Raymond Jewell: [00:00] Beating the banks at their own game. Last week we built the groundwork on how to do it. Today, we’re going to do it. Stay tuned.
Announcer: [00:11] From Philadelphia, the home of the Liberty Bell, Financial Freedom Radio starts now. Here’s your host, Raymond Jewell!
Raymond Jewell: [00:22] Welcome back, everyone. Today we’re going to talk about beating the banks at their own game and when we’re finished today, you will know how to do it. But first, let’s understand a little bit about wealth. Before we do that, we’re gonna bring in the engineer, Steve, to let everyone know that there is someone behind all this and not just me. How are you doing, Steve?
Steve Bailey: [00:49] I’m doing good today, Ray. Look, my microphone worked right out of the chute. I’m super excited. I figured it out.
Raymond Jewell: [00:56] You came right in there, didn’t you?
Steve Bailey: [00:59] I got everything figured out today. It’s gonna be a good day. I can feel it.
Raymond Jewell: [01:03] Yeah, me too. What we’re going to talk about is something that you’ll really enjoy. It’s called “Using Growth Simultaneously” and we’re going to understand first and talk about imaging. I know you say I’m beating this dead horse Steve, but I have to do it. Primarily because it’s the only way people are gonna get it. If I did one show and I said “this is how you do it” and people say that’s great, they won’t go out and do it. It’s easy to say and hard to do.
Steve Bailey: [01:35] The feedback from the field has been great so far. So I think that you’re onto something. So whatever you’re doing seems to be working and making people happy so let’s keep going with it.
Raymond Jewell: [01:46] Imaging and visualization are key in all of this and we get this from birth. Where do we get these skills from? They’re innate. Do you remember when you were in school and you got caught daydreaming? What happened when you got caught daydreaming, Steve?
Steve Bailey: [02:06] I usually got yelled at by the teacher and told “stop doing it.”
Raymond Jewell: [02:12] Yeah. We’ve had imaging and visualization educated out of us.
Steve Bailey: [02:19] That’s a very true statement.
Raymond Jewell: [02:21] So when we do it, which is God’s gift, our Creator gave us this gift to image and visualize what we want, but yet, when we do it, we get our hands smacked. Now of course, when you go to school, you’re younger. You didn’t get your hand paddled on. I got my hand whacked with a ruler.
Steve Bailey: [02:41] Don’t think my principal didn’t have that paddle with the three holes in it. I saw that a couple of times.
Raymond Jewell: [02:48] Corporal punishment was alive and well back then, very effective. When you look at what’s wrong with that strategy, it’s no wonder why people can’t visualize, image of what they want out of life. But aside from that, and I just want to leave that for people to ponder because I’m gonna beat this horse every show a little bit just to get us conditioned. Let’s talk about use and growth simultaneously. This is a test that I developed that will enable anyone to beat the banks. So, when you have anything of substance, you want to use it and grow it at the same time. I’m gonna say that again. Whenever you have anything, you want to physically use it and have it grown in value at the same time. Now, you’re saying how do you do that. Well, we’re gonna talk about it. Have you ever toured the mansion of a wealthy person that’s dead and they’ve opened their mansion up. There’s one in Delaware. The DuPont family. They’re all over down here in Naples. There’s the Ford Edison Museum.
Steve Bailey: [04:15] You’ve got Graceland in Nashville too. Elvis.
Raymond Jewell: [04:20] That’s right. When you walk through these places, what do you see? You see art, antiques, gold, silver. This is how they grew their wealth. They knew that if they had anything of substance that it would grow and appreciate over time. So they didn’t use financial institutions. They would put all their wealth in art, gold, silver, real estate. So, we’re going to talk about that. So when you see what they did and analyze it, ask yourself “well that’s not cash.” Well, if they need cash, they can liquidate it real fast. But, let’s talk about it. So whenever you have anything of substance, you want to be able to use it and grow it at the same time. So, let’s look at where we put our money. When we put our money into insurances, protection, car insurance, homeowners insurance, liability insurance, disability insurance, term life insurance, universal life insurance, we’ve got to ask the question “do we get use of the money?” And the answer is no. Do we get growth? No. So, we have been conditioned by the financial institutions to give them our money and get no use and no growth. Well, you’re probably going to say “Well Ray, if something happens, if they have a car accident, they get money.” Remember last week, we talked about getting your money out of financial institutions. I need a new roof because of Hurricane Irma and I’m having to sue them because they don’t want to give me my money which I’m rightfully owed to fix my roof. I will win, but they want to give it back as little as possible. So yes, you have protection against a catastrophic problem, but you’re not getting any use and you’re not getting any growth on those moneys they are.
