More Money Podcast - 197 The Leverage Equation to Reach Financial Independence - Todd Tresidder, Author & Founder of FinancialMentor.com

Episode Date: May 8, 2019

I love having repeat guests on the show, especially when it's been years since their last interview with me. For this episode, I have FinancialMentor.com founder and author Todd Tresidder back on the show to talk about his new book The Leverage Equation. If you're a longtime listener, you'll remember him from episode 46 where we talked about his journey of reaching financial independence at 35. For this episode, we talk more about the topics he discusses in his book, namely how to reach financial independence by using leverage. So, what is leverage? It's not a negative word at all! It actually means using different processes and strategies to reach your goals. For instance, we talk a lot about how many investment experts will share how passive investing is the way to go. And although Todd agrees this strategy has merit, he doesn't believe can reach millionaire status quickly by doing this alone. In order to reach financial independence at an early age, you need to take advantage of other asset classes besides stocks and bonds, such as real estate and entrepreneurship. To learn more, grab a copy of his new book The Leverage Equation! Todd's Relevant Blog Posts You May Want to Read What Is a Good Investment Reduce Your Risk by Increasing Leverage – 5 Uncommon Strategies Leverage – How To Fast-Track Your Financial Goals Check Out Todd's Courses Todd has a whole series of courses on different aspects of investing. Click here to check out all 7 courses about how to reach seven figures in seven steps! Grab Copies of Todd's Books The Leverage Equation: How to Work Less, Make More, and Cut 30 Years Off Your Retirement Plan The 4% Rule and Safe Withdrawal Rates In Retirement Variable Annuity Pros & Cons Investment Fraud: How Financial “Experts” Rip You Off And What To Do About It Don’t Hire a Financial Coach! (Until You Read This Book) How Much Money Do I Need to Retire? Follow Todd Tresidder FinancialMentor.com Podcast: The Financial Mentor Twitter: @financialmentor Facebook: Financial Mentor YouTube: Financial Mentor For full episode show notes, visit https://jessicamoorhouse.com/197 Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, hello, hello, and welcome to episode 197 of the Momenty Podcast. I'm your host, Jessica Morehouse. Welcome back to the show for a fresh new episode of the podcast. I've got another repeat guest on the show today because he has a new book out, Todd Trestor. You may remember him all the way back from episode 46. You can check out that one if you just go jessicamorehouse.com slash 46. It'll take you right to the show notes, but all the links to listen to it, or you can just scroll down into iTunes or wherever you're listening and check it out. But as I mentioned, he has a new book out called The Leverage Equation, and I want him on the show to talk about it. It's a really,

really interesting conversation we had. I feel like sometimes, this is what I felt like immediately after our interview, I, and I'm sure other people, maybe you feel the same way, but I sometimes get stuck in my own little bubble, you know, reading the kind of books that all kind of say the same thing, because I'm attracted to that kind of topic or information or point of view, or just hanging out and talking with people that have the same point of view, all that kind of stuff. I think it's really, really important to grow as a person, but also to expand your horizons in terms of personal finance and investing and financial independence and all these great things by hearing from people with a different perspective, a different

experience than you. And that's why I have Todd on the show. He's a super smart guy. So just as a kind of refresh, in case you don't remember what we talked about or who Todd is from episode 46, he graduated from the University of California at Davis with a BA in economics and a passion for creating successful businesses. He's a serial entrepreneur, has been since childhood, and he went on to build his own wealth as a hedge fund investment manager before retiring, air quotes, at 35 because he's a very busy man. So he's not like retirement, you know, sitting on the beach kind of thing. He just became financially independent, basically. So he grew his net worth from less than zero at the age of 23 to the point

of financial independence just 12 years later. And I feel like I at the age of 23 to the point of financial independence just 12 years later. And I feel like I have a lot of people on the show that have been able to achieve that. And it's just really, for me, I know sometimes it could be like, oh, there's no way I could ever do that. For me, I find it super inspiring to talk to people that were able to do that. And he has so much knowledge, especially because of his background as a hedge fund manager, but he runs the website financialmentor.com. So he also educates and teaches people just all of his knowledge, which I think is good. And we talk a little bit about his book, his courses, and some of his advice in this episode. So I can't wait to share it with you. But before I get to that interview with Todd, here's just a few words about this episode's sponsor.

This episode of the Mo Money Podcast is supported by TD Direct Investing. What are you investing for? Retirement? Sure, that's a common investment goal. But what about a major purchase or simply building wealth? With TD Direct Investing's new Goal Assist tool, you can build your confidence as a DIY investor by setting investment goals and creating a plan to help you reach them. Once you open your TD Direct Investing account, or maybe you already have one, navigate to the Goals tab on the top menu. That's where you can use Goal Assist to help define your investment goal, validate your plan, and monitor your progress all in one place. You can even set up multiple goals with different time horizons and investment profiles. Want to learn more?

