Summary:
In this week’s episode of The CEO Warrior Podcast, Mike Agugliaro interviews Todd Tressider, who is a former hedge fund manager and retired at age 35. He is the author of five books on personal finance and loves playing the money game. Todd is a financial educator whose specialty is advance retirement planning and investment strategy to build wealth. During this episode, Mike and Todd discuss the myths of wealth, wealth building, and planning for your future.
Main Questions Asked:
- What is wealth?
- What are the problems you’ve seen with people who are trying to build wealth, and the problems of not understanding?
- What are the steps for someone who has been in the working game to turn it into wealth?
- Can you have freedom without wealth?
- What are the brackets of wealth?
- Give us some ideas of vehicles, and what we should consider when it comes to wealth?
- What do business owners need to think about in the next few years?
Key Lessons Learned:
Day Trading
- Day trading is a tough game as you’re dealing within the noise of the market, and there is a lot of random distribution of price movement in a short-term level.
- Investing is all about mathematical expectancy, and there is a formula for that. Todd takes an engineering scientific approach to things.
- The fundamental problem with day trading is that it is a job, so you aren’t developing passive income and freedom.
- It is hard to get statistical validity on day trading.
Financial Wealth
- Wealth is when cash flow exceeds expenses.
- A common problem is not defining your assets properly.
- There are three large asset categories for building wealth:
1) Real estate
2) Business
3) Paper assets
- A lot of people think building wealth is putting money away in the 401K or savings, but the statistics show building wealth is through business or real estate.
- There are tax advantages and leverage advantages to business and real estate that doesn’t exist in the paper asset field.
- Paper assets are a wealth storage vehicle that tries to maintain wealth.
- People confuse assets with cash flow.
- When you convert your business into a true business where it produces cash flow, then you are truly building wealth.
- For some, money is not a tool but has an emotional connection, and for others it is a sense of self-worth.
- The vast majority of people who create wealth give more value than they take.
Personal Wealth
- There is a difference between financial wealth and personal wealth.
- To make a change you have to have a mindset shift.
- Think about where you are right now and where you want to be.
- The stuff you love the most is meaningful when it’s punctuated by a meaningful life and meaningful work.
- There is a lot of value to work that people don’t recognize when they are stuck in the middle of it.
- Work provides a sense of contribution, community, and relationships that happen through business.
- The question should be, ‘how do I build a life so wonderful that I never want to retire from it?’
- The root of what creates fulfilling work isn’t passion.
- Passion isn’t innate, it is developed.
- You can have freedom without wealth; however, this will not be financial freedom.
Breaking Investment Myths
- Investment done right is not a product, it’s a process.
- Any of us can open a brokerage account, and we are all equals with access to the same product. Yet, we will all produce widely different investment results. The difference is the process.
- What is a good investment today could be a bad investment tomorrow.
Blowing Up Myths in Retirement Planning
- Retirement is a euphemism for ‘old age financial independence.’
- Cash flow is often more valuable than the asset.
- The government has waged a war on savers, so there is little return on assets right now.
- When you sell your business, you will pay a huge chunk of tax on the proceeds.
- Financial planning done right is all about scenario analysis.
- The myth is that you go to the calculator and input variables. A calculator is a mathematical projection of assumptions you plug in.
- Approaching retirement from a life planning approach is super powerful.
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Links to Resources Mentioned
How Much Money Do I Need To Retire? (Book)
mikea.ceowarrior@gmail.com
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