Speaker 1: 0:02

Hello and welcome back to another episode of Train for Great Life. If you are listening to this episode without going back through part one first, I would suggest doing that. It will make a little bit more sense. Toward the end I recommended Rich Dad, poor Dad as a great resource if your brain is sort of sparked on how to think differently about money and wealth and all those sort of things, and I also teased that there are nine different ways that Lacey and I are making money from, either active or passive pursuits, and so I'm going to first go through those quickly and then I'm going to dive quite a bit deeper.

Speaker 1: 0:42

So the gym this is the main thing. We put a lot of time into this and also we have leverage of our time through ownership, meaning that we have sort of crossed the line of paying ourself by the time spent in the business Two brain. So I mentor gym owners through two brain business. It is a high value for my time. It's. Both of these two things are very active the gym and two brain. Um, they're also very purposeful, meaningful passion for all of that, okay, um, we have a trailer, a little trailer cottage out in Niagara and the lake that we Airbnb. There are costs to it. It doesn't net us much at all. But we also have a thing that we can use. We use tax-free savings accounts, which are unrealized gains, but we've been doing that for a long time Well since 2016 for my account, 2017 for Lacey's account and they have compounded at an annualized 18.5% and 16%, which both are beating the market. We have a corporate investment account. It has not done nearly as well as those other two. We've taken some losses in there, but also had a few gains. We've taken some losses in there, but also had a few gains.

Speaker 1: 2:09

We have a whole life insurance policy which is not traditional by any means, but it can serve a business owner well because it can be housed inside of a corporation and it can also serve high earners well that have like massive T4 incomes that need a place to store money. It serves an insurance need. They are expensive policies, but they serve other purposes which I'm going to get into in more detail. And, when structured properly to have high early cash value, you can set up a policy to have a portion of it which can be quote unquote overfunded, which essentially creates your own banking system. If this doesn't make sense to you through about three sentences. It took me literally five years from the first time I heard it to the point of opening a policy, with a lot of back and forth with whether it was a good move for us or not. Eventually I saw too many smart and savvy people around me doing it and I trusted that I would learn how to use the system along the way, that I would learn how to use the system along the way so very quickly. The insurance policy grows at around a four to 6% annual, paid out through a dividend, and then I can pull loans against the cash value of the policy and use them for other investments, one of which I have on the go right now and we'll be getting into another one shortly, if all goes well there. So I'm going to get into these in more detail, but first a quick story.

Speaker 1: 3:35

In the depths of a dark forest there lived two strong lumberjacks. They both lived in small cabins not far apart from one another and they both loved to harvest oak and pine trees of the wild forest more than anything in the world. Every morning around 4 am, the first lumberjack was ready to go in the woods. He sharpened his axe really early and started out on the day, there was no time to waste. The second lumberjack woke up at 7 am, had a big breakfast. He loved bread and honey and he loved to eat it slowly while listening to the many sounds of nature surrounding him. The first lumberjack worked non-stop all day. He loved the sound of his axe against the wood, the smell of the oak trees, the feeling of the sweat dripping down his forehead and the blood running through his hands. At the end of the day, when he finally could get home and rest, he always chopped 10 trees a day, which made him feel very proud and powerful.

Speaker 1: 4:29

The second lumberjack worked very hard as well, stopping once in a while to take some breaks. He would sit down and listen to the birds, cut some flowers, rest his arms and eat his lunch. He would continue to chop more wood. He went home early with no blood involved. His personal mark was 15 trees a day, which made him feel proud and powerful.

Speaker 1: 4:49

One night after a long day of work, the first lumberjack passed by the house of the second and he was astonished and devastated to count 15 trees on the front of his friend's yard. Confused and in despair, he called out to his friend and asked him how can this be? I know you take a rest every hour and I work continuously through the day. There's no possible way you can chop off more wood. Tell me your secret. The second lumberjack turned to him and said you are right, old friend. Every hour I take a break to rest. Eat and sharpen my axe. Eat and sharpen my axe.

Speaker 1: 5:28

When was the last time that you took a break and put some space between yourself, your projects, your work, your friends, your family and even your own thoughts? Sometimes we need this time to not think about what's important, to figure out what really needs to be done to get ahead. Okay, so all of this stuff I'm going to talk about I was not taught in school or by anyone in my family. I had to seek it out, sometimes not even knowing what I was seeking out, just knowing that I needed to get into a new room around new people smarter than me. Toward the end of the episode, I'm also going to share two books as resources that can help you find some money in your own life and get ahead. Remember, this is simple. It is not easy. Okay, so diving a little bit more into each of these Between the gym and Two Brain Mentoring. This is our main cash flow. Okay, so these are the active pursuits. I touched on that and these are the things that have funded everything else. Okay, again, over a long period of time.

