two decades, that's the number you hit that it's a complete game changer. And now you are on that foster track doing incredible deals not having a, an issue. Financing or money or anything at that point because people at that stage or chasing you in the beginning of the rack, Bryce, nobody's chasing you. You're just the rat on the treadmill essentially. Then you get out of it. And all of a sudden you're chasing folks to still do deals and get access to capital and grow your net worth. But once you get there, The script is flipped, and now you become the hunted. The hunter has become the hunted from fine financial institutions and folks that specialize in much more higher level of strategies. So it's a it's a good place to be.

brian:

I love it. And everyone, we will give you the tools to get to 20 million. If you leave us a rating and a review five stars on the action academy podcast. Cashflow ninja podcast. So anyways, people were coming out the gate, we're coming out the gate with pure knowledge MC we will get into his background, but this is his game. He plays with money and he plays with high-level strategies every single day, every single night and dances with some really high net worth high level people on that note. I want to take you down another rabbit hole with your fellow south African brother, the first African-American to. Twitter, Elon Musk. Let's talk about this acquisition because it's timely right now. And I want to really talk about this acquisition and how does that work? Because that is infinitely. Interesting to me. And it is something that a lot of us don't really understand that the ground floor 44 billion thrown around, that's too big of a number to comprehend. Walk us through the process from Elan being like, Hey I like tweeting ha. Funny. Two. Okay. I'm going to dish out 44 billion cause that's not in cash.

mc:

Walk us through this. There's a, so there's a lot to learn from Elon Musk. And obviously a lot of folks are chasing a lot of different rabbit holes and completely missing. Probably some of the most powerful lessons that you can learn right now. So what's the first lesson from Elon Musk. He's acquisition of Twitter and it's still in process, but what can we learn besides all of the things that you're seeing all over the internet and social media and so forth. So the first lesson from that, for me, what. Is how brilliant this guy and his public relations team is in executing and implementing a strategy called news jacking. And it's a news hijacking tactic. And that, that was implemented. Just think about this for a second, right? We are in an attention economy, essentially all over the world. Everybody's fighting for our eyeballs and our attention and. Since 2020 we had COVID and then when COVID sorta slowed down after the one variant to the other variant, all of a sudden there's like world war three is now breaking out there's the war between Russia and the Ukraine. So the fear factory, the news media, as I call them, cause they essentially are peddling fear and panic to people that I have everybody's eyeballs right now. And attention. You're coming as Mr. Musk, Elon Musk and buys Twitter, and because of his media strategy. This is all that people are talking about. I'm like literally between COVID and world war three, and people are only talking about Elon Musk. That is the first lesson. That is brilliant. That's absolutely brilliant. Regardless of what you think again, off of a person, you can learn anything from anyone and study them and pick up things. There's things that you can learn from his media strategy and what's he what he has been able to do. That's quite brilliant. That's the first thing that I would. That I would say by that, by the way, you would have to go back. There's only one other person that's basically in his league when it comes to news and news jacking. And that was Donald J. Trump before he started running for president. And this is before social media. And this was before any of this internet stuff. Donald Trump used to bond. This is all far, it goes back by one page advertisements in the New York times. And then basically of course troll local politicians, troll national politicians and. There was a lot going on in New York city at that time in the world. But he was the only person that everybody was talking about because he found a way to hijack the news and insert himself in the news and the leverage, the news, and that, that was before an attention economy. So that's why Elon Musk just took this to another level. So that's the first lesson that you can learn from that. The second lesson that I think is huge here, before we get into the acquisition strategy. What Elan did essentially. And this is very important for any business owner and for any entrepreneur that's out there inspiring entrepreneur. So most people look at what what other people are doing with money and their money. I do that. I look at the big players. What do the big players do? So what does Ilan do? He puts his money and invest it. Number one in himself, any of these companies, he's companies he show Elon does not have a 401k or an IRA. And a diversified portfolio of stocks, bonds, and mutual funds or an index fund. Elon Musk is investing in Elon Musks and he strings. So Elan's money is in Tesla. Before that, if you go back, it was in Pipelle. Then he had a huge exit of Pipelle. And then he moved the capital that he acquired from that exit. He moved it into Tesla. You moved it into spice, ex you move it into Neurolik and this boring company that he had. All of these dreams, all of this stuff that he's working on, not someone else's dreams, he stuff. So now he is controlling and that's a lot of questions that folks ask me, especially when they're getting started, what do I do? Where do I start invest in yourself, invest in your relationships, your network, and invest in your own dreams and focus. And they will be a point where you diversify. And if you're playing at the league that Elan. Yeah, that's essentially what he did with Tesla and with Twitter. So Tesla is obviously publicly try to company in a very explosive growth area, which is electric vehicles. But Ian is not a Muppet. As we would say in South Africa, he's not an idiot. He understands that there's a lot of uncertainty. There's a lot of disruption coming on. There's a, the one manufac facture crisis to the next. So what does Elan do? He goes, I do need some diversification. I'm all in on the Evy electrical vehicles. I'm into spice, which is pretty cool. And then I'm into neuro link, which that's as a industry with some legs and then a boring company, but I need diversification. So instead of handing his money again, over to someone else, investing in someone else's dream, what does Elan do? He doesn't go and buy apple stock. No, he buys another company that is not correlated with all the other industries that is in. And by the way, he's taking the company private. Which means it's not going to be as volatile where people can if you're a publicly traded company, just watch the show, bill lands. It happens in real life that hedge funds they w they would try and destroy you and they can with the media and so forth. There's so many examples just look at there's a gentleman called bill Ackman. On wall street, look at what that guy does. That's all he does essentially is look at w for any weakness targeted company and try to take them down. So Elan's taking that, that away. So now it's private and now he's diversified. Now let's get into the nitty gritty of like how. These billionaires buy stuff. So what did Elan do? Elan did not sell Tesla shares and got cash and buy Twitter. Why didn't he do that? Because that is probably what 99% of the world would do. I have some. Yeah, that's a T number one, a taxable event right there. And so what billionaires do, and this is a different, another level of wealth creation is they collateralize assets that if they build assets within their own wealth and their own portfolio and they position. Capitol specifically, it's very intentionally. This has been not by any accident, they position assets so that they can leverage it. So what Elan did, is he the biggest part of the purchase? He financed through putting his Tesla shares as collateral. Okay. And then borrowing against his share. They call it IBL in the industry, asset based lending as advice loan. And then he took and because he's Elon Musk and high net worth folks at that stage is probably around a percent, or he's probably getting less than a percent on that essentially free money tax-free which he then took. And then bought Twitter with it. And where does he come up with the rest of the financing? Because now he can negotiate with, I believe it was Morgan Stanley that was in the rice and three or four other people fighting for it because he can go now to people and say, listen, I put up the bulk of the cashier who wants to finance the rest of. And everybody's fighting over each other, just like I said, in the beginning, when you hit that number, now they're scrambling and fighting over each other to do business with Elan and do this deal with them and finance the restaurant. So if you essentially look at what he's done as an entrepreneur and a business owner he invests in his dream Elan's dreams, he stuff. But he diversified then to leverage what he's got, like his Tesla shares, putting it up as collateral and then essentially acquiring another company, which he then took private from. So it can not be finagled with and financial markets and all these other hiders can go off there. And so he protects that a little bit and now essentially end, he got the rest of the findings as financing probably at very low rights from an outside source. Again. Fighting each other to do the deal with them. So it's a genius deal. And that's why when the big part of business and investing is the art of the deal. There is an art and a science to doing deals where the majority of folks just have cash and buy stuff. And that's it. And that's cool. This is like another level of how do I, there's an art to this. There's an art form. Taken one asset and acquiring another asset with that. Oh man.

brian:

Okay. So this did, we all were all drinking. Some water here. Everyone's in the car. You haven't even touched your coffee. You haven't even touched your coffee because you're so fired up off of all these ideas and concepts that aren't accessible to normal people. They were so buzzed up. Tangent just go poorly accomplish what I wanted it to where this is so interesting to me. And so interest I know is going to be interesting to this audience as well. So now we understand that it's possible. We understand the concept is out there. We see the mechanisms that people are utilizing to be able to do big shit here. Let's bring it back. And let's talk about that sweet spot between that person that's on there in the rat race. And then they're trying to use these concepts because now they're aware that they exist. Let's work it backwards now down to us mere mortals and how we can get up to that level, because now as inflation's going on, as everything is going on, being a millionaire, isn't going to be sexy anymore. Especially in 10 years, we're chasing that 20 and I don't need any of you to be intimidated by it. It's very possible and it's very doable. And these people on the show are going to tell us how so let's walk it back a little bit and walk back to that person that's in the rat race. And then how do we utilize these concepts and leverage to be able to use our own advantage?