Visit the show notes for this episode or go to jessicamorehouse.com slash goal assist to watch my video tutorial. TD Direct Investing is a division of TD Waterhouse Canada Inc., a subsidiary of the Toronto Dominion Bank. Welcome, Todd, back to the show. It's been a little while, a couple of years since you've been on the show, actually. So I feel like a lot has happened in your life. You've got a new book out. I'm excited to have you back on the show. Thanks. Thanks for having me on the show, Jessica. Absolutely. So your new book, The Leverage Equation, How to Work Less, Make More, and Cut 30 Years Off off your retirement is out.

Really liked it. As I was kind of telling you before I hit the record button, I've been reading a lot of investing books lately. And it could be just because I do, you know, I need to kind of get out of my bubble. I read like lots of books that kind of I feel like say the same thing, you know, passive investing is great, you know, index funds, all that stuff, which is great. However, it's funny. I was recently, I finished Tony Robbins' Unshakeable book because I, you know, my husband actually bought it for me like a year ago and then he read it and then I never did. I'm like, I should probably read that as like a Christmas present. And so I finally read it. You know, nothing kind of groundbreaking. I'm like, oh yeah, I know all this stuff.

But it was interesting because I was just curious with some of the comments or what other people were thinking of the book. And so I went on Amazon, looked at some of the comments. And it was interesting. There was this one comment that I thought was really fascinating. It was like, okay, I kind of thought this book would be a little bit more, I don't know, talk a little bit more about how Tony himself got rich. And I guess what, he probably didn't get rich just by doing index investing. You know what I mean? Like he started businesses. Why isn't he talking about that in his book? And I kind of felt like, then I picked up your book and I'm like, oh, I feel like you're answering a lot of this guy's questions. He should probably grab a copy of your book. Yeah. I mean, it's kind of one of these funny things where a

lot of people sit there and teach you about wealth building, right? Let's make a distinction between investing and wealth building, right? Because ultimately your wealth is the compound growth of your personal capital and your financial capital. But what happens is when they talk about investing, they really start getting isolated to just personal, or I mean, just financial capital. And if you look at what Tony did, Tony built his wealth through multiplying his personal capital, not his financial capital. And now he's running around and coming back and trying to claim the spotlight as an investment expert through his last couple of books, whether that's Unshakeable or Master Your Money. And he's making some classic investment mistakes. I haven't really looked at

Unshakeable. I just have better things to do. Unshakeable is basically a condensed version of Money Master the Game. That's what he even says in the book. Oh, really? Okay. That would make sense. So it's like taking the meaty part or the key points of his first book and then putting it into this smaller book, more digestible. Yeah. I mean, I don't know if you want to go straight down the rabbit hole with some technical investment stuff. I'm curious what you mean by some classic investing mistakes, because I'm sure a lot of people listening have read that book and they're like, what do you mean? Right. So Tony, one thing he did is he went off and interviewed a bunch of hedge fund experts

with the premise. The whole premise is if I go interview these money management experts to claim money management experts, then I'll have the expertise and I'll go write the book about it. And it's kind of a false premise. You're not going to develop the expertise through an interview or two. So Ray Dalio goes through there and he talks about risk parity investing, which is where you vary your asset allocation based on the risk profile of the asset, the historical risk profile of the asset. And it's supposed to balance up your risk reward ratio. And the problem with any approach like that, any of the risk parity approaches, they're going to give you an overweight to bonds. And it even says it right in the book, right? You'll typically end up with somewhere around 60, 70% allocation of bonds. And I wrote a post on my site back in 2013, right at the peak high in bonds, peak low in bond interest rates, right? Because they're

inversely correlated. The valuations is opposite the interest rate. I wrote a post back in early 2013. I think it was April 2013 that said the bond bubble is here, what to do next? And basically, it just claimed that there was no positive expectancy in bonds, no positive expected return in bonds, net of inflation going forward. And the absolute best outcome you could hope for would be a sideways market where you net lose money against inflation, that there was literally no way to make money on bonds as a buy and hold basis. From then forward, it was just a trading vehicle. And subsequent to that, and I've left it on my site, the five years since publishing that, bonds have had the worst returns,

the worst five-year returns in their entire history. And so it was accurate, right? Well, that's around the time Tony published his book saying you should be 60% to 70% weighted in bonds on an asset allocation, which of course is absolute nonsense. And it's a classic mistake where people are assuming that the history of financial markets, even if it's long-term, will somehow represent the future. And every prospectus, every investment document always says historical past is not representative of the future. And people just blow it over because it's legal boilerplate. But it's one of those few legal boilerplates that's actually valid and true. And so Tony's making that mistake. What they did is they did this massive data

crunching analysis that says, gee, you'd be better off if you had a 60, 70% allocation of bonds historically over the last 30, 40 years. Well, we've had a 30 to 40 year bond bull market where interest rates went from in the high teens down to basically close to zero. And they're below any sort of normal business relationship to interest rates. So mean reversion is not a question of when, but if. And so ultimately, a mean reversion means it goes backwards, right? It goes the opposite direction. So ultimately, it means that any portfolio that you try to allocate largely to bonds on a buy and hold basis is destined to have problems. And absolutely, it's mathematically impossible for it to replicate the past. There's just not enough room in interest rates to come anywhere near replicating the past.

