TGCI 68: Personal Finance Tips by America’s Money Answers Man

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Episode 68: Personal Finance Tips by America's Money Answers Man

Copy of EP #18 - 2 Guests

Summary

In today’s show, Pancham interviews Jordan Goodman, a financial journalist for over 4 decades now. Jordan is also the host of Money Answers Radio Show, a Wall Street Correspondent at MONEY Magazine, and the author of 13 best-selling books on personal finance such as Master Your Debt, Everyone’s Money Book, and Fast Profits in Hard Times.

Jordan is also known as “America’s Money Answers Man.” True to his nickname, he frequently appears on national and local TV and radio shows all over the country to answer every investor’s question about personal financial issues.

In this episode, Jordan covered the basics of personal finance. He also shared his opinions on the current market and what he predicts the future market would be. Jordan also provided ideas in terms of where you can invest your money.

 

If you’d like to increase your personal finance knowledge, this episode is for you!

PanchamHeadshotTGCI
Pancham Gupta
Screen Shot 2020-10-22 at 9.42.14 AM
Jordan Goodman

Tune in to this show and enjoy!

Watch on YouTube below:

Copy of Quote #00 - 1 Guest

Timestamped Shownotes:

  • 4:32 – Pancham introduces Jordan to the show
  • 5:55 – How he got into personal finance journalism
  • 8:04 – His thoughts on the stock market and its current market status
  • 12:08 – His prediction on the continuation of market liquidity
  • 15:20 – Why the stock market would keep accelerating amidst COVID-19
  • 18:15 – Where he invests his capital
  • 22:25 – All about the Mortgage Optimization Strategy
  • 32:41 – First investment outside Wall Street
  • 33:07 – His fears in investing outside Wall Street
  • 33:33 – One investment that didn’t do well
  • 34:16 – His advice to novice investors
  • 36:45 – Jordan’s contact information

3 Key Points:

    1. Analyzing the market performance in the stock market
    2. Importance of knowing where to invest your finances
    3. Utilizing the Mortgage Optimization Strategy

 

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Read Full Transcript

Introduction

Welcome to The Gold Collar Investor Podcast with your host, Pancham Gupta. This podcast is dedicated to helping high-paid professionals to break out of Wall Street investments and create multiple income streams. Here is your host, Pancham Gupta.

Hi, this is Joe Fairless. If you wanna diversify out of Wall Street investments, then listen to The Gold Collar Investor Podcast.

Hey, this is Mauricio Rauld, founder and CEO of Premier Law Group and if you are serious about investing in real estate, listen to The Gold Collar Investor podcast with Pancham Gupta.

 

