Real Assets vs. Stock Market Secrets Revealed!

Today, we dive into our core investment philosophies and our unique perspective on money.

Firstly, this podcast's title, "Good At Money," isn’t just a phrase. Everyone excels at something, whether it's math, creativity, or leadership. Yet, a common refrain I hear is, "I'm just bad with money." That’s a misconception! Everyone has the potential to be financially savvy. Our lives don't need to revolve around money, but a basic understanding can transform challenges into mere hiccups.

Let's kick things off with the stock market. When we think about investing, stocks immediately come to mind. However, we believe the stock market isn't the ideal vehicle for retirement. Its unpredictability, influenced by supply-demand dynamics, often isn't tied to a company's financial health. Even top executives can be perplexed by the market's volatility. Tax benefits? Nearly non-existent in the stock arena.

Further complicating matters, today's market has changed drastically from even a decade ago. Automated bots make rapid trades, politicians potentially use undisclosed information, and social movements, like the GameStop frenzy, can disrupt the market without any link to actual business performance. Relying solely on past performance? That's a shaky foundation.

So, what's our advice? Invest in tangible assets, like real estate. Two primary reasons:

1. Cash Flow: Assets like properties guarantee steady cash flow, offering a semi-passive income stream that could last indefinitely.

2. Tax Advantages: Tangible assets often offer depreciation benefits. This means that on paper, the asset loses value, providing potential tax deductions while still appreciating in real life.

Our next core belief is the value of cash flow in retirement versus accumulating a massive portfolio. The traditional approach often emphasizes withdrawing a fixed percentage annually, hoping that the nest egg outlives you. We advocate for steady income streams instead.

Lastly, it’s imperative to take control of your finances. Entrusting mutual funds or relying solely on 401ks can be limiting. With tangible assets, you're in the driver's seat. You research, decide, and act on your terms, not on the whims of a volatile market.

Before we wrap up, a common question I hear is about paying off mortgages. Instead of that, consider how best to leverage your home equity for your financial goals.

Stay with us in the coming episodes, where we'll delve deeper into the intricacies of smart investing and building a sound financial future.

Episode Show Notes

Introduction:

• Introduction to Josh Walker, co-owner of Arete Investing.

• Overview of Arete's core beliefs and strategies.

Addressing the Myth:

• The common belief that people are "innately bad" at money.

• Debunking the myth: Everyone can be competent with money with the right guidance.

Significance of Financial Literacy:

• Why understanding money is pivotal to daily life.

• Money should not dominate life but rather complement it.

Breaking the Silence on Money:

• Addressing the taboo around money discussions.

• Learning from others' financial experiences.

Stock Market Myths and Realities:

• Stock market as the popularly hyped investment platform.

• The unpredictable nature of stocks.

• Concerns with relying on the stock market for retirement.

• Why historic performance is not an indicator of future success.

Flaws of Stock Market:

• Automated bots and trading complexities.

• Insider trading and governmental influences.

• Social media's role in stock market fluctuations (e.g., GameStop example).

Advocacy for Real Assets:

• Benefits of investing in tangible assets like real estate.

• Generating cash flow and passive income.

• Significant tax advantages of real assets.

Retiring on Cash Flow vs Nest Egg:

• The flawed "4% rule" for retirement.

• Advantages of passive income streams over liquidating investments.

Taking Control of Finances:

• Concerns about third-party control over mutual funds.

• Benefits of personal oversight on real assets.

• The predictability of real assets over stocks.

Home Equity as an Asset:

• Reframing the question on whether to pay off the house.

• Maximizing the use of home equity.