And yet that's exactly what Tony's advising people to do in that book and in his investment offerings that he provides as a backend to that book. And so it's just classic investment mistakes and time has already proven it. I mean, it's not even me making conjecture. I said it back then when he published the book and I'm saying it now and it's just going to continue to carry forward. Nothing's changed. So with that being said, because pretty much every investing book, we'll talk about diversify your portfolio into the three traditional asset classes, fixed income and equities and cash. If bonds, which typically take up that fixed income allocation,

if bonds aren't really the best investment anymore, because they were in the past, not so much now and maybe into the future, what do you suggest people do? It's not that simple, Jessica. I mean, we'd be going- Yeah, I know. But I'm like, I guarantee someone's like, what do you want me to do then? Yeah. You're like saying, I mean, basically, yeah, I have a post on my site called What's a Good Investment. And it's basically, that's the premise of your question. Your question is, what's a good investment? And it explains why that's a flawed premise to a question. I'm not trying to knock you down, right? I mean, it's absolutely normal and everybody thinks that way.

They think they need to find a good investment. And that's not how you approach investing as a business. What you need is a valid investment process. And that's not how you approach investing as a business. What you need is a valid investment process. And that means a provable positive mathematical expectancy. And again, it's like it's a whole nother way of looking at investing that I teach. You're not trying to look for a good investment. That's a myth. And that's not the way the pros do it. That's not the way you build a portfolio that performs over time. So anyway, what's a good investment today won't be a good investment tomorrow and on, on, on. Which I get, but how then with that being said, it's like for just a regular old investor, someone, clients that I you know, work in corporate and have money and

they want to invest, but they don't really have too much time and they don't have the expertise and they're never going to be high level, you know, a very advanced investor, you know, what, you know, with all of this said, you know, past performance doesn't, you know, guarantee future performance. And with all the kind of, you know, information all over the place, it can get pretty overwhelming and pretty, and this is why I think a lot of people don't invest is because there's too, everyone has an opinion and, and it's sometimes it's so unclear what to do. And so totally understand where you're coming from. It's like, yeah, there's no such thing as a good investment. There's so many other things to consider, but I think it's very difficult for

people to be like, okay, yeah, yeah, yeah. But let's go back to my question, which is, what should I do? Right. So I always laugh, right? Because people interview me and they'll want to know what's a good investment or they'll want soundbite investment advice, right? And it doesn't lend it... So people who give you soundbite investment advice just run the other way. There's inherent complexity to investing. And anybody who tries, you know, it's like Albert Einstein said, make it as simple as possible, but no simpler. And so when people run around and they give you soundbite investment advice, it's worth what you paid for it.

Investing is an inherently dynamic fluid process. And so what I teach is that investing done right is a process, not a product. In other words, your question was about a product. You were looking for what's a good investment, which is a product-based question. And the valid question is what's a good investment process or what's a valid investment process? That's a fundamentally different question that lends you to fundamentally different answers. And so that would be probably about the best answer I can give in an interview format is that you have to focus on investment process, not products. Do you want to kind of speak a little bit more about what you mean by process?

You have to have an investment process that identifies what are good investments, what the criteria is, how you buy them, how you sell them, where opportunity is in the market, where risk is. You have to have a valid investment process that you follow with discipline through a variety of market environments and has a provable positive mathematical expectancy. There's not a ton of valid investment processes actually, which is surprising. When I worked in the hedge fund business, I spent 12 years researching investment systems. That was my claim to fame as I was one of the early pioneers of computerized investment research. And so I spent 12 years doing nothing but researching investment processes. So most of what's taught I've tested and most of what's

taught doesn't actually work. Now, fortunately, you know, buy and hold low cost passive index as commonly taught that you're referring to early in the interview, it is valid. It's just not efficient, right? So it's valid in the sense that it has approval of positive mathematical expectancy. And so the long-term return from, I mean, the return formula for stocks is dividends plus economic growth, plus or minus change in market valuation. And so what happens is over the long-term, the reason everybody tells you you have to have a long-term perspective with buy and hold is that third component is the tail that wags the dog, which is the plus or minus change in

market valuation. That'll have huge big numbers, positive and negative every year. Meanwhile, the first two components of the equation, which is dividends plus economic growth, are almost constant, and they're pretty much determined by the date you invest. And so that's like the tortoise and the hare, right? The tortoise just inexorably compounds those first two components. Meanwhile, the hare has these huge numbers on the third component up and down. But the interesting thing is that between 20 and 30-year time horizons, that third component starts reverting to the mean and canceling out towards zero. In other words, it's bounded, right? It goes up, it goes down, it goes up, it goes down.

