George Kamel - Rich Young Americans Are Investing in WHAT?!

Episode Date: November 22, 2023

A recent article claims rich young Americans are losing confidence in the stock market and betting on other kinds of assets. But are any of them a good investment? In today’s video, we’ll look into the three alternative assets mentioned in the article so you can be confident you’re investing the right way.  Links:  This episode is brought to you by BetterHelp. Give online therapy a try at https://www.betterhelp.com/george and get on your way to being your best self.  Preorder George Kamel’s new book, Breaking Free From Broke, and get more than $100 in FREE bonus items.  Investing for Beginners  EveryDollar Budget Deal: I love a good deal, when you sign up using this link , I’ll hook you up with a 14-day free trial and $15 off your first year of the premium version of EveryDollar.    Learn more about your ad choices. Visit megaphone.fm/adchoices

Recently, I came across an article about some very interesting alternative investments. It's posted on a website called Money Wise, which ironically doesn't seem to have much wisdom on money. More on that later. But the headline is very intriguing. Rich young Americans have lost confidence in the stock market and are betting on these assets instead. Get in now for strong long-term tail wins. Side note, if you work in marketing for Taco Bell, there's your new tagline right there. Taco Bell, get in now for strong long-term tail wins.

Anyhow, this headline sounds a little suss, and they're definitely pushing something here with that FOMO language. So in today's video, we're going to go over those three alternative assets they mentioned in the article and determine whether each one is a good idea or bad idea, so you can be confident you're investing the right way. But first, hit that like button, subscribe to the channel, and share this video with your friends who are no stranger to tailwinds in the Taco Bell bathroom. Looking at you, Jeff. Jeff. Jeff's love Taco Bell. That's just a classic Jeff move. My name is Jeff.

All right. Let's take a look. Okay, the first alternative asset the article mentions is real estate. All right, I can get on board with that. I mean, real estate can be a great investment if you're financially ready for it. And by that, I mean, you can pay for that investment property in cash. Yeah, them's fighting words. But that's not what this article's talking about at all. They're pointing you to a very specific company called First National Realty Partners,

which, according to their website, offers accredited investors' unique opportunities to invest in grocery-anchored shopping centers, multi-family communities, and industrial commercial real estate. So basically, they let you invest in commercial real estate without having enough money to buy the whole property yourself. Okay, first of all, you shouldn't be investing in anything until you're financially ready. What does that look like? Well, two things.

You have zero consumer debt, with the exception of your mortgage, and you have three to six months of expenses saved up for emergencies. Once you're there, you're ready to start investing. But not in real estate. You're not there yet. Start with retirement accounts like your company 401K, a Roth, I, And here's why. These accounts have special tax advantages that regular investment accounts don't have. And when you pay less in taxes, that means you get to keep more of your money.

So I recommend investing 15% of your income into retirement until your mortgage is paid off. And then and only then should you start contributing more. But there's a limit to what you can contribute to these accounts every year. So for example, in 2023, employees under 50 years old are only allowed to contribute $22,500 to their company 401K. So if you've hit those contribution limits and you've already maxed, maxed out a Roth IRA, you've already maxed out your HSA and you're investing there, then and only then would it make sense to move on to other investments that don't have all those tax benefits, like a non-retirement brokerage account or even, yes, real estate.

But I'd honestly recommend just saving up and buying a property in cash on your own, not through this company. Hey, maybe you could audition to be on a million dollar listing. I'd fit right in with this fella with the pompadour and beard. And besides, I don't know this company's track record and I don't know anyone who's had any success investing with these types of companies. Definitely look suspicious. All right, let's move on to the second asset mentioned in this article.

Fine art. All right. Again, this article points to a very specific company, and this time it's a company called MasterWorks, which lets you invest in shares of individual works of art. So, if you don't have millions of dollars to buy a Picasso, no problem. You can just buy a couple shares of a Banksy. So here's how this works in a nutshell.

MasterWorks buys a piece of art and securitizes it. Now, for us peons who don't have a PhD in finance, Securitize is a verb meaning to convert an asset into marketable securities. What the heck are marketable securities? How should I know? They're financial assets that can be easily bought and sold on a public market. So basically, they file paperwork with the agency, the SEC,

to make it so people can invest in it. They hold the artwork for three to ten years, hoping it will increase in value, and then they sell it. So how do investors get money out of this? Well, they can either wait until the piece sells and get a cut of the proceeds, or they can try to sell their shares on the Masterworks trading market.