[06:39] So now, let’s go to savings. Let’s look at checking accounts, savings accounts, money market accounts, CDs, 401ks, IRAs. When you have your money in those areas, do you get use? Let’s go to mutual funds and stocks and bonds. When you have money in these instruments, do you get use of the money? The answer is no. Do you get growth? Yes. You get a little bit of growth and that’s called economic rent. What’s the cheapest I can pay you to keep you happy while I’m using your stuff? Economic rent is what they’re charging you. They’re paying you a little bit of money for them to go out and take your money and create massive amounts of returns with it. When they do that after glass-steagall, remember we talked about this last week. Glass-steagall, if you don’t remember, go back and play last week’s podcast. When they repeal that, they can now lend out more than 90% of your money. So if they ever have a run on the banks, they can’t pay the money back all of a sudden because it’s tied up elsewhere. So, anyway, in those areas, in the savings and growth areas, we’ve been taught to give up use and settle for a little bit of growth. Now, if you take your money out, what do you lose? You lose growth. If you take it out to use it, you lose the growth. So, let’s ask this question “When you have your money in these places, do you get use?” No, you get growth a little bit. Do you get use and growth simultaneously? No. So whenever you have anything, you want to ask these questions. Am I getting use, am I getting growth, and am I getting use and growth simultaneously? If there’s a no in there, it’s not good.
[09:02] Now, let’s go travel back into the homes of wealthy people. What are they loaded with? They’re loaded with real estate because the home has value, doesn’t it?
Steve Bailey: [09:16] Yes.
Raymond Jewell: [09:17] It has value for the people living in it. We know that real estate in that home is going to go up in value. So, let’s ask the question. In the real estate, am I getting use? Yes. Am I getting growth? Yes. Am I getting use growth and simultaneously? Yes. Now, let’s take your house. You’re getting use and growth, you’re living in it and you’re getting the values to go up at the same time. If you need money, desperately need money, can you get it out of your home? Yes you can. You can do a home equity loan. If you need to improve it, you could take it out if you don’t have the money, but the point is that it’s being used and grown at the same time. So, we’re going to explore real estate, art, gold, silver, antiques, even a business. So when you look at real estate, because there are some people out there and I take issue with Robert Kyosaki who wrote Rich Dad Poor Dad. He says “your home is not an asset.” When you have a home and you’re living here and you have rental property, when you calculate the money you’re getting from the rental property, yes you’re paying your mortgage, but you’re always paying a mortgage. So, if you put them together, you’re paying rent to live in the place that you have and the values going up. So, I submit it’s an asset because you’ve got to pay rent somewhere. Whether you rent and own a rental property, whatever it is, you’re paying rent.
[11:14] So anyway, that was a rabbit trail, but let’s look. I found a chart on the internet called Rent Versus Buy Affordability Gap. We can flip that up on the screen and you’ll see that in some locations, buying is actually more affordable than renting. When the market went down, people were renting because they couldn’t afford to buy, but now there’s ways that you can. You can get a house, you could buy property. So when we look at use and growth simultaneously, we can see that it’s actually, if you can do it, better to buy than rent. Now, let’s look at real estate. We’re gonna play video clip number one and look at what he says. Always remember while you’re hearing it, you have to live somewhere. He ignored the money that is paid out for rent or mortgage. You’ve got to look at the macro picture. You can’t look at the micro. You’ve got to look at the macro.