And over the long term, it cancels out and becomes zero, which means that over the long term, all you get from a buy and hold portfolio is dividends plus economic growth. And so that's why buy and hold works is the relentless compounding of the dividends and the economic growth gets built into your stock market return. And that's why if you look at a super long term chart of like the Dow Jones averages or the S&P 500, you'll see that it goes from the bottom left of the chart to the top right. So, I mean, investing at the core is really, really simple. And if you have that really long time horizon, it is a valid process in the sense that it has a provable positive mathematical expectancy, which is what I was stating was the criteria for a valid investment process. The problem is it's really inefficient because you are experiencing, you know, 50% plus drawdowns at several points along the timeline to get single digit returns compounded.

And that's just horrible. You know, that to me is not acceptable. And that's what causes things like the sequence of returns risk and why you can only withdraw, you know, 3% or 4% from your portfolio in retirement when the portfolio is expected to return seven or 8%. And it has to do with that huge amount of volatility. Traditional financial advice will tell you that you're supposed to just accept volatility and tolerate volatility. I teach very different. I teach that volatility is something that must be managed. And there's math reasons why that's true. So again, a lot of the stuff is way beyond the scope of the interview. I just wanted to kind of give you a flavor and respect your question by

giving a direct answer. But there's a lot to it. It's sort of like you would never have a guest on and say, that's an expert brain surgeon and say, so Todd, tell me, how would we do brain surgery? Right? Because it wouldn't lend itself to a quick answer, right? I mean, it's something that somebody spent years developing and there's complexity to it. There's the human body system. There's all the different things that go on during brain surgery. And I say that investing done right is not brain surgery. It's way more complex than that. And that's where I'm like, I find that so fascinating. And I think it's a very interesting, different point of view because it's interesting because I feel like there's kind of two camps where people believe that it is very complex.

And I don't know, I've never been a hedge fund manager. I've never dived into it as you have. And then there's another camp where like investing should be simple. It is simple. But it is. It can be simple, but it's also complex. Well, no. It depends on what you're willing to tolerate, right? So it can be very simple. If you want to just do buy and hold low-cost passive index investing, I can teach you everything you

know about investing in like two sentences, right? I mean, it's literally that simple. But like all things in life, if you take that simple approach, there's trade-offs, right? You're going to pay a certain price. So you're saying that it can be more complex if you want to do a different process and that different process could potentially lead you, like there's higher risk, but higher reward. Is that kind of? A little bit different, a little bit different. So you're going to pay a price either way. Okay. So if you take the simple route, that's fine, but you pay the price in accepting a very poor risk reward relationship. If you want to pay the price and develop your knowledge, then instead what you can do is you can improve the risk

reward relationship. You can get higher returns and lower risk. And again, this is tantamount to how it's traditionally taught, but this is one of the realizations I had back in my hedge fund days when I was developing investment methodologies is I was shocked at the less they lost, the more I made. And that's antithetical to how investing is commonly taught and how you just asked the question, which is you're going to make more, but you're going to risk more. Yeah, because that's typically what they say. Yeah, but that's not true. That's only true on a product basis. Okay, so again,

there's the distinction between product and process. If you look at things on a product basis, which is how it's commonly taught, then what you're saying is true. There is a definite relationship between risk and reward. But if you go to investment process, it turns all the math upside down. And so you can actually get improved returns with lower risk. Interesting. And I feel like, yeah, you've... But again, you're going to pay the price. You're going to pay the price in terms of developing that knowledge. So you get to pay the price either way. There is no silver bullet here, right?

Yeah, no. And that makes a lot of sense. Basically, I think the reason that people are kind of, not flocking, but kind of, oh, I'd like to do passive investing that makes sense to me because it doesn't take that much time and it's passive and it's easy to understand. Whereas I do know a lot of people going to a different route, investing a lot of different products and doing lots of different strategies and systems. And for me, I'm like, I understand what gets you interested in that. Like they love it. They, you know, it's a passion of theirs. But yeah,

they're also taking up a lot of their personal time to develop these skills and learn about these things. So there is kind of that. It's like, do you want to put the time in is kind of what you're saying. Yeah, yeah. And there's no one right answer. There's not like one's better than the other or one's right or wrong. So in my wealth, I have a course I teach called Expectancy Wealth Planning. And what's unique about that, it's not like a financial plan like right or wrong. So in my wealth, I have a course I teach called expectancy wealth planning. And what's unique about that, it's not like a financial plan like you get from a broker or an advisor, right? Because that's just about, send me all your money and I'll put it in my magic asset allocation. And at the end of the rainbow, you'll have riches. That's basically a traditional

financial advisor plan. I'm simplifying it, but in a nutshell, that's what it'll be. And then you take it and you go, oh, that's nice. And it's got pretty charts and graphs and you put it up on your shelf and it starts collecting dust and you never do anything with it. And so expectancy wealth planning is different because what it's about is it's an active process where you put yourself in the middle, you develop the plan, you know it inside out. It uses all three asset classes, not just the stocks and bonds your broker can sell you, but it uses business entrepreneurship, which is the second asset class. And it uses direct ownership of real estate, which is the third asset class. And that should be intuitive to everybody because it goes back to the comment you made right at the beginning of the interview, which is, how did Tony Robbins get rich? Well,