Pancham: Welcome to The Gold Collar Investor podcast. This is your host, Pancham. I really appreciate you for tuning in today. On this show, we will discuss all the things related to personal finance. Let’s get into today’s show. There is a lot going on in the world. We have worldwide pandemic going on. It’s really sad to see what is happening and people impacted by COVID. On the main street, we are seeing a regard number of companies filing for bankruptcies. At the same time, so many of us small businesses are permanently closing. People are getting laid off and furloughed. In the middle of all this, we saw the biggest comeback in the stock market in the shortest amount of time. The topic all of we have elections coming up on November 3rd here in the US. Lately, many people are saying that US has some fundamental issues. My argument against that is which country does not have issues? In my opinion compared to the rest of the world, the US is still the greatest country in the world and I don’t see that changing anytime soon. There is no other place in the history of the world that provides as much opportunity for those who are willing to work hard as compared to the United States of America. I say this as a first generation Indian immigrant, I have seen many, many examples of who came from nothing and became the best in their field in this country. I was inspired by Swapnil’s story right here on The Gold Collar Investor podcast show number 42, he used to distribute piece of flyers door-to-door to pay for his college education at different apartment buildings in Houston, Texas. And now he owns those apartment complexes. If you wanna listen to that show, really great show by the way, you can go check it out by going to TheGoldCollarInvestor.com/show42. I repeat TheGoldCollarInvestor.com/show42. I know there are people who are extremely pessimistic about the future of the US. There is no doubt that we are in the middle of many issues and that we might see some tough times in the next 10 years. But let me remind you that the US is indeed the heart of global economy. If US goes down then in my opinion the rest of the world goes down too. If the global economy implodes, do you really think that you are safer in South America or most parts of Asia or Europe? If all had breaks lose, there is no other place I would rather be than the US. And for as much as we have some tough times on the horizon, I personally do not see the fall of the US instead I see a new era of greatness, some of the best companies are going to get formed right now in the middle of this pandemic and adjusting to this new reality. 20 years from now, we will look back to this era much the way we look back at the 70s or the 20s. We will see that times were tough but did we come out stronger, even stronger from where we are today. I believe that American ingenuity and entrepreneurship will prevail. I still believe in the entire potential of the US and the greatness that we are going to see in the coming years. Let’s focus on what we can do right now. Let’s focus on the opportunity rather than looking for all the negatives. How about we listen to Jordan Goodman who has been a financial journalist for over four decades. You think that this guy knows a thing or two about personal finance and has seen many cycles. We are going to ask his opinion about the March crash and also the upcoming elections. A bit about Jordan Goodman before I bring him on. A bit about Jordan Goodman, Jordan Goodman is known as America’s Money Answers Man because he has been answering Americans’ questions about personal finance for over 40 years. His website is moneyanswers.com and he’s the host of Weekly Money Answers Radio Show on VoiceAmerica Business Network. He was the Wall Street correspondent at Money Magazine for 18 years and has written 13 books on financial topics including Dictionary of Finance and Investment Terms, Master Your Debt, Everyone’s Money Book, and Fast Profits in Hard Times. He is a frequent guest on national and local TV and radio shows across the country speaking on personal finance issues. Jordan, welcome to the show.

 

Jordan: It’s nice to be with you Pancham.

 

Pancham: Thank you so much for your time. Are you ready to fire up my listeners break out of Wall Street investments?

 

Jordan: Absolutely, I’m ready.

 

Pancham: Great. Great. So, Jordan, tell our listeners about your background and how you got into this personal finance journalism?

 

Jordan: So, I’ve been doing this for over 40 years. I went to Columbia’s School of Journalism. Got my Master’s there. I went into Money Magazine. Right after that I was at Time Inc. at Money Magazine for 18 years covering all aspects of personal finance. I’ve written 13 books on different financial topics including the Dictionary of Finance and Investment Term. A lot of people in Wall Street have that on their desks somewhere. I did a book called Fast Profits in Hard Times, Everyone’s Money Book, Master Your Money Type, Master Your Debt, the latest ones called The Ultimate Guide to Student Loans. So, I’ve been doing the whole personal financing for a long time. My website is moneyanswers.com so people call me America’s Money Answers Man because I answer people’s questions on any kind of personal finance. My whole style is to help give practical strategies and resources to help people actually implement those strategies. I’ve got about 150 resources at moneyanswers.com, various affiliates that help people get better mortgages or get better credit cards or invest their money well or get out of debt or get life insurance or health insurance even 150 different categories of things. Every week I do what’s called the Money Answers Minute which is like a 2 or 3 minute piece about some aspect to personal finance. I do what’s called the Money Answer Show which is a weekly show I’ve done since 2007 where I’ve interviewed the top people in personal finance also called the VoiceAmerica Business Network and then every Friday I do what’s called the Money Answers Weekend Review where I review what happened during the week and give some personal financial tips as well. So, I’m constantly putting on videos, audios, blogs, newsletters, I’m on TV shows and radio shows.

 

Pancham: Amazing.

 

Jordan: What I love to do is to help people in every aspect of their personal finances.

 

Pancham: This is so awesome. This entire show that when I started it was about personal finance for people who are hardworking people and they are making high salaries on Wall Street or outside of Wall Street, so great. Thank you for that background. So, you’ve been here in this space for over four decades, right? You’ve seen the highs and lows of the market. You’ve seen the crashes and you’ve seen the boom all of that so in the last six or seven months, the stock market saw the quickest and probably the biggest comeback from the low in the middle of pandemic, right? What is your take on the market in general given what we have, you know, we have an election coming up we are recording this in October, it may go out after election but what’s your take?