Speaker 1: 6:32

The Airbnb the trailer is an active investment. We have fees, upkeep and maintenance and we manage the Airbnb profile ourselves the lead, nurture and like communication side of things. It's like second nature to me after owning a gym for so long, so I find that part very easy. But this is not actually really a great investment in terms of cash flow. But it wasn't bought with that solely in mind either. We own the trailer. We don't own the land, so we have something that is only going to depreciate, whereas if we had a cottage on a piece of land, that would likely appreciate. We didn't have options to do anything like that when we bought the trailer. So this is a place for us to get away to while our house was being built and we were living with Lacey's parents. It did serve a purpose. So now, as long as it's not costing us a bunch of money, we have a thing that kicks off a small net positive, like it's really not much at all after all the fees, but it gives us a place to go so we can even if it's rented, we can go out to Niagara-on-the-Lake and get lunch and go hang out at the pool for a few hours and come home it's 35 to 40 minutes door-to-door. Okay.

Speaker 1: 7:47

The next ones the TFSAs and the whole life policy. These are very future focused. They aren't really cash flowing assets at all, meaning that we don't get a check or a dividend that shows up each month that we can do something with. In fact, if we did try to do that, we would mess up the whole system, either by taking money out of the TFSAs or by not fully funding or not paying back loans on the life insurance policy. The TFSAs, in particular small numbers compounding are not all that impressive. Large numbers get crazy, and so we really just need to be patient and give this thing time. As long as you have a long enough time horizon and you don't need to retire on the money anytime soon, time in the market is the most important thing, okay. So throwing out some numbers 30 years of compounding, even at 10%, is crazy. Without any further contribution, it would take $20,000 to $348,000 after 30 years. If you contributed another $1,000 each year, it goes up to $529,000 after 30 years I really don't think most people understand compounding and even if they do, once you see it happening it is completely different. It's not the easiest road to stomach because there will be ups and downs, but so long as you can trust the process and your time horizon and continue to get smarter with all these, it should play out quite well.

Speaker 1: 9:27

A great book on investing in the market if you don't want anything to do with picking individual stocks is called the Simple Path to Wealth by JL Collins. It was originally written as a memoir to his daughter. The long and short of it is that the right index funds will outperform nearly every financial advisor over the long term and the fees that they collect off the top eat away at that end result and your account's like crazy. That they collect off the top, eat away at that end result and your account's like crazy. If we take the numbers that I just gave before about that initial $20,000 investment, take those returns down by 1% to 9% instead of 10% and the end result is $265,000 down from $348,000. 348. With the extra $1,000 contributed each year, it's down to 413,000 instead of 529. That 1% matters. It makes a great argument and while I do own some individual companies which I've used Stock Advisor Canada as a resource for the last 8, nine, 10 years. I do have a fair amount of the VUN stock. It's a Canadian option for the Vanguard index fund. That is an index of the S&P 500.

Speaker 1: 10:41

Okay, so what do you do if you don't have $20,000 to start with to throw in, okay, and like that's how you would start? Okay, most don't do that. Don't be discouraged. Here's another example $100 contributed each month into an investment that does 10% annually would be $223,000 after 30 years. $36,000 of that is your contribution and 187 is the growth. Okay, the whole point and it doesn't always work out exactly that way is the growth. Okay, the whole point, and it doesn't always work out exactly that way, but the whole point is there is value to getting the money in early. If you had $36,000 with no other contribution, rather than you know, over time it would be 696,030 years at the same growth rate. Okay, the idea of investing and putting money into the market is if that's scary to you, you're not alone.

Speaker 1: 11:35

For me, I've gotten to the point that not taking action and getting return on my money and just having a sitting there is scarier, but I've had years and experience to come to that viewpoint. Okay, something that I did way back I think I was in teacher's college was I set up a fake stock portfolio through Google. I can't remember any specifics or why I did it, but I did. I put I think it was ten thousand dollars of fake money into different companies. One was Under Armour why, I don't know. Google another one, I can't remember. Your guess is as good as mine, but I totally forgot about it. I didn't manage it whatsoever. I didn't really look at it ever again. And then at one point, years later, I logged back in and I saw what my fake portfolio had done. It had turned a bunch of fake money into a whole lot more fake money. Hmm, maybe there's something to this.