he did it in the business asset class. And that's true for anybody that's a 20-something or a 30-something multimillionaire. If you interviewed them and they said, well, I did it by putting my money away in low-cost passive index funds and doing asset allocation, you'd laugh. Everybody knows that you don't get rich at age 20 or 30 doing that. You do it through business and real estate. you can look at the research too. There's quite a few research studies on how the rich become that way. And it always says the same thing, which is the vast, vast majority of wealth is built through the business asset class. And second is real estate, and it's a distant second. But real estate is unique. And this is another thing I teach is you have to understand unique characteristics, but let me come back to that. So real estate second, and then in the far distant

third place is stocks, bonds, and mutual funds. And the thing about stocks, bonds, and mutual funds, when it does actually work and you do actually build wealth, it's generally very late in life after a lifetime of compounding and scrimping and saving. So it's sort of the old age conventional plan where you amass a certain level of financial security in old age, or you do it the way the fire community does, which is you go to extreme frugality, you cut your expenses way down. And that allows you to achieve financial independence at a much lower level of wealth. Plus, you can save a much higher level of your earnings. So it accelerates the plan. So if you're not willing to do the extreme frugality path and some people love it, some

people don't. Again, not right, wrong. It's different flavors for different people. And so if you don't want to do the extreme frugality and you don't want to spend a lifetime scrimping and saving and compounding your way there, then that leaves you with the two other asset classes. You need a more comprehensive wealth plan. And so what I do is I teach that there's the traditional approach, which is what we're talking about, right? And that's in one module. And then I call that the conventional planning framework. And then you have the advanced planning framework, which uses the other two asset classes, employs principles of leverage, risk management, and on and on and on. It adds like additional

dimensions to the plan so that it's comprehensive. And then the other thing too, it's really important to understand when you're trying to put together wealth plans is that you have to understand the characteristics of the asset class. Like think of the analogy of Velcro, right? Each asset class has characteristics and they're unique to that asset class. So for instance, real estate is one of the most secure paths to wealth, one of the most stable, okay? Business has the single greatest risk reward ratio of anything out there. Nothing comes close and you have all kinds of ways you can manage it. Paper assets, they're slow, but reliable, but very volatile, okay? And they're passive. The other two are

active. That one's passive. The other two are active. That one's passive, which we were talking about earlier in the interview. And so each one has unique characteristics. You have to take those characteristics and then you have to match them up to the unique characteristics of your life, which is your skills, your resources, your values, your needs, what you're bringing to the table. And there's not one right wrong answer. You just have to do it like hooks and loops and Velcro and connect them to create a plan that will actually work for you. Yeah. And does it also say like, it seems kind of like with the traditional kind of module, it seems like that's kind of a catch all for anybody. Anybody can do that. And then the other two asset classes, is it a certain type of people that can do that successfully? I just know in terms of the business, not everyone's cut out to be an entrepreneur. It's sometimes some people are like, no, I just don't want to do that.

And for the real estate, is that something? No, most people could probably do that if they just learned how it all works. It's not that crazy. Yeah, what I teach in the course is I call them continuums, right? So you're going to have a continuum of passive versus active, and you can plot each investment strategy and each asset class on that continuum of passive versus active. You can also plot it on the skill level required, right? So at the far left with almost no skill required is buy and hold passive index investing.

Somewhere in the middle is real estate investing, and you've got degrees of that, right? Because you could have a very active fix and flip strategy, which is more skill required than just a buy and hold strategy. Right? And then you've got business on the far right, which requires more skill, but also has a greater opportunity for gain because it has greater leverage and tax opportunities. Yeah. Yeah. Yeah. That's kind of what I was getting at that's what it seems like it's like it depends it's like those are all different things for kind of different people like not everyone's it's not like one size fits all it's like everyone is different that's why i mean you know you're basically asking me to pitch the course i mean that's why i don't know i didn't mean no no no

but i mean interesting that's why i did the? It's because nobody's teaching it this way, and yet that's the way it works in practice. No, it's true. There is not one right answer. Yeah, people are either talking about the traditional way of investing, or they're talking about business, or they're talking about real estate investing. Exactly. They're not pointing out that different strokes fit different folks, right? And they're not showing-

Or you can do all three or two or, you know- Or how you integrate them together into a comprehensive plan. So for example, let's say you've got a, I had a client who was a very successful attorney. He had a growing practice and it was an immigration practice down in Texas. So he had multiple attorneys underneath him, legal assistants, secretaries. So it was a large staff. I think at the time we were working together, it was like 40 or 50 people and growing. And he was renting his office space. So he's making a lot of money, right? But in terms, he had no wealth plan and he was running the office space. And so one of the no-brainer strategies in a situation like that, he bought a large four-unit office building and the company, his law firm guaranteed

