Financial Institutions want you to feel they have your best interests at heart. They push financial products to us all day long with the support of government-sponsored plans well.
Your host today Hari Luker breaks down how to take typical financial products and help support them with a secured strategy to help generate more wealth for you and your family.
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Hey everybody. And welcome to a new episode of the wealth in overdrive podcast. This is your host, Harry Luca . And today we are gonna start talking about one of my favorite topics , um, that I again can sometimes get on a rant about, which is perfectly fine, but it's gonna be about winning strategies more to the point strategy versus product. In this instance, we're gonna take a look at if in the instance of, let's say, if you had the opportunity to play golf with tiger woods, if he was gonna offer you his bag of clubs, would you rather his clubs or his swing? Of course, if you're in your right mind, or if you know anything about golf, then of course you're gonna want his swing. You could pick up any branch off a tree and probably kick my butt even no matter what kind of clubs I was using. If he was playing the twig from a tree or something on those lines. So in this one, we are gonna break down the difference and how people kind of get confused or note focus on the strategy. They purely end up focusing on the product and then collecting all these products and not having a strategy, putting these products together. So if sound financial planning were merely a matter of discipline to let's say, save and invest money over the long run everybody's financial plan would work successfully. I think we can agree with that. Unfortunately it simply is not that easy. And the current state of financial planning does not contain all the components that lead to a successful plan. So that's a pretty big statement. So let's review the reasons why so many people fail financially. Even if they plan the first one, some people are not able to save enough or invest enough money to reach financial, you know, required targets. In other words, they just can't put enough fuel in the vehicle to get where they want to go. And that can come for many reasons. I'm not saying that's right or wrong. It's simply just a reason. Second, many people do not have the ability to continually receive the rate of return on their savings or investments in their plans designed. Or as we've seen in the past, what these financial advisors say they can do as one famous one sent once said, if you put a thousand dollars a month into an account for 30 years in an average rate of return of 12%, stop right there, average rate of return of 12%. Sign me up for that longer period of time all day long. Of course, that person isn't licensed to make comments like that and has probably never proven that point, right? Either third one, some people will lose money in the stock market or other other investments. I'm sure we've all been there. If you listen to this podcast, fourth people end , people will end up needing to spend , um , some of that money before it has time to fully accumulate towards their financial goals. In other words , an emergency kicked in and they had to pull that money from an account and then lost all that additional growth and compounding fifth, many people are searching for a single financial product that will do the job instead of building a coordinated process that uses many different financial products coordinated in tank integrated together. Now, this is huge. Again, this is kind of coming back onto that shinySpeaker 2:
Object syndrome. We're always looking for the next best thing, that one thing that's gonna take us to the world of wealth and sixth , the most important, the eroding factors of taxes, inflation, planned adolescence . I think it's like technological change. So our iPhone always getting newer and better and more expensive, and we're always having to buy it naturally. We've got market fluctuations, interest rate, fluctuations, interest rate changes, lawsuits, inflation, blah, blah, blah, blah, blah . The list goes on, may all take their toll and work hard to reduce wealth accumulation. Again, I always put this important poll out there. What's the best way to build wealth. Is it one to chase a rate of return two? Is it just to take more risk in the market or three, is it to reduce the costs and eliminate the eroding factors of our wealth to then build more wealth? And that sixth point, right there pretty much shows you when a rate of return is one thing increasing your risk can be another, but of course you can increase the risk to lose it all at the same time, but there is multiple aspects of costs we can reduce or eliminate or control , um, that can help create wealth. So it should make sense that if there were only one financial product that could make everyone's financial plan more successful, everyone would own it by now. I'm pretty sure it would be on TikTok famous right now, and everyone would have this product and be millionaires, but <laugh> for more than a hundred years, people have made the same mistake over and over again , looking for the magic financial product that will make their, you know, make them and their family rich or financially successful. There would not be so many choices of mutual funds. If there were one mutual fund that could, you simply could depend on or work all the time, there would not be just one modern