mc:

Yeah. And this is the advice that I wish I got, I just got started to, we have a podcast. Exactly. Essentially after studying the players in this game of capital and wall for 20 years, and I've interviewed some of the best minds in business and just investing. Over for the past six years of my, in my pod, my podcast at cashflow ninja, what I came across is there's a framework and I love frameworks because frameworks can be used. It's like this blueprint, right? So essentially there's a framework. So what does the framework look like of the best players in this game of capital and wealth and just to take a step back. You're in a game, we're all in a game that this is a game, literally there's rules. The rule by rule book is the tax code. So you want to play by the rules of the game to play at the highest level in the game. And that's how you build the dream. You're the life of your dreams. So in this game of capital and wealth, All of us start with making money, capital creation, cash creation. We all have to make money somehow. So we either do it as entrepreneurs and business owners. We do it in the capacity of an employee, a W2, and by the way, And that's where I started to. So this is what we all have. We all have to make money in some way, shape or form, and there's folks that are absolutely crushing it by the way. So a side note that loved what they did as an employee, but offer they obtained freedom and levels of wealth. They can now do two days a week or three days a week. The things that they love to do there was, for example, a surgeon that I interviewed that he loves. What he loves that, that Croft and he's Croft. He loves that, that, that was what he was born to do, but he's financially free. He's crushing it and moving up in levels of wealth. And now is working two to three days a week, still doing those surgeries, not because he has to because he loves it. So anyway, so you might get you, you have to create capital first cash creation. The second step is capital positioning and I call it cash capture too. There's a way that. You make money and you have to put it. You have to put it somewhere and then often you put it somewhere, you deploy it into things that generate more income for you cashflow, or they could be growth. Things like Bitcoin is for example, just an an example of that. And then the final step is you got to protect all of this because it's no use to like creating and producing. Positioning capital and deploying it and building great things. And now you've got predators and creditors coming in and they're trying to take it from you. So you have to predict what did you, who's your biggest predator out there? It's the IRS tax man. So you have to have a proper tax strategy and with great people with taxes on your team, you have to have good asset protection in place and great estate planning to eventually just build a family legacy. And that if that's what motivates you. So to bring it like to a small Lebanon, I always say to folks, don't do not be intimidated by this. You do not have to be the Rockefellers to do what the Rockefellers do. You could do it. You could look at this framework and you can essentially structure the same kind of framework within your own life. And you'll see massive changes. And some of these strategies that I'm going to share with you now, you can do the same thing and what I. Share them with you. You're going to be like, yeah, I could totally do that. So a lot of folks with producing capital and cash creation they're building that they're scaling, they're growing the biggest challenge or, and maybe even they find investments that can cashflow. And they do all that stuff properly. And that's good. And maybe growth, maybe you invested in crypto early. Great for you. And maybe that. Know-how to protect it and they have people helping them to do that. But the biggest thing that'll put some juice and rocket fuel on what you're doing. And this ties into the Elon Musk example is capital positioning and being intentional of where you put your capital where's the base place to put capital for a business owner or an entrepreneur. Again, sticking to the example, your dreams, where can I access it to grow my business? Where can I access it to build my investment portfolio? So there's a couple of things that folks can do capital positioning. And this is, if you're listening to this, you've probably heard of this, and you're probably doing this already. You just haven't thought of it within this framework. So a business owners, right? Most business owners understand business lines of. And business loans. So we had someone in our name. He's a business owner and he was crushing it, but he wanted to buy the building from which he's business operator. So he can go to the bank. He could put his receivables or the assets of the business up for collateral, which is just what the banks need to lend you money. By doing that, he was able to get a business loan. He bought the property from. The business was operating and now he owns a business and he has the property. And by the way, there was other, there are other tenants in there too paying rent, and now he's company and all the other companies are paying rent as tenants to this building, which he now owns. And now he has the real estate and he has the business. You did what Elan did there. You used your business to acquire another asset without selling the business real estate folks know this by the way, if you think, if you want to bring it to real estate the cash out refi or the Healogics strategy, home equity line of credit, this is the exact same collateralization strategy. You get to tap into the equity of the home without selling. So cashout refinance or he locked essentially is as a way to do it. Now you can roll the loan that you got from the credit or the credit line, the proceeds of it, you roll it into the next property and you can do that in

