Making of a Millionaire
By Ben Le Fort
Making of a Millionaire Dec 07, 2021
How To Invest In Real Estate With Less Than $100
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Summary of today’s episodeWhile investing in physical real estate requires a lot of money, investing in REITs allows someone with less than $100 to begin investing in real estate.
REITs are companies that buy real estate and payout 90% of their taxable income to their shareholders. You can easily buy REITs in the same way you would buy stocks. Additionally, you can increase your diversification by buying REIT index funds in the same way you would buy an S&P 500 index fund.
REITs have historically provided a strong return while maintaining a low correlation to stocks. However, investing in REITs is investing in one specific sector of the economy (real estate), which exposes investors to idiosyncratic risk.
REITs solve the three biggest problems of investing in physical real estate.
- Diversification
- Liquidity
- Management time and effort
REIT investors need to know that the dividends from REITs are less tax-efficient than dividends from other publicly traded companies. This means the most efficient way to invest in REITs is through retirement and other tax-sheltered accounts.
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How I Manage Money As A 1st Generation Wealth Builder
The term first-generation wealth builder refers to someone who does not have any financial inheritance and builds wealth, starting from $0, or even less in some cases.
For this podcast, I will add to the definition of a first-generation wealth builder to include someone who is building wealth to support themselves, their family, and future generations of their family.
In 2013, I finished graduate school with $50,000 in debt, $600 in the bank, and a mission to begin my journey as a first-generation wealth builder.
Every major financial decision I’ve made since that point has had the express purpose of accomplishing two goals:
- Improve my personal financial situation.
- Improve my family’s financial situation. That goes for my current family members and future generations of my family.
With that in mind, in this episode, I discuss how I manage money as a first-generation wealth builder.
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This podcast is for entertainment purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.
Your Biggest Financial Risk & How To Manage It
In today’s episode, I am discussing why our ability to earn an income, what economists would call our “Human Capital” is our greatest asset. That means, losing that asset is our greatest financial risk. Luckily there is a simple and cheap way to manage that risk which we discuss in today’s episode.
For more discussions on the Present Value of our human capital check out this article on Making of a Millionaire: https://themakingofamillionaire.com/3-reasons-it-makes-sense-for-me-to-be-invested-100-in-stocks-4a5d4c3681c2
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How I Used Debt to Build an Amazing Life
In this episode, I discuss why bumper sticker advice like “debt is evil and should be avoided at all costs” is short-sited.
I do this by reviewing all the ways debt has helped me build a life that I love with financial security.
I also provide a framework of questions to ask yourself if you ever consider taking on debt:
1. What phase of your financial life are you in?
2. What are your financial goals?
3. Is the use of debt likely to move you towards those goals?
4. What are the risks of taking on debt, and have you prepared for them?
Here is the link to the article on the pros and cons of owning a home: https://themakingofamillionaire.com/the-financial-paradox-of-owning-a-home-2dc36bfca080?sk=a92bb6d33d2688c7e658d602b5e046df
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The 3 phases of our financial life
In this episode, we discuss why managing money is less of a science than it is an elegant dance. There will be times for frugality and times for abundance; knowing what to do during these times is what will determine your financial future.
Most of us have three phases of our financial life- Forced frugality
- Optional frugality
- Thoughtful abundance
If you’re lucky, you move in a straight line from forced frugality and eventually hit thoughtful abundance and never look back.
Let’s discuss what each of these phases looks like and the top priorities for your money.
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Why It Makes Sense For Me To Be 100% Invested In Stocks
Three factors that explain why I should be invested 100% in stocks
1. My wife and I each have high job security and extremely predictable income.
2. We are lucky enough to each have Defined Benefit (DB) pensions through work, which means our retirement income will be very secure and extremely predictable.
3. I am relatively young at 32 years old, which means I have a lot more income I will earn in my life through my human capital.
That does NOT mean it makes sense for you. In this episode, we discuss some of the important factors we all need to consider when making asset allocation decisions.
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Check out all the other investing articles on Making of a Millionaire: https://themakingofamillionaire.com/investing/home
The Most Important Investment You Can Make If You Want to Build Wealth
When most people think about assets that will build wealth, they think about the stock market and real estate.
While stocks and real estate are great investments, they are not even close to your greatest asset; yourself.
In this episode, I discuss why your human capital, aka “your ability to earn an income,” is by far the greatest asset in your financial tool belt and how you can unleash it.
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The Myth of "Passive Income"
Topics covered in today's episode.
- Why passive income is a myth
- An example of how scalable income works
- The simple path to wealth lies in keeping your expenses constant, increasing your income, and investing the difference
- How scalable income helped me save my first $100,000
- The road to saving $1 million
- The goal of generational wealth
- The cost of working two jobs
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The Rise of the Part-time Entrepreneur
Topics discussed in today's episode:
- COVID-19 as an accelerant of change in the economy.
- The importance of diversifying your income streams
- Two types of side hustle to diversify your income
- Are you a stock or a bond?
- Working from home has torn down the final barrier to part-time entrepreneurship
- Why a digital business works best as a side hustle
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The 2 Levers Of Financial Independence
Personal finance does not always need to be complicated!
When you boil it down; most personal finance problems can be solved through a combination of;
- Making more money.
- Cutting back your current spending.
That's why I call these the "two levers of financial independence." In this episode, we dive into each with examples.
How I Paid Off $50,000 Of Debt
In today's episode, I share "My debt story."
- How I ended up $50,000 in debt.
- What it was like living in debt.
- How I paid it off.
If you're loving the podcast, share it with a friend and leave us a review.
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Building a Financial Emergency Fund
Today we are discussing all things related to "Emergency funds"
- Why we need them.
- How to use them.
- How to build them.
Here is the link to the emergency fund savings calculator: https://dogged-mover-9757.ck.page/bb7c6b5e10
Here is the link to a brief course on "How to build a financial emergency fund": https://sso.teachable.com/secure/423017/checkout/2673312/how-to-build-a-financial-emergency-fund
This course is normally $10, but you get it for free by copying and pasting this coupon code at checkout: EMERG342100
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Financial Freedom Vs. FIRE
Topics covered in today's episode
- My Definition of "Financial Freedom"
- The math behind the Financial Independence, Retire Early (FIRE) movement.
- Why the spirit and the math of FIRE are at odds with each other
- How I plan on using my human and financial capital to move towards Financial Freedom and eventually Financial Independence.
What Does Financial Freedom Mean To You?
In this episode, I share with you my specific definition of financial freedom and how writing down a specific definition of what financial success looks like to me has made it easier for me to make that goal become a reality.
Your task after listening to this episode is to write down your specific definition of financial freedom.
What's Your Why?
You can know everything there is to know about paying off debt, saving, and investing or anything to do with money, but it means nothing if you don’t have the right mindset.
When I say the right mindset, you simply need to believe that you can be successful with money. If you don’t have hope that things can get better than they are today, you will be far less likely to be financially successful.
I believe that the most crucial factor in developing the right money mindset is to have a powerful “why.”
Check out the YouTube video on finding "your why": https://www.youtube.com/watch?v=p6Y7GeF3L7I