Robert Kyosaki: [12:30] When I released Rich Dad Poor Dad, that book caused a bit of an upset because I said your house is not an asset. So in today’s world, if you want to be rich, you have to know the difference between assets versus liabilities. One of the reasons so many people are struggling financially today is simply because they’re calling their liabilities assets. Such as your house is not an asset, your car is not an asset and things like that. So very simply, when I was a young boy, my rich dad taught me you have to understand a financial statement. So this is an income statement. This is a balance sheet. Now, this is overly simplified. It says, what creates something to be an asset is very simply, assets cash flow money into your pocket and a liability takes money from your pocket. So for most people, their houses are not assets or liabilities because every month, it takes money to live in that house. Even those who say “Well I don’t have any debt on my house I’ve paid off.” Look, you still have insurance, still have upkeep, you still have maintenance. So let me explain this. I’m not saying don’t buy a house or don’t buy this and all this. I said, if this is a house and I rent the house out and every month it’s putting money in my pocket more than my expenses, then that house is an asset. Now that very same house, if it goes unrented or somebody trashes it or whatever they do, that very same house can be a liability. So a house can be an asset or a liability depending upon the most important word in business. It’s called cash flow.
Raymond Jewell: [14:07] So, he’s right as far as the cash flow part of it, but this is a typical one-sided narrative that people use. Then others hear it and they go out and they start trying to buy real estate to create cash flow and in one pocket, they’ve got cash coming in and out of the other pocket, they’re spending money to live. So, you’ve got to factor those in and look at the macro as a whole. So when you understand the whole picture, you understand that it’s really your asset. The banks know that because what do the banks do? I see ads all the time on TV. We’ll lend you 100% of your equity. There’s the one that lends it to veterans. They want to give you 100% of your equity and what do they tell you to do? They tell you to go out and pay off your credit cards, take a trip, enjoy yourself, have a good time, pay off car loans. So, what they’re doing is they’re instructing you to create debt or to take a car that you have debt on. You go and you pay that car off, now the bank that has that loan gets paid back, but the bank that’s got your mortgage is now getting you paying them on a systematic and ongoing basis. If you go and take a trip and you run up a credit card. You took the money out, you’ve got a debt that you’ve got on that mortgage and then you go and take a trip and you run it up on that credit card, then you pay that credit card off. You’ve now got an additional debt here to the bank that instructed you to create debt and get rid of a credit card that maybe they didn’t own. Now they have debt So the bank’s know that your house is one of the largest pieces of your asset package. It has equity and they try to attack it and you have to resist them because you’ve got to ask the use and growth simultaneously test. If you’ve got your house 100% leveraged, are you getting use? Yes. Are you getting growth? Yes, above what you’ve got it financed for. So, if you keep constantly refinancing it, you’re eating up your debt. Understand?
Steve Bailey: [16:52] Yep, it makes perfect sense to me.
Raymond Jewell: [16:55] Now, let’s look at art and we’re gonna go through these. Always remember ‘use’. Am I getting use, am I getting growth, am I getting use and growth simultaneously? Let’s roll the one about art, Steve.
David Gelles: [17:10] Every year, hundreds of galleries from dozens of countries come here to try and sell their works in the financial capital of the world. It’s the first major art show of the year and one of the largest in the U.S. It’s a great time to take the pulse of the art market and see what collectors and investors are thinking for the year. This year, one of the big things on everyone’s mind is art funds.
Enrique Liberman: [17:31] An art fund is a privately offered investment vehicle that is really aimed at producing significant returns for investors. An art fund, obviously, takes money from investors. An art fund manager then goes out and finds investment quality works of art and acquires them, manages the portfolio, and then disposes of them anywhere from five to ten years out depending on the investment strategy of the fund.
Interviewer: [17:58] So, is this art an asset class?
Enrique Liberman: [18:00] Yes it is. There’s a growing understanding that art is no longer a collectible. It is an alternative asset class.
