Episode 52
Follow The Host
Rewind: An Alternative Take on Investments
We're thrilled to embark on a thrilling journey with our esteemed guest, Chris Odegard, as he pulls back the curtain on the intriguing world of alternative investments. A traditional investor turned savvy financial strategist, Chris shares his insights on low-risk assets yielding substantial returns and how his financial philosophy evolved after an illiquidity event.
Prepare yourself as we delve into the unexplored realm of family banking, a unique money management strategy that keeps interest within the family. From understanding the potential of ATM investments to unlocking the power of the tax code, Chris's stories offer an exciting blend of education and entertainment. And, if that's not enough, we dive headfirst into the revolution of cryptocurrency, exploring its impact on the financial landscape and its potential for mainstream adoption.
As we wrap up the episode, we discuss the influence of technology on investments and the government's battles against the deflationary force it poses. We also shed light on the criticality of due diligence, differentiate between accredited and non-accredited investors and venture into the captivating world of turnkey rental providers. So get ready to have your financial acumen significantly elevated, as we navigate through the mysteries of alternative investments.
Topics of Discussion
Chris’s Resources
About The Show
Thoughts of a Random (Citizen Remote Podcast) is a podcast oriented around open ideas, entrepreneurship, travel, investing, politics, philosophy, and an odd take on history. Together with Toarc United & Citizen Remote we talk with thought leaders from all around the world to stir the innovative mind. This podcast specifically talks about the importance of having an international perspective, the ins and outs of the business world, the entrepreneurial life, the digital nomad life, investing and ways to enjoy life in the new age.
Businesses worldwide have very quickly oriented themselves around freelancing, digital nomads, remote workers, and diluting borders. If you'd like
Episode 52
Follow The Host
Rewind: An Alternative Take on Investments
We're thrilled to embark on a thrilling journey with our esteemed guest, Chris Odegard, as he pulls back the curtain on the intriguing world of alternative investments. A traditional investor turned savvy financial strategist, Chris shares his insights on low-risk assets yielding substantial returns and how his financial philosophy evolved after an illiquidity event.
Prepare yourself as we delve into the unexplored realm of family banking, a unique money management strategy that keeps interest within the family. From understanding the potential of ATM investments to unlocking the power of the tax code, Chris's stories offer an exciting blend of education and entertainment. And, if that's not enough, we dive headfirst into the revolution of cryptocurrency, exploring its impact on the financial landscape and its potential for mainstream adoption.
As we wrap up the episode, we discuss the influence of technology on investments and the government's battles against the deflationary force it poses. We also shed light on the criticality of due diligence, differentiate between accredited and non-accredited investors and venture into the captivating world of turnkey rental providers. So get ready to have your financial acumen significantly elevated, as we navigate through the mysteries of alternative investments.
Topics of Discussion
Chris’s Resources
About The Show
Thoughts of a Random (Citizen Remote Podcast) is a podcast oriented around open ideas, entrepreneurship, travel, investing, politics, philosophy, and an odd take on history. Together with Toarc United & Citizen Remote we talk with thought leaders from all around the world to stir the innovative mind. This podcast specifically talks about the importance of having an international perspective, the ins and outs of the business world, the entrepreneurial life, the digital nomad life, investing and ways to enjoy life in the new age.
Businesses worldwide have very quickly oriented themselves around freelancing, digital nomads, remote workers, and diluting borders. If you'd like
Hello everyone and welcome to another episode of Thoughts of a Random Citizen. This is actually an episode that you might have already heard before if you've been a listener from the start. This is because we are currently in the process of repurposing all of our old podcast episodes and cleaning up the entire feed. These changes will allow listeners to enjoy the best episodes and highlight the most insightful content. Now, if you're newer to this podcast and wondering where to find, or why you can't find, season 1 and 2, don't worry. They'll eventually be available on our website, torquianadacom. We do some fun, tear-i-say, innovative things with them, but stay tuned for that.
Speaker 1:In the meantime, we plan to release rewines every other week to repurpose older podcast episodes. This will simply just allow listeners to revisit classic content from insightful and featured guests and enjoy it in a new light at a different time in their life, to hopefully provide a new perspective. But at the end of the day, it's our intention to bring the best possible content to you. So enjoy this repurposed rewind, but at the end of the day, sticks and stands. People break your bound. The word shouldn't really hurt you. I'm the kind of person who really likes to get to the bottom of things, and I don't let my own belief system get in the way of fact.
Speaker 3:It's one of the most important financial centers in the world by the terms of freedom of speech, expression and civil liberties and self-defeatorship.
Speaker 1:Alright, and thank you everyone for tuning in to another episode of Thoughts of a Random Citizen. Today I have an amazing interview with Chris Otagard. If you're kind of tired or exhausted or emotionally damaged from the stock market ups and downs, maybe you're looking for a passive income and not sure where to start. I'll just say now, this conversation with Chris is the place to start. I pound Chris with a bunch of little questions and he knocks him out of the park with amazing insight in how to invest in low risk assets that yield solid returns. He's living proof that these strategies work, and for any who want to continue to invest but again can't stomach that current market volatility, this episode should be a breath of fresh air for you. Chris has said he allocates maybe one percent of his portfolio into the stock market and even though I'm about the exact opposite of that, it just goes to show that when you hear investments, it doesn't only mean traditional ETF stocks and bonds. It kind of goes back to what Matthew McConaughey said in Wolfville, wall Street.
Speaker 2:It's all a fugazi. You know what a fugazi is Fugazi? It's fake Fugazi. Fugazi, it's a wazzy, it's a woozy, it's a fairy dust, it doesn't exist, it's never landed, it is no matter, it's not on the elemental chart, it's not fucking real, right? Stay with me. So if you've got a client who bought stock at eight and now sits at sixteen and he's all fucking happy, he wants to cash in, liquidate, take his fucking money and run home, you don't let him do that, because that would make it real Right. Now, what do you do? You get another brilliant idea, a special idea, another situation, another stock to reinvest his earnings, and then some and he will every single time because they're fucking addicted. And then you just keep doing this again and again and again. Meanwhile he thinks he's getting shit rich, which he is on paper, but you and me, the brokers, we're taking home cold hard cash via commission motherfucker.