 

Jordan: Fed Reserve money does amazing things. I mean really that’s when it get down to it why the market is up so much. The fed reserve came into the pandemic with roughly 4.5 trillion dollar balance sheet. Now, it’s up to 8 trillion and it will probably be 10 trillion by the end of the year. Not only the US Fed Reserve, the European Central Bank, the Japanese Central Bank, the Chinese Central Bank, the Indian Nationalist, Canadian, every Central Bank has been pouring money into the economy for the last whatever eight months, long, long time. That money is not building new factories and new office buildings, it’s going to the markets and that’s a major reason that liquidity has a place to go and it’s going to the market. It’s pushed out interest rates which makes stocks dramatically more attractive than bonds obviously and cash is at zero if not below zero. In Europe you literally have negative interest rates, in Japan and other places. So, knowing in advance you’re going to lose money by putting money in the bank is not a particularly great deal. So, stocks are you know, what they call the only game in town basically. There is no alternative. That’s [Inaudible] [09:45] stands for. That’s a big reason of it. Clearly there’s been a lot of hope that we’re gonna get over the pandemic that there’s gonna be therapies and vaccines and we are making a lot of progress, many companies Lilly, Merck and Pfizer, all these companies are doing great work and there’s Wall Street always looks ahead six to nine months and the feeling is six to nine months from now we’re gonna have some therapies and vaccines and get this behind us, so that’s clearly been part of it and then the kind of stocks have been doing best are the so-called stay-at-home stocks. The Zoom videos, the Netflix, Microsoft, Google, Facebook, the companies that are benefitting, Amazon, they are benefitting on the stay-at-home economy whereas retailers Sears, JCPenny Neiman Marcus, J.Crew, they are all going bankrupts. Latest I saw where there are 29 retail companies that have gone bankrupt so far this year up from 22 all last year and there have been over 6,000 store closings. So, it’s not as everybody’s win. There’s big winners and losers but the winners are doing much better. In fact, the pandemic has really accelerated trends that were already in place and certainly that has helped the stocks to benefit just one example Amazon I mean Amazon was already in place, was already a big company but their sales and profits have exploded as more people buy everyday things from home. They built at this huge infrastructure. Their impregnable mode I guess you might say. That stock has gone up a lot. That’s gonna continue to. So, that’s just one of many examples that kind of companies that have been benefitting in the pandemic. 

 

Pancham: Right. So, you know, to summarize what you just said that a lot of money got into the market, flooded the money literally with so much liquidity, it has no place, we went into stock market but on the ground level, we have so many companies going bankrupt, you mentioned so many of them already, right? And we know people who are still getting laid off or they are you know, furloughed for a very long time, they are not going back to where again in some places schools are open, some places schools are you know, still people have to work from home and all that stuff, so the ground level reality versus what’s happening in the liquidity it’s creating this huge spread, so what do you think like, you know, will happen this continues of liquidity, do you think they can keep pumping?

 

Jordan: That’s the only thing like they can and will keep pumping because if they didn’t we will have outright depression and you get the similar what they call pushing on a string. You can put up liquidity up but it doesn’t have any effect or that basically what happened in Japan. Japan in 1989 went through a deflationary contraction for the last 30 years and they’ve been pumping out liquidity and hasn’t really helped that much in Japan because they got past the point of health basically. I mean they all have these infrastructure projects, roads to nowhere and all that, but it hasn’t revived the economy in Japan for the most part so that’s what the Fed Reserve is worried about. If you wait too long, it’s too late, so they are pumping liquidity up. European Central Bank the same. The Chinese Central Bank is putting a huge amount of money. You think we have a lot of debt in America and way, way, way more debt in China and Japan and other places, we are just roughly 100% of GDP now in our deficit. Japan is like 2-1/2 times GDP. China, maybe as much as four times GDP, something like that, they got 36 trillion in debt in China and their GDP is maybe 10 trillion or something like that. So, around the world and there’s no way for the Central Bank to stop doing it. They could think normally that putting that on liquidity would cause a huge amount of inflation and in a normal situation it would. More dollars chasing fewer goods. But the huge amount of liquidity is the offsetting, the deflationary impact of the pandemic we have companies shutdown, layoffs, lower prices for commodities like oil and other kinds of commodities so the deflation enforces even stronger and the inflationary first of all this what I call free money basically. So, where does this money go? It goes to the markets and gone to real estate and real estate has been very hot particularly in the suburbs because people escaping the cities. This whole pandemic has also accelerated the trends that have been happening before which is the movement out of central cities into suburbs and rural areas. That’s a long-term demographic change which we never thought would happen. People were moving into the cities for decades before that. In New York City alone, I think I saw a recent number that there have been over 500,000 actual permanent change of address in the last six months or so. People are moving out long term. And where they are going? They are going to Connecticut, they are going to upstate New York for months, all kinds of places, Long Island and you know, the Hamptons. Where I live, I live in Westchester, it’s an absolute boom time in real estate here. You put a house in the market, you get 10 offers over asking price and closed by that afternoon. This was not happening a year ago at all. That’s where that liquidity is going to some extent as well. So, it’s exacerbating this trends and I don’t think it’s gonna stop.