Now, according to the article, Fine Art is the perfect alternative investment for savvy and high net worth investors who are looking to diversify their portfolio. So is investing in art really a good idea? Here's my answer. No. Terrible idea. If you're loaded and you've maxed out your retirement contributions and you're just looking for places to throw your money, sure, why not? But for most of us, this doesn't really make sense. And before you art lovers get mad at me for poo-pooing this, I'm not the only one who thinks this is a bad investment. Here's what Business Insider had to say about it. Art has no intrinsic value.

It cannot be regularly marked to some market price. It has zero cash flow. And five years from now, it's much more likely to be worth less than it is to be worth more than what you paid for it. Spot on, business insider, spot on. Now, even if you bought shares in a piece that went up in value, you've either got to wait years for that artwork to sell or try to dump your shares at just the right time.

And who knows how long that could take? The McRib could be back before then, and it likely will be. I feel like it's back every year at this point. Excuse me? Now, in top of that, it's just hard to diversify this kind of investment. I mean, buying shares of one painting is kind of like buying shares of a single stock, which I definitely don't recommend. What happens if the painting drops in value?

What happens if nobody wants to buy it? What happens if Claude Monet suddenly gets canceled posthumously because it came out that he would feed the local ducks bread when everyone knows ducks need cracked corn? Way easier on the digestive system. Google it, Claude. Come on, man. So unless you're an art connoisseur who has so much money that you're bored,

it just seems a little risky to me. So for those reasons, I'm out. All right, the third and final asset they mention is ridiculous, and I'll get to it right after we talk about today's sponsor. This episode is sponsored by BetterHelp. Hey, guys, it's George. You knew that. Sometimes this time of year can get a little rough.

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That's BetterHelp.com slash George. All right, let's get back to it. All right, the third and final asset this article is encouraging you to invest in is wine. That's right. Look, I love liquid assets, but this takes it to a whole other level. And according to this article, investing in wine means you can benefit from the steady returns over the long term with the promise of growth. So, like mutual funds?

Well, if mutual funds paired well with a nice waggy ribai. But here's the deal with investing in wine. It's a lot like the fine art thing. The value is so subjective. And it's only worth what people will pay for it, right? It's a lot like buying those single stocks. Now, if someone can show me how to have a diversified portfolio of wine, maybe I'll change my mind.

But until then, I'm sticking to more traditional investments and saving the Savvy B, Sauvignon Blanc, from my next Bachelor Watch party with the bros. And surprise, surprise, Once again, they linked to a very specific company that lets you invest in wine. Hmm. Are you seeing a pattern here? This is starting to feel less like a helpful article with money advice and more like one giant advertisement.

And here's why. Money Wise makes money from sponsors and affiliate links. The site plainly states, Please be aware that some or all products and services linked in this article are from our sponsors. See? It's right there under this stock photo of a millennial holding a tiny cup pretending to fly on a jet that is no doubt just sitting on a runway. They make money when you click one of their affiliate links and spend money.

with one of their sponsors. And this article is riddled with affiliate links. And it's one of the reasons I don't recommend this site. Another reason is that they sometimes just have bad advice. Like your Uncle Larry, who said you should buy a PT cruiser and go to Fire Festival. Oh for two, Uncle Larry. Oh for two. Now, let me just say, there's nothing wrong with pointing people to helpful products and services,

but in this case, it's just a gross giant ad, and these are not good investments. They're just looking to make money off of you. So don't let this article make you think you're doing the wrong thing. If you're not investing in a Kroger building in Ohio or in one-third of a brush stroke of American Gothic or a Napa Cabernet with notes of cardam and gooseberry with an oaky afterbirth. What was that? Good investments are usually boring. And that's a good thing. According to the Ramsey study of millionaires, the largest one ever done, the number one investment vehicle to become a millionaire was get this.

A company 401k plan. It's that boring. Wasn't a wine seller, not a Bob Ross, and not a Ross stress for less in Ankeny, Iowa. If you want to be wealthy, do what wealthy people do. and be careful who you listen to when it comes to personal finance. Don't make any rash investing decisions based on one ad-filled article you read online. But hey, if you're a rich young American with maxed-out retirement accounts and a but-ton of cash to invest, and the thought of owning shares of a painting puts a Mona Lisa smile on your face,

go for it. Just don't dump all your money into it, and don't be surprised if your tailwinds are neither strong nor lengthy. Yikes. All right, hope this video was helpful, and if you want a deeper dive on investing, you want to know more about these investing traps. Look no further than my new book. breaking free from broke. The book is available for pre-sale now, and you can get your copy with the link in the description below. As always, be sure to like, subscribe, and share this video with your

friends, and let me know in the comments if you have any alternative investments. Looking at you, Linda, with your sacks full of vintage Happy Meal toys, the ain't worth Jack Squat. I'm not giving you more than $4 for that grimace. Thanks for watching. I'll see you next time.