Speaker 1:Sorry, I just had to do that because I love that movie and McConaughey's hilarious. Anyways, chris has a great take on owning and purchasing real assets, which is why I played that clip and how he preserves wealth all the same, if not better than traditional investments and buy foreign away, better than cash sitting by itself in a bank account. So I hope you guys enjoy the conversation. Chris, thank you so much for coming on and being a part of the podcast. I believe you're actually one of the first guests I've had on the podcast to talk specifically about investing with, so I'm really excited about that, considering I love investing so much. I know you've recently wrote a book called Get Off your Ass and Manage your Money why you Need Alternative Investments which, before we get into that book and your alternative investments and financial knowledge, can you walk us through a bit of your background before the book leading up to now?
Speaker 4:Yeah, well, thanks you. First of all, thanks for having me on. I'm happy to be here, hoping I can provide some value and maybe some little entertainment to your audience. That's great.
Speaker 4:I used to be, like most people, a conventional investor, and that means investing in stocks, bonds and mutual funds through your employers. 401k. What I fondly refer to is the 401K highway to mediocrity, with retirement so far away that you need a telescope just to see it. So I was that guy. That's what I grew up with and around 2009, in my mid-40s, I had this huge illiquidity event where I lost 55% of my assets and thousands of dollars per month in cash flow, and in my case, it was divorce, and lots of people can relate to that, whether it's divorce or whatever kind of thing happens.
Speaker 4:And so, all of a sudden, that highway to mediocrity was looking even worse than it was before, and, coincidentally, around that time, a friend of mine said hey, chris, you got to read this book. You got to read this book. So I bought the book and I just set it aside for way too long, and then one day I was flying somewhere. I said, okay, I'm finally going to read the book, and the book, of course, was Robert Kiyosaki's Rich Dad, poor Dad, and, like millions of others, my mind was open to a new way of thinking about money and investing. And so I did that pretty aggressively.
Speaker 4:And lo and behold, nine years later I had made up that 55% and multiplied it many times over and I fired the man. I never have to work again if I don't want to. And so I wrote the book and started the blog at theprolificinvestornet Share. Just, you know, there's this, there's this completely other way of thinking about money investing that is so much better, so much more profitable, and it'll get you to retirement, financial freedom, whatever much faster. It is harder, but the benefits are so worth it. So that's that's. That's kind of my story.
Speaker 1:Yeah, so what was like? What was the career that you had to enable the alternative investments?
Speaker 4:Yeah, so you know, if you've read Robert Kiyosaki's book the Cash Flow Quadrant, I was an E, I was an employee. You know I grew up with a family of E's. None of us were entrepreneurs, it was just plain Jane Vanilla stuff, and so that's what I knew. I I went to every little aeronautical university in Daytona Beach floor to become an airplane mechanic, which I did, and then I worked at the Kennedy Space Center about the time the first shells were going off. And then I moved out to Seattle work for Boeing at the height of my career. I was a director of contracts out there and I wrote, negotiated the contracts for the sale of commercial airplanes all over the world to airlines and one one royal family. So it was.
Speaker 4:It was a lot of fun. You know it's easy to look back. It's easy to look back at a job, you know, on the last few years or whatever, and you know it sucked, you know, or whatever. But when I look at the whole, the whole time, it was really. It was really fantastic, and especially the the contracts job was like an MBA on steroids. You couldn't learn what I learned, you know, in a classroom and you know, traveled over 30 countries and just met people from everywhere and done big business, big dollar business and tough negotiations, and it was just. It was just a blast.
Speaker 1:So I talk a lot about travel in this podcast before we dive into the financial stuff. What were some of the highlights of your travels? Maybe, like your most favorite, can use walks through that.
Speaker 4:Oh sure, yeah, walking on the Great Pyramids, you know. On safari in Africa, walking on the Great Wall, you know, just being in my orca or the Maldives I've been on on just the most beautiful beaches all over the world, it's just incredible. In, hong Kong is my favorite city. I lived in China for three years. I love. I've probably been to Hong Kong like 50 times, you know, and so I love going to. Just such an energy, you know about that place. So, yeah, I just I'm ready to. If we get back to some kind of more normalcy in terms of international travel, I'm ready to, ready to get on the road again.
Speaker 1:Yeah, and just veering off of it here, has that? Has it been more difficult with Hong Kong and not a recent events?
Speaker 4:I haven't been there since covid, so I went back. My daughter was living in Seoul, and so my girlfriend and I flew up from Seattle up to Vancouver, got on a brand new 787, flew into Seoul, spread Christmas there and then flew over to Hong Kong on the 747-8 and had New Year's even Hong Kong with. That was probably 2017, maybe so I haven't done any international travel since then. It's all been domestic, on motorcycles and Corvettes across the US. Well, there you go. It's not too bad. There's not a bad substitute.
Speaker 1:Yeah cool, all right. Well, get into your book, get off your ass and manage your money while you need alternative investments. You designed a pyramid of how you recommend investment allocations and in the shadow of the pyramid is traditional, traditional investment stocks, bond, mutual funds, etc. Can you elaborate on why you've thrown those specifically into the shadow of that model pyramid?
Speaker 4:It's a little bit of it's a little bit of humor and making fun at conventional investments, because you know you're in the shadow, you know the period. You're talking about a pyramid or ladder and something you get on and you climb. All the conventional investors aren't even on the ladder there in the shadow, where it's dark and damp, and there's just no fun down there. There's nothing good happening down there. You know there's mold growing. You know it's in when you're the dark in the shadow. So you gotta all the good stuff happens on the pyramid. You gotta, you gotta get on it and start climbing and the sun comes out and the air is cleaner and there are always are better. So it's a little bit just kind of I think it's true, but just a little bit of making me you know, making fun of the whole situation.
Speaker 1:Oh yeah, and when you've walked on the pyramids yourself.
Speaker 4:Oh, I want to. I want to correct one thing you said there. So the those, all those different investments are on the period. That's not an asset allocation. Those are just examples of alternatives and they're not in any particular order. Anything you could start on that pyramid at the middle of the top or anything.