 

Pancham: Thank you for that explanation that I’m in the same boat as what you’re explaining but basically what you’re saying is that we’re gonna print our way out of depression or recession whatever you wanna call it and when will this stop really that you know after the vaccine comes out and people go back to work and you know, it’s not like the amount of skewness that we have like you know, the amount of money that they have printed and the huge amount of debt that we are taking I understand it’s very still less than what Japan has, still less than the Europe but we, our children and their children will have to pay for that.

 

Jordan: The reality is that they are gonna pay for it because it’s not gonna be paid off people talk about paying off—never gonna happen. We are accelerating it I mean the entire federal budget in the United States is roughly 4.5 trillion a year. We’ve taken on we have a 3.3 trillion dollar back in March, that money is all gone. There’s a need for another 2 to 3 trillion something like that. That just ended physically at the end of September 30th was over a 3 trillion dollar deficit for that year. Now, we’ve had one physical stimulus, we do not have another one yet, so the only game in town the monetary stimulus, but there’s clearly a need for another physical stimulus. There’s just no question about it. The states, the cities are desperate, small businesses are closing and you go down the street and you see all kinds of street malls with closed doors, restaurant even if they can be opened they don’t make that 50% of capacity. It doesn’t even—the numbers don’t even work. So, PPP program was helpful in keeping people in their jobs and small businesses. The airlines had a 25 billion dollar bail out that’s gone as of September 30th bail out and the United Airlines American Airlines laid off 32,000 people on a day and that’s gonna happen throughout. So, the Fed money is not gonna bail people out like this it’s basically it goes into the markets. So, it’s been this enormous disconnect between main street doing worst and worst and Wall Street doing better and better. People like why is this happening? But it’s gonna continue.

 

Pancham: Yeah. It’s massive transfer of wealth so to speak in terms of the gap. So the moral of the story really is of this is that it’s gonna keep going up at least for the near future.

 

Jordan: Right. I mean again the market is going up in anticipation of the COVID situation being over at some point and we are making good progress on vaccines and therapeutics so at some point we will get this under control, we hope. It’s not gonna be instant, it’s not as if we have a vaccine and all of a sudden this problem goes away. We have to manufacture it at mass quantities and inoculated in vast qualities and I’ve heard studies of 50% of the people saying they don’t want take it or they worry about taking it so even once you have it it’s gonna take a while. We’ve never done a mass inoculation of 330 million people in American and the whole world 7 billion people, you know, so I guess the inoculation part alone it’s not gonna be instant even once we have an effective vaccine.

 

Pancham: Got it. Got it. So, moving on to your own personal investing space like what are you doing today like where are you investing your capital?

 

Jordan: Well, there are—I go with the things that are benefitting from the trends. I’m not a bottom feeder, so you know, is this company gonna go bankrupt? I mean when Hertz went bankrupt I did not rush in like all the people from Robin Hood, that’s not just my style. So you know, Zoom video, NVIDIA has done very well, Google, Microsoft, Salesforce.com, Netflix, Tesla, Amazon, the companies that have been benefiting from this I think will continue to benefit long term.