two of the units, which was enough rent that he was guaranteed positive cashflow. Initially, it subleased one of those two of the four units. He leased the other two. He then subleased one of the other ones. And then as his practice continued to expand, he then leased out the remainder of that to his own practice. And so his practice guaranteed the rental value of the property enough that he was positive cashflow on a personal basis. And rather than waste that money on rent to a landlord, and that was on a, he used, here was another thing we did was because he had a lucrative law practice, the bank really wanted his account, right? Because he's got millions of dollars flowing through this account

and they're making tons of money off him. Plus they got all the service fees and everything. And so he went into the bank and I worked with him and he negotiated 20 year fixed rate loan for a large commercial building, which is like unheard of. But the bank did it because they wanted his business account. And so they did that 20-year fixed rate loan on his building in exchange for him keeping his business account there. And so in 20 years, that building's going to be paid off and that alone will be sufficient for him to retire on. And so there's ways you combine it depending on what you bring to the equation. That's what I was talking about. It's like hooks and loops and Velcro. You've got to look at it. A teacher is going to be somebody

totally different with a totally different plan, right? Because they don't have the high income like the attorney did, but they do have time and maybe this teacher has handyman skills and happens to love improving buildings. So maybe they pick up one unit a year while maxing out their teacher retirement plan. And they fix it up during the summer when they're on vacation or on holidays, and they pick up a building every few years. And then that's another way for them to approach it and overcome their lower salary. And so you have to look at the characteristics you bring, what your skills are, your values, your interests, your timeline, your resources, and you have to match that up to the various investment strategies to put together a plan that'll work for you. And I haven't seen anybody else teach it that way.

Not that way, no. And it should be because even for my own investment strategy, it's like, I've got the traditional going. And in the future, we're hoping to add in the real estate. And I guess technically, I've got the business thing going, though. It is just, it's not going to be like a startup or anything like that. Ah, but yeah, but see, you can work at passive income streams within your business. I could. Like, that's the thing. There's the opportunity that it could.

I'm in still very early days in my business. It's only been two years. And I have been able to increase profitability you know, profitability and everything like that. But it's still kind of, you know, reading your book, I'm like, I remember when we first chatted, and I think you were doing more coaching then. And now you've moved away from that. Because like you said, in the book, you're trading time for money. And there's, you know, a limit on how much money you can charge for your time. And that's kind of definitely something I'm foreseeing. I'm like, totally relate to that.

Yeah. But see, when you get clear on that, you know, financial independence is, you know, passive cashflow exceeds expenses, right? And so you look at that and you go, well, okay, now that I know that that's the objective, I can start building that into how I design my business. Right. And so you can look at me, I'm building out courses, books, I build out the marketing platform. They're all, they're all what I all what I call delayed gratification practices. They're not passive income in the sense that I still work the business, but I'm in control of my time when I choose to work and how. Like I just got back from a two-week vacation in the Turks and Caicos Islands for kite surfing. Ooh, that sounds like heaven. Yeah. And I think I worked a total of maybe six,

seven hours out of two weeks. Yeah, that's the dream. I think that's the other thing too, with the business thing, at least from my own personal experience, it's something that can evolve. So even though it started in one way, it's definitely evolving. And definitely I'm taking some of your tips from the book, like trying to not just, and this is something that I've been actively doing is even though I do, you know, financial counseling, so that is trading my time for money. I put a cap on that and I don't actually actively promote it at all because it's like, there's only so many clients I want to work with. And one of my main things too is I like working with clients because I get to talk to real people to find out the real

struggle so I could hopefully develop products that are passive and sell those in the future. Yeah. The key is you have to have the plan and the principles right. And that's part of what the leverage equation book teaches as well as the course that the leverage book was excerpted from. So the book we're talking about is leverage equation, just to clarify for people listening. The course that we're talking about, about the expectancy wealth planning course, the leverage equation book came from just two lessons in one module in that entire course, where there was like, I think nine or 10 videos in those two lessons that I then did just because the clients inside the course were kind of demanding it of me. I'd always thought of

leverage as a standalone book, but I really had to have it inside the course for it to be complete. And the clients were clear on that. So I went ahead and put it in there and then excerpted it out and published it as this book. So it's just one piece of the entire expectancy wealth planning process. The next book that's going to come out is going to be risk management, which is the mirror image of leverage. Yeah. No, I really just... Yeah, no, I really appreciated this book. It was very, it just, it gave me, at first, I'll be honest, when I saw the cover and it said leverage equation, how to work less, make more and cut 30 years off your retirement plan, I thought it would be more about retirement planning.

