Episode 04: Live the Life You Want Today

This is The WealthAbility™ Show with Tom Wheelwright. Way more money. Way less taxes.

Welcome everybody to The WealthAbility™ Show where we talk about how to make way more money while paying way less taxes.

Hi, this is Tom Wheelwright. I'm your host. And I am so excited about this show today because we're going to talk about how to start living the life you want to live today. Not tomorrow, not next year, not 10 years from now. But how do you start living the life you want to live today? And all we're going to do is I'm going to tell you one decision, one decision, that I make and others make that you can make too. These people like Warren Buffet, Bill Gates, Mark Zuckerberg, all make this decision. Even my buddy Ken McElroy who a lot of you know. He makes this one decision and this decision can change your life and allow you to start living the life you want today.

See the average investor, it takes them about 24 years to even double their money. Think about how hard that is to save for the life you want to live today. Right? It takes you too long. It's completely out of reach. It's like the best I can hope for is to not live under a bridge.

Instead, what if you could double your money in three years. Think about how much faster you could live the life you want to live? You don't have to wait for years and years and years and scrimp and save and live below your means, right? You can start actually living the life you want to live just because your money is working that much better for you. See, a professional investor is very different from an amateur investor. We hear about amateur investors, what kind of returns they get. Well, the amateur investor gets about 3% return on their money. That's why it takes them so long to double their money. It's so hard when you're only getting 3%. And some of them don't even get that much.

Think about the professional investor who's getting 15 or 20 or 30% of more on their money. The result is that they're living the life they want to live right now. I mean, I can honestly tell you, I live in this dream. Right? My wife, Louanne, and I we talk about this all the time. Life is sweet because we're living the life we want to live. And really, it's because of this one decision. It doesn't take 20, 30, 40 years to do this. You can actually start living your life today.

And here's what's even better in my view, of course. You know, everything's going to come back to taxes, right? So when you're listening to The WealthAbility™ Show, there's always going to be less taxes. Well, here's the thing. The tax law actually supports this one decision. The tax law actually says that if you do things the way Zuckerberg, Buffer, Gates, Kiyosaki, McElroy, and okay, Wheelwright, the way we do things, then you actually get to pay less tax. And how many of you have heard and remember when Warren Buffet said that he pays less taxes than his secretary. Right? He pays less taxes than his secretary. Why is that?

Well, it's really because of this one decision. This one thing that I'm going to tell you in just a minute here, that will actually allow you start living the life that you want and pay less taxes. Okay, so think about my friend Robert's Cashflow Quadrant. Like a lot of you know the Cashflow Quadrant, ESBI, right? E stands for employee. S stands for self-employed or smart or small business owner or specialist. B stands for big business. And I stands for professional investor, okay? We're focused here on the professional investor. Remember that the employee, on average, around the world is going to pay about 40% taxes on the money that they make. 40%. That means that you only get 60% to start out with. How are you ever going to live the life that you want to live today if you're paying 40% to the government right off the bat?

And then you decide … You get more education and you decide what am I going to do? I'm going to be a doctor. I'm going to be a lawyer. I'm going to be a specialist. I'm going to be a star. And you're all of a sudden, you're going to pay 60% because now not only are you paying your share of the taxes, you're paying the employer's share of the taxes. And now you're giving away 60%. And you're only starting with 40%. How are you ever … And now, if you're at 3% returns, how are you ever going to get there?

You go the big business owner and all of a sudden, it drops drastically. It drops to 20%. Now not very many of us are going to get to big business but here's the thing. The professional investor gets to zero. It's called tax-free wealth. They get to zero because they're a professional investor because the government wants you to do things a certain way. They want you to be professional in your investing. And that's one decision, I can tell you right now, this one decision is the thing that distinguishes more than anything the professional investor from the amateur investor.

Here's what happens. In an amateur investor, what do you typically do? Well, every time an investment comes up, you go should I invest in this? Is this a good investment? It's the wrong question. This is the question that 99% of investors ask themselves? Should I invest in this? Is this a good investment? The question is, am I a good investor? That's the better question. What can I do to be a better investor? And here's what you can do. You make a single decision. Okay? So it's just one decision. You make a single decision about how you're going to invest. And I'm going to walk through how to make that single decision in just minute here. You make a single decision about how you're going to invest and then you apply that decision over and over and over again.

I want you to think about these four people. Buffet, Gates, Zuckerberg, and our friend, Ken McElroy. Okay? And think about what they do. Buffet invests a very certain way. How many of you have heard somebody say I invest like Warren Buffet? Well, you don't really because Warren Buffet actually controls his companies. Okay? And we're going to talk a little bit more about that in our next podcast. But Buffet makes a single decision. He's not all over the place. Okay? He rejects most of the investments that come across his desk. Okay? Not because they're bad investments but because they're bad investments for him. I'm going to repeat that. Because they are bad investments for him.