 

Pancham: Great. And are you investing in like alternative investments like outside of Wall Street?

 

Jordan: I’ll give you some ideas. Agricultural land actually can be quite good. At moneyanswers.com my website I have a lot of resources you can kind of access these things, there’s a place called farmtogether.com for example where they do all the work for you and find agricultural land which produces nice cash flow, consistent cash flow, producing almonds or corn or wheat or whatever maybe, a farm land tends to go up in this kind of environment that’s kind of an alternative investment. Another investment is fine wine, rare wine. One of the other resources I have is called Vinovest and they curate fine wines which tend to outperform even stocks over long period of time as long as you don’t drink it. You have to hold on to it but that’s an alternative investments that make sense. Clearly cryptocurrencies have done quite well also. I would just stick to Bitcoin as all these other ones but Bitcoins whatever 10,000 plus these days. It’s kinda seen as almost an alternative to gold in a certain way. When the stock market was going down, gold and Bitcoin was going up, so I think you should definitely have some of your portfolio in some kind of cryptocurrency or Bitcoin and clearly gold has done well. It’s roughly $2,000 now so something like that. So you can buy physical gold, you can buy—others give me some resources that is something called Hard Assets Alliance which is a resource I have in moneyanswers.com. They have a bunch of competing deals to get you the best price on either buying or selling gold, silver, platinum or plating and that’s for physical gold. Certainly, the ATS like GLD for gold, SLD for silver is a pure way to play gold or I think that’s gonna make some sense. The most speculative way would be the gold mining shares. The big ones would be like a GBX that would have mining and Barrick gold and the big ones in there and a few more speculative GDXJ is an ATF for the junior mining companies where the thing about gold mining companies is they’ve got more leverage to the price of gold. When gold goes up from $1500 to $2000 an ounce, their cost don’t go up very much at all. So, the rest of those pure profit for them. So leverage the price of gold makes gold mining shares is a better way to play this and I think in the long run there’s gonna be move higher in gold and silver and platinum and palladium because of all of this money that’s being printed. People are worried about inflation coming in the future. It hasn’t happened yet but I don’t think we’ve ever seen a time in world history where all the Central Banks in the world are just pouring money out and they’re gonna continue to do so for as long as I can see. That is bullish for precious metals. 

 

Pancham: Great. Myself very big fan of precious metals just as inflation hedge to be like, you know, insurance…

 

Jordan: It can also be a deflation hedge. It can be—it can go on both ways.

 

Pancham: Right. Exactly.

 

Jordan: And then there’s deflation that means interest rates are low if not negative. Gold does not pay any interest. If interest rates are negative, earning no interest is better than investing in those [Inaudible] [22:10]. Negative interest rates are actually positive for gold because you’re not losing money if you’re sure with the way you are with putting your money in a minus 0.5% German bond or something like that.

 

Pancham: Right. Right. Absolutely. Great. So, you know, in one of your books, I wanna switch gears a little bit, in one of your books, you have this strategy on you know, paying off mortgage in 5 to 7 years on your personal home, you know, I would like to understand that better a bit like would you mind discussing that on the podcast?

 

Jordan: This is what’s called the mortgage equity optimization strategy and this is something particularly good in the current time with low interest rates. It literally allows you to pay off a mortgage in about 5, 6, 7 years when your existing level of income having your money flow in a different way. All right, so I’m gonna describe this existing system and then alternative system. You have to have your mind open. A lot of people never heard about this before so as this is impossible but it’s just math, it’s not magic, okay. So, and by the way I’m gonna tell you this a website you can get more about this was just called TruthInEquity.com. Okay, so the traditional system you gotta 30 year mortgage, you make the same mortgage payment for 30 years, the first 10 to 15 years you’re paying almost all interest, very, very little principal. After 15 years made you paid off 10% of the interest of the mortgage something like that, okay. All the interest cost is upfront, okay.

 

Pancham: Right.

 

Jordan: That’s the traditional system and also the traditional system if you keep your money, setting you a checking account earning zero to make that monthly mortgage payment. Yeah, that’s the system works really well for the banks. They get interest. All the interest upfront for many years and they get to use your money for free and they charge you fees to get your own money.