And then I'm like, oh, it's not. And I'm actually pleasantly surprised because kind of like we talked about in this episode, you talk, you don't just talk about like the financial leverage. You talk about a lot of different things, like how to create systems in your business. So you don't spend so much time, you know, doing this and that and all these different elements that I think are important. And it's touches just like on what we talked about, the different kind of ways you can invest in yourself and in your finances, all that. of stuff. Yeah. At the core, leverage is that nobody builds wealth without leverage. Okay. That's like the core message. And people really misunderstand leverage. They think it's

about financial leverage. They think of like mortgage financing, debt financing, things like that when they... I think that word has some emotions behind it. Because even when I'm like, oh, leverage, it has a bit of a negative connotation sometimes, or positive, depending on who you are and your experience with leverage. But usually people are like, leverage, it could mean like you're, I don't know, doing something kind of behind the scenes, not so great, or, you know, or, I don't know, taking advantage. I think people think of leverage as taking advantage. Yeah, people think leverage is risky, right? And so here's the funny

thing. You know, the only type of leverage that's risky is financial. That's the only one people seem to understand. There's five other types of leverage and all of them can actually increase reward and reduce risk. What I've realized, Jessica, is that I positioned the book wrong because I've gotten the same comment you have. I like the title because it is all about leverage and his leverage equation. Once you read it, you're like, I get it. Yeah. The title is absolutely appropriate. It's the subtitle I'm going to be changing and I'm going to reposition the book. I had one interviewer tell me that really what I've done is I've redefined leverage for entrepreneurs and for wealth builders. The core message is that you have limited resources

at your disposal that are yours, right? In other words, you're in possession of a limited amount of time and you have a limited amount of capital and you have limited access to networks and different types of things, right? And so that's your limited pool of resources. But when you apply leverage, you have unlimited resources because you have access to everybody else's time, networks, resources, finances. And so the idea is that you can greatly accelerate your wealth path when you understand smart ways to apply leverage. And that's what the book teaches is how to do that, to get beyond your own resource limitations. And then the other thing the book teaches, which really surprises a lot of people, is that you use leverage to break through all the obstacles that hold you back from greater success.

And the reason that's true, and people get it intuitively once it's explained right, is that the reason you have an obstacle is because you lack that resource. Whether that's you don't have enough time, you don't have enough money, you don't know how to fix the problem, which means you lack the knowledge or you lack the technology. Whatever it is that you lack is the reason that it's an obstacle that's holding you back from greater success. And so the way you break through that obstacle is by leveraging away that problem. You have to find access to the resources that will solve the problem. And so, and the book teaches you how to do that. And so it's both about how you break through the obstacles that reduce your level of success or hold you back from greater success. And it's also about how you multiply the success you create through leveraged strategies. And as I'm reading the book, I'm just like, yeah, I need to do better. Like I've gotten better because I used to be, I mean, I am still a company of one, but I mean, you have just a lot of great points. Like I use a lot of great software and programs to help me kind

of, you know, maximize my time. But I think in terms of like hiring other people, contractors that could do things probably better for cheaper for less time, I need to, you know, because like you said, like there's, there's a limit on if you're going to do everything yourself, there's going to be a kind of a cap on how far you can get. Yeah. And, and I'm still learning, right? I run into problems myself and I teach the subject, right? I mean, it's, it's a constant learning process. So for example, you know, in my business, my writing is both the clog and the cog, right? In other words, people are buying my books, buying my courses. The information on the website is all written by me a hundred percent. And so there's only so much time I can spend writing, right? And so it's always been the limitation to the growth and

expansion of the business because all these ideas are in my head and in note files and things, and I have to form them into products and usable articles and things like that. And it just takes a lot of time. Well, what I realized as I was in an interview actually on the book was that my writing process is only about 20% creating and about 80% editing. And I realized that I can probably find editors who are better than me. Now, it wasn't easy. It took four editors, but on the fourth editor, I found one that I can work with that's better at it than me. And so it allows me to accelerate my writing process. I just get it down now to a fairly tight text. So they're not having to like figure out what everything is there. And then the editor comes back and really polishes it for me and cuts the writing time in

about half. Yeah. But like you said, it's not easy. You had to go through a bunch of people to find the right one. And I think some people get, me included, I've tried, you know, higher outsourcing and it didn't work out. And you kind of feel like, oh, maybe I shouldn't. Maybe outsourcing is bad. But really, I think sometimes you just have to keep trying to find the right person. Because when you do, and I have experienced this, it's amazing. Oh, yeah, yeah. When you get it right, it's awesome. And I mean, just listen to what I went through, right? I first identified the clog, right? I identified the limitation to greater success, which is what we're talking about earlier, right? Once you identify it, then you start seeking the solution. And you may not get it right the first time, but that's why persistence

is so important to success, right? As long as you've got the formula right and you understand that your highest and best value, my highest and best value is not spent editing. There are people who are better at editing than me. But I'm not replaceable on the writing side. I have, the ideas are mine. I have to craft the message. It's my voice. And so I can't leverage that away. I've tried it by the way, I've tried hiring writers. I can't, it doesn't work. Um, but I, I have found that I can hire editors and that's about, you know, depending on at what point in the process you hire out, it's about half the writing process. Yeah, absolutely. Well, I feel like people that will pick up your book will learn a ton. And I think a lot of things will click.

Where can more people find out about you? Grab a copy of this book as well. Yeah. So my website is financialmentor.com. That's financial mentor, all together one word, financialmentor.com. And you'll find the book in the sidebar under the topics. You'll find all my books there. I've got six books. And you can also find it anywhere where books are sold. But the neat thing about the website, there's over a thousand printed pages of content. I have one of the largest collections of free calculators. I mean, wealth is math, right? But people don't like math.