Speaker 1:So Okay, cool. One thing in your book that I really wanted to question you about was the concept of a family bank, or I don't know if that was actually in your book. It might have been on your website. Can you walk us through the formation process of this bank kind of? Who qualifies in the concept in general?
Speaker 4:Yeah, well, it's way easier than that. So there's some. There's a good statistic that I have that that about thirty four and a half percent of the average Americans income goes to interest other people. So think about that. I mean, if you make a hundred thousand dollars a year, 34000 is going out credit card interest, student loans, home mortgage interest. So that's a huge amount. So what if you could? What if you could bring that? What? What easier way would there be than to just keep that interest inside?
Speaker 4:So a family bank is nothing more than opening up a checking account or savings account or taking an account that you already have that you don't really use. You know, some people might have a couple of savings account and they don't really have activity. So you designate one of these accounts as your family bank and then you start to fund that bank. And you can fund it with oh, I've got an extra thousand dollars or an extra five thousand or ten thousand, or you can just start by make you know, setting up a recurring automatic deposit into that bank and then, pretty soon, all of a sudden you've got, let's say, you've got five thousand. All of a sudden you've accumulated five thousand dollars in that bank and maybe I'm dating myself here and then, and then your first child you know, turns fifteen or sixteen and they need a car to drive. Yeah, today you probably can't get much of a car for five thousand dollars but back when I was younger use car, yeah, use car, yeah.
Speaker 4:So you go, okay, instead of going to the bank to get a loan, you withdraw that five thousand dollars to pay for that car and you set up an amortization schedule, just like you would know what. What's the going rate for use cars? You go, go to your credit union bank and say, oh, it's about four, whatever, that's four percent, and you can do it for sixty months. So you start paying yourself back at that at that rate. Oh, you know whatever the monthly payment is, but you, you set it up, and so now you're keeping that interest that would have gone to somebody else, to yourself, and it's no more. It's no more complicated than that.
Speaker 4:And and so some people would say, you know, the question will be well, if I could pay cash for it, why wouldn't I just pay cash? Well, so, if you, if you pay cash for the interest let me back up if you have a loan to a bank, you will find a way to make those payments right. But if you, if you pay cash, the money that you save an interest, you'll never end up saving that anywhere, it'll just get spent.
Speaker 4:So by paying yourself back. You put that principle in interest and pretty soon now you've got your five thousand dollars back, and with interest. All of a sudden you've got, you know, eight thousand, and the next big expense comes along you need a roof on the car, you need a new washer and dryer, whatever, and all the money that comes out of that account comes out in the form of a loan that gets paid back on some schedule okay.
Speaker 1:So it's kind of like a financial discipline strategy. Essentially, you are, you are, I guess, in one way paying that cash, but you're just structuring the loan yourself, correct?
Speaker 4:right, yeah okay it's all.
Speaker 4:Yeah, there's no, there's. You know it's a little. There is no third party separate bank, it's just an account and you, you borrow money from yourself. And think about this. I mean, if you were, you know, a young family starting off with kids and you started doing this from the very beginning. I mean, you know you start off financing little things and you know you're doing cars and you get a boat or whatever.
Speaker 4:And you know my, my daughter, is a therapist out in Las Vegas and and she's self-employed. So you know her, her, you know she's not a good candidate for a loan because she's got some flexible income. Well, you know what, if I'm to the point where she could come to me and say, dad, I'd like to buy this $250,000 condo, can you be the bank? And so, and I could, you know, I could arrange that, give it enough time, I could, you know, put, put that money aside, but really it's not. Loaning her money at the typical 30 year fixed rates really isn't a isn't a good investment for me because I can get some more. But I'd say, okay, here's the deal, it's on a five year balloon, so in the next five years you need to get your credit in everything order so that you can refinance and take me out of this loan, right?
Speaker 1:but it wouldn't be great if think what that would do over generations if you just kept all that money in the family yeah, absolutely, and you know, financial discipline, just that strategy itself that's so important in regards to money, because that's really all it is discipline, yeah, so so one of the things you also talked about in your book that I really want to talk about is passive income, and I love passive income strategies.
Speaker 1:One thing, though, I've never considered that you actually talk a lot about was atm's. Yeah, it's something that you yeah, you reference it quite a bit. For those who might not be aware of this idea, can you elaborate on it a bit for us?
Speaker 4:yeah, so, um, so let's talk. Let's talk about something called a syndication. So a syndication is just where I would like to buy, you know, that 40 million dollar apartment building. But I don't have 40 million dollars, or I don't have the, the 10 million dollar down payment that I that I need to get the loan. So I get, go out and get a hundred, 100 guys and or gals, whatever investors and we each put in you know some amount of money and we form a company and we go buy that thing together and now we all get the benefits of the ownership. We get that, you know, the pass through tax benefits and you can do a syndication for anything. You could buy a shopping mall, you could buy a apartment, apartment, apartment, apartment building, or you could buy atm machines, and so these are.
Speaker 4:So I own atm machines all over the country. I've never seen them, never touched them, never will. They are all managed by a third party and there are three players in the atm space. So you've got the person that owns the real estate that you're going to put the atm. So you gotta, you gotta have an arrangement with that person. And then you have the person that owns the atm, in this case me and then you have the, the companies that do all the, the maintenance insurance and, and you know, putting the, the cash in the machines, and if they're not performing well at one location, they move them to another thing. So those are the three, those are the three parties, and every time you go to an atm machine and you pay that surcharge of probably averaging around $3, you know, depending on your location, those three parties get some percentage of that of that fee.
Speaker 4:Now if I own these, if I own these things directly and I was it put them in my pickup truck and moved them here and move them there, I would get a different amount of money every month from each machine because there would be number, a different number of transactions. So the way that I do this, or the way that I participate in this, is, you know, I'm just wiring money to a company that's going to go out and buy these things. I have ownership of these things by serial number and hundreds of atm machines are all managed together and I get what's called a blended return. So they look at all the stuff and they look, look. If we have, if we meet this average amount of transactions across the whole thing.