 

Pancham: Right. Best business in the world. 

 

Jordan: It was the great system, the banks have stole those—this is a wonderful system for us, now it’s a wonderful system for them. So now I’m gonna turn that out on a ten and have your money work for you instead of the banks. So what you do, you keep your traditional first mortgage, say you have a good interest rate of 3.5% or whatever it maybe but you open a home equity line of credit (HELOC) which is a liquid line against your house, take money in, take it out whatever you like electronically, with checks, completely liquid account, okay, and what you do is you keep your income and your money which is normally sitting in a checking account doing nothing in the home equity line of credit which is constantly pushing down your balance. HELOC are basically once called average daily balance, how much do I owe today, okay.

 

Pancham: Right.

 

Jordan: And so you’re taking money from the HELOC to pay down the first, you get money into the HELOC, every day you’re making a little bit of progress and continue to pay the HELOC and then you put more money towards the first and depending on how the numbers work out, 5, 6, 7 years you’ve paid off all your mortgage completely. If I can let me just give you a simple example of how it might work, would that be helpful?

 

Pancham: Yeah, that would be great. Yes.

 

Jordan: Let’s say you have a house worth 300,000 and say your first mortgage is 200,000 at 4%, you know, some good interest rate, okay?

 

Pancham: Mm-hmm.

 

Jordan: Normally it would take 30 years to pay that off. For the first few years, it’s almost all interest.

 

Pancham: Interest.

 

Jordan: Okay, so what you would do you’ve got some room there, so you take out $50,000 home equity line of credit (HELOC), you’ve got plenty of room because your house is worth 300. You take out 50,000 HELOC, you then write a check on your HELOC towards the first so now you owe 50,000 on your HELOC and 150,000 on your first, right?

 

Pancham: On your first mortgage, right.

 

Jordan: And down by 50,000, okay, know that in the first if you make the same mortgage payments, you’re paying off principal faster because you are now paying 350 instead of 200.

 

Pancham: Right. So now you have two payments coming out, right?

 

Jordan: The HELOC and the first mortgage payment, correct.

 

Pancham: Right.

 

Jordan: Now you keep your income in that HELOC, you’ve paid a paycheck for a thousand dollars, you put it on the HELOC, okay, you owe 50,000 so immediately you owe 49,000.

 

Pancham: Mm-hmm.

 

Jordan: Okay, you pushed your balance down and then as much as you can you pay your bills on one day during the month, so you have one credit card so you put all your bills on there, so one day a month your balance goes up. The rest of the day, its average daily balance, your balance is going down, you’re making a little bit of progress on your principal every day, okay. So, to make this work, you have to have three things, positive cash flow during the month, use some credit score to qualify for the HELOC and you gotta have a home with equity in it. If you’re under in your home, this is not gonna work but most of your listeners would have those three things, okay. 

 

Pancham: Right.

 

Jordan: You put the thousand dollars in so I’m just making—say your positive cash flow is $200 a month, whatever it maybe, okay, so by the end of the month, you paid down 200 dollars in principal on that mortgage, maybe a little bit more because you’re doing every day and then the next month you go another thousand in, you make another 200 hundred dollar, every month that goes by you’re making accelerating progress on paying down your principal and then you pay the 50,000 HELOC off in nine months, a year, what I will say it’s nine months and do it again. You write another 50,000-dollar check on the HELOC, towards the first, now you owe 100 on the first, 50 in the HELOC. You do it again, you pay off the HELOC in nine months, a year whatever it maybe, do it again and now 15 on your first and 15 on the HELOC paid off, now you do it again, your first is now paid off. You paid off the HELOC and in 5 or 6 years you’re mortgage free. See, how your money is working for you every day because all your dollars are pushing your balance down every time as opposed to sitting on the checking account doing nothing and earning interest for the bank, that’s why this turns the whole system on its head because your money is working for you all the time. Now, the more positive cash flow you got the faster you paid off. The slower, the slower. At that website I gave you TruthInEquity.com, it’s a free website, you put in all the numbers that applied to you, your income, your expenses, your tax rate, mortgage or house value and they say okay based on the numbers you just gave us, it’s gonna take you 28-1/2 years to pay off your existing mortgage and with the numbers you just gave us it will be 6.2 years whatever they may tell you precisely based on the numbers gave them how quickly you pay off your mortgage and then they’ll show you step by step how to do it and now I’ve just literally save in 25 years off your mortgage and tens of thousands of dollars in needless interest and you will never get this from a bank.