Raymond Jewell: [18:08] See, they figured it out. What did the wealthy know if they had a Rembrandt hanging on the wall? Whether it’s an asset class or not, it was a collectible to them. They got use. They looked at it and it grew over time in value. So if they paid X for it, they knew they were going to be able to sell it for Y. So now, they’re creating an asset class and they’re selling shares in the asset class. So people are now buying into mutual funds that contain art and they know that that art’s going to go up over time substantially because it’s one piece of art and many will desire it. So now the financial institutions have figured out that it’s an asset class, but if you have our piece of art hanging on the wall, you’re enjoying it, it’s growing. Before we get deep into this, let me point out one thing. Wealthy people knew that if they had anything of value, they could always liquidate it for cash. If they needed money, they could get cash, but it was better off as the collectible then in cash because when you convert it to cash and you have that cash in your hand, you lose the art. The cash starts going down in value where the art was going up in value, but if they really had a rough patch and they needed to get money, they knew that they could convert it over. Am I making sense, Steve?
Steve Bailey: [20:01] Yeah. It makes sense. I think the trick is you have to figure out and that’s why a lot of people stick with art and things like that. What’s going to be what you think is collectible versus what is actually collectible. The challenge for me is trying to figure that out.
Raymond Jewell: [20:17]We’ve got to be smart in all cases of course, but once you figure it out and you have a passion for a certain piece of art you know it has value, right? People don’t just go out and collect a hodgepodge of stuff. They specialize.
Steve Bailey: [20:33] But it has to have value to others not necessarily just to you. I may find a giant tin sculpture in my front yard valuable to me, but if someone else doesn’t see value in it, it’s not really worth it, right?
Raymond Jewell: [20:47] That’s true, but it depends on the person. There’s somebody out there that will want a one-off. See collectibles are one-off. So you have the ability of finding that person that’s gonna want that one sculpture that you have in your front yard.
Steve Bailey: [21:08] You hope.
Raymond Jewell: [21:09] Well that’s why they have auction houses. That’s where they do it. So always remember that if you convert anything to cash, you now have inflation eating up the value of your money. You always want to leave it in the collectible and now they’re calling it an asset class. So, let’s look at gold, silver, and precious metals. We’ve got a video that’ll give you a little insight into that.
Peter Leeds: [21:38] Precious metals should be dramatically higher and soon. I do believe that they will get there relatively sooner than you probably realize. There’s not a lot of people who remember a time, especially a lot of these brokers who call up to make a trade and you’re talking to some 12 year old kid. There’s a lot of brokers who have never really seen what precious metals are for or what they can do. It’s a good way to preserve your wealth and preserve your purchasing power. If the dollar declines, it will make that gain even greater, but if it doesn’t, then you’re still looking at the prices and should be trading a lot higher. I’m looking at all the data, I’m looking at which central banks are buying how much gold and when. It’s absolutely, absolutely completely wrong in my opinion. I’m wrong all the time 100% of the time I’m incorrect, but I believe that prices of precious metals will spike. I’ve been saying this for a while and there’s been a delay because of all the commotion that’s going over the economy right now and the tax cuts and the trade deals in yappy app’. Precious metals always win out over people. Gold will be here longer than we are by thousands of years and it will still have value.
Raymond Jewell: [22:58] They call gold God’s currency. Silver, these have been around since the creation of time. They have value. Our standard of money used to be on the gold standard till they took it off and now it just floats based on the value that the government wants it to be or the value that people perceive it to be. But yet inflation will eat up the value of fiat money over time when it’s in precious metals, in that tangible gold. It will now continue to go up in value and it will fluctuate with the economy. So if the economy starts to go into the tank, gold and silver goes up. There’s markets you can track, but it’s always safe to have a piece of your portfolio in gold. What do the wealthy people have in their homes that you’ve toured? Gold, silver, jewelry. They get it. They don’t want it to sit in cash. Use and growth simultaneously. You have to ask that test and when you can say yes to all three questions, you’ve got a winner. When you have a no in there, it’s not. So you want to figure a way around it. I used to take clients through this and show them how to do it and this little test. I could call up a client and not talk to them for 20 years and they’d say “Oh yeah I remember the use and growth simultaneously test.” So, let’s look at antiques and let’s look at video number four, Steve.