Speaker 1: 12:34

Okay, early on, I had a rule for myself I would only put money into the TFSA investment account that we did not need on a three to five year time horizon, or at least what I thought. Right, chicken always hit the fan. Okay, you have to. You have to have your own risk tolerances. Along the way, we also learned how to grow our business. This kind of coincided with the time of leaning into mentorship and learning. We did our best to keep a very modest lifestyle and whack away as much money into these accounts as we could each year. When you see it working, why wouldn't you? So that became the goal for many years max out the TFSA contribution each year as quickly as possible. Okay, along the way, somewhere maybe eight to 10 years in, I realized how well it was all going and that, given how a TFSA works, there's no taxable event on gains in the account.

Speaker 1: 13:30

I want to just leave it, be Okay, be patient. I have had thoughts along the way of like what if we just used this, you know, pull out a little bit for an extra family vacation per year? But that idea is always trumped by the one that enough time can get this to the point where we can potentially live off of it entirely, meaning that whatever we needed for expenses would be outpaced by the growth of the account. To put real dollars to that, if you had a TFSA, eventually get to like two and a half million dollars and assumed a six percent growth rate, you could take out effectively $150,000 with a zero tax implication and then have the account grow. And if it grew at six percent you'd be back at square one the next year. Now six percent is considerably less than what I've been getting, but I have to be conservative with a model for the future.

Speaker 1: 14:24

Things do not always work out this cleanly. Sometimes the market's up 20 percent in a year. Sometimes it might be down over the course of a year. I can't predict the future any better than anyone else, and so it's also why this is why portfolios tend to get a lot more conservative. As people get closer and closer to retirement ages, they don't need exposure to as much upside. They just have to limit the downside.

Speaker 1: 14:48

Anyway, that is my thought process on the TFSAs and how they serve us as business owner entrepreneurs. Without pensions or retirement funds set up for us, we have to figure it out on our own. 10 years ago, when we started this journey, the bigger vision of what it could be was not even a thought in my mind. How could it be right? And that's the point. It all starts with getting curious and starting somewhere. You learn along the way. You'll also encounter new challenges. There's a saying that goes different devils for different levels, and that basically means that nobody no one in the world has a life that is void of problems, no matter how much money or how powerful a position they hold. Okay, so remember the story of the two lumberjacks. Learning about investing is scary. You feel like a beginner. What if it doesn't work? Yes, but what if it does? Okay. The lumberjack that took deliberate breaks in the middle of the day, knowing it would temporarily set him back, only to get ahead in the future.

Speaker 1: 15:52

Okay, living more simply for a period of time, um, pulling back the wants that maybe aren't all that important after all, trusting yourself to take some time to learn and sharpen the ax. That is your mind. It's a way, um, it's, in a way, a form of delayed gratification, which is, if you're listening to this, you're likely quite good at or getting better at, because fitness, um is a huge thing that we talk about and it's the ultimate delayed gratification. Okay, we feel good after a workout, but that's once. We're well into that process. Um, initially it kicks our ass. We have to get through that push and discomfort and do it over and over and over again, um, along with all of these other habits, and then, maybe some weeks and months and years down the road, we see results in the form of like body fat and muscle, and all that if we stop for six months. Let me just say don't do that okay. Eating sweets, tasty food, laying around, partying so many things in life that provide this quick reward fly in the face of getting really fit and healthy. Okay, if you're doing that, you can do this okay.

Speaker 1: 16:59

Moving on, um, investments in the stock market are more traditional and more well known. The next stuff that we've gotten into more recently is not nearly as well known or understood. In fact, there are people who tell you it is a terrible idea and for many people they would be right. Okay, so take that with a grain of salt. So we have this is the whole life insurance policy. So we have investments with the loans of the whole life insurance policy. They are passive. One of them is a real estate syndication in Houston. It is a large housing complex. In a syndication, you actually own a piece of the asset. You're not buying into a company that owns it, so you can actually have some of the tax deductions and depreciation.