 

Pancham: Wow, that’s great.

 

Jordan: Did that makes sense to you?

 

Pancham: Yeah, it does but you know, I’m an engineer so you know, like I have to put that in the spreadsheet to really see that working, but I’m assuming that the reason this is working the way you are saying it’s working is because you’re exploiting the arbitrage that you know, the HELOC is going to be higher than what the rate that we get.

 

Jordan: It’s not about interest rates, okay. It’s not an interest rate arbitrage. It’s a principal paid down arbitrage.

 

Pancham: Right. Yes.

 

Jordan: The traditional system you’re making—even if the interest rate is low, you’re still making very slow progress in the principal. With this, you’re making accelerated progress on the principal all the time. Say when a bank offers you a mortgage, they have you asked two questions, what’s the interest rate and what’s the payment? Okay. Those are the wrong questions. That’s happening, we looked the wrong way. The right question is how fast am I gonna pay off my principal? Anyone that bring that up, okay, because it’s very, very slow. Now, in all the papers you sign that’s actually an amortization table that actually shows you how slow it’s going to be. Nobody even looks at that because it’s too depressing, okay. But this is actually getting your money working for you pushing that principal down beating up the amortization much, much faster, with your existing level of income, you don’t need more income is the way you’re flowing it, it has such a dramatic impact and help you become mortgage free. So say you’re a couple, you’re 35, you just your first home and your mortgage is paid off by 40, isn’t that a little bit better than 65?

 

Pancham: Absolutely. You can use that money to invest in all the things we discussed here either you put it in 8% you know, first lane position in properties or do whatever you wanna do.

 

Jordan: Money is now working for you compounding that’s what I call positive compounding as opposed to negative compounding where interest is piling on interest all the time. 

 

Pancham: Absolutely.

 

Jordan: And it’s a very simple thing it takes people a little bit mind shift to kinda get it but once they get it it’s like god the banks have been fooling me for all these years, how they got away with it. Because nobody ever knows about these things.

 

Pancham: Right. I actually myself did not know about this and I wish I would have done this. I have not done it so I will definitely look into it.

 

Jordan: That’s find.

 

Pancham: Great. So, thank you for that, you know, we want to move to the next section of the show but before I do that I have one question that I have been asking everyone, my question is do you have a morning routine that you follow? If so, what is it and do you think that attributes to your success?

 

Jordan: My morning routine, well, when I got up, I’m showering, I’m shaving and I have CNBC on so I’m kinda checking on the markets. The latest crazy thing Jim Cramer maybe saying. You know, get it and start doing emails right away after I’ve eaten but I do try to check in with the markets before I kind of start the day.

 

Pancham: Got it. Got it. Great. Well, thank you. So, we will be back after this message.

 

Jordan: Have you ever wondered why the rich keep getting richer? What is the secret that they know but you do not? What if I told you that wealthy people make their money work for them in two different places? Yes, the same dollars invested in two different places and working hard for them while they sleep. They utilize this special accounts that have been in existence for more than hundred years. Do you want to learn more about this accounts then you are in the right place. Listen to the episode number five by going to TheGoldCollarInvestorBanking.com/bankingshow. I repeat TheGoldCollarInvestorBanking.com/bankingshow or visit TheGoldCollarInvestorBanking.com. 

 

Pancham: So, now let’s move on to the next section of the show which I call Taking the Leap round, so Jordan these are the four questions I ask every guest on my show, my first question for you is when was the first time you invested outside of Wall Street?

 

Jordan: Well, real estate I would say the first time I did bridge loans basically secured loans on specific pieces of property typically one-year bridge loan and after that you get your money back. Typically, you will get 6%, 7% or 8% something in that range and those work out quite well so it would be the first time.

 

Pancham: Okay, great. So did you have any fears that you had to overcome when you first invested in that bridge loan?