Think about Bill Gates. Bill Gates decided years ago he was going to focus on software. Now software … When Bill Gates started in the software business, hardware was the big business. Okay? IBM, big machines. Hardware was the big business. Software was a little business. Bill Gates decided I'm only going to invest in software. He made one decision. And it actually is a very specific kind of software. He only … consumer software.

Mark Zuckerberg said I'm going to do something cool with social media. Nobody had even heard of social media before Mark Zuckerberg came around. There was not even a term. Now it's like a term of art. Now everybody does their marketing through social media. Why? Because Mark Zuckerberg decided I'm going to do one thing. I'm going to do one thing. I'm not going to advertise on television. I'm not going to build machines. I'm not going to go do real estate. I'm going to do one thing.

So here's what you do. You create your criteria and you create very specific criteria. Let me give you an example by talking about my friend, Ken McElroy. Now I'm not divulging anything I've not heard Ken say on stage because the reason I know this is because I've traveled around the world with Ken McElroy who is a phenomenal real estate investor. And the way he invests is not the way you're going to invest. Okay? Everybody is going to invest differently. And we'll actually talk about how to decide what to invest in. We'll talk about that in our next podcast. Okay? Because how to decide what you should invest in is a critical decision because you want to invest in something that you really love to do. You don't want to invest in something that is just oh, this looks like a good investment so I'm going to go do this. No. Okay? Let's decide … We'll talk about that next time.

So what we're going to talk about right now is how do you make that one decision? How do you make one decision that is so specific that you can turn down 99% of the investments that come your way and you're going how could I ever do that? Why would I ever want to do that? Well, the reason you want to do that is because you want to live the life you want to live today. You don't want to get 3% returns. You don't want to wait for 30 years to hopefully not retire under a bridge and live in a little condo. We have a place here in … No offense to anybody that lives in Sun City but not where we actually choose to live. We could live somewhere else. We'd rather live in Paradise Valley if we're in Arizona, right?

So we want to live the life we want to live. Not the life that some financial planner wants us to live. So what we do is we make this one decision. Here's how you do it. So first of all, you already decided what type of investment you're going to do. Is it going to be real estate? Is it going to be stocks? Is it going to be whatever it is? But then, you're going to make very specific criteria. Let me go through Ken McElroy's.

Ken McElroy invests in … Anybody who knows him knows he invests in apartment buildings. He doesn't invest in storage units. He doesn't invest in hotels. He doesn't invest in the stock market. He invests in apartment buildings. He invests in apartment buildings that have a certain occupancy. Actually, he wants the occupancy lower because his specialty is raising the occupancy. So he's looking for a project that actually has a low occupancy because that will give him a lower price when he buys it and he can add more value to it. Okay?

So he's made that decision, first of all, apartment buildings. How big are his apartment buildings? Typically, 100-200. Not less than 100. I rarely see him get much more than 200 units in his apartment buildings. Okay, how many units does he want? Okay, where does he invest? Where does he invest? He invests in what we call tier two cities. He invests in places like San Antonio, Texas. He invests in the suburbs of Dallas, Texas. He invests in Tucson, Arizona. He invests in Flagstaff, Arizona. Portland, Oregon. These are not your top tier cities. These are not New York, LA, San Francisco, right? Or even Phoenix. I mean, he lives in Phoenix. Very few investments in Phoenix. Now I know this just because I've heard I'm say this on stage, okay?

So he's investing, think about this, he's decided he's going to do 100, 200 unit apartment buildings. He's going to do it in tier two cities. By the way, they're always class B buildings. A, B, and C … A meaning that they're brand new and they're fabulous and newly built. Class C meaning they're just above slum, right? And class B is right that middle of the road. A lot of them 10, 20, 30 years old. Now that does not mean you should do what Ken does. I'm telling you right now. You probably should not do what Ken does. But I'm telling you this is what Ken does. Okay? He's made that one decision which means that when he looks at a new deal, it doesn't take him very long because if it doesn't meet his criteria. If he gets a deal on his desk that's 68 apartment units, 68 units, he's going to say no. If he gets a deal on his desk that says 2,000 apartment units in San Francisco, he's going to say no. That doesn't meet his criteria which means it's really easy to make that investment decision.

Let me give you an example of my own, okay? So several years ago, I was investing in single family homes. This was years and years ago. I was investing in single family homes and I had very specific criteria. And I'd gone over those criteria with all my team members. And I had one team member who was out looking for properties for me every single day. That was his job on my team was to look for properties for me. So I'm actually at a Rich Dad event. We happened to be on a break and I get a call from my buddy and he goes I've got a deal for you. And he starts … He loves talking about all the details. And I'm not much for details except when it comes for first setting my criteria.