And so what I did is I made the math easy by putting it all in these ready-to-go calculators. And they're all free. And then I give away a book. And I give away a free course. And I have lots of free givies and stuff. So just go over to the website and sign up. And you'll get all kinds of free stuff. And the books are available on Amazon wherever books are sold.

Amazing. Well, thanks so much for taking the time to chat with me. It was a really great conversation. I really appreciate getting your insight. Thank you, Jessica. And that was episode 197 with Todd Trestor. Make sure to check out his website, financialmentor.com and grab a copy of his new book called The Leverage Equation. Of course, we'll include all this information in the show notes, which you can check out at jessicamorehouse.com slash 197. And to check out show notes of any episode, you just go jessicamorehouse.com slash whatever the number of the episode is. Made it real easy. Or just

go to jessicamorehouse.com slash podcast, and it has every single podcast ever on there. Yeah, easy peasy lemon squeezy. Don't go away. I have a few things that I'd like to share with you. So before I get to that, here's just a few words about this episode's sponsor. This episode of the Momany Podcast is supported by TD Direct Investing. You know what I hear often from listeners like you? I want to try out DIY investing, but it kind of scares me. Totally. It can be scary and overwhelming, even if you've listened to all my episodes on investing and read all the investing books you've been recommended. When you're a DIY investor, you're in the driver's seat, and you have to make all the decisions for your investment

portfolio. That's a lot of pressure, which is why I am totally here for TD Direct Investing's new investment planning tool called Goal Assist. It's available to new and current clients and is an awesome way of helping DIY investors identify, monitor, and review their investment goals. When you use Goal Assist, you'll be guided step-by-step to identify your investment goal, risk tolerance, and time horizon. You can even set up multiple goals with different time horizons and investor profiles to create a clear roadmap of where you want to go and how to get there. Want to learn more? Just visit the show notes for this episode or go to jessicamorehouse.com slash goal assist to watch my video tutorial.

TD Direct Investing is a division of TD Waterhouse Canada Inc., a subsidiary of the Toronto Dominion Bank. going to very shortly be able to put the video online as well as I'm going to make the audio of the panel discussion with myself, Aaron, Barry Choi, and our expert from TD Direct Investing on the podcast. So stay tuned for that. That will be available shortly next week or two. So I'm very excited about that. And in terms of other events, I mentioned some things that are upcoming in last week's events, I mentioned some things that are upcoming in last week's episode, but I want to share them again in case you missed it. Other events that are coming up that I would love to see you at if you are based out of Toronto, because these are ones are all based out of Toronto. I've got one very soon on May 16th. It's hosted by the Toronto

Region Board of Trade and Young Professional Network. It's called Millennial Money Had a Plan for Financial Freedom. I'm going to be one of the panelists at this event. I will also, on May 19th, be at the Toronto Public Library, the Evelyn Gregory Branch. I will be doing my How to Become a Side Hustler presentation. Quite honestly, it's my most popular presentation. So if you want to come say hello, learn about side hustles, come check me out. It's free. So, you know, why not? So you can find more information about those events and any events I do on my website, jessicamoros.com slash community is probably the easiest way to find all that info or sign up to my email list. Also, one other event that I'll be doing May 22nd

is called How to Run a Successful Business from Anywhere. So if you specifically want to learn information about how to run your own business as a solopreneur or small business, but really learn more about digital marketing and just running an online business, because that's what I do. I run it out of my home office slash anywhere. I basically like as long as I have a laptop and a phone, I can run my business. So I'm gonna be talking about how to do that on May 22nd. And it's hosted by Rogers. And you can find more information about that, you know, on my Twitter or again, JessicaMorales.com slash community. Last thing I just want to remind you all of, I have a ton of freebies on my website. So if you are just starting your journey, or maybe you're not,

you've been listening to the podcast for a while and you just had no idea, I have a bunch of free downloadables, spreadsheets, worksheets, videos on my website. It is in a special resource library for members only, but it's free. So you just have to sign up and create a login and all that stuff. You can find all the information on my website or just go directly to just morehouse.com slash resources. But you know, if you want to start getting your stuff together, I would highly recommend just checking that out. It's free. There's nothing stopping you. And also if you're not part of my Facebook group, again, another free community to be a part of. It's super fun. Just go to facebook.com slash group slash money life

balance. Or again, just go to my website. There will be info about it. Basically, I just want to have a nice safe space for people to ask their questions, even though they're afraid maybe they're a dumb question or a basic question and not have any judgment. Because guess what? There's no such thing as a dumb question. It just means you don't have the answer right now and you'll have it soon. So that is something that you can join and I think be pretty, pretty cool. That is it for me. I'll see you back here next week with a fresh new episode. Thanks for listening once again. I'll see you next week. Have a great rest of your week and weekend and see you soon. This podcast is distributed by the Women in Media Podcast Network. Find out more at womeninmedia.network.