portfolio theor asset allocation. If there were one portfolio that they'd be able to use, provide reliable returns, then we'd all be doing it. But even if there were one product or one portfolio that was right for everybody just putting money away and accumulating it in a product that just one's, you know, future financial needs and goals and desires would still not work effectively. You see the process of building wealth needs to both be an offense and a defense. And you've heard me say this so many times. And Phil is defense is what wins games between the two is the defense that is much more important than the offense. And that basically is the problem. Too many people concentrate their financial life on the offense, the accumulation, and ignore the defense. Why? Because offense is exciting. It's the bit that promises gains. It's the bit that promises goals and outcomes and more wealth, but when life happens, which it will, your defense is what stops any issue, getting in the way and preventing your wealth to drop or be lost or be taken away from you unannounced. So what could you do to avoid the same mistakes that people make and find a successful financial result? Well, you need to know how to use your money and not just where to put it by the, how I mean saving and investing your money in the most productive, efficient, and effective manner. So over a lifetime understanding and avoiding all the financial pitfalls and overcoming the eroding factors in the most important financial strategies and can utilize to successfully build and protect your wealth, where you put your money will become less and less important than how your money works in the process. So that is the real winning factor. I need you to understand. It's more about how not, where you must always remember the big lesson that we've been over a couple times before that there are three influences in your financial world. One is financial institutions. Two is the government and three is corporations. These are the guys that make the rules. You can either play with them or against them. And half the time, if you're just following their rules, you're playing their rule book, which there's only one winner. And that's them financial institutions follow the full rules of wanting your money, wanting over a systematic basis, holding your money for as long as possible and convincing you not to take it all back at once. The government has the power to get your money by taxing it and regulating its use and incorporations build and make products that you need and want, but also plan to get more of your money by having these products break down , you know , coming out with new ones, new improved ones, increasing the technology and just intriguing you into buying that product again. And again and again and again, thank you, apple. That is a huge influence in my life. Same thing, phones . Anyway, I digress. What powers do you have over your money? Once you begin to save and invest it, you have to understand that it's probably very little. If you let the financial institutions, governments and corporations become your financial partners, you need to tap into your own power over your own income and assets. Now I understand this doesn't sound as simple as what it could be, but you have a great power, but most people relinquish their power unknowingly. They put their money into financial products, give up control and hope for a successful result. Again, there's that H word hope as in any casino, the odds are against you and only a few will win. You must control your money at all times learning to use it over and over again, getting more than one use out at that dollar. And this is the only winning strategy. I was at a mastermind in Nashville, not so long ago with Trent Forner. And he told me a great story. Him and an owner, a , a business owner, went into a casino and they loved to play blackjack. So they went over to the blackjack table at that table. They were playing their little game doing their thing , but they were sitting next to a couple that was continually losing, but they kept and kept and kept on playing. Now, if you all know, if you continue and continue to lose, you're either very intoxicated or you just don't have the rules, understand the rules. And it's a lot of hope, but they kept watching, watching, and these guys lost another hand and they went over it cuz every time they , they went to play a hand, they'd whip up this little card , take a little, look at it and then make their place, their bear, or, you know, play the blackjack and lose . And so eventually they lent over and said, guys, what's that card you guys keep on looking at. And they said, oh, it's a little card on how to play the game of blackjack. And it's like, well, who gave you that card? And they said, the casino did when we walked in. And when I heard that story, it just made all the sense in the world is the casino was teaching their customers how to play their game. And what does the casino wanna , wanna do? Make money and win. So what rules are they gonna teach you? Probably not the right rules. Again, this is where it comes down to strategy, not product notice that are used term strategy throughout this podcast, over and over, over again as the product itself or goal or objective, many financial advisors use the words need goal or objective in order to design your financial plan. So what good is setting financial needs, goals and objective. If the wrong use of money or strategies used for