And he asks me … I asked him, I said, “Wait a minute. Does it meet all my criteria?” And he said, “Yes.” I said, “How much money and when do you need it?” We literally had a three minute conversation for me to acquire that property. Now if I had to make a new decision every time, we would have been sitting down for three days trying to figure out whether to buy that property. So not only does it increase your rate of return but it actually reduces the amount of time you have to spend on investing.

Now here's what's even better. It increases the amount of deals you see. You're going, what do you mean? You think well wait a minute. If I'm turning away all of these deals, I'm actually going to be seeing less of the deals I want, not more of them. No, no. You're actually not even going to see the deals you don't want. Here's why. I want you to think about the last time you bought a new car, okay? I love cars. I mean, I love, love cars. My favorite's the sports car. I've got this rare BMW M4. I just love sports cars. So I love cars.

So think about this new car. But let's say, all right. What you really want is you want a real practical car. You decide I'm going to go get a Honda because I know it's going to last me for 250,000 miles and it's going to be safe and it's going to retain its value and I know all sorts of good things about Hondas. And they're always winning the awards, right? So you go to the dealer, and you talk to the dealer and you say okay, show me all the different things I can put on this Honda.

And the first thing the dealer says is what color do you want? And he says, well, I want blue. Okay. So you get this blue Honda. And then he asks about your wheels and your tires and your brakes and your engine and your interior. You know, do you want cloth? Do you want leather? What color do you want? What do you want the steering? What do you want the electronics to be like? You go through and you make all these decisions. You decide these very specific criteria for buying your car.

And then, the dealer says you know what? That is a great car that you have designed. Let me look in my inventory. And sure enough, I can have one for you in three weeks. And you're going three weeks. Okay, I can do that. I can wait three weeks for that car. What happens for the next three weeks? What car do you see on the road almost exclusively for the next three weeks? You see blue Hondas don't you? That's exactly how it works. There's actually a scientific term for it which I can never remember. I just call it the blue Honda rule. And the rule is that when we make a very specific decision with very specific criteria, then all of a sudden, our mind is focused on that and that's what we're going to see.

What does that mean from an investment standpoint? Think about it. You can live the life that you want to live today because you made a single decision and all those deals that meet your criteria, you're going to start seeing those deals. You never saw them before. They were always there. But you didn't have the focus. You didn't know what your criteria were. So you couldn't see them. So all you saw was this noise. When you think about investing, for most investors, investing is just a lot of noise. How do I possibly make a decision? How do I decide, am I going to invest in … Oh, this oil and gas deal looks really good over here or this apartment building deal looks really good over here or oh my heavens, this single family home, oh man, it's just so cheap. I just need to get it. Or gold just dropped by $20 an ounce. I should be buying gold. What should I be doing here?

Well, guess what? You make a single decision, not only do you start seeing all those deals. The deals get better because you've already decided what the criteria are. They're realistic criteria, right? You've gone out and you've practiced. You've looked. You've developed your criteria. This is not something you're going to do overnight, right? You're going to spend time with a professional developing those criteria. Okay? That's what a wealth strategist is for. We use the term wealth strategist at WealthAbility™ and that's why we use that term is because they're helping you strategize and developing your criteria for investing is a huge, huge part of your strategy.

Think about it. Warren Buffet, Bill Gates, Mark Zuckerberg, what do they all have in common? They're multi-billionaires. They did it with one thing. We've all heard the term a niche will make you rich. Well, this is how you get that niche. You get so specific on your resume. If you're investing in single family homes, are you investing three bedroom, two bath homes or four bedroom, two bath homes? We're talking that specific.

So when you make that one decision, those criteria, that decision you've made. You're just going to apply it over and over and over again and when you do, you start living the life you want today. You actually take a lot less time with your investing so you can be living your life instead of worrying about your investing. You start to see all that deal flow and guess what? Your taxes go down because the tax law favors the professional investor. The tax law actually gives benefits to the professional investor it does not give to everybody else.

Why is that? Because the government wants you to do things a certain way. And when you do them this way because are you going to be more successful if you have all these deals coming at you that are specific to yours. Are you going to be more successful? Of course you are. Because you've made one decision. When that one decision is the one that allows you to live the life you live today, this is Tom Wheelwright, The WealthAbility™ Show, way more money, way less taxes.

You've been listening to The WealthAbility™ Show with Tom Wheelwright. Way more money. Way less taxes. To learn more, go to wealthability.com.