 

Jordan: Well, you wanna understand what it is, make sure that things are secure and that you’ve got first security interest and they did and it worked out quite well. Other people call it hard money lending. There’s a lot of people that cannot get loans who are not credit worthy of this country and they have to pay a higher interest rate but that’s the way to do it.

 

Pancham: Great. Great. So my third question for you is can you share with us one investment that did not go as expected?

 

Jordan: Well, two years ago I did a commodities fund and the whole idea was, you know, you can make money on the upside, the downside, the short sale and go up and down and they will show you a great track record and I lost money on them. I kept saying it’s gonna turn around, it’s gonna turn around but it never did. So, certain point I gave them like $5,000 or something. Not everything always works out and that was this commodity funds. In theory they can do well, but just because I have a good track in the past, that’s not gonna mean they are gonna do well in the future.

 

Pancham: Absolutely. That’s a fine print in every single thing. All right, so my last question for you is what is one piece of advice would you give to people who are thinking of investing in the main street that is outside of Wall Street?

 

Jordan: Have something that’s gonna take advantage of the current trends and don’t fight the trends, don’t fight the fed and don’t fight the tape, same thing I mean we talked about some alternative that’s like wine and farm land but again the benefit by the current trends. Bitcoin, golds, those things I think are going to do well in this environment. You wanna have some traditional stuff but you definitely wanna have alternatives and make your money work for you. So many people have so much money sitting there in liquid assets earning nothing if not negative these days just out of fear. They are actually taking a big risk and the risk is not getting any return. They are so worried about losing money that they lose money to cost a living going on. So, particularly people who gone through traumatic times whether it would be our parents that went through the depression, people who lost money in the 2008 and 2009 crash or recently I mean what happened with the pandemic it has wiped out a lot of people, a lot of small businesses have been wiped out. Fear is very powerful that can be paralyzing to people. We got to overcome your fear I mean just thinking that you began this year and say, boy, I’ve stay-at-home stocks that’s gonna do well. Have you put money into Zoom, Netflix, Amazon, NVIDIA, SalesForce, Google, Facebook, Apple, I think you would have done pretty well without being an expert in any of these things. Just kinda get, you know, not to be a day trader but kept with the trend that you think it’s gonna do it and hold for the long term and keep adding, reinvest dividends and just keep adding on a regular basis. I like to say investing is not an event, it’s a process. That’s something you do once and that’s it. You should be an ongoing habit to be investing maximize your 401(k), maximize your IRA whether it would be Roth IRA. If you’re a solo practitioner do a solo 401(k), you can put as much as $56,000 into a solo 401(k) so make saving and investing a habit on a regular basis and your dollar cost averaging. The price goes down great you’re buying more. In the long run, the price of the things should go up. 

 

Pancham: Great. Thank you Jordan for your wisdom here and if people wanna connect with you how they can reach you?

 

Jordan: My website is MoneyAnswers.com. I take emails from people all the time and again that’s about 150 different resources of all types and we just mentioned a few of them here. I’ve got videos I mentioned I’m doing weekly. I’m doing weekend review. I’m interviewing the top people in personal finance for a long, long time so it’s a wealth of information on MoneyAnswers.com all for free and I love to get questions from your listeners.

 

Pancham: Great. Thank you for your time here.

 

Jordan: Thanks so much. I appreciate it Pancham.

 

Pancham: Oh my god, so many golden nuggets there from Jordan. He’s been in this industry for a very long time and you know, 5 to 7 years paying off your mortgage without even taking on more, you know, without making more money with exactly the same situation that’s good strategy. Now, we really taught about it and I will check it out and also we discussed farm land, I’m a big proponent of that myself and wine investing something I never really thought about. Now, I will check that out too. So guys thank you for listening. I really appreciate you. If you have questions, email me at p@thegoldcollarinvestor.com. Until next time. Take care.

 

Thank you for listening to The Gold Collar Investor Podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldcollarinvestor.com and follow us on Facebook at The Gold Collar Investor. The information on this podcast are opinions. As always, please consult your own financial team before investing.

Copy of EP #18 - 2 Guests

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