Speaker 4:I can pay Chris this X amount of fixed dollars a month for the next seven years and it's a. It's a really a. It's a. It's a really great investment. It started before covid and it just gives me a predictable monthly cash flow for seven years at the end of seven years. Kind of a used car, it's like it's kind of outdated. You sell it for whatever it's worth and then you move on. So, unlike an apartment building you don't have that produces cash flow, you don't still have this appreciating asset at the end that you could sell. This is a depreciating asset. So if you spend all the money that comes off these atms for seven years, you just have to know that well, there's nothing left, that that money's all gone right yeah, absolutely well.
Speaker 1:So for some of those seeking passive income, that's obviously a great route, and for the innovators out there, something that just popped into my head would be doing this with some kind of bitcoin or crypto implementation, where you essentially have the atm but instead of you know fiat currency, it would print out fiat currency but you obviously would withdraw via crypto kind of a unique, innovative implementation. I know that they actually have those in Australia I've seen a few, but I was looking at some of the returns and obviously you have to give a lot to the people managing it. Do you think that there is, if people are interested in a side hustle, any potential in managing yourselves?
Speaker 4:Or just too much. Yeah, yeah, no, there are certainly people that do that. That's not really passive income. Well, you know, sorry, passive income. So you, you know, whether you, if you own, you know, if you own a piece of rental real estate, or if you own, you know, a portfolio of ATMs. However that may be, you've got a job right. You've got a small business in running the rental or managing those ATM machines. So, and then, there's nothing wrong with that. It just depends on whether you want to have a job or do you want to have what we used to call mail, mailbox money or passive income.
Speaker 1:I've never actually heard that term. That's great. So shifting gears a bit, you release something else on your website that I really liked and you said that Trump paid 715 taxes and you paid zero ignoring politics, obviously, because the mention of him is rough sometimes, but you said that 95% of the tax code is written to tell you how to pay less taxes by adding benefit to the economy. Can you elaborate on this?
Speaker 4:Yeah. So there's a, there's a. There's a book that everybody should read. Let me back up.
Speaker 4:You know, if you're an investor unless you know the average stock investor, the S&P 500, over its history, has delivered about 9.8% average annual returns. It's routine for me to get returns in excess of 20% and it's really weird when you think about it. But the the ease, you know, if you're getting 10% on an investment, you say, well, I'd rather get 20. How do you? You know, how do you go from double the return on investment? Well, the easiest way is to keep more money in your pocket from in the form of taxes. It's really the, it's the low hanging fruit, if you will. So there's a guy named Tom Wheelwright who a lot of people refer to as the smartest tax guy in the country, and he wrote a book called Tax Free Wealth and if anybody wants to know how to, that is one book they should read. And Tom would say what I said, or I got it from him. I should say that you know, 90 plus percent of the tax code is telling people how to pay less taxes.
Speaker 4:The government uses the tax code to to modify behavior. So, for example, the government thinks that having married people having babies is important for the country. So guess what? If you're married and you have children, you get you get tax breaks. You pay less taxes. They also feel that you know people. To have a roof over their head, whether it be at an apartment or a single family residence, is important too. So if you build or or rents property, you get huge tax benefits in the form of depreciation.
Speaker 4:And now for one more year 2022, something called bonus depreciation. So if I were to put $100,000 into an apartment syndication, I would actually get a $100,000 negative on my tax return for that year. So the next $100,000 that comes to me of the same, of the same type of income is tax free. Wow, geez. So you know. And energy, too. You know the government and it's switching from fossil fuels to more greener fuels. But the reason that I paid no taxes in that year is because I strategically made an investment in some, some coal processing units and since the country you know the government we need energy to run the country, like it or not, we need energy in some form, and so those people that go out and drill or refined you know petroleum products get to get some of the best tax benefits.
Speaker 1:Do you think? Is that still today? I know you said you did that a few years ago or whenever that was. Has that inverted into some kind of form of green tax benefit?
Speaker 4:I don't. It's interesting that, with all the talk that there is about green energy and solar and all that stuff, the tax benefits to my knowledge have never, have never kept up, because investors will go where those tax benefits are, and so I think it's shifting, but I don't think it's quite moved all the way over in that direction, although I was just listening to a podcast this morning and talked about how, you know, president Biden, you know shut down the Keystone pipeline and shut down some nuclear plants, and so he's really, you know, kind of putting a damper on on on the kind of the traditional energy sources which is driving up energy prices, you know.
Speaker 1:Oh yeah yeah, I thought nuclear was zero emissions. Why would he be shut? I mean, obviously this is kind of going just shocking to me.
Speaker 4:Well, you know, france has got. You know I think they get about. I think France gets about 50% of their electricity from nuclear power In the United States. It's, it's a very small. You know we had an accident here called Three Mile and Island, like you know, 40 years ago, and from that point forward there was just no more building of nuclear plants. So it's really, it's really tragic.
Speaker 1:Yeah, I mean, obviously you know there's some dangers to them, but when there's zero emissions and they're super powerful, but anyways, that's. That's often to another topic in and of itself and a quick break from today's sponsor.
Speaker 3:Hi, my name is Candice Smiley and I'm the host of the Create the Ripple podcast, the place where we talk about trust and enigal and telling the truth. A place where, whether we're interviewing amazing guests, we're hearing from you personally, one on one. We talk about trust and enigal. So learning to listen to yourself and trusting what you hear, and then learning to tell yourself the truth, or living out your truth out loud, on plan, on purpose, in total integrity. Our place where we work to cut through the noise and offer you incredible value with each and every episode. Find previous episodes or connect with me directly at CandiceSmileycom. Thanks so much.
Speaker 1:And we're back. I'm curious to see what you think talking about kind of the economy in regards to inflation in the next 10 years. Do you kind of see hyperinflation? And obviously this is speculation, but I just kind of wanted to pick your brain about it a bit, yeah.
Speaker 4:So I'll make the disclaimer that my crystal ball is as good as everybody else's. I listened to lots of different sources of information and try to figure out how I'm going to do my investing based on what I think from all the things that I hear. And I don't think it's going to be universal. I mean I don't think everything's going to go up in price or everything's going to go down in price. So when you think about, technology is doubling about every 18 months and technology is all about delivering more to the consumers for less. So it's driving prices down.
Speaker 4:I'm an older guy and what used to be making or receiving long distance phone calls, was it? Nor do they be inexpensive. If you were out in the yard and somebody called, you, say it's long distance, it's long distance, get in here and get on the phone and get this over with, because it's costing us $2 a minute. So technology is driving down. So there's an incredible deflationary force through technology and that's because a lot of technology is also eliminating jobs. So that's one thing that's happening. And then another thing that's happening is the government is with all the money printing and it is pumping up asset prices at the stock market. So you've got a deflationary force on one hand and you've got the government trying to push up asset prices and then you have market forces.
Speaker 4:So I'm a big investor in apartment buildings and the value of apartment buildings and the rents are going up like we've never seen before because there's a huge shortage of housing in the United States, whether it be single family rentals or apartment buildings. So I'm betting on that and putting a lot of money into apartment buildings. It's unfortunate if you're a renter, but the people that get ahead in the world are the people that own things. So if all you are is a consumer and inflation is going up, then your buying power is just going down every day. But if you own the things that are going up in value, whether it be stock market or real estate, that is going to your positive side of your ledger. So that's a long way of saying I think it's going to be a mix right.
Speaker 1:Yeah, so I know that you had briefly said for a moment how you safeguarded your assets. Is it primarily, then, just the stock market in apartments, or is there any other alternative safeguards that you have? I'm assuming it's quite diversified, but any that you'd like to recommend.
Speaker 4:Well, I've invested very little in the stock market.
Speaker 4:I mean, maybe like 1% of my portfolio is in the stock market, so I'm not a big believer in diversification, so my main investments are apartment buildings, atm machines, self storage and, believe it or not, whole cash value. Life insurance is a great foundational investment that I should I think should be part of every serious investor's portfolio, and everything I talk about there's an article on my website about in one of the blog articles. So if you want to look in there I talk. I got an interview with an insurance guy that puts together my cash value life insurance. I talk about the family bank. You know there's the article about me paying zero taxes, how I did it and then all that stuff. So the details are all out there.
Speaker 1:Amazing, yeah, and we'll obviously have all of your stuff, chris's stuff, in the show notes and also just goes to show that investments are a unique category, if you can even call it that, a unique asset. That applies to a lot of different things in life. So while I'm in the stock market and in some alternative investments, you know you're in all alternative investments, so it's crazy that there's no one way to win investing Something definitely to keep in mind. So, moving on to alternative investments specifically, in your book you said alternative investments require a bit more work than a conventional investment. Now, for the people listening out there who are kind of for that side hustle or looking for that, what are some cautions that you would suggest they know before jumping into the alternative investment space?
Speaker 4:So you know, conventional investments are your stocks, bonds, mutual funds, etfs and all of those, all the all the things that are publicly traded. So in order to get your, your company or whatever it is, on the stock market, it's a pretty rigorous process to go through the SEC and get listed on exchange. So the SEC has kind of done the vetting of the investment for you. So it's not that they're not bad players in the stock market. I mean, we've all heard what we heard what Volkswagen did with the, the emissions, and Wells Fargo opening bank accounts, and there was Enron. So there it does happen in the stock market, but it's easier to happen in the alternative space because these are all. They're mostly private deals that are completely unregulated. So you know, if somebody wants to set up a syndication, anybody who's got $15,000 to to have a lawyer do the legal work to set up you know all the paperwork to do one of these syndications can say hey, I'm a syndicator, would you like to buy into my fund? We're going to go out and buy some apartment buildings and then they run off with your money. So it's easier.
Speaker 4:That's something you got to be careful of. So you really have to pick and choose carefully. You know if you're in today's world, if you get a job with an employer who has a 401k, in many cases they will automatically you enroll you in their 401k plan. They will pick how much of your paycheck goes into the the 401k plan and which mix of you know stocks, funds and mutual funds you buy. You can't do that in the alternative space. There's no portfolio. You know you, you have to. You have to kind of look at what's out there, figure out what's kind of a good match for your interest and your risk tolerance and that kind of thing.
Speaker 1:So for that example, you said, hey, we have this syndicate and we want people to invest in apartment buildings and they run off with your money. Is there any way that if somebody was in that scenario, they can find a way to recoup the that money?
Speaker 4:or Well, I know of one particular situation where that it was an investment, that was a Ponzi scheme and and and that you know that the old, just the oldest, the oldest trick in the book, and this guy was very good at it and he was arrested and he's in jail and there are, you know there are multiple lawsuits going on to recover, you know, assets of the investors. How that's going to work out, how much they're going to get back, I don't know. But you know it's usually not a very high percentage of what you invested. So you know it's it's really something that you want to avoid.
Speaker 1:Yeah, and for any Ponzi scheme one of these out there maybe don't yeah, and I guess if you're interested on or don't know what a Ponzi scheme is, really quickly it's pretty much a pyramid scheme. It's one top level investor gets some investors to find more investors who then have to find more investors, all at the promise of an underlying business that isn't really anything besides taking money from the newest investor in paying all of the previous investors until it gets to a point where there's no more investors and they just happen to liquidate and quit their business operations. That never really existed. So something to be aware of if the core of what somebody is trying to get you involved in is acquiring more people to invest after you're being acquired to invest?
Speaker 1:Maybe red flags steer clear, but anyways moving on. So I'm curious to your approach on investing in small businesses as an alternative investment class. For those who might not be aware, are you assuming that an investor is already an accredited investor when approaching these small businesses, or?
Speaker 4:A lot of.
Speaker 4:Most of the stuff that I do requires you to be an accredited investor and if your audience doesn't know, that means that they have to meet an income or net worth threshold, and it's a. They have to have an income of $150,000 a year as a single person or $300,000 as a married couple, and or have a net worth of a million dollars, excluding their primary residents. And the reason that's an SEC thing, the reason that that's in place is because the SEC knows that these are unregulated things and they they're thinking is that well, we need to only let higher income or higher net worth people into these deals because they can afford the loss and maybe they're smarter not necessarily, and so so a lot of the the, the private businesses that I have invested in, have required you to be an accredited investor. The thing I'll say about you know the majority of small businesses fail, so my advice would be to make those invest if you want to go down that path.
Speaker 4:You know this. This is high risk, high reward with these things. So if you want to do that, I would do smaller investments across a number of companies instead of big investments across, you know, one or two or three companies, because if they all fail, then you're out. So it's risky, and I made the mistake early in getting two kind of wrapped up in these, these new companies, and so I do it differently now than I did when I started.
Speaker 1:Yeah, absolutely. What kind of process do you go through if you're interested in these small businesses and reaching out to them? How do you find them?
Speaker 4:Well, the way that I found most of my investments is being part of some kind of investor mastermind group and and I've been part of probably three of them over the past decade, and this is just you know somebody says, hey, we're a group of investors and we're gonna, we're gonna. You know, maybe it's in one case. It's a guy who has a podcast and he also has a group and you pay a membership fee and we have bi-weekly zoom calls and we talk about what's going on with taxes and what investments are out there, and some of them are more focused on, you know, small businesses or real estate or whatever. So you've got to, you know, with all this is part of why it's harder with alternatives. You've got to, you know, put yourself in the right company, in the right group.
Speaker 1:You know, you've got a you've got a due diligence yeah, and you've got a it's.
Speaker 4:It's why it's so much harder, because I, you know you have in in my book.
Speaker 4:There's a checklist, there's a, there's a link that you go to in the front of the book that takes you to an action guide and I've tried to lay out how you kind of go from being a conventional investor to an alternative investor, and a lot of it is education. You've got to start reading books, you start a learning, listening to podcasts and, oh, there'll be seminars and classes. You got to travel to different states and go to them and, you know, over the course of time you'll kind of figure out what interests you and you'll meet people. And the most important thing to do is when you're getting ready to go into investment, you need to talk to other people who have done business with that fund or that company and see what their experience was, because the guy or gal who's trying to get you into investment, some cases they're you know they're, they're salespeople right, and you need to. You need to get referrals from other people that had positive experiences yeah, really good insight there and then just maybe not discourage everyone.
Speaker 1:I think I was looking up this specifically for this question right before we got on here and I think you can back me up on this. If, if you're a private company, you can take on 35 non-accredited investors before there's like a cutoff, is that? Is that right, you?
Speaker 4:know I I don't know the details of that. I know that let's just go back to the syndications. Some syndications will take a certain number. They will take accredited investors and a certain number of non-accredited investors, but that's. That's kind of up to whoever's putting that deal together. In some cases there, in some cases I think it's more expensive. There's more things that the syndicator has to go through to allow non-accredited investors in, and I think sometimes, sometimes the philosophy as well okay, why do I want to go through that? There's no shortage of accredited investors who want to invest with me. And then you have other people that are really like look, I want, I want as many people as possible to have access to this and I'm going to go through the process so that I have a fund that anybody can invest in. And I and I've seen both of those models- so I don't.
Speaker 4:I don't know the answers to your question specifically yeah, no, that's fine.
Speaker 1:I think that that's accurate, but I just wanted to maybe not discourage people who are like dang, I can't invest now in small businesses.
Speaker 4:So yeah, you know you, uh, even even though I would say there are more opportunities and it's easier when you're a credit investor, there are, there are other, there are other avenues for non-accredited investors.
Speaker 4:And look, everybody has to start somewhere and it should be something that you aspire to and you know absolutely one of the ways in in real estate is you know you could go out and and buy a single family rental or duplex or triplex, and, you know, manage it yourself and hire property manager.
Speaker 4:Now you've taken on kind of a second job, you know, or in throughout the country there are what are called turnkey rental providers, and there are some really good ones out there, and what they do is they focus on a specific market and they go okay, this is a great cash flowing market. Let's go out and build or acquire houses that we're going to sell to landlords, and so they'll go buy these places and they'll do the improvements and make them durable for tenants and they'll, and they have their own property management company. They'll put, they'll put a qualified tenant in there and then you show up with your down payment in your bank loan and you buy what's called a loaded rental. It's a. It's a rental that's already got a paying tenant in it, along with the professional property manager who specializes in single family rentals in that market, and that's the easiest way to get started now.
Speaker 4:It's you know, and, for example, if you have a property management company, they're going to do all the kind of things, but there'll be some rules that'll be set up and something might be like okay, any, any expenses under $500, pay them anything above $500. I want to know about it and have a say so you're still gonna. You, you're gonna be more involved than if you just wired your money off to a syndicator, but it's a way to start climbing up that ladder yeah, absolutely.
Speaker 1:And then I know they have things like crowdfunding and stuff too. That is kind of becoming more mainstream. So, talking about other alternative investments, I know you mentioned precious metals as one on your pyramid. Are you in diversified in precious metals or not?
Speaker 4:really, is that not something that you yeah, I, I like buying, you know, silver and gold coins and and I have and and this is a really kind of a amateur swing that I do and I have I have a friend who's really into this. He follows this very closely and when he thinks it's a good time to buy, he'll buy and I say, okay, let me piggyback my order on yours, and it's almost more of a hobby. The coins are really cool, they're really pretty, it's nice to have them in there and it is a good. You know, if the zombie apocalypse comes, you'll be able trade you know buy stuff with your silver, silver coins.
Speaker 1:So I do that yeah, I kind of treat it the same way with my, with my gold and silver allocations mostly gold I just like to buy it for the collectibles because I mean they're cool, and then it's a safe investment, you know, for later in. At the end of the day, I don't understand the mindset of owning a piece of paper which is backed by a gold company, but if a shit hits, the fan scenario occurs. You know that that piece of paper that says you own gold isn't gonna be much different. Then the piece of paper that is the dollar, like they're not. If it's worst case, which is obviously unfortunate for everyone you want that actual physical gold. You know otherwise. As a hedge against inflation, sure, but otherwise Don't expect them to take your piece of paper and return gold, yep.
Speaker 1:Moving on to another alternative investment which I've spent a lot of time and money I'm not sure if you are well versed in this is cryptocurrency. Before we dive into that, are you Invested in the cryptocurrency? Is it something that you see moving forward in the next or in the near future?
Speaker 4:Yeah, yeah, I have a. I have a weekly trade of I'm very bullish on Bitcoin. I think it's here to stay, I think it's gonna continue going up in value and some point it will stabilize. And so I dollar cost average in every week at a certain dollar amount and that kind of goes up and down based on you know how much I can afford at the time. But yeah, I think that's a and I know there's money to be made and all of these altcoins. But that's kind of like day trading and I am. I am I'm in and speculation and I'm an investor who wants passive income, so I don't and it. You know, day trading is just another job. Once you stop day trading, the money stops coming in and I Avoid jobs like the blank.
Speaker 4:So that's why I like buying the Bitcoin.
Speaker 3:And there's.
Speaker 4:I read a book recently called layered money and this is really interesting. The guy and I think this is his term, this is the way that he talks about it he said you know, for forever the only first layer money was precious metals, just to say gold and silver. And then when United States was on the gold standard, you had a piece of paper, a dollar or a silver certificate. You could take that dollar and exchange it for gold. Well, the the gold was the first layer money and the piece of paper was a second layer money. And with every other layer that's not first layer. There's something called counter party risk. Somebody has to perform in order for you to get the value. And what he says is that cryptocurrency is the is the first layer money that has ever been around since gold. So this is a big, you know, you know, once in a lifetime kind of change.
Speaker 4:And you know, think about people and some people are almost like evangelical about it, like it's the next coming of Christ. You know and you know, but you think about if you're in some Third-world country where the monetary system and the banking system is not very stable, you know. So you're trading your hard, your your time for that currency and that currency might be worth half tomorrow what it is on the day that you earned it. So anybody who's got an interconnection can now exchange, you know, their dollars and local currency to something that at some point in time, you know will be more stable. So it's really gonna.
Speaker 4:You know, some people are thinking it's like a great equalizer in terms of financially across the globe. And you know, if you want to, if you want to carry your wealth from one country to another, or maybe you need to escape a, you know a country, you've got a thumb drive and you've got your, your, your whole asset base in there. So so it's, it's a real, it's a real interesting thing and it's kind of like with the guy that wrote this book where he talks about Technology doubling every 18 months. You know, I feel like we're seeing things that in previous times you would see once in a lifetime and we're seeing these, you know. So in our lifetime we've seen the internet, now we're seeing Bitcoin, I mean.
Speaker 4:Compressing yeah, I mean I used to think my parents and my grandparents saw change in their lifetime, but it's nothing compared to the progress we've seen.
Speaker 1:Oh yeah, and it's just becoming more rapid and rapid, as everyone kind of understands the interest intricacies of building on the internet, I guess. Well, I was gonna ask you to try to convince my friends or family that I've had a difficult time convincing to get in. I've told them everything I can about. You know crypto in general, but it seems like you've already done a decent job on that. If you could, though, speaking of kind of the three Most talked about aspects of the crypto industry being blockchain technology, kind of the decentralized nature in the store of value, well, which do you see those being the one that kind of maybe propels this industry into mainstream financial adoption?
Speaker 4:Well, I think there's one more, and that is the fact that this stuff cannot be manipulated by anybody. You know so. Even if we end up having a US dollar Fed coin, you know, with Bitcoin, the fact that there's only going to be what is it? 33 million bitcoins, or whatever the number. I can't remember what the number is.
Speaker 1:Yeah, to be just under 21 million.
Speaker 4:Okay, so anyway, nobody can go in and manipulate the supply. So, as people see what's happening with you know all currencies are being devalued, you know, every year by governments printing more of it. And you know, if you're just sitting on, one way to guarantee that you're going to lose money is by not investing. If you just sit on your money, and I mean having it even in a bank account, you're essentially getting zero. Well, you're basically in today's environment. You're actually losing 6% a year of value.
Speaker 1:What they say? What they say is 6%.
Speaker 4:Yeah, right, and then the real number is something other in the upward direction.
Speaker 1:Yeah, yeah, because I one of them I think I've said this on a previous podcast but they've increased the money supply by like 25% in the last 18 months and that was a few months ago when I saw that but in, but somehow, it's only 6% that we're losing, you know? So Right, right, right, but yeah.
Speaker 4:I'm going to go back to something I said before. But see, there's money to be made in every market cycle. So, like I said, if you're just a consumer and you're spending, then you're getting killed by inflation. But if you go out and buy the assets that are being, that are going up whether it's a supply and demand issue or it's because the government's manipulating the stock market then you're benefiting from that. So you got to get on the right side of that equation, or the correct side. Whether it's on the right side or left side, I don't know.
Speaker 1:Yeah, absolutely so. Lastly, is there a major difference in the timeline of an alternative investment compared to a conventional investment? And then kind of on top of that, additionally, is there a quicker, longer ROI or return on investment from those investments?
Speaker 4:The ROIs are higher, you get your money back. You get your principal back quicker. I'll give you one example. So I invested in a. I don't know, probably maybe three years ago or so, I invested in an apartment building in Atlanta, Georgia, and that apartment building is going to be sold this year. So the average annual return on my investment is 24%. So take something and say, okay, 24% compounded, 24% compounded for three years. How much quicker are you getting to where you want to go and how much quicker are you building your wealth when you're getting those type of returns? And that's before you consider that that piece of real estate came with depreciation that was passed on to me, so a lot of the income that's coming back from that. I can actually tell you that I will pay no taxes on that.
Speaker 1:Wonderful. Can you actually elaborate on that specifically?
Speaker 4:Because when you buy a, let's say, I'm making my first $100,000 investment in an apartment syndication and I have bonus depreciation of $80,000. So that means that the next $80,000 that comes to me from apartments is tax free. Well, the first couple of years I'm not giving a whole lot of tax excuse me a whole lot of income from that investment. So that $80,000 just gets. It's just a bucket that gets carried forward to the next year and the next year and the next year. And so now I've got this big buildup of unused depreciation and when this investment comes in and I have $50,000 of profits, I just I just take, I subtract the 50 from the 80 that was carried forward and I pay no taxes.
Speaker 4:And what you do is the way you keep that train. We call it the golden, the golden hamster wheel, right? So how do I keep that going? I just continue to invest in new real estate every year and keep gaining depreciation that gets banked and then, as the profits come in, I'm just continually buying new assets to wash out the income that comes from the apartment buildings. You know, when they've matured and get sold.
Speaker 1:Are there any other? I know you mentioned ATMs being one of them. Any other major depreciating assets that you can use to implement that strategy?
Speaker 4:ATMs have the same thing. And any type of real estate, you know, any self storage, so any type of real estate comes with depreciation. And I use ATMs, I just call it business equipment. So business equipment comes with depreciation. You know, if you got into a situation where you were, I mean if you bought a brand new pickup truck and it was associated with your business, guess what? You get depreciation. So hard, hard assets. You don't get that in the stock market.
Speaker 1:Yeah, absolutely yeah, in that 24% annualized, which is love that number over the last three years. That kind of just spells out the previous thing we were just talking about to a T of being invested in real assets while the government decides to print. You know as much as they are. So, chris, this has been amazing and extremely informative. I really appreciate your time. I do always ask one thing to all my guests if you could take all of the knowledge you've learned throughout the entirety of your life and narrow it down into one thing and tell someone that one thing, what would it be?
Speaker 4:Well, that's a tough one, I would say, have childlike curiosity. So if somebody, when somebody says to you, when somebody says to you, hey, it's possible to pay zero income taxes, guess what most people do? Too good to be true. Not going to look at that any further, what do you mean? You routinely get 20 to 30% annual returns before tax benefits. Sounds too good to be true, must be too good to be true. So I'm not going to do that. If I had had that attitude over the past 10 plus years, I would have left so much money on the table. So you know, and that kind of goes along with being open-minded Look, be curious about what's out there in the world and don't just dismiss something that somebody tells you because it's so different than you know what you're used to. So that would be, that would be my one thing.
Speaker 1:I absolutely love. That Sounds like coming from the mouth of a traveler, to be honest. Well, Chris, thank you. Where can people find you or your book or get in contact with you?
Speaker 4:Yeah. So if you go to the website at theprolificinvestornet, there's a handful of ways you can interact with me. There there's a conventional wisdom quiz. So if you take this 10-question quiz it'll ask you some things and you know they're usually yes or no, true or false and you'll have your answers. And then you'll get my answers and I think it'll be pretty interesting. There's a cup of coffee there and you can schedule a free virtual 30-minute coffee with me.
Speaker 4:I set a site Thursday, so if anybody wants to have a Zoom call with me and talk about alternatives, we can do that. There's 40 something articles on the blog site and I'm on all the social media sites and you can get to them from there. Some of the articles I'll do a video as well, and sometimes I'll do a video in lieu of an article. And, of course, right there in the screen is the flashing star that says the book is out.
Speaker 4:Get off your ass and manage your money, why you need alternative investments, and that'll basically take you to an Amazon link, and if you go directly to Amazon, the quickest way is just to type in my name, chris Otegaard, and that'll bring up the book quicker than if you type in get off your ass and manage your money. It might take you a while to find it but, yeah, everything is at theprolificinvestornet and you know for people who think they want to make this move. That's why I wrote the book to really kind of lay it out for you and explain it and give you an action guide that you can follow to try and to make your path a lot straighter and more efficient than mine was.
Speaker 1:So yeah, absolutely. I've read probably about the first 40% of it and it's very well written, so I'll throw that in there. Yeah, absolutely, I'll throw that in there, along with some of the other books we mentioned as well, if anyone else is interested, and then along with the website.
Speaker 4:So, yeah, please, please, leave a review.
Speaker 1:Absolutely, Chris. Thank you so much. I appreciate your time and thanks for coming on.
Speaker 4:It's always great. I enjoyed it. Thanks a lot.
Speaker 1:And that wraps up another episode. If you guys like the show, spotify actually recently released a rating system. If you want to take one second and click five stars or whatever you prefer, it would be greatly appreciated. And same goes for Apple podcasts. Although their reviews take longer than one second, it definitely helps the show a lot. Otherwise, if you do like the show, share it with a friend, maybe just one episode or the entire show. Either way, we're okay with it.
Speaker 1:Speaking of the show, of course I'll have experts on and all thoroughly researched before each episode. But it's your life when you make decisions. That's your choice and meaning. This isn't advice. See professional help for anything and everything apparently nowadays. But definitely don't rely on this show or blame it. I love disclaimers. Anyways, I hope you guys tune in next week, get in the tell, then enjoy your life. And that wraps up another episode of Thoughts for Random Citizen. Thank you everyone so much for tuning back in. For those who are new listeners, welcome and I appreciate you joining. I hope you enjoyed the podcast and our guests today.
Speaker 1:If you are new and you're doing anything remote, be sure to check out Citizen Remote. It is fantastic. If you're already traveling the world, it's a great app to join a very quickly growing community. It's a great tool for those who are just about to begin traveling and figuring out how to navigate that, especially if you work remotely. It's a fantastic platform and we continue to build more and more tools for you guys, weekend and week out. Otherwise, if you're an entrepreneur and you're looking for tools or assistance with the next steps of what you need to do with your startup, or if you're looking for software development network connections, reach out to us at Torque United. Otherwise, if you're just tuning in for the conversations, thank you. That's why I love doing what I'm doing.
Speaker 1:Keep tuning in and actually keep a lookout for the not-for-profit that we're about to open up. Its main focus is going to be on international collaboration and helping build a borderless world, because it's something that I'm very passionate about. That's why I'm not only doing Torque United but Citizen Remote as well. Really exciting stuff on that horizon. Please keep up to date with all of that stuff the not-for-profit and entrepreneurial side of things at Torque United. But again, if you're traveling the world, check out Citizen Remote. If you're wanting to travel the world, if you're a remote worker, check out Citizen Remote. Check out the app we've built for you guys. Check out the platform we've built. It's only growing every single week. Hopefully you guys will take part in that with us. Otherwise, I will speak with everyone in a fortnight. Until then, cheers.