brian:

31. And then you also do a 10 31, if

mc:

you could also do a 10 31, but if you want to grow and not even sell that property, Use one property to acquire another property. There's another great strategy which we touched on the stocks one, right? So Elan there's a lot of folks that know about ABLs, which is the asset based lending as advice loans, which is a saintly. You can place a stock portfolio and borrow against it to go and buy real estate. For example, that's all you can to diversify. Golden silver golden, silver and art. There are banking and financial institutions and even custodians, which will give you a loan up to 50% of your gold and silver of holdings, annual art that you can then go out and buy another hard asset that might be pays you. If you have golden solar. Which is great. I understand why you have it, but now you could leverage that. Go buy real estate. Now, even another hard asset that pays you. So you use two hard assets, gold and silver leverage that. Now you buy another hard asset and the other one pays you even better. You could do it with crypto. Crypto, by the way, in breaking news story yesterday just came out at 5:00 PM and so forth that there was a huge deal done between Goldman Sachs and between Coinbase and Coinbase is like a crypto exchange. Now, most people. It doesn't listen. They don't listen to the show. This is just going to go over their head when they see this in the news. But essentially what that deal is Goldman say to Coinbase, because Coinbase is publicly traded. They went public, but they needed cash for expansion and they needed liquidity to because crypto exchanges can become very illiquid. Uncertain times in downturns. So they were trying to get ahead of it. What if there's a massive off in crypto, they need liquidity as an exchange because otherwise you could be in trouble. So Goldman Sachs say to them, that's cool. Give us the Bitcoins as collateral and we'll give you, we'll give you a loan secured by the Bitcoin. So they did a collateralized loan with their crypto and by the way, for the little guy. Us regular folks. There are central lending platforms that do the same thing. They will allow you to place Bitcoin or Ethereum as collateral. And you can borrow up to 50% into that and then buy real estate with it. Just like with the. Just like what stocks crypto stocks can be very volatile. There's huge pullbacks. So again, these are higher level strategies. You have to understand, for example, what a margin call is, right when the market let's just say, Bitcoin is at 60,000 and you take a little. Of at 50% and all of a sudden one falls to 38,000, which this is a great example because this happened by the way. And then folks that at that stage had a collateralized loan. You got a margin call from your lender and said, Hey buddy, we need to fix this loan. You're out of whack. We gave you a 50% LTV and now it's not 50% anymore. So you now have to fix it. So how do you fix it? You have to buy more Bitcoin at the collection. Or they in the contract and sell off some of that. So you have to understand, again, this is high-level strategies. You always say kids, don't try this at home. When you're doing, we're doing some tricks on on with some cars and motorbikes and skateboards, but in all serious now, seriousness. Now you do need to understand all the risks under. How it works, what the strategy is, what the downside is, how to protect that. That's just a part of of being an investor. Most

brian:

of the people, most of the people are probably leveraging off of their real estate too. Like I see the stock in the crypto, but I don't think that would probably be. You're a first case, unless you've got seven figures worth of crypto, I can understand, but that's probably not going to be the first place you look. It's probably going to be that real estate, which is a much more stable asset and you're not going to have that same problem.

mc:

I'm going to get to the life insurance one. If you look at life insurance, let's go life insurance is that is the other one that I'll also throw in there. That is my favorite one to talk about. The other ones are great cocktail party conversation. By the way, you talk about to someone that you could leverage gold and silver in that way in art, you've got their attention. You talk about cryptocurrencies right now that you can do that. You have their attention, but one of the best ones. Is the life insurance strategy. So this is not your mom and dad's life insurance. This is not the Dave Ramsey life insurance, by the way. I agree with Dave Ramsey on 99% of it on everything that he says about the way that life insurance is sold to the general public, it's terrible. But the one thing he doesn't tell you, there's always three sides of the coin heads, tails, and the edge. And then in the 1% of that, he doesn't tell you as he does it. Mentioned that you should probably look into how bank. Corporations family offices and very wealthy individuals buy life insurance. It's a completely different ball game. And that's what I'm talking about. So essentially when you buy life insurance, like the rich. You can buy a life insurance policy where, and it's has to be structured a very specific way, but it's essentially a savings vehicle. Most people think of life insurance and they go that kind of sucks because somebody has to die in order for someone else to benefit. That's not the life insurance that I'm talking about. So this is a very specifically structured life insurance policy with a majority of the, your premium. Goes towards cash. It's a savings vehicle. And what I love about that is the money that you're putting in there. And I've been doing this for over a decade, the strategy that I'm talking about. So when the money that you're putting in there, the principal is guaranteed. The growth has guaranteed dividends, which if you structure it with a mutual, which is what, how you should structure it with a mutual insurance company, some of them have been around since the mid 18 hundreds and they've paid dividends every single year, since they were established. The one carrier was established in 1847. It's pre civil war stuff in the U S so they by debit. These are all tax-free by the way, once it's in the policy, this is why the rich love this. And corporations love it in the bank. So the growth and the dividends are tax free in the policy. You will never pay taxes on that money again, through certain strategies, then you get to again, collateralized. Cash value that's in there up to 90 and 95%. In some instances that to corrupt though, that's 50 and golden. Silver is like 50. And even on a stock portfolio, you're going to be around about that, those same ratios around 50%. But compared to those asset classes, so 90 to 95% and there's no moving pieces, so you mentioned real estate. So compare that to real estate. Your equity is in your house. It's not guaranteed your equity. If it's growing is not tax-free unless you 10 35 and until you eventually keel over and it doesn't have, for example, a death benefit at a multiple, which will pay out a multiple to your beneficiaries. And also the money is completely tax free in there. This for entrepreneurs and business owners, We'll allow them to set up a quote unquote, private pension on the back end of their life as a plan B. So for example, a lot of these folks, and this is what the wealthiest families and individuals do. They have a plan B most people are just being sold because they watched media and TV. All they're being sold is stocks, bonds, and mutual funds and indexing. Maybe buy a house or maybe buy a second house. And I know Airbnb was cool for a while and maybe made it in a there it's still a very powerful strategy. We talk about it and we love that, but that's about it. That's all I've got. There's no plan B. So if you have another 2008, 2009 crisis, what does that look like? Your equity will be wiped. Out of your house and your second property and your stock market portfolio will be down 40 to 50%. Like it was like, it was the last time, the money, the cash that's in that life insurance policy that's growing at around 4% tax free, by the way. So you have to get eight to 9% pre-tax is guaranteed. So in a crisis, nothing happens to that. So that's why, where do we get. Cash in a times of crisis, a lot of the wealthy individuals and families have them in these life insurance policies. So it's a very powerful strategy. And you can essentially set up your own banking system in this framework that I shared with everyone with proper capital positioning in there, having your money. In many different places simultaneously here's the thing. You also mentioned inflation, which is crazy. It's going to crush most people unless there's a big wildcard and a very deflationary event. But for the most part, if you look at it, inflation's crazy. So how. They're telling you it's eight to 9%, right? Oh, I'm Williams from shadows stats calculates it between 16 and 17% and he calculates it the way that it was calculated before the shenanigans started you could torture data until it confesses. And it usually does. And then the governments gave their employees, their Stauffers and lawyers in DC. They gave them a 21% rights. So it's more 20 to 21%. Then the eight or nine that they're telling that they're telling people. So when you are trying to survive and build, and also prosper, you got to play the game better. You got to have your money work in different places simultaneously and effectively. And again if it does it tax free, it's even better because most folks don't have a strategy. They just keep doing what they've been doing. So even though they're making more money, they pay more in taxes. They get bumped into another tax bracket. They're the wealthiest folks on this planet do not buy taxes legally. Okay. Because they have a strategy. So the folks that are getting hosed or the metal claws, and of course the folks at the bottom economic wrong. So you can set up a banking system. You could be more efficient, you could be more effective. Intentionally positioning where your money's going to put it there to eventually access it. Even if you don't use it. This is what wealthy people are doing right now. Is that. Making sure that they have proper asset allocation and capital positioning, and they're getting credit lines to get everything because they know when their bloods in the streets, they've already got it set up when nobody up, when everybody else is then scrambling to call their banker or their financial professional or their stockbroker to get credit lines established at that stage, it's going to be caught off when there is blood in the streets and all of these folks are going to be. The feast because everybody loves a sale. Look at our people are still fighting each other over TVs on black Friday.