Dale Krueger: [24:40] Hi, I’m Dale Krueger, a managing partner of tangible assets LLC. I was a financial broker and coin collector for over 34 years. Over the last 20 years, I’ve specialized in the metals of Karl Goetz, the most prolific medalist in world history. He created and sold commercial medals, was hired to craft medals for private consignments, and produced political or historical medals which were the political cartoons of the day. Karl gets often posed people coming in to have a medal created to commemorate their special event, then crafted the image in reverse to create a mold used to hand cast the metals. One of the reasons I like his metals is that they are the perfect blend of art, beauty, history, politics, satire, and hard assets. I’m trying to broaden the collector and investor’s interest in these rare metals. Every portfolio should have at least a small portion of rare metals as its hedge in hard assets. If you’re going to be in hard assets, why not get into something that’s fun and collectible.
Raymond Jewell: [25:46] There you are. This fellow is specializing in a certain type of collectible and the collectibles that he’s specializing in are unique to him, but people will specialize in what they have passion for. It’s very simple. Antique Roadshow, have you ever seen that on television? In the U.S., here in this country, there’s a show and I think it’s in the U.K. too and maybe some other parts of the country. Antiques Roadshow, where people bring in valuables that have been handed down through generations to find out what value it is. Now, we haven’t talked about this, but let’s step back. They were getting use and growth simultaneously. It got handed down from generation to generations. Each time they paid no taxes, it was not a currency, it’s a collectible that has value, but they go to the Antiques Roadshow and the Antique Roadshow says yes this is worth X thousands of dollars. It costs them nothing. So when they converted it to cash, the collectibles lost value. They no longer had that collectible. They no longer had the ability to enjoy it, but they got enjoyment off the money.
[27:15] Here’s another statistic. 10% of the people, some people say 20%, 10% of the people control 90% of the world’s wealth. So they know how to time it. They know what to keep their wealth in and it’s not in the banks. It’s not the financial institutions. It’s keeping it in that asset. You’ve seen ads on TV for gold. They have gold funds, an asset class. You can put money in the gold fund, all you get is a piece of paper. You don’t want that. You want to hold that piece of gold in your hand. You want to have that. Assume this is gold.
Steve Bailey: [28:02] It looks gold.
Raymond Jewell: [28:03] Yes. So when you want to beat the banks, keep it in a collectible form. Keep it in the tangible asset form.
[28:14] Now, one more real quick one and we’ll go into this next show is business. Business is an asset. Let’s do the test. Do you get use? Yeah you use your business. Do you get a growth? Yes it goes up in value. Do you get use and grow simultaneously? Yes. Now next week, we’re going to dissect that whole theme and show all you entrepreneurs out there how that business becomes an asset that you control and that grows. So I want to thank you for coming and watching. Thanks Steve for keeping us on track here.
Steve Bailey: [28:58] I got you, Ray.
Raymond Jewell: [29:00] I’ll see you next week. By the way, Financial Freedom Radio on YouTube. Go to Financial Freedom Radio, the YouTube channel and you can watch all of these videos that we’re doing and like us and subscribe to us and share us with your friends because we do work on referrals. One of the ways we get the words out. So if you could subscribe to us and like us and share us that would be great. Also go to financialfreedomradio.com and you can get–
Steve Bailey: [29:36] Show notes.
Raymond Jewell: [29:39] Our blog there and you could get the show notes. So listen, I want to thank you for coming. You have a great week, take care, God bless.
Announcer: [29:46] Thanks for listening! Please remember to subscribe to the podcast. If you want to learn how to create real sustainable wealth like the extremely rich people do, or maybe you just want to sustain the wealth you already have, you need to check out Dr. Ray’s new book “Why the Rich are Rich”. Ray’s been coaching clients for 35 years and has completely unlocked the secret strategies that rich people use day in and day out to grow and sustain their wealth, regardless of what’s going on in the economy. His book is completely free, and you can get it by going to https://whythericharerich.com and entering in your email address. Again, that’s https://whythericharerich.com. Head over there now.