Hello PI listeners. If you did not get a chance to listen to episode 129, Infinite Banking Strategies with M.C. Laubscher, what a treat it was. M.C. speaks with John Fortes and shares a wealth of insight regarding how the wealthy structure their finances and how passive investors can do the same. He emphasizes the importance of focus and mastery and shares illustrative examples that just may improve your financial and business trajectory. Below is a summary of that excellent episode.
M.C., originally from South Africa, created Cash Flow Ninja, which is now an educational enterprise for helping people position themselves and grow their wealth. He is a passionate teacher and researcher, has released over 600 podcast episodes and is a firm believer in the martial arts approach to wealth building, which is to build on your knowledge, grow and pursue mastery. Part of this approach is to pay very close attention to models of success – in our case, the wealthy.
Do What the Wealthy Do
M.C. shares that the best way to get to where we all want to be, secure in our finances, abundant in wealth and rich in legacy, is to model what the wealthy do. The wealthy do not behave in the same way that others do. Here are a few examples that M.C. shares with us:
Treat your personal finances like a business: whereas many novice investors only focus on the fun part of finance – investing and growing wealth – the wealthy build a solid foundation. This includes staying liquid, creating security by doing estate planning, using infinite banking strategies such as whole life insurance and keeping liquidity. M.C. reminds listeners that the average person seeks to focus on their 10%, which are investment funds, whereas wealthy families focus on 100% of the picture.
Avoid taxable events as much as possible: the wealthy understand the impact of taxes and seek counsel to protect their finances and wealth from unnecessary taxable events. They utilize whole life insurance policies, which M.C is very fond of, to invest in assets while being taxed only on the “seed, and not the harvest.” This means that the initial funds are taxed but gains within these policies are not. This example highlights the savvy of the wealthy, but also the same access to knowledge and resourcefulness that anyone can have.
Focus on mastery: M.C. urges listeners to think about some of the wealthiest investors. Do they diversify? Not very much relative to conventional investment advice. The reason is because they are focused on their asset classes of choice as well as investment criteria and have chosen the path of mastery. Warren Buffet is a great example of mastery. Having focused specifically on the equity’s asset class, he only invests in what he knows and has become the black belt of investing.
Think Outside the Box
M.C. warns investors to think outside the box. He tells listeners to question conventional wisdom. “The quality of your life is determined by the quality of your questions,” he passionately exclaims. Ask lots of questions and rethink what is taught. For example, when taking financial advice, some people skip the foundational steps and go to a financial planner who tells him or her to buy stocks. Why does this happen? M.C. reminds listeners that financial planners get paid by assets under management. The more investments they can sell, the more they receive in fees. Furthermore, 401k’s are sold to hard working people who enroll because they are told it is smart. They have little control over the asset, pay exorbitant fees and are taxed on the seed and the harvest. M.C. cautions following the herd.
How Can Investors Prepare Themselves?
John asked a pivotal question that is central to the Passive Investor audience. How can passive investors prepare Themselves?
M.C. 5 step response:
- Invest in yourself:
Just like the wealthy, M.C stresses to first invest in yourself. This means to invest in mindset, education and relationships. To emphasize the importance, think about the billionaires that we have heard who have lost it all in the past only to re-establish wealth and power in a short time afterward. What made the difference is that they invested in themselves.
- Get Liquid:
The wealthy understand the importance of liquidity. M.C urges listeners to plan to save up to six months of living expenses in cash and then work to get to twelve months. In these uncertain times, liquidity is critical. As in the last recession, banks may pull lines of credit and equity in your home could disappear seemingly overnight. Cash is king and liquidity should be highly valued.
- Find Efficiencies:
After having achieved enough liquidity, this is the time to identify ways to find ways to save on expenses such as insurance. Now that there is more liquidity, the deductibles that one pays may not be justified. By opting for lower deductibles for casualty, property or disability, one can save thousands of dollars. Look at your options.
- Asset Protection:
This includes estate planning as well as establishing family constitutions. You do not have to be the Rockefellers to create a family constitution. M.C. says that this can simply be done with a pen and paper, and some of your family’s time. What is most important is that there is alignment with your family with regards to what the family’s investment philosophy is and how they will invest their family funds. M.C. makes the powerful statement to have a strategy, not a plan. “Everyone has a plan, until they get punched in the face (famous Mike Tyson quote).”
- Get to the fun stuff:
The first four steps outline the foundation of wealth creation. They are what M.C refers to as the unsexy side of wealth building. He argues, however, that building the foundation is key and many who have not done so focused only on the fun side and lost much. Now that one has achieved the foundation, they can participate in the fun, which is invest freely based upon the strategy that they outlined in their personal finance and business plan. This includes stocks, real estate, businesses and even other asset classes such as precious metals or cryptocurrency.
M.C.’s mastery approach to wealth building is a treat for anyone willing to listen. If you have not heard the podcast, listen to the full episode here.
For more information:
You can follow M.C. Laubscher at www.CashFlowNinja.com, where you can find his podcasts, webinars and courses.
If you have considered investing with a private equity investment firm, please create your investor profile with The Fortes Company at www.investwithfortes.com.
Contributor Guest writer Rodney Robinson of http://rodneyrobinsonii.com/.
Disclaimer: The views and opinions expressed in this blog are provided for informational purposes only, and should not be interpreted as an offer to buy or sell any investment or course of action.