brian:

Oh, my gosh. So let's a couple of clarifying questions on the banking system and the, in the setups and everything. So first first question, 4%. Is that taken into account management fees or is that post I know if you do regular mutual fund, maybe 7%, 9%, and then you take out like 2% of fees. Is there any fees associated?

mc:

Yeah. So that's the fees, like all the fees included and yeah. There's fees associated with everyone with anything that you do, I always say to folks, when you have certain equities, there's a fee. Even in ETFs and all that kind of stuff with certain real estate syndications, there are fees and property management fees with golden silver there's storage fees. I look at that as it's a value add to me because I've got dies with big. Darden gold and silver. So I don't have to have it in my house and be freaked out every time that I'm going to get robbed. So there's a value to that. So when things are of value, think of it as a value add to it. But yeah that, that includes that. And the big game here is, and this is this. We could really get into the weeds on that one, but essentially a very powerful concept. W which folks should research is arbitrage of taking. From one area and allocating a different one. And obviously there's a cost of capital from where you're getting it from, but where you're investing it, you're getting a much bigger return. So I'll share with you an example on the life insurance stuff. So on life insurance loans right now, it's 4%. You could get it lower when you go through financial institutions and bank, but let's just for the sake of this example, you're accessing. I alone, I policy loan using your cash value as collateral. And let's just say it's 4%. And let's just say there's a hundred thousand dollars that you can pull from that. So a hundred thousand dollars, you can pull at 4%. So that's where you're getting it. And that's the cost of your capital, which is a very important concept also to understand it'll make you a better business owner, a better investor to understand that there's a cost of care. They're all, there's always a cost of capital, whether your money is in your mattress, it's in your backyard, in a tin can where you're hiding it in the bank. There's a cost of capital. So now it's 4% and let's just say, I'm throwing it in a stable point, earning the eight and a half percent just to keep this very simple. So I've taken money at 4% and I'm putting it in a stable coin and I'm earning 8.5% on that. So obviously my spread on that is 4.5%. And this is just through capital allocation. You could be doing this inside of your capital positioning, where you're essentially making a 4.5% or your 4,500 bucks that you're pocketing there. And the downside is. Yeah, because the U S DC, let's just say a stable coin, not financial advice, just using it as an example, as tied to the dollar so that crypto's not going to go down in value. You mentioned

brian:

the insurance policy, right? Like you can't like there's I know that there's like long-term growth, but then there's also a floor where you don't lose, like the original. Capital is preserved.

mc:

Yeah. And this is a whole life policy. So this isn't even tied to the stock market. So the great thing about this is I took that a hundred thousand out. Let's just say my account value was 500,000 in that life insurance policy. That's the money that I had in there. And I took a policy loan of a hundred thousand. I still have $500,000 in Mike. I didn't touch them. So it's uninterrupted compound growth that you have in that policy. And I got to use the money to earn 4.5% in that stable coin strategy that I just shared there for just over simplification.

brian:

Oh, holy crap. Okay. So you took money from your whole life and then you put it into the stable coin to earn even more. Oh, my God.

mc:

And all my money is working at two places. My money is working at a life insurance policy, earning uninterrupted compound growth.

brian:

And then you have the 4% loan on that, that you're putting into the stable coin, which is now yielding you eight and a half. So now you've got two different assets. So you're taking one summer. And then you're just putting it in two different ways to just have it grow. So it's grown in the whole life and it's growing in the stable coin. What capital. What capital challenge would you recommend people starting with this? This is something somebody can throw 10 grand into. Is it a hundred grand? What are you looking at for somebody saving up that cash to begin something like this

mc:

when it makes sense? Yeah. $10,000 a year is if you could put that into one of those policies, that'll make sense. Cause it's still have the life insurance costs. I want to share one thing with you too, before I forget W and you and I have talked before the power of compounding, whether it be mindset, whether it be efforts, whether it be actions and most people just talk about money with compounding. But that compounding thing is just it's a force. When you go against it, which most people do and the amount of taxes they buy, they are on the other side of a compound interest equation. By the way, if you think about it, that way, folks that are paying like 20 to 30 to 40% in taxes every year there's no way to get ahead and out of that game unless you change your strategy, but essentially the power of uninterrupted compounding. One of the guys on my team, he loves to get into the weeds and I love it. Cause he always brings out really good points. He was doing an example and this is how the wealthy family stink. They don't think in five years. They don't think at 10 years or 15 years, they think multi-generational, they think three to four to five generations. That's how they think about the world. They think about planting trees, which they will never be able to sit underneath and enjoy. So when you do that as a family strategy, and now we're getting into like the Rockefeller method and strategy, which folks have might be heard about it. But if you do that over three generations, and let's just say, I'm the first generation start having kids at age 30 and then the second generation two. And then the third generation, it's like something to the effect of 140 years of uninterrupted compounding in that family bank. It is a it's now it's like it's beast mode,

brian:

billions out. And they're using the capital at the same

mc:

time. And in all three generations, you are able to leverage that capital to build whatever they wanted to build at that stage within that generation. I wanted to share that. I always give the good and the bad and the ugly. What's the negative of the strategy? The negative is it's an insurance policy. So the first year, and the first couple of years you're buying the insurance so that you could throw the excess cash in. So you'll get to a point where there's more cash in the policy than what you've put in. But the first couple of years, yeah. It's a life insurance policy. So you're, there is the insurance portion of it. So especially and young folks might think of this too. Like why. I don't have a spouse yet. I don't have kids yet. I started when I didn't have a wife and kids. Because the earlier you start again, that concept of uninterrupted compounding, you start that in your twenties and eventually you can add other more policies on my family. And I we've added a ton of policies. I have them with my kids too. It's part of our family bank and it's. Primary mechanism for financing and that's just on the life insurance side. I do the other stuff too. I love the other asset clauses too. But I'm just sharing that because of all the other different things that will obviously do for you.

brian:

Oh man. Okay. So there's a lot of life insurance out there. And like you said Dave Ramsey is saying that 99% of it's being peddled the wrong way. What are some resources that people listening to this myself included can look up our specific terms that people can look up and what to avoid so that we don't listen to this show. And then we want to go all hockey Doring into throwing money around, and then even me, I've got, I got a lot of cash, so it's just throw. We want to make sure that people are thrown in the right place and not just Googling life insurance. And then it's not the correct setup. It's not the correct broker. What are some things to look for here? And what are just some

mc:

resources? Yeah. One of my companies actually produces wealth. I do help people around the country in all 50 states set this up. I started that in 2014. And we've got some content that we could share. It's at your own banking system.com your own banking system. There's about. Eight to nine videos. We do, we walk through everything. Step-by-step show examples, frequently asked questions and so forth. Because you make a great point. When we talk about this kind of stuff on my show, I usually get a couple of angry emails a couple of months later and they say, this is, yeah, this is a fraud. This is not. My brother-in-law works for this insurance company. I went to him and I set it up and it doesn't do anything on what you said it's supposed to do. And I'm like, exactly, you're going to have very few people that know exactly how to set this up properly and structure it exactly how it's structured and family offices, which. The family office serves a family. It's like a private wealth management firm that services a family, and you got to have around about a hundred million bucks just to have one of those set up, or even be part of a firm that services many of those families. But essentially we have set it up and structured correctly with the correct carrier. And then the other part of it too, is. Who's going to coach you through this. Who's going to coach you how to use a policy loan. What makes the most sense, how to set up a policy loan, which a resource to use, how to finance it, how to pay this back? It's a strategy it's a strategy and that's the big thing. Two things. Don't think of, because we're marketed to a lot of products too. So when you're listening to the show, did I don't think of, oh, I have to buy this product. It's no, I have to try and figure out a way how to implement this strategy. By implementing and executing a strategy. That's where the advice comes in and off of coaches and mentors that can help you do that. So that's why I set up a lot of folks know of cashflow ninja, which is my, my bought costs and my. Educational platform that we built. We also have producers wealth and they specialize in those policies and the setup of the policies. And then they'll be able to guide you and obviously coach you on your journey cause that's, it's an ongoing process. There was a book that I would also recommend for folks listening to this, becoming your own bank. It was written by my mentor, Mr. Nelson Nash and the title. He was very intentional with his words. It's not become a banker or become the bank. It is becoming because it's a process. It's a process of doing this over. It's not just a one hit wonder and you're done. It's no, every day. You're learning, you're growing, you figuring out new strategies. You're finding way how to amplify what you're doing that kind of stuff. And it kinda ties into the ninja theme that I have to wear. My dad is actually a. He is a very well-known martial artist. So he travels the world teaching karate to about eight to 10 countries a year. He traveled before 2020 and growing up as a kid you learn by observation and how your parents and say one thing, but you watch them do stuff more than what they tell you. And I always saw him like get up and try to pursue excellence in his Croft. As a karate guy and he still does it. He's in his seventies. Still could still kick my ass by the way. That's not even a that's not even a joke by and, but he still does it. He gets up and he pursues excellence in his craft. So for me, when I think of. You know how I want to approach business, how I want to approach investing. That's what I take with a too is I want to pursue excellence in my Croft daily, which is my Croft is being an entrepreneur. My craft is being this investor and I want to get better and better, and I want to learn more things than. More people, because as there's always something to learn, right? You get into one room where you feel like a mouse and eventually you're like, oh, I'm I'm doing pretty well. And then you leave that room and you walk into the next room and you're like, I'm in the wrong room. And you feel like that analysis again. So which is fun and that's how life's supposed to be.

brian:

Yeah. And that's the game that we keep playing. And this has been a wild interview because I think this is going to be the only one where I'm looking through the transcript. And the only thing that I have to offer the conversation is. Hey sometimes you just gotta, you just gotta listen. And I hope everyone here was listening because holy crap, that was some information, man. That was fantastic. Talk give another plug for the show. Cashflow ninja. Talk about that. Who's the show for what's it about? And then also the.

mc:

Yeah. So cashflow ninja is just my platform. Cashflow ninja.com. I've been doing this for six years, just interviewing people about all different kinds of cashflow strategies. So we're wide. We cover business entrepreneurship, we cover commodities, gold, silver art, all that other stuff we cover crypto and blockchain. We've been covering that since 2016. We cover Piper assets and we also cover real estate and all the niches. And I just have a book out because the number one question that people asked me, they said MC you've interviewed all these folks some of the best minds of business and investing, what are some of the best investment opportunities out there? So I wrote a book called the 21 based cashflow niches and also Mike an offer to your listeners. If they grabbed the book, it's a castle on engine.com or on Amazon. If you grab a copy of the book, just screenshot approve of your purchase and send it to my team@infoatcashflowninja.com. And we'll give you access to the bonus goodies, which is a digital version of the book audio version, because people like to listen shocker, they're listening to this podcast and then a curated library of interviews we did with the book. So you and assets that we featured in the book. So you don't have to listen to 856. Ooh,

brian:

man. That is an offer. All right. And then that's at a, what's the website again,

mc:

a cashflow and Angela comment. It's also available on amazon.com. It's just the 21 based cashflow niches. That'll pop up when you're taught that

brian:

in. All right, perfect. And then everyone, a screenshot of that, and then send that to the email that he just said. And we will have that in the show description as well. M C man just came on the podcast, dropped them. That's what he did. Yeah. I greatly appreciate you coming on, man. This has been fantastic. You've been one of the few, the only episode where I've basically been speechless the entire time, but Hey, maybe some of the people listening to this will be like, thank God finally, but appreciate you coming on, brother. This has been Brian and MC with action academy podcast signing

mc:

off.