Speaker 1: 17:46

All of that I know very little about, but this is where having a team and the right accountant is key. We are on our fourth accountant in the last 10 years. I have nothing to do with the operations of this. We partner with an operator who finds deals and does everything on that end, like the due diligence of understanding whether it's a good idea and a good investment and all the specifics. We get a small dividend each month and the investment the one that we're in is expected to double, uh, over five years upon the sale of the, the uh, the building, and so this would be an average 16 annual return. It's not guaranteed, but again, there's parts of it that make it a little bit more expected. Like this one has certain tax advantages to it there's another one, actually, so the next one that we were going to get into is through the same company.

Speaker 1: 18:42

I have the same guy that puts forth some of these private investments, and it was a debt fund for a large company who's raising capital. Okay, so there, if you give them a sum of money, they are paying 12% on a one-year term, meaning if you give them $10,000, they're going to give you back $11,212 months. In the last day or two since putting together this podcast, this guy has actually come back to me with another syndication, which to me, is more attractive than the 12-year debt fund If it's anything like the first. I'm waiting on some of those details. So it will take time to set up this system where we use loans against the life insurance policy but if we can be disciplined in paying them back, we have a policy that grows through dividends at 4% to 6% per year and then investments that should pay 16%, 12% respectively on a loan that we're taking at 6.5% Okay. So there's a bit of like arbitrage here. If we can be diligent to pay down that loan and free up the room for the next investment, the velocity of everything picks up right. And so now when that loan sorry, when that first investment matures at five years, not only will it kick back the initial principle but it can fund the next investment with the profit right. So there's a there's sort of like a flywheel, a cyclical thing here. That's the idea at least. So I'm sure somewhere along the way we're going to find a bad deal or something that doesn't work out, something that screws up the whole thing. But that's part of the learning curve with these things.

Speaker 1: 20:23

Okay, main thing. Again back to our main thing. It's the gym. It's where we make a living, but we truly love being in it. The purpose purpose it brings to our life, helping people with something that we know that we're good at. Um. I've talked multiple times about not necessarily being interested in second or multiple gyms.

Speaker 1: 20:45

This is a bit more background as to why I don't want my active bandwidth diluted. I want to focus hard on the main thing and then create other passive things gradually that help with cash flow. Okay, so that's it. When I say that's it, that's ridiculous, because I know what that would have sounded like to me 10 years ago. But this is our system. More or less that has evolved into what it is over the last 10 years. You may listen and be well on your own path. Don't be distracted by mine. You may be ahead or behind or whatever. That's not important.

Speaker 1: 21:20

The purpose of this episode is to spark thought, mainly for someone who isn't getting ahead financially and may have the opportunity to. Okay, I said I was going to give two books as resources as well. Actually, I lied. There's five in here. There, these first two would be great places to start.

Speaker 1: 21:40

Okay, so the first one is the Latte Factor by David Bach. It is a short, parable style book that follows the story of a young woman named Zoe who learns the secret to financial freedom through small daily choices. She's guided by a wise mentor. She discovers that consistent, mindful spending, like skipping a daily five dollar latte, can lead to major long-term wealth. The book emphasizes that you don't need to earn more to become rich. You need to pay yourself first. Make your money work for you and believe that you are richer than you think. Okay. The next one is called I Will Teach you To Be Rich by Ramit Sethi. It is a practical, no-nonsense personal finance guide for young adults that outlines a six-week program to automate finances, crush debt and build long-term wealth. Automate finances, crush debt and build long-term wealth With a focus on conscious spending and guilt-free indulgence. Seti covers everything from optimizing credit cards and bank accounts to investing in low-cost index funds and negotiating big purchases. The tone is humorous, bold and urging readers to take action, focus on big wins and build a rich life on their own terms.

Speaker 1: 22:48

The third one I'm going to mention is the Simple Path wealth, again by JL Collins, because it is great. It has to do with investing in the stock market and doing so without financial advisors and people managing your accounts. And then the life insurance policies. So if that stuff was interesting to you or sparked something, so the life insurance policies and the infinite banking strategies and you want to learn more about this.

Speaker 1: 23:17

There's a book called the and Asset, which I have a PDF copy of that I'll be happy to share with you. I don't think you can find a print copy of it anywhere, so just ask me, I'll send it to you. It's very short, and then what a timely one here. A personal mentor of mine, jeff Smith, has released a book last week called Operation Wealth. It's a very tactical guide which is all about using this strategy. I ordered his book and four extra copies of it, and I will give them to the first people who are interested. So be curious, ask questions, find people that are doing things that you want to do. I'll see you in the gym.