the journey itself, most of the financial literature, advertising and marketing make appeals for you to first establish your financial needs goals or objectives. This methodology is wrong in. So doing, they are asking you to concentrate your efforts on the end rather than the means . So by focusing on the ends or the needs, the goals or the objectives, one can lose sight of the means of the best methods for reaching our financial potential. So sure we all know that we need money in the future for things such as a new home college tuition for our kids, retirement or estate planning. But what's the best way to get to these goals, trying to predict the exact amount of money needed may sound easy. Again, that goes back to some of those questions you get asked when it comes to retirement, how much do you need? How long will it last? When will you retire? But it is almost impossible to do so. Why do so many people pretend it can be done advisors and consumers, we're both as bad as each other and why put limits on the financial future. Anyway, when it is impossible to predict, let's, let's look at why using the ends rather than the means as a primary design tool for the future plan is kind of incomplete. You know, all we have to do is study and understand our own capitalist society and construct it with the economics of a communist society. So now I have an article here and Karl marks was the author and he said it all in the communist manifesto, the Bible of communism when he said each, according to his need each according to his ability. So again, each according to his need, each according to his ability, in other words, no individual in a society should have more than what he or she needs and each person should contribute to the good of all based on his or her ability to work and earn money. Listen, that type of society is fell over and over again in history because it is based on first establishing people's needs and then building a planned society to meet those needs. It does not consider the fact that needs and the world changes over time. It fails also because the means to get to the goal and meaning someone's everyone's needs is always inefficient and ineffective. So the goals are never reached. There is a parallel between a communist society tendency to create an economic plan and a tendency of many financial advisors to use only deductive reasoning when designing financial plans for clients. This leads in so many ways to the same end result, failure to reach a society or individual's full financial potential and deductive financial planning fails individuals on many of the same reasons. Communism has failed entire societies. The inability to take into account changes that occurs into the world over time, changes in personal needs over time and the inefficient and ineffective use of resources. So on the other hand , um, what was his name? Adam Smith, the father of capitalism and author of the wealth of nations wrote about the invisible hand or the market. Let's say he said that I got it here. He said that there should not be a financial plan, but trust that the drive towards profits will lead each of us to use our money limited resources in the most efficient and effective manner. Capitalism has proven that an unplanned society succeeds where the planned societies of communism fail. So you too should focus on controlling the efficient and effective use of your limited supply of money rather than the low liqui its uses to target needs or goals. So this brings me to the point where we have to start focusing on what we class as the four rules of personal finance success sounds simple, but trust me, it really is that simple. So just as financial service institutions have four rules, they try to follow in order to maximize their financial wellbeing. You can take advantage of these four rules in order to be successful. Capitalists. These will allow you to create a winning strategy to defend against and counteract the factors that erode money in order to build and protect your own personal wealth. So number one, money is a commodity. It is not simply a number. Number two. Money is precious and finite. It must be treated as precious commodity and protected against all eroding factors. Number three, money must be used efficiently and effectively. It must not be left and just accumulate over time, nor should it be set aside for just one purpose. I retirement, number four, money should be respected and must be put to work for the good society as well as of your own financial future. I E thriving giving to charities and being a good steward with your money. So only when you understand that money is a scarce resource and a commodity, can you fully understand why you need to develop a better strategy for lifelong financial success? If you think it is only mathematical, you will most likely not reach your full financial potential. You have to make sure your money serves multiple purposes. The key to successfully building and protecting your wealth is to have your money do more than one job. You should strive to make each dollar serve two, three, or even four purposes. Although none of us has the financial power of a bank or these other financial institutions. You can use the same principles to make your money work productively and efficiently and effectively for you. The reality is that even if money is earning a decent rate of return, it may not be working for you as powerfully as it should be. Only when money stays in motion, being put to several different users and flowing through your personal financial model like blood through your body. Will you have successful results by using the motion of money? You can use your limited resources to perform multiple tasks and produce multiple benefits and is the major strategy we've used in our practice for almost 30 years that Phil developed is wealth in overdrive. Hence the name, the wealth in overdrive podcast. So there is, that is the winning strategy. The motion of money, the winning strategy, the motion of money is personal. Finance cannot be attained or found in any single financial product. Rather this winning strategy is one that coordinates and integrates the use of multiple financial products that has the money flowing freely among them. Since every financial product has advantages and disadvantages, this strategy helps accentuate the advantages while minimizing or even eliminating its a disadvantages. Again, I know this can be so hard to believe, but anytime people sit down with us , it's laid out right in front of them and it comes real clear real quick. You see the analogy I like to use to help explain the concept of the coordination in integration of financial products, advantages and the elimination of their disadvantages can be found in the world of nature. Pretty much oxygen is a guess and too much oxygen in your body will kill you. Hydrogen is also a guess and too much hydrogen in your body will kill you. But when they are combined in the proper proportion, oxygen, hydrogen makeup water, which is the basis of all life on this planet, you see, I know people come here for both scientific and mathematical reasons.Speaker 1:
So I hope you got great value of that one. So it took me a hell of a time to learn and understand it. So in a similar way, a single financial product is too large, a concentration and can leave you in a dangerous financial position and severely damage. Your ability to attain grow, you know, and even protect your wealth, but two or more separate products coming together at the right time and in the right mix can help you attain substantial success in your quest for a lifetime of wealth building. As you stick around with us on this podcast, you're definitely gonna see us talking about the advantages and disadvantage of many different products, but there's also different products that have very strong advantages to them where some of them might be seemed as disadvantages. But sometimes that's also just a lack of education of not knowing how to leverage what some of the class's disadvantages in some areas of your life and everybody's plan is different. So one thing we always strive for on this podcast is to hope we can open the minds, see PE help people see a different way of how traditional financial planning has almost failed us. You know, when it comes back to the four reasons of the, you know , the financial institutions, how they want, what they wanna do with our money, how they market to us on how we should use our money is just some of the biggest ways that when people are broken down into that specific understanding, all of a sudden the light bulb goes off and you're like, I've been doing that with my bank all this time. My employer has conditioned me this way. The , my taxes have always been done this way. I've never been told different. Now that doesn't mean your advisor's wrong. It doesn't mean you are wrong. It just means neither have been educated or neither have been put in the same room with a mic macro manager to look over everything, to make sure everything is being considered and work together coordinated. Like we said earlier and orchestrated together. I always like to look at our financials as an orchestra itself. Now you've got the strings, you've got the horns, you've got the drums. Now, if they weren't being orchestrated correctly, you'd have an absolute mess, but I don't know classical music very well. And I really should to explain this out this a lot better, but when you've got an orchestra plus playing in symphony, playing together, playing well, playing harmonic, I mean, and it can be moving. It can make a huge difference and a different feeling to you when you hear that music and your finances can be treated the same way. You just need a trusted advisor that can look over every advisor. You have to make sure they're all coming together with your best interests, creating the best strategy. They all have their own product. Your insurance guy has his own product. Your CPA has his own product, your tax accountant, your attorney, they all have their own products, but are they all in the same room working together, guys, I could go down this rabbit hole for a long time again. And I greatly appreciate your time with us here on the wealth of overdrive podcast. This has been your host, Harry Luca . If you've received value from this podcast, I really hope that you could, you know , reach out, like share comment down below, let us know what you want to hear more of, let us know what you want to hear less of, I guess, at the same time. But if you've also provided value and you wanna share it with friends and family, that is the biggest reward you could ever provide us. That's the purpose of putting this content together, out there and making sure that you guys can see what we see and how we are here to help everybody out there. Just paint a better picture for their financial futures. Again, this is Harry Luca wealth and overdrive podcast